July 22, 2005

An Opportunity as Big as The Sun

A new way to harness solar power presents a huge business opportunity

In 1953 Gerald Pearson and his two colleagues at Bell Labs announced the first solar cell. The NY Times marked the event as the beginning of an era that would eventually lead to harnessing of the limiteless energy of the sun. Over 50 years and an estimated $50 billion of investment later, we're still far from realising that dream.

Solar power has made big strides over the last two decades in both efficiency and deployment but due to its high cost it's a long way from becoming a viable mainstream energy alternative for the masses. But as a recent story in Wired suggests, "eventually - say, 20 years from now - mass production and technological improvements will make solar power fully competitive with coal, gas, and nuclear. And then the market will explode."

Now comes a remarkable idea that could hasten the change and in the process might go on to become the greatest venture creation opportunity of recent times. Wired Magazine has the story of Bill Gross, dotcom entrepreneur and founder of incubator idealab, who alongwith his team at startup Energy Innovations has invented a rooftop solar concentrator to convert solar energy into electric current for household consumption at about half the cost of traditional solar panels.

The idea isn't novel. Solar concentrators have existed since the 80s but installing them involved millions of dollars of investment as they require huge infrastructure involving "parabolic dishes, mirrored troughs, and 'power towers' surrounded by fields of reflectors, aided by complex mechanical gear that tracks the sun's path across the sky." Such concentrators deliver superb efficiency over simple PV fields but they also weigh several tons.

Bill Gross has taken that model and done two things with it. He miniaturised it so that his concentrator can be installed over any flat rooftop of an industrial building or a home. And secondly, after experimenting with dozens of iterations over the years, removing a complex gear of motors for each of the 25 mirror in favor of a just two motors in an innovative deisgn and employing outsourced manufacturing, he has managed to bring down the cost to a competitive level.

Bill Gross' startup, Energy Innovations plan to deploy their first 'Sunflower' systems on commercial sites by the end of 2005. Residential applications will begin after that. If the deployment becomes successful (their recent beta test program was extremely well received) then there's no stopping how far this can go. In Bill's own words...
Reinventing energy is a multitrillion-dollar opportunity. It's the next big disruption. It dwarfs any business opportunity in history.... We've been looking for a big problem to get our hands around, and we think we've got an answer.

The five page long Wired story explains the opportunity in much more detail. Some highlights:

How does the solar concentrator work?
The sunflower shaped apparatus is a grid of 25 mirrors arranged to focus incoming light into a concentrated point directed towards an overhead panel of photovoltaic silicon, which converts it into electrical current. A cheap processor tracks the sun's movement instructing a pair of motors set in a unique design at the base to position the 25 mirrors.

Why solar power?
It's inexhaustible, can be used almost anywhere and the fuel it runs on comes for free. Although the cost of production of PV generated power (21 cents / KW-H) is much more than traditional sources of power such as coal (4.74 cents) and natural gas (5.15 cents). But its unique advantage of no distribution costs (can be installed directly where its needed, therefore no wastage during distribution and no middlemen) bring down the cost difference considerably.

What's unique about the 'Sunflower'?
The Sunflower concentrator converts over 20% of incoming sunlight into electricity, about 50% more efficient than standard PV panels, providing a peak power output of 1 kilowatt-hour on a sunny day. The Sunflower is over 30% cheaper than PV panels before rebates and even more in most US states. While for PV panels, the payback period is 20 years, Bill Gross is aiming at a 5 year period in California.

The Dotcom King & the Rooftop Solar Revolution
Bill Gross profile and his company Energy Innovations

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