WEBVTT 00:00:00.060 --> 00:00:02.490 The following content is provided under a Creative 00:00:02.490 --> 00:00:04.010 Commons license. 00:00:04.010 --> 00:00:06.340 Your support will help MIT OpenCourseWare 00:00:06.340 --> 00:00:10.710 continue to offer high-quality educational resources for free. 00:00:10.710 --> 00:00:13.320 To make a donation or view additional materials 00:00:13.320 --> 00:00:17.192 from 100s of MIT courses, visit MIT OpenCourseWare 00:00:17.192 --> 00:00:17.817 at ocw.mit.edu. 00:00:26.410 --> 00:00:28.480 PROFESSOR: I promised everybody that we 00:00:28.480 --> 00:00:32.240 would have the capability of testing 00:00:32.240 --> 00:00:34.510 a multi-junction solar cell. 00:00:34.510 --> 00:00:37.350 We've been working so far with a single-junction crystalline 00:00:37.350 --> 00:00:38.220 silicon. 00:00:38.220 --> 00:00:40.340 And just to refresh everybody about what 00:00:40.340 --> 00:00:44.750 a multi-junction device is, it is a high-efficiency concept. 00:00:44.750 --> 00:00:46.640 The efficiencies that are obtained 00:00:46.640 --> 00:00:49.850 under concentrated sunlight are above 40% 00:00:49.850 --> 00:00:52.500 now with some of these high-efficiency concentrated 00:00:52.500 --> 00:00:53.520 devices. 00:00:53.520 --> 00:00:57.840 And again, the way this concentrated device works 00:00:57.840 --> 00:01:00.380 is if you have, for example, germanium, gallium arsenide 00:01:00.380 --> 00:01:02.290 indium, gallium phosphide stack-- 00:01:02.290 --> 00:01:05.170 three different materials, three different band gaps ranging 00:01:05.170 --> 00:01:07.980 from somewhere in the range of 0.67 00:01:07.980 --> 00:01:11.970 eV all the way up to a few eV. 00:01:11.970 --> 00:01:14.640 The largest band gap is placed at the top, 00:01:14.640 --> 00:01:17.950 because the short wavelength light is absorbed by that one, 00:01:17.950 --> 00:01:20.740 and the longer wavelength lights go through and are absorbed 00:01:20.740 --> 00:01:22.970 by the layers underneath. 00:01:22.970 --> 00:01:26.650 So you can think about this as blue, orange, and red, 00:01:26.650 --> 00:01:29.680 if you like to see things in colors, the short wavelength 00:01:29.680 --> 00:01:33.010 light being the blue absorbed at the top, the sunlight obviously 00:01:33.010 --> 00:01:35.630 coming in through that side through the top, 00:01:35.630 --> 00:01:38.730 the middle cell absorbing the light somewhere in the middle 00:01:38.730 --> 00:01:42.010 of the solar spectrum, and the bottom cell into the reds. 00:01:42.010 --> 00:01:44.460 So the notion is to have a device that 00:01:44.460 --> 00:01:48.930 is capable of minimizing thermalization losses. 00:01:48.930 --> 00:01:52.610 So the short wavelength light, instead 00:01:52.610 --> 00:01:54.870 of being absorbed in a low bandgap material 00:01:54.870 --> 00:01:58.670 and generating a ton of heat in the process, 00:01:58.670 --> 00:02:02.440 is able to be absorbed very efficiently via that top cell. 00:02:02.440 --> 00:02:05.150 And only the longest wavelength light, the lowest energy light, 00:02:05.150 --> 00:02:07.850 makes it down to the small bandgap material underneath. 00:02:07.850 --> 00:02:11.080 So this is representative of the stack of materials 00:02:11.080 --> 00:02:11.702 that we have. 00:02:11.702 --> 00:02:13.160 I believe what we're going to do is 00:02:13.160 --> 00:02:15.680 do a direct comparison of silicon versus multi-junction. 00:02:15.680 --> 00:02:17.000 Is that right? 00:02:17.000 --> 00:02:19.790 Yeah, so right now we have installed the silicon devices. 00:02:19.790 --> 00:02:22.700 Those are the very nicely encapsulated ones. 00:02:22.700 --> 00:02:24.310 We had to change the light source. 00:02:24.310 --> 00:02:29.390 As you see now, we have a little bit of a flashlight there. 00:02:29.390 --> 00:02:31.360 Why is that? 00:02:31.360 --> 00:02:33.360 Why did we have to go from an LED, 00:02:33.360 --> 00:02:38.618 a monochromatic light source, to a broadband flashlight? 00:02:38.618 --> 00:02:40.284 AUDIENCE: Well, if the point is that you 00:02:40.284 --> 00:02:43.914 have these different absorbing layers that 00:02:43.914 --> 00:02:46.576 absorb different wavelengths of light, 00:02:46.576 --> 00:02:50.448 if you only put one [? group ?] like that, 00:02:50.448 --> 00:02:52.400 the other layers wouldn't have any effect. 00:02:52.400 --> 00:02:54.316 PROFESSOR: And it kind of defeats the purpose. 00:02:54.316 --> 00:02:56.800 Plus the current outputs of these three different cells 00:02:56.800 --> 00:02:58.900 have to be more or less matched. 00:02:58.900 --> 00:03:02.030 So because they're connected in series, 00:03:02.030 --> 00:03:06.530 if you have a poor performing cell-- or one component, one 00:03:06.530 --> 00:03:08.530 sub-cell, if you will-- that is generating 00:03:08.530 --> 00:03:10.600 a small amount of current, that will 00:03:10.600 --> 00:03:13.810 limit the combined current output of the entire stack. 00:03:13.810 --> 00:03:14.330 Good. 00:03:14.330 --> 00:03:16.788 So why don't we go ahead and connect them to our computers. 00:03:16.788 --> 00:03:19.020 We have our tech support staff available on call-- 00:03:19.020 --> 00:03:21.030 who just walked out, conveniently, 00:03:21.030 --> 00:03:23.330 but will be back momentarily. 00:03:23.330 --> 00:03:25.120 We'll connect them to our computers, 00:03:25.120 --> 00:03:27.910 fire it up, and team up with somebody 00:03:27.910 --> 00:03:29.930 if you don't happen to have a computer with you. 00:03:29.930 --> 00:03:32.650 We'll get this demo started. 00:03:32.650 --> 00:03:36.620 So the notion here is to first test the silicon-based device. 00:03:36.620 --> 00:03:38.120 Once we have a good working IV curve 00:03:38.120 --> 00:03:42.359 out of the silicon-based device, we'll take a pause. 00:03:42.359 --> 00:03:43.900 We'll talk about what we would expect 00:03:43.900 --> 00:03:45.800 to see from the multi-junction device 00:03:45.800 --> 00:03:46.970 when we hook that one up. 00:03:46.970 --> 00:03:49.950 So why don't we go to it and give it a shot. 00:03:57.570 --> 00:04:02.630 So let me dive into what is effectively 00:04:02.630 --> 00:04:07.100 our last in-class lecture before we 00:04:07.100 --> 00:04:10.680 are graced with some really nice presentations. 00:04:10.680 --> 00:04:12.310 I'm looking forward to those. 00:04:12.310 --> 00:04:15.390 So global trends-- what I decided 00:04:15.390 --> 00:04:18.860 to talk the last day about-- really 00:04:18.860 --> 00:04:20.829 we have a couple of topics left, which 00:04:20.829 --> 00:04:23.735 we don't have time to cover. 00:04:23.735 --> 00:04:25.110 We won't have time to cover both. 00:04:25.110 --> 00:04:27.068 We'll have time to cover one but not the other. 00:04:27.068 --> 00:04:31.070 And the two topics are the future of R&D in solar. 00:04:31.070 --> 00:04:33.370 And the other topic is solar in developing countries. 00:04:33.370 --> 00:04:36.340 And I think both are equally important. 00:04:36.340 --> 00:04:40.100 I decided to pick the former rather than the latter. 00:04:40.100 --> 00:04:42.740 Global investments, trends in solar and other renewables-- 00:04:42.740 --> 00:04:44.410 what I wanted to do was to briefly walk 00:04:44.410 --> 00:04:46.980 through some of the recent trends 00:04:46.980 --> 00:04:50.670 in R&D. So energy companies traditionally 00:04:50.670 --> 00:04:52.720 are not R&D spenders. 00:04:52.720 --> 00:04:55.760 They reinvest a very small fraction 00:04:55.760 --> 00:04:59.530 of their profits in R&D, in research and development. 00:04:59.530 --> 00:05:03.540 And solar, because it is far from grid parity right now-- 00:05:03.540 --> 00:05:06.700 factor of two or factor of three in terms of cost-- not price, 00:05:06.700 --> 00:05:12.050 cost-- we have to invest R&D to get the cost down. 00:05:12.050 --> 00:05:14.820 And this is both manufacturing innovation and, of course, 00:05:14.820 --> 00:05:17.020 engineering scientific innovation. 00:05:17.020 --> 00:05:19.130 So this right here is financial investment 00:05:19.130 --> 00:05:21.190 in clean energy, global trends by quarter. 00:05:21.190 --> 00:05:23.090 I decided to compile as much data 00:05:23.090 --> 00:05:25.300 as I possibly could into the slides 00:05:25.300 --> 00:05:27.150 so that you can go on afterward, if you're 00:05:27.150 --> 00:05:29.350 really interested in the topic, pursue it further. 00:05:29.350 --> 00:05:33.740 And what we see is as a rise overall of investment 00:05:33.740 --> 00:05:36.910 in so-called clean energy. 00:05:36.910 --> 00:05:39.850 And by and large, by the G20-- these 00:05:39.850 --> 00:05:44.850 are countries that have access to resources, to capital-- 00:05:44.850 --> 00:05:46.740 larger GDPs on average. 00:05:46.740 --> 00:05:51.970 You also see a trend and in non G20 countries, more recently, 00:05:51.970 --> 00:05:54.890 an uptick or recognition that this is an important area. 00:05:54.890 --> 00:05:57.410 And perhaps there's room to play, niches if you will, 00:05:57.410 --> 00:06:01.470 that certain countries can adopt that would provide 00:06:01.470 --> 00:06:03.070 a competitive advantage. 00:06:03.070 --> 00:06:05.110 This is an interesting chart as well. 00:06:05.110 --> 00:06:11.580 This shows the investment in-- I believe this is government R&D. 00:06:11.580 --> 00:06:14.400 Oh, this is financial sector investment only, 00:06:14.400 --> 00:06:16.370 excludes corporate and government R&D-- 00:06:16.370 --> 00:06:20.430 small distributed capacity in both-- so financial sector 00:06:20.430 --> 00:06:23.160 investment in the US and China. 00:06:23.160 --> 00:06:28.100 What we see in the US is relatively stable investment-- 00:06:28.100 --> 00:06:31.910 picked up in the mid 2000s, but relatively stable throughout. 00:06:31.910 --> 00:06:33.930 And in China, just a really steady 00:06:33.930 --> 00:06:36.840 increase here of a R&D funding. 00:06:36.840 --> 00:06:39.620 Note the role of the market in the United States. 00:06:39.620 --> 00:06:44.910 Right around '05 and '06, this was when the price of PV began 00:06:44.910 --> 00:06:46.560 to plateau. 00:06:46.560 --> 00:06:49.630 The costs continue coming down, but the price of PV modules 00:06:49.630 --> 00:06:53.820 began to plateau because of the silicon feedstock shortage. 00:06:53.820 --> 00:06:55.950 So people saw opportunity here, especially 00:06:55.950 --> 00:06:58.860 the financial sector, private capital, and said, 00:06:58.860 --> 00:07:01.970 hey, if prices are remaining high 00:07:01.970 --> 00:07:03.470 and the costs are coming down, that 00:07:03.470 --> 00:07:05.304 means our profit margin is growing. 00:07:05.304 --> 00:07:07.720 This is a good industry for us to get into-- a high profit 00:07:07.720 --> 00:07:09.030 margin industry. 00:07:09.030 --> 00:07:11.520 So there are many folks getting in because 00:07:11.520 --> 00:07:13.700 of that market condition. 00:07:13.700 --> 00:07:16.099 Some of them saw the future in the market and said, 00:07:16.099 --> 00:07:17.640 this is trending towards commodities. 00:07:17.640 --> 00:07:19.810 We have to adopt that mentality, and really 00:07:19.810 --> 00:07:23.080 squeeze every penny out of our cost structure that we can do. 00:07:23.080 --> 00:07:25.570 And others went into it thinking that this 00:07:25.570 --> 00:07:30.370 would be a bumper crop-- a really high yield investment. 00:07:30.370 --> 00:07:34.210 And then as the margins began to get squeezed, they got scared, 00:07:34.210 --> 00:07:35.640 and some pulled out. 00:07:35.640 --> 00:07:38.920 So it's an interesting trend, following the market 00:07:38.920 --> 00:07:40.880 perturbations in the United States 00:07:40.880 --> 00:07:43.390 and having this fluctuation. 00:07:43.390 --> 00:07:48.400 And in China, from what I can tell discussing with business 00:07:48.400 --> 00:07:52.350 leaders and politicians, a much more premeditated, 00:07:52.350 --> 00:07:55.980 long-term strategy saying this is a strategic industry 00:07:55.980 --> 00:07:57.150 for our country. 00:07:57.150 --> 00:07:58.650 We are going to invest in it. 00:07:58.650 --> 00:08:01.150 And this is of fundamental national importance. 00:08:01.150 --> 00:08:03.690 So a little bit of difference in the investment strategies 00:08:03.690 --> 00:08:04.190 of the two. 00:08:04.190 --> 00:08:06.950 The EU is a little bit in between-- a mixed bag. 00:08:06.950 --> 00:08:10.200 Again, this uptick in the middle of the 2000s, 00:08:10.200 --> 00:08:17.650 but a continued investment in PV and renewables. 00:08:17.650 --> 00:08:22.610 This shows the investment type by sector, broken down 00:08:22.610 --> 00:08:25.850 on the right-hand side between the renewable energy types. 00:08:25.850 --> 00:08:28.810 So you have wind, solar, other renewables, biofuels, 00:08:28.810 --> 00:08:34.049 and so-called negawatts, so-called energy efficiency. 00:08:34.049 --> 00:08:37.059 And on the left-hand side, we have the different types 00:08:37.059 --> 00:08:40.830 of investment into clean tech. 00:08:40.830 --> 00:08:42.860 And interestingly, here in the United States-- 00:08:42.860 --> 00:08:46.430 this is in 2009-- venture capital 00:08:46.430 --> 00:08:51.470 is comprising a surprising total of the investment 00:08:51.470 --> 00:08:54.360 in renewable energy. 00:08:54.360 --> 00:08:57.090 And in terms of the sector itself, 00:08:57.090 --> 00:08:59.400 we can see solar here in the United States comprising 00:08:59.400 --> 00:09:02.670 a large percentage, again, of the total investment. 00:09:05.202 --> 00:09:07.660 I want to bring caution to one data point up there-- Spain. 00:09:07.660 --> 00:09:10.810 That was a little bit of a short-term fluke. 00:09:10.810 --> 00:09:14.380 The Spanish government instituted a feed-in tariff 00:09:14.380 --> 00:09:17.260 similar to what Germany has implemented, 00:09:17.260 --> 00:09:18.920 but a little less successfully. 00:09:18.920 --> 00:09:20.560 Let me dive into the details. 00:09:20.560 --> 00:09:22.830 Germany did a careful market analysis, 00:09:22.830 --> 00:09:24.480 was the first to move into the space, 00:09:24.480 --> 00:09:28.649 and began dominating the market for PV-- 50% of PV installed. 00:09:28.649 --> 00:09:30.690 So if Germany set the price a little differently, 00:09:30.690 --> 00:09:32.720 the PV market would adjust accordingly. 00:09:32.720 --> 00:09:35.310 Spain, a new entrant, seeing Germany's success, 00:09:35.310 --> 00:09:36.630 decided to replicate it. 00:09:36.630 --> 00:09:39.340 The first time they attempted a feed-in tariff, 00:09:39.340 --> 00:09:41.065 their feed-in tariff came in too low, 00:09:41.065 --> 00:09:43.440 and the market looked at Spain, shrugged their shoulders, 00:09:43.440 --> 00:09:45.980 and continued installing in Germany. 00:09:45.980 --> 00:09:48.060 The second time they decided to come in, 00:09:48.060 --> 00:09:51.450 they put their feed-in tariff a little bit too high. 00:09:51.450 --> 00:09:53.700 And as a result, the market said, really, you kidding? 00:09:53.700 --> 00:09:55.260 OK, we go there and install. 00:09:55.260 --> 00:09:58.480 And there was a slush of modules over to Spain, 00:09:58.480 --> 00:09:59.770 flooding the market. 00:09:59.770 --> 00:10:02.800 And over a period of about a year to two years, 00:10:02.800 --> 00:10:05.020 they got much more than they bargained for. 00:10:05.020 --> 00:10:07.940 In other words, they had many, many more modules installed 00:10:07.940 --> 00:10:09.430 than they had expected. 00:10:09.430 --> 00:10:10.980 And now the government has to pay out 00:10:10.980 --> 00:10:14.060 to these installed systems. 00:10:14.060 --> 00:10:15.700 They have to pay out a certain rate 00:10:15.700 --> 00:10:17.350 based on the feed-in tariff. 00:10:17.350 --> 00:10:20.100 And it was more than they expected to have to pay out. 00:10:20.100 --> 00:10:21.810 Then the financial crisis hits. 00:10:21.810 --> 00:10:23.600 So it was a little bit of a disaster, 00:10:23.600 --> 00:10:26.400 because they ended up killing the program, 00:10:26.400 --> 00:10:29.340 killing in the process about 10 years of work 00:10:29.340 --> 00:10:32.010 to design the program, 10 years of institution building 00:10:32.010 --> 00:10:34.950 to think about how to create a feed-in tariff for Spain, 00:10:34.950 --> 00:10:38.350 and without the desired result, which 00:10:38.350 --> 00:10:43.330 was a slow, steady increase of the photovoltaic installations 00:10:43.330 --> 00:10:45.780 in Spain and hence, the local industry. 00:10:45.780 --> 00:10:47.430 So it was a little bit of a flash 00:10:47.430 --> 00:10:50.690 in the pan-- a huge market that burst very suddenly, 00:10:50.690 --> 00:10:53.160 and then quickly extinguished itself. 00:10:53.160 --> 00:10:54.880 So it's a good example of how not 00:10:54.880 --> 00:10:59.400 to perform a feed-in tariff, how not to design a feed-in tariff. 00:10:59.400 --> 00:11:06.530 So in 2009, that was the end of the bumper year investment. 00:11:06.530 --> 00:11:09.240 Spain also did something that was pretty nasty 00:11:09.240 --> 00:11:11.770 from a government policy point of view. 00:11:11.770 --> 00:11:15.073 They decided to retroactively change their feed-in tariff. 00:11:15.073 --> 00:11:15.980 AUDIENCE: Ooh. 00:11:15.980 --> 00:11:18.690 PROFESSOR: Ooh, so a feed-in tariff 00:11:18.690 --> 00:11:22.190 is a contract between the government-- 00:11:22.190 --> 00:11:24.340 or the utility-- and the installer, 00:11:24.340 --> 00:11:26.400 saying that we will pay a certain amount per year 00:11:26.400 --> 00:11:27.820 for a number of years. 00:11:27.820 --> 00:11:31.970 And to go back on that, renege on the feed-in tariff-- 00:11:31.970 --> 00:11:34.200 that's a no-no. 00:11:34.200 --> 00:11:36.680 It undermines market confidence. 00:11:36.680 --> 00:11:40.650 So the PV module prices-- I just wanted 00:11:40.650 --> 00:11:42.410 to highlight this slide once again, 00:11:42.410 --> 00:11:44.604 to highlight the market conditions that are 00:11:44.604 --> 00:11:45.770 being experienced right now. 00:11:45.770 --> 00:11:54.010 We had, in the mid 2000s, a rise in, or fairly steady prices. 00:11:54.010 --> 00:11:56.880 And meanwhile, costs were coming down. 00:11:56.880 --> 00:11:59.100 This, by the way is price, but in thin films 00:11:59.100 --> 00:12:01.240 for solar cad-tel, these blue dots 00:12:01.240 --> 00:12:02.720 here being crystalline silicon. 00:12:02.720 --> 00:12:05.390 And the prices remained fairly steady. 00:12:05.390 --> 00:12:10.320 And then in, say, 2008 to 2011, prices 00:12:10.320 --> 00:12:12.100 have dropped precipitously. 00:12:12.100 --> 00:12:15.960 The 2011 numbers here are at or slightly below $1. 00:12:15.960 --> 00:12:18.520 So you can see, for somebody who is 00:12:18.520 --> 00:12:20.890 being driven by market conditions, 00:12:20.890 --> 00:12:22.580 this is extremely unsettling. 00:12:22.580 --> 00:12:27.989 And it causes capital to fluctuate back and forth. 00:12:27.989 --> 00:12:29.780 Now the same thing-- what is happening here 00:12:29.780 --> 00:12:31.390 in the solar modules, the inverse 00:12:31.390 --> 00:12:33.660 is happening in the installations. 00:12:33.660 --> 00:12:36.620 So the installers are seeing the price of their modules go down 00:12:36.620 --> 00:12:38.590 and the price of their installations 00:12:38.590 --> 00:12:40.874 declining steadily, but more or less 00:12:40.874 --> 00:12:43.290 staying fixed because of the investment tax credit staying 00:12:43.290 --> 00:12:46.382 fixed and so forth in the US, and utility prices rising. 00:12:46.382 --> 00:12:48.590 And so the installers are saying, hey, this is great. 00:12:48.590 --> 00:12:50.520 So their profit margins are really big. 00:12:50.520 --> 00:12:52.950 Warning to anybody trying to get into the sector right 00:12:52.950 --> 00:12:55.422 now-- think carefully about these market dynamics 00:12:55.422 --> 00:12:56.880 in the United States and in Europe, 00:12:56.880 --> 00:12:58.990 and how that will affect your business. 00:12:58.990 --> 00:13:01.550 If you're trying to get into the solar absorber, 00:13:01.550 --> 00:13:03.212 as in module, manufacturing business, 00:13:03.212 --> 00:13:05.670 or if you're trying to get into the equipment manufacturing 00:13:05.670 --> 00:13:08.480 business, or in the installation side in the grid, 00:13:08.480 --> 00:13:10.530 think about how these market dynamics are 00:13:10.530 --> 00:13:14.069 going to affect your business as it grows and tries to gain 00:13:14.069 --> 00:13:15.360 a foothold in this environment. 00:13:15.360 --> 00:13:16.985 It's a great time to be a new installer 00:13:16.985 --> 00:13:19.089 company, but in three or four years, when we're 00:13:19.089 --> 00:13:20.630 in an under-supplied condition again, 00:13:20.630 --> 00:13:24.340 and prices might even go up, what then? 00:13:24.340 --> 00:13:26.700 So think about these topics. 00:13:29.490 --> 00:13:33.000 We're talking about renewable energy R&D and the technology 00:13:33.000 --> 00:13:33.500 pipeline. 00:13:33.500 --> 00:13:35.860 So it's important to recognize the path 00:13:35.860 --> 00:13:37.320 that many of these new technologies 00:13:37.320 --> 00:13:41.380 take to go from concept or idea into full-scale manufacturing. 00:13:41.380 --> 00:13:46.230 So in general, this is the path followed in the United States. 00:13:46.230 --> 00:13:49.690 And we have technology research happening in places like this, 00:13:49.690 --> 00:13:51.140 at MIT. 00:13:51.140 --> 00:13:54.890 The roll-out, in other words, the installations 00:13:54.890 --> 00:13:58.490 and large-scale manufacturing on the other side. 00:13:58.490 --> 00:14:04.000 And there are many funding sources available for that-- 00:14:04.000 --> 00:14:06.750 not so much this last one here in the United States, 00:14:06.750 --> 00:14:09.120 but maybe in Australia or Europe, 00:14:09.120 --> 00:14:11.354 in select regions of the US. 00:14:11.354 --> 00:14:13.520 This technology development right here in the middle 00:14:13.520 --> 00:14:15.690 has been what is referred to as the Valley of Death. 00:14:15.690 --> 00:14:18.190 Does anybody know why-- what that means, Valley of Death? 00:14:18.190 --> 00:14:19.812 What is it? 00:14:19.812 --> 00:14:22.020 AUDIENCE: A period when it's difficult to get funding 00:14:22.020 --> 00:14:23.302 from any source. 00:14:23.302 --> 00:14:25.760 PROFESSOR: It's a period when it's difficult to get funding 00:14:25.760 --> 00:14:26.426 from any source. 00:14:26.426 --> 00:14:29.060 Now imagine you're a group of postdocs and students 00:14:29.060 --> 00:14:29.760 in the lab. 00:14:29.760 --> 00:14:32.040 You come up with a new, fancy technology, 00:14:32.040 --> 00:14:34.000 and you can't quite get the venture 00:14:34.000 --> 00:14:36.160 capital or private equity necessary to kick off 00:14:36.160 --> 00:14:38.370 your company. 00:14:38.370 --> 00:14:41.350 That would be one mini-valley of death. 00:14:41.350 --> 00:14:44.680 It's fairly avoided here in US. 00:14:44.680 --> 00:14:48.070 Good ideas have a tendency to get funded at that stage. 00:14:48.070 --> 00:14:50.174 But if you don't get funded, then the postdoc 00:14:50.174 --> 00:14:51.840 gets another position over here, becomes 00:14:51.840 --> 00:14:53.890 a professor at university across the country. 00:14:53.890 --> 00:14:56.640 The student goes off and does a postdoc in another place. 00:14:56.640 --> 00:14:59.665 And all of a sudden, three, five, six months later, 00:14:59.665 --> 00:15:01.040 the venture capital swirls around 00:15:01.040 --> 00:15:02.748 to the professor, who's still here at MIT 00:15:02.748 --> 00:15:05.321 and kind of has a hollowed-out group at this point, and says, 00:15:05.321 --> 00:15:06.320 wow that's a great idea. 00:15:06.320 --> 00:15:07.361 I'd like to invest in it. 00:15:07.361 --> 00:15:09.290 Where's your team? 00:15:09.290 --> 00:15:10.390 Yeah, poof. 00:15:10.390 --> 00:15:14.180 So that's one possible mechanism wherein technologies 00:15:14.180 --> 00:15:16.300 don't make it forward. 00:15:16.300 --> 00:15:19.100 And so keeping the team together is extremely important. 00:15:19.100 --> 00:15:20.730 The second Valley of Death can happen 00:15:20.730 --> 00:15:22.980 right between technology development and manufacturing 00:15:22.980 --> 00:15:24.880 and scale-up. 00:15:24.880 --> 00:15:26.726 We've seen some of these. 00:15:26.726 --> 00:15:28.600 We've seen pictures of some of the factories. 00:15:28.600 --> 00:15:31.150 They're around here in the countryside. 00:15:31.150 --> 00:15:35.430 These are oftentimes $10s, more likely $100s 00:15:35.430 --> 00:15:37.720 of millions investments. 00:15:37.720 --> 00:15:39.990 And venture capital funds tend to be 00:15:39.990 --> 00:15:42.420 on the order of $100s of millions to $1 billion. 00:15:42.420 --> 00:15:46.986 They don't like investing in large asset goods. 00:15:46.986 --> 00:15:48.610 They don't like investing in factories. 00:15:48.610 --> 00:15:50.568 They'd rather invest in a small group of people 00:15:50.568 --> 00:15:54.490 with the computers set in their garage, 00:15:54.490 --> 00:15:57.460 maybe put in a couple $10s of thousands 00:15:57.460 --> 00:15:59.374 and turn around, profit of a few million. 00:15:59.374 --> 00:16:00.790 That's the type of investment that 00:16:00.790 --> 00:16:02.940 makes a lot of sense for venture capital. 00:16:02.940 --> 00:16:05.540 When you start investing in fixed goods-- in brick 00:16:05.540 --> 00:16:09.470 and mortar-- you need other forms of financing. 00:16:09.470 --> 00:16:11.180 And some countries around the world 00:16:11.180 --> 00:16:13.910 have been very adept in providing this financing. 00:16:13.910 --> 00:16:15.660 China, in particular, has done a great job 00:16:15.660 --> 00:16:18.990 at making that type of financing available for companies 00:16:18.990 --> 00:16:21.180 that are small and looking to expand. 00:16:21.180 --> 00:16:23.430 But in the United States, it's very difficult 00:16:23.430 --> 00:16:27.720 to access these essentially money from banks, especially, 00:16:27.720 --> 00:16:29.200 for new technology. 00:16:29.200 --> 00:16:31.595 The bank will say, well, why am I investing in you? 00:16:31.595 --> 00:16:32.970 I could be investing in something 00:16:32.970 --> 00:16:36.080 that's much more sure of a bet-- today's technology, instead of 00:16:36.080 --> 00:16:37.932 investing in something risky. 00:16:37.932 --> 00:16:40.390 So the government has stepped in with a variety of programs 00:16:40.390 --> 00:16:43.730 to try to ease that inefficiency in the market. 00:16:43.730 --> 00:16:45.890 And so one of the means are loans-- 00:16:45.890 --> 00:16:48.884 loan guarantee program, for example, is one mechanism. 00:16:48.884 --> 00:16:50.425 There is a [? sunPATH ?] program that 00:16:50.425 --> 00:16:52.320 is coming down the pipeline as well. 00:16:52.320 --> 00:16:54.480 So we have venture capital and private equity, 00:16:54.480 --> 00:16:56.520 but that can only take you so far, typically. 00:16:56.520 --> 00:16:59.420 They invest a few $10s of millions, 00:16:59.420 --> 00:17:02.480 in a few rare cases, a few $100s of millions. 00:17:02.480 --> 00:17:05.630 But then they reach the end of their credit line, if you will. 00:17:05.630 --> 00:17:08.030 They exhaust their ability to invest. 00:17:08.030 --> 00:17:10.599 And what's needed to expand manufacturing 00:17:10.599 --> 00:17:12.770 is typically on the order of $100s of millions 00:17:12.770 --> 00:17:16.720 to billions of dollars to reach 100s of megawatts-- gigawatt 00:17:16.720 --> 00:17:17.439 scale. 00:17:17.439 --> 00:17:19.980 So that's the second big Valley of Death in the United States 00:17:19.980 --> 00:17:21.000 that exists. 00:17:21.000 --> 00:17:25.730 And the way some companies are transitioning 00:17:25.730 --> 00:17:28.400 across that valley-- they find a variety of means. 00:17:28.400 --> 00:17:29.610 Some go overseas. 00:17:29.610 --> 00:17:31.925 They say, hey, the Central Bank of China 00:17:31.925 --> 00:17:33.300 is willing to invest money in me. 00:17:33.300 --> 00:17:34.190 I go there. 00:17:34.190 --> 00:17:35.650 I set up manufacturing. 00:17:35.650 --> 00:17:39.520 Other companies, small companies, might say, well, GE, 00:17:39.520 --> 00:17:42.010 you have a big finance group within your big umbrella 00:17:42.010 --> 00:17:42.710 company. 00:17:42.710 --> 00:17:43.757 Why don't you buy us? 00:17:43.757 --> 00:17:45.340 And then we can gain access to capital 00:17:45.340 --> 00:17:48.330 and expand our manufacturing plant. 00:17:48.330 --> 00:17:53.050 Others form partnerships with banks. 00:17:53.050 --> 00:17:57.149 It's a mixed set of business strategies. 00:17:57.149 --> 00:17:59.690 But if you look around at some of the start-up companies that 00:17:59.690 --> 00:18:03.830 are now entering small-scale production, 00:18:03.830 --> 00:18:06.330 this is where the business side of creativity comes in play. 00:18:06.330 --> 00:18:08.746 And that's where you really need a good business developer 00:18:08.746 --> 00:18:10.480 at hand to arrange those deals for you. 00:18:13.390 --> 00:18:18.290 In terms of where the money is, in terms of clean tech 00:18:18.290 --> 00:18:23.170 in general, these are some figures in terms of 2009 data. 00:18:23.170 --> 00:18:27.010 I'm sure we can get some more up-to-date figures as well. 00:18:27.010 --> 00:18:28.920 And in terms of growth and investment, 00:18:28.920 --> 00:18:32.330 we see some countries that might be rather surprising in terms 00:18:32.330 --> 00:18:35.570 of the five-year growth of investment in renewables. 00:18:35.570 --> 00:18:37.900 Obviously, if you start from a very small number, 00:18:37.900 --> 00:18:40.370 you can grow pretty quick in terms of percents. 00:18:40.370 --> 00:18:42.950 But it's still interesting to see the development 00:18:42.950 --> 00:18:46.670 of some countries here. 00:18:46.670 --> 00:18:48.800 This is sobering. 00:18:48.800 --> 00:18:53.440 So this is the US government R&D by budget function '55 00:18:53.440 --> 00:18:57.662 to '97, the most comprehensive data set I could find. 00:18:57.662 --> 00:18:59.120 I'm sure that there are graphs that 00:18:59.120 --> 00:19:00.286 extend this into the future. 00:19:00.286 --> 00:19:02.390 If you happen to have one, I'd be happy to see it. 00:19:02.390 --> 00:19:04.600 But the basic story of this graph 00:19:04.600 --> 00:19:08.390 is the following-- the lion's share of R&D 00:19:08.390 --> 00:19:11.300 is going to the Defense Department, 00:19:11.300 --> 00:19:12.890 so the Army Research Office, Office 00:19:12.890 --> 00:19:17.050 of Naval Research, DARPA-- that's the advanced research 00:19:17.050 --> 00:19:20.960 program-- a variety of night vision labs, and so forth. 00:19:20.960 --> 00:19:24.976 These are a variety of defense R&D. And there is trickle down. 00:19:24.976 --> 00:19:27.350 There's some trickle down of technologies being developed 00:19:27.350 --> 00:19:31.870 in defence into civilian uses. 00:19:31.870 --> 00:19:33.730 And so I don't want to point to this 00:19:33.730 --> 00:19:35.730 and say it's a bogey man-- by no means. 00:19:35.730 --> 00:19:37.890 But it does indicate national priorities 00:19:37.890 --> 00:19:39.470 in terms of R&D research. 00:19:39.470 --> 00:19:41.110 The other big one is health. 00:19:41.110 --> 00:19:43.570 So NIH, National Institutes of Health-- 00:19:43.570 --> 00:19:45.040 that's growing and expanding. 00:19:45.040 --> 00:19:47.620 It's very easy to go to congresspeople 00:19:47.620 --> 00:19:50.792 and senators who might be advancing in their years, 00:19:50.792 --> 00:19:53.000 and say, hey, we need money for Alzheimer's research, 00:19:53.000 --> 00:19:56.130 or we need money for cancer research. 00:19:56.130 --> 00:19:57.010 It resonates. 00:19:57.010 --> 00:19:59.770 It's easy to convince people of that. 00:19:59.770 --> 00:20:04.010 Energy is small, traditionally. 00:20:04.010 --> 00:20:08.380 Let me dive forward into this going a little bit further. 00:20:08.380 --> 00:20:12.920 This is non-defense R&D funding pushed out to 2004. 00:20:12.920 --> 00:20:15.510 Again, you can see health really driving things. 00:20:15.510 --> 00:20:20.070 Energy, traditionally-- in the Jimmy Carter years right 00:20:20.070 --> 00:20:22.270 around here, it expanded a bit. 00:20:22.270 --> 00:20:23.437 This was a renewables burst. 00:20:23.437 --> 00:20:25.645 That's where the National Renewable Energy Laboratory 00:20:25.645 --> 00:20:28.090 was founded, originally called the Solar Energy Research 00:20:28.090 --> 00:20:30.080 Institute or SERI. 00:20:30.080 --> 00:20:33.530 And then got crimped down again and really experienced 00:20:33.530 --> 00:20:38.660 a bit of a pinch in the US right when solar was really 00:20:38.660 --> 00:20:40.600 beginning to take off in Japan. 00:20:40.600 --> 00:20:43.750 So this is when solar cell production by Sharp 00:20:43.750 --> 00:20:48.139 was really beginning to climb in the late '90s and early 2000s. 00:20:48.139 --> 00:20:49.680 And then, of course, Germany followed 00:20:49.680 --> 00:20:51.140 and the rest of the world. 00:20:51.140 --> 00:20:54.140 So we've been a little bit behind, step by step. 00:20:54.140 --> 00:20:58.420 And the interesting thing that many people have looked into 00:20:58.420 --> 00:21:02.140 is, what sort of correlation exists between US government 00:21:02.140 --> 00:21:04.994 R&D spending and output of new ideas. 00:21:04.994 --> 00:21:07.160 And the output of new ideas, the metric that they're 00:21:07.160 --> 00:21:09.580 using for this are patents. 00:21:09.580 --> 00:21:11.346 So you could dispute that. 00:21:11.346 --> 00:21:13.595 You could say, well, patents aren't the best indicator 00:21:13.595 --> 00:21:14.410 of new ideas. 00:21:14.410 --> 00:21:16.197 Sometimes new ideas are diffuse benefits, 00:21:16.197 --> 00:21:18.280 and they help all industries, but you can't really 00:21:18.280 --> 00:21:19.630 patent the idea. 00:21:19.630 --> 00:21:23.530 Fine, but this is, I think, the most quantitative comparison 00:21:23.530 --> 00:21:25.310 that folks have performed. 00:21:25.310 --> 00:21:27.816 This is an interesting study where 00:21:27.816 --> 00:21:29.690 folks looked at the number of patents granted 00:21:29.690 --> 00:21:34.440 and energy R&D funding and plotted it 00:21:34.440 --> 00:21:37.040 as a function of year, and saw a strong correlation 00:21:37.040 --> 00:21:41.360 between uptick of national priority and government 00:21:41.360 --> 00:21:44.260 funding and innovation. 00:21:44.260 --> 00:21:46.350 So this was the first wave of innovation 00:21:46.350 --> 00:21:50.750 in energy, and in PV specifically, 00:21:50.750 --> 00:21:53.600 in the late 1970s when the OPEC oil crisis hit in the United 00:21:53.600 --> 00:21:56.000 States and there was a big push for renewable energy 00:21:56.000 --> 00:21:56.500 development. 00:21:56.500 --> 00:21:57.984 Yes, question. 00:21:57.984 --> 00:22:00.140 AUDIENCE: Just patents in energy or-- 00:22:00.140 --> 00:22:03.620 PROFESSOR: Yeah, exactly, so these are pushed down. 00:22:03.620 --> 00:22:07.390 And we can dive into patents just for PV, 00:22:07.390 --> 00:22:08.700 which is this graph right here. 00:22:08.700 --> 00:22:11.270 And this is an updated version of that earlier 00:22:11.270 --> 00:22:13.560 study by Dan Kammen. 00:22:13.560 --> 00:22:16.550 This earlier stuff study by Robert Margolis. 00:22:16.550 --> 00:22:19.460 Robert Margolis is now at NREL, National Renewable Energy 00:22:19.460 --> 00:22:23.110 Laboratory, and he works on market assessment there. 00:22:23.110 --> 00:22:25.890 Gregory Nemet was a student at the time 00:22:25.890 --> 00:22:29.140 with Dan Kammen, produced this wonderful continuation 00:22:29.140 --> 00:22:33.140 of the study published a few years later. 00:22:33.140 --> 00:22:39.270 And again, broke it down into specific technologies, 00:22:39.270 --> 00:22:41.770 including photovoltaics, and saw, again, 00:22:41.770 --> 00:22:43.910 some correlation between the number of patents 00:22:43.910 --> 00:22:49.150 and public R&D. In the mid 2000s, this really-- the number 00:22:49.150 --> 00:22:52.270 of patents and started to grow as startup companies got 00:22:52.270 --> 00:22:53.070 into the fray. 00:22:53.070 --> 00:22:55.770 Remember when prices stayed flat and costs continued 00:22:55.770 --> 00:22:58.620 coming down, and those margins increased, a bunch of players 00:22:58.620 --> 00:23:01.094 got into that space and said, we could make money. 00:23:01.094 --> 00:23:02.510 So a number of patents were filed. 00:23:02.510 --> 00:23:04.820 A number of startup companies got off the ground. 00:23:04.820 --> 00:23:06.350 Again, funding-patent correlation 00:23:06.350 --> 00:23:08.510 for energy in general-- I provide you the data. 00:23:08.510 --> 00:23:10.301 You can dive into it in more detail if you, 00:23:10.301 --> 00:23:14.930 not only PV but other technologies-- interesting. 00:23:14.930 --> 00:23:16.650 Global trends in venture investing-- 00:23:16.650 --> 00:23:18.360 since venture investing is important 00:23:18.360 --> 00:23:21.344 for you specifically, it's one of the pathways 00:23:21.344 --> 00:23:22.760 to get ideas out of the university 00:23:22.760 --> 00:23:25.460 and into a startup company. 00:23:25.460 --> 00:23:27.730 We talked about this so far. 00:23:27.730 --> 00:23:33.400 And OK, so we're diving a little bit deeper here. 00:23:33.400 --> 00:23:37.610 This is for the venture capital private equity financing 00:23:37.610 --> 00:23:40.260 by sector in 2009, looking specifically 00:23:40.260 --> 00:23:42.560 at solar in the United States, comprised 00:23:42.560 --> 00:23:43.940 a large fraction of it. 00:23:43.940 --> 00:23:46.330 Solar continues to comprise a large fraction of venture 00:23:46.330 --> 00:23:48.890 investment, surprisingly, despite the market conditions 00:23:48.890 --> 00:23:49.910 right now. 00:23:49.910 --> 00:23:52.880 Because folks, especially in the VC community, 00:23:52.880 --> 00:23:55.870 are looking at today's market as an opportunity. 00:23:55.870 --> 00:23:58.630 They think that if enough people are scared out of the market, 00:23:58.630 --> 00:24:00.630 that they'll be able to remain there and pick up 00:24:00.630 --> 00:24:01.464 the good ideas. 00:24:01.464 --> 00:24:04.130 And if they're only a little bit smarter than their competition, 00:24:04.130 --> 00:24:06.380 they can pick up the right companies 00:24:06.380 --> 00:24:08.415 and the right sections of the value chain-- 00:24:08.415 --> 00:24:10.540 maybe an equipment manufacturer, maybe an installer 00:24:10.540 --> 00:24:13.470 with a new idea-- and avoid some of the pain that's 00:24:13.470 --> 00:24:16.010 going on right now in wafer fabrication and cell 00:24:16.010 --> 00:24:18.860 fabrication upstream. 00:24:18.860 --> 00:24:23.610 This was the VC investment in solar right 00:24:23.610 --> 00:24:28.220 here in those boom years that I mentioned. 00:24:28.220 --> 00:24:33.080 So during the years when prices started to plateau because 00:24:33.080 --> 00:24:35.940 of the silicon feedstock shortage in the mid 2000s, 00:24:35.940 --> 00:24:38.526 you saw this massive uptick of investment 00:24:38.526 --> 00:24:39.650 in venture capital funding. 00:24:39.650 --> 00:24:41.960 That scale is in millions of dollars. 00:24:41.960 --> 00:24:46.750 You're exceeding $1 billion of VC funding in solar in 2007. 00:24:46.750 --> 00:24:49.670 And that trend continued in 2008. 00:24:49.670 --> 00:24:52.150 So still to this day, we're seeing 00:24:52.150 --> 00:24:57.085 $100s of millions plowed into solar by venture capital funds. 00:24:57.085 --> 00:24:59.300 It's interesting, really interesting. 00:25:02.384 --> 00:25:04.550 The number of startup companies in the United States 00:25:04.550 --> 00:25:06.530 has proliferated. 00:25:06.530 --> 00:25:08.800 There are, I think, somewhere on the order 00:25:08.800 --> 00:25:12.730 of over 200 solar startup companies worldwide. 00:25:12.730 --> 00:25:15.260 There are a few that have failed. 00:25:15.260 --> 00:25:20.230 So Wakonda, Solasta, SV Solar, Synergen, Optisolar, Solyndra, 00:25:20.230 --> 00:25:23.906 SpectraWatt, Evergreen Solar-- these are all I'd 00:25:23.906 --> 00:25:25.530 say failed companies, by the definition 00:25:25.530 --> 00:25:26.850 of failure-- bankruptcy. 00:25:26.850 --> 00:25:29.390 I mean, by that metric, so is United Airlines failed, 00:25:29.390 --> 00:25:30.830 and American Airlines failed. 00:25:30.830 --> 00:25:32.160 They're still around. 00:25:32.160 --> 00:25:35.410 They restructured under bankruptcy protection. 00:25:35.410 --> 00:25:37.480 Some have closed their doors entirely. 00:25:37.480 --> 00:25:40.870 Other ones have restructured, or are in the process 00:25:40.870 --> 00:25:42.520 of restructuring. 00:25:42.520 --> 00:25:45.700 Why each of these companies have failed? 00:25:45.700 --> 00:25:47.100 Different reasons. 00:25:47.100 --> 00:25:51.500 You can't claim that each one had the exact same trajectory. 00:25:51.500 --> 00:25:54.490 But you can definitely point to certain market conditions 00:25:54.490 --> 00:25:58.100 as influencing or precipitating the failure. 00:25:58.100 --> 00:25:59.930 Let me be more specific. 00:25:59.930 --> 00:26:05.820 These companies right here are all wafer or thin-film device 00:26:05.820 --> 00:26:07.450 and module manufacturers. 00:26:07.450 --> 00:26:09.751 They're the upstream components. 00:26:09.751 --> 00:26:11.250 These aren't installation companies. 00:26:11.250 --> 00:26:12.990 These aren't installers failing. 00:26:12.990 --> 00:26:16.040 These are upstream manufacturers failing-- 00:26:16.040 --> 00:26:19.220 and a few high-profile ones at that. 00:26:19.220 --> 00:26:21.820 So that was precipitated by the recent market conditions-- 00:26:21.820 --> 00:26:24.980 the capital crunch. 00:26:24.980 --> 00:26:28.030 It begins with some of the companies, 00:26:28.030 --> 00:26:31.470 say OptiSolar in 2009, I believe. 00:26:31.470 --> 00:26:34.350 They were a company that was producing amorphous silicon 00:26:34.350 --> 00:26:34.860 modules. 00:26:34.860 --> 00:26:36.359 And as we studied amorphous silicon, 00:26:36.359 --> 00:26:39.482 the efficiencies are low, right? 00:26:39.482 --> 00:26:41.190 The amorphous silicon module efficiency's 00:26:41.190 --> 00:26:42.940 on the order of 6%. 00:26:42.940 --> 00:26:44.980 And they said, well, never mind that our cost 00:26:44.980 --> 00:26:46.240 structure's a little high. 00:26:46.240 --> 00:26:48.480 We're going to scale up like nobody's business. 00:26:48.480 --> 00:26:50.710 We're going to ramp up manufacturing capacity 00:26:50.710 --> 00:26:53.920 to over a gigawatt, and do it really, really quick. 00:26:53.920 --> 00:26:55.770 And just by sheer scale alone, we'll 00:26:55.770 --> 00:26:58.790 be able to drive down costs and get us to the point 00:26:58.790 --> 00:27:01.570 where we're competitive on a cents per kilowatt hour basis 00:27:01.570 --> 00:27:03.290 with crystalline silicon. 00:27:03.290 --> 00:27:05.500 There's a great business plan in theory. 00:27:05.500 --> 00:27:08.650 But what happened to them was, when they went out 00:27:08.650 --> 00:27:11.280 to try to raise money, they couldn't find any right 00:27:11.280 --> 00:27:11.835 around 2008. 00:27:11.835 --> 00:27:14.337 It was the beginning of the financial crisis. 00:27:14.337 --> 00:27:15.920 So they had the business plan in mind. 00:27:15.920 --> 00:27:17.220 And on paper, it looked great. 00:27:17.220 --> 00:27:19.900 But when it came time to raise the funding to grow, 00:27:19.900 --> 00:27:24.020 they didn't have it, even though they had a guaranteed 00:27:24.020 --> 00:27:27.635 customer-- PG&E. That was the Pacific Gas 00:27:27.635 --> 00:27:29.459 and Electric, the California utility. 00:27:29.459 --> 00:27:31.000 They just could not get the financing 00:27:31.000 --> 00:27:34.170 to expand their factory. 00:27:34.170 --> 00:27:36.040 So what ended up happening was they folded, 00:27:36.040 --> 00:27:42.240 sold the supply stream, if you will, to First Solar, 00:27:42.240 --> 00:27:44.220 who picked it up for pennies on the dollar. 00:27:44.220 --> 00:27:50.190 And First Solar modules ended up going in the PG&E field 00:27:50.190 --> 00:27:52.970 installations, instead of the OptiSolar amorphous silicon. 00:27:52.970 --> 00:27:55.910 Each company has its own story, and have 00:27:55.910 --> 00:27:58.470 failed for different reasons. 00:27:58.470 --> 00:28:01.520 What's clear is also, there are more failed start-ups coming. 00:28:01.520 --> 00:28:04.050 This is a time of a financial pain for them. 00:28:04.050 --> 00:28:07.370 The prices are very, very low. 00:28:07.370 --> 00:28:12.120 And there are a few people who are tracking these startup 00:28:12.120 --> 00:28:12.677 companies. 00:28:12.677 --> 00:28:14.510 I would say Eric Wesoff from Greentech Media 00:28:14.510 --> 00:28:16.290 is probably one of the most active 00:28:16.290 --> 00:28:19.680 in publishing his insights. 00:28:19.680 --> 00:28:22.600 That said, there are many promising companies among here, 00:28:22.600 --> 00:28:26.090 and some of these, hopefully, will become household names 00:28:26.090 --> 00:28:31.440 for good reasons in the future, as they have an innovation that 00:28:31.440 --> 00:28:34.269 significantly drives down cost over their competitors. 00:28:34.269 --> 00:28:36.060 We're going to get to that in a few slides. 00:28:36.060 --> 00:28:38.920 We're going to talk about how to evaluate a company. 00:28:38.920 --> 00:28:40.850 Because it's going to be important for you-- 00:28:40.850 --> 00:28:42.600 near term because you might want a job, 00:28:42.600 --> 00:28:45.240 or you might want to form your own company, 00:28:45.240 --> 00:28:48.620 long term because you might become an investor in PV. 00:28:48.620 --> 00:28:51.190 And you have to figure out what types of companies make sense 00:28:51.190 --> 00:28:53.660 to invest in, and which don't. 00:28:53.660 --> 00:28:56.160 In terms of startup companies in the New England area, 00:28:56.160 --> 00:29:01.390 we often think of ourselves as kind of maybe second fiddle 00:29:01.390 --> 00:29:02.590 to Silicon Valley. 00:29:02.590 --> 00:29:04.310 But there's a lot going on in the region, 00:29:04.310 --> 00:29:05.910 and a lot of good work. 00:29:05.910 --> 00:29:08.750 So if you go to cleanenergycouncil.org cluster 00:29:08.750 --> 00:29:11.950 map, you'll see a map of the local clean tech 00:29:11.950 --> 00:29:13.332 companies in the region. 00:29:13.332 --> 00:29:14.956 I'll leave this slide up there, since I 00:29:14.956 --> 00:29:17.850 see a few of you jotting notes. 00:29:17.850 --> 00:29:20.700 It's a useful map, and you can select by sector 00:29:20.700 --> 00:29:24.510 as well, if you look at solar, look at biofuels, and so forth. 00:29:28.980 --> 00:29:31.770 Trends in renewable energy manufacturing-- this slide 00:29:31.770 --> 00:29:34.400 is a little bit outdated, but it's the Greentech Media 00:29:34.400 --> 00:29:38.610 research map of manufacturing in the United States 00:29:38.610 --> 00:29:41.210 of the different solar technologies-- 00:29:41.210 --> 00:29:42.310 again, a bit outdated. 00:29:42.310 --> 00:29:44.680 There are a few companies that have changed. 00:29:44.680 --> 00:29:48.350 But it gives you a sense of what the distribution is. 00:29:48.350 --> 00:29:50.305 What are the latest trends of manufacturing 00:29:50.305 --> 00:29:51.180 in the United States? 00:29:51.180 --> 00:29:52.045 The latest trends of manufacturing, 00:29:52.045 --> 00:29:54.050 if I were to point to a few of them-- 00:29:54.050 --> 00:29:57.770 Mississippi has emerged as a big manufacturing state. 00:29:57.770 --> 00:29:58.270 Why? 00:30:01.150 --> 00:30:03.560 First off, who's from the Southeast here? 00:30:03.560 --> 00:30:04.780 Show of hands-- one, two. 00:30:04.780 --> 00:30:09.270 All right, what do you have in this region right around here 00:30:09.270 --> 00:30:13.530 that the rest of the country doesn't have? 00:30:13.530 --> 00:30:15.491 AUDIENCE: [INAUDIBLE]. 00:30:15.491 --> 00:30:17.490 PROFESSOR: Close, coal-- you have a lot of coal. 00:30:17.490 --> 00:30:20.420 You have nuclear as well. 00:30:20.420 --> 00:30:22.950 The TVA-- does anybody know what the TVA is? 00:30:22.950 --> 00:30:24.690 Tennessee Valley Authority-- that's 00:30:24.690 --> 00:30:29.760 a big public works project, in fact, that got started. 00:30:29.760 --> 00:30:33.550 It provides low-cost electricity to this entire region 00:30:33.550 --> 00:30:35.866 right up here, including northern Mississippi, 00:30:35.866 --> 00:30:37.490 including some of the northern portions 00:30:37.490 --> 00:30:40.920 of the far Southeast states. 00:30:40.920 --> 00:30:45.340 Bottom line-- you have depressed wages, by and large, 00:30:45.340 --> 00:30:48.720 in these rural communities, and low-cost electricity-- which 00:30:48.720 --> 00:30:51.180 if labor and utilities matter-- which 00:30:51.180 --> 00:30:54.940 it does in solar manufacturing-- it's ripe for manufacturing. 00:30:54.940 --> 00:30:59.040 And you have many startup companies-- Stion, Calisolar, 00:30:59.040 --> 00:31:02.000 Twin Creeks, and others that have moved into the Mississippi 00:31:02.000 --> 00:31:07.910 region in very recent months for that reason. 00:31:07.910 --> 00:31:13.440 You have Suniva was based in Georgia, Atlanta. 00:31:13.440 --> 00:31:15.410 Ohio still continues to be. 00:31:15.410 --> 00:31:20.010 The Northwest as well-- cheap hydro, not exactly cheap wages, 00:31:20.010 --> 00:31:21.340 but cheap hydro. 00:31:21.340 --> 00:31:27.780 And the technologies do tend to stay closer to the places 00:31:27.780 --> 00:31:28.900 where they are born. 00:31:28.900 --> 00:31:30.800 You can see in the San Francisco Bay Area, 00:31:30.800 --> 00:31:34.020 there's a propensity to form startup companies 00:31:34.020 --> 00:31:37.960 in new technologies as well as in the Massachusetts area. 00:31:37.960 --> 00:31:42.310 So these are focusing on some of the medium-scale manufacturers. 00:31:42.310 --> 00:31:44.670 In terms of manufacturing support, 00:31:44.670 --> 00:31:46.450 this is what local state governments 00:31:46.450 --> 00:31:49.930 are doing to help form new companies in the United States. 00:31:49.930 --> 00:31:52.676 You have, as well, a variety of mechanisms-- grants, loans, 00:31:52.676 --> 00:31:54.675 tax credits, and so forth for new factories that 00:31:54.675 --> 00:31:56.280 are trying to start up. 00:31:56.280 --> 00:32:00.020 So keep that in mind if you're going for it. 00:32:00.020 --> 00:32:07.350 And market incentives-- in terms of the three-- Germany, US, 00:32:07.350 --> 00:32:11.660 and China-- you also have to consider Korea, Japan, India, 00:32:11.660 --> 00:32:13.930 Brazil, other countries as well in this mix, 00:32:13.930 --> 00:32:15.800 if you really want a global perspective. 00:32:15.800 --> 00:32:17.670 But this dumbs it down to three. 00:32:17.670 --> 00:32:20.160 In terms of what incentives are available 00:32:20.160 --> 00:32:23.854 for different countries, there is 00:32:23.854 --> 00:32:25.270 a plethora of different incentives 00:32:25.270 --> 00:32:28.750 which can help the market pull. 00:32:28.750 --> 00:32:31.970 OK, so we go back and have a clearer picture 00:32:31.970 --> 00:32:35.620 of what's happening, at least in the US with its investment-- 00:32:35.620 --> 00:32:38.340 the VC investments as well as manufacturing, 00:32:38.340 --> 00:32:40.040 the next step on the state level. 00:32:40.040 --> 00:32:41.900 So we're collecting some data points there. 00:32:44.720 --> 00:32:46.020 This is interesting. 00:32:46.020 --> 00:32:50.274 If your money is from the bank, let's say, 00:32:50.274 --> 00:32:51.940 and you're paying an interest rate on it 00:32:51.940 --> 00:32:53.880 and you want to start a new factory, 00:32:53.880 --> 00:32:57.244 but then your local inspector comes back to you and says, 00:32:57.244 --> 00:32:59.660 well, we're going to have to delay by three months because 00:32:59.660 --> 00:33:01.210 of reason x, y and z. 00:33:01.210 --> 00:33:05.617 Now you're paying interest on the money, potentially. 00:33:05.617 --> 00:33:07.450 But you're not generating profits off of it. 00:33:07.450 --> 00:33:10.350 So delays cost money. 00:33:10.350 --> 00:33:11.700 Project delays cost money. 00:33:11.700 --> 00:33:13.260 It's also an opportunity cost. 00:33:13.260 --> 00:33:19.190 And so there was a study done a few years ago 00:33:19.190 --> 00:33:22.460 looking into why it is that renewable energy projects are 00:33:22.460 --> 00:33:23.270 delayed. 00:33:23.270 --> 00:33:26.600 And they came up with some interesting region-dependent 00:33:26.600 --> 00:33:28.850 conclusions as a result of this study-- 00:33:28.850 --> 00:33:32.090 whether it's transmission limitations-- Texas, there have 00:33:32.090 --> 00:33:35.810 even been cases in New York of transmission lines 00:33:35.810 --> 00:33:39.960 having limited capacity for renewables-- financing 00:33:39.960 --> 00:33:43.300 constraints, power purchase agreement weaknesses, 00:33:43.300 --> 00:33:46.640 permitting-- that could be a big slow down if that's not 00:33:46.640 --> 00:33:50.450 streamlined-- financing and permitting, 00:33:50.450 --> 00:33:53.180 and negligible local market. 00:33:53.180 --> 00:33:55.550 And again, we see the TVA popping up 00:33:55.550 --> 00:33:58.350 here as a negligible market for the renewables, 00:33:58.350 --> 00:34:00.830 because, well, you have cheap electricity. 00:34:00.830 --> 00:34:03.120 It's hard to compete against that. 00:34:03.120 --> 00:34:07.170 But in other states with more sun and more expensive 00:34:07.170 --> 00:34:09.690 electricity, there's the potential to install it. 00:34:09.690 --> 00:34:12.370 But you may be limited, in fact, by the grid. 00:34:12.370 --> 00:34:14.035 There's a big new study released, 00:34:14.035 --> 00:34:16.830 I believe it was this week, by the MIT Energy Initiative 00:34:16.830 --> 00:34:19.966 on the future of the grid. 00:34:19.966 --> 00:34:20.465 Yeah. 00:34:20.465 --> 00:34:21.860 AUDIENCE: Could you say again what PPA stands for? 00:34:21.860 --> 00:34:23.800 PROFESSOR: Power Purchase Agreement-- 00:34:23.800 --> 00:34:28.139 so that's the incentive mechanism whereby 00:34:28.139 --> 00:34:30.650 you can begin putting the solar panels on your roof, 00:34:30.650 --> 00:34:33.345 and the installer pays for the panels, 00:34:33.345 --> 00:34:35.719 gets the money from the bank, installs them on your roof. 00:34:35.719 --> 00:34:37.552 You sign the contract to pay a certain price 00:34:37.552 --> 00:34:42.870 for the electricity over the next 12, 15, 20 years. 00:34:42.870 --> 00:34:49.139 So global trends in R&D-- this is, again, 00:34:49.139 --> 00:34:53.100 a data dump of several sources, one from the NSF showing 00:34:53.100 --> 00:34:57.415 industry R&D expenditures, government, federal government, 00:34:57.415 --> 00:34:57.915 and other. 00:34:57.915 --> 00:34:59.360 You can see in the United States-- 00:34:59.360 --> 00:35:00.890 this is across all sectors here-- 00:35:00.890 --> 00:35:04.310 but really an inversion of the role of industry 00:35:04.310 --> 00:35:05.880 and federal government. 00:35:05.880 --> 00:35:09.630 So when you hear MIT, for instance, 00:35:09.630 --> 00:35:11.870 going after large companies and saying hey, 00:35:11.870 --> 00:35:14.620 you should invest in R&D here at MIT, 00:35:14.620 --> 00:35:17.750 this is one of the fundamental driving forces-- 00:35:17.750 --> 00:35:22.250 this inversion here, the decline of federal government spending. 00:35:22.250 --> 00:35:28.440 And as well, has resulted in MIT looking elsewhere 00:35:28.440 --> 00:35:30.170 for funding, not only industry. 00:35:32.700 --> 00:35:37.690 The greatest gains in R&D intensity in terms of the R&D 00:35:37.690 --> 00:35:39.590 expenditure have been in Asia. 00:35:39.590 --> 00:35:41.710 You can see on the right-hand side of this chart, 00:35:41.710 --> 00:35:45.470 China, Japan, and Korea increasing the expenditure 00:35:45.470 --> 00:35:48.130 from 1997 to 2007. 00:35:48.130 --> 00:35:50.900 This was right before the financial crisis hit. 00:35:50.900 --> 00:35:54.260 In the US, holding relatively constant as a percentage, 00:35:54.260 --> 00:35:55.175 as a share of GDP. 00:36:00.180 --> 00:36:03.210 Science and engineering interest in Asia-- 00:36:03.210 --> 00:36:05.410 this is science and engineering degrees 00:36:05.410 --> 00:36:07.570 as the percentage of new degrees. 00:36:07.570 --> 00:36:10.840 You can see over here we have Germany, Korea, and China. 00:36:10.840 --> 00:36:12.050 Germany makes a lot of sense. 00:36:12.050 --> 00:36:17.880 The Germans have about 44,000 engineering jobs in renewables 00:36:17.880 --> 00:36:20.020 right now that are unfilled. 00:36:20.020 --> 00:36:21.540 So they need people. 00:36:21.540 --> 00:36:26.640 They need people to go to Germany to get high-tech jobs. 00:36:26.640 --> 00:36:29.890 China is a bit more precarious, in the sense 00:36:29.890 --> 00:36:32.360 that the supply and demand is much more evenly matched. 00:36:32.360 --> 00:36:36.000 And the growth of both are increasing at steady rates. 00:36:36.000 --> 00:36:38.780 So if the growth of manufacturing and R&D 00:36:38.780 --> 00:36:40.980 does not continue to rise in China, 00:36:40.980 --> 00:36:43.270 there's going to be an oversupply of people. 00:36:43.270 --> 00:36:46.260 And that can lead to a number of problems. 00:36:46.260 --> 00:36:48.650 And so it's very important for China 00:36:48.650 --> 00:36:52.260 over the next several years to keep a strong, steady handle 00:36:52.260 --> 00:36:54.174 on this growth, to make growth manageable. 00:36:54.174 --> 00:36:55.340 It's a good problem to have. 00:36:55.340 --> 00:36:56.860 It's managing success. 00:36:56.860 --> 00:36:59.480 But it could also lead to some catastrophic consequences 00:36:59.480 --> 00:37:03.260 if the system gets out of balance. 00:37:03.260 --> 00:37:06.030 In the United States, well, I believe 00:37:06.030 --> 00:37:07.950 this data came from 2005. 00:37:07.950 --> 00:37:11.624 That was at the height of financial engineering. 00:37:11.624 --> 00:37:13.040 I would hope that this number here 00:37:13.040 --> 00:37:15.780 has increased a bit since the collapse 00:37:15.780 --> 00:37:18.920 of the financial markets, and a recognition 00:37:18.920 --> 00:37:22.020 that there are productive ways of investing 00:37:22.020 --> 00:37:25.850 one's talents and mental gifts. 00:37:25.850 --> 00:37:28.330 Global research output shifts towards Asia. 00:37:28.330 --> 00:37:32.110 This is global research R&D, share of science 00:37:32.110 --> 00:37:33.910 and engineering articles. 00:37:33.910 --> 00:37:38.040 So if you're starting from a small amount and growing, 00:37:38.040 --> 00:37:42.500 you're going to be, if you just look in a percentage basis, 00:37:42.500 --> 00:37:47.430 by necessity taking away a share of the pie from another entity. 00:37:47.430 --> 00:37:52.330 So as China grows, India grows, the rest of the world grows. 00:37:52.330 --> 00:37:56.450 The share of science and engineering articles in the US 00:37:56.450 --> 00:37:59.130 and in the EU begin to drop-- essentially 00:37:59.130 --> 00:38:02.090 the dominant players-- and in Japan as well. 00:38:02.090 --> 00:38:04.300 Now, that's not necessarily a bad thing 00:38:04.300 --> 00:38:07.720 if the quality of the articles is maintained, 00:38:07.720 --> 00:38:10.410 and the total number of articles continues to expand, 00:38:10.410 --> 00:38:15.120 and we have the capacity to keep up with the information. 00:38:15.120 --> 00:38:17.480 So there's a threshold, or a limit, to how much 00:38:17.480 --> 00:38:19.740 we can absorb-- how much new information 00:38:19.740 --> 00:38:21.550 we can absorb per unit time. 00:38:21.550 --> 00:38:23.925 So people are working on more sophisticated ways 00:38:23.925 --> 00:38:25.800 of gathering and assembling this information, 00:38:25.800 --> 00:38:27.760 especially using computers nowadays, 00:38:27.760 --> 00:38:31.560 that can help expedite R&D. So a number 00:38:31.560 --> 00:38:34.790 of trends happening on the scientific side-- you're 00:38:34.790 --> 00:38:37.620 involved with that. 00:38:37.620 --> 00:38:40.880 High-tech trade balances continue to widen. 00:38:40.880 --> 00:38:44.590 This is the trade balance in high technology goods, US 00:38:44.590 --> 00:38:46.390 and China. 00:38:46.390 --> 00:38:50.550 And so obviously, Chinese economy 00:38:50.550 --> 00:38:53.810 is trending away from-- still heavily invested 00:38:53.810 --> 00:38:56.240 in raw materials-- but trending away 00:38:56.240 --> 00:38:59.160 from that toward high-tech manufactured goods. 00:38:59.160 --> 00:39:03.800 And the US entering a region of trade deficit 00:39:03.800 --> 00:39:06.170 as a result of purchasing those products. 00:39:06.170 --> 00:39:09.230 So these are all trends that have policymakers, 00:39:09.230 --> 00:39:12.830 in particular, concerned, and looking 00:39:12.830 --> 00:39:15.300 at the future of global competitiveness. 00:39:15.300 --> 00:39:17.560 Technology evaluation-- let me spend 00:39:17.560 --> 00:39:20.240 a couple of words bringing all of what I've just said, 00:39:20.240 --> 00:39:23.720 and everything over the entire course, home to you. 00:39:23.720 --> 00:39:27.230 So far we've talked about these things in very ethereal terms. 00:39:27.230 --> 00:39:28.300 It's useful information. 00:39:28.300 --> 00:39:31.800 It will prove useful once you begin applying it. 00:39:31.800 --> 00:39:34.710 But we want to run through a quick, little scenario 00:39:34.710 --> 00:39:36.860 right here, where you're asked to evaluate a new PV 00:39:36.860 --> 00:39:37.620 technology. 00:39:37.620 --> 00:39:38.200 Why? 00:39:38.200 --> 00:39:40.020 Well, you might be applying for a job at this company, 00:39:40.020 --> 00:39:41.478 and they say they have the greatest 00:39:41.478 --> 00:39:42.550 thing since sliced bread. 00:39:42.550 --> 00:39:44.374 And you want to put on your thinking cap, 00:39:44.374 --> 00:39:46.040 and evaluate whether that's true or not. 00:39:46.040 --> 00:39:48.070 You might have a new idea or new innovation. 00:39:48.070 --> 00:39:51.100 And you're trying to make the tough call-- do I go forward 00:39:51.100 --> 00:39:52.812 and establish a company off of this idea? 00:39:52.812 --> 00:39:55.270 Or do I have to go back and turn the crank a few more times 00:39:55.270 --> 00:39:58.220 to come up with the next better idea that's 00:39:58.220 --> 00:40:00.400 more worthy of investment? 00:40:00.400 --> 00:40:01.487 You could be an investor. 00:40:01.487 --> 00:40:03.070 You could have money at your disposal, 00:40:03.070 --> 00:40:05.170 and you could decide what company to invest in 00:40:05.170 --> 00:40:06.610 or what not to invest in. 00:40:06.610 --> 00:40:08.440 So how do you go about this? 00:40:08.440 --> 00:40:11.220 I'd say three fundamental components. 00:40:11.220 --> 00:40:13.666 And venture capitalists might disagree with me, 00:40:13.666 --> 00:40:15.540 or other people who have different skill sets 00:40:15.540 --> 00:40:16.690 might disagree with me. 00:40:16.690 --> 00:40:20.160 But me, from this perspective as an engineer, 00:40:20.160 --> 00:40:22.210 I say first analyze the physics. 00:40:22.210 --> 00:40:24.590 Figure out how this technology works. 00:40:24.590 --> 00:40:26.929 Because if you understand how the technology works, 00:40:26.929 --> 00:40:29.220 you can understand some of the fundamental limitations. 00:40:29.220 --> 00:40:31.050 You can understand efficiency limits. 00:40:31.050 --> 00:40:33.270 And you can predict, based on pattern recognition, 00:40:33.270 --> 00:40:36.320 how hard is it going to be to obtain or to approach 00:40:36.320 --> 00:40:38.620 those limitations? 00:40:38.620 --> 00:40:41.280 Analyze the cost scale potential, 00:40:41.280 --> 00:40:44.970 meaning the potential to scale up, and manufacturing. 00:40:44.970 --> 00:40:47.639 This is really more in the engineering science side. 00:40:47.639 --> 00:40:49.180 And we've been getting more into this 00:40:49.180 --> 00:40:51.190 during the second and third parts of the course. 00:40:51.190 --> 00:40:52.500 And analyze markets-- this is definitely 00:40:52.500 --> 00:40:53.950 the third part of the course. 00:40:53.950 --> 00:40:56.520 So this begins to pull it all together. 00:40:56.520 --> 00:40:59.210 Let's start with analyzing the physics. 00:40:59.210 --> 00:41:00.780 We talked about conversion efficiency 00:41:00.780 --> 00:41:02.160 being a strong lever for cost. 00:41:02.160 --> 00:41:05.050 That's way we're analyzing conversion efficiency. 00:41:05.050 --> 00:41:07.890 The way I would recommend analyzing any PV technology 00:41:07.890 --> 00:41:10.004 that they throw at you would be thinking 00:41:10.004 --> 00:41:11.920 about conversion efficiency in terms of output 00:41:11.920 --> 00:41:13.400 energy versus input energy. 00:41:13.400 --> 00:41:15.799 And think about losses along each step of the way. 00:41:15.799 --> 00:41:18.340 If you have time with the R&D department, sit down with them. 00:41:18.340 --> 00:41:20.048 Sit down with some of the chief engineers 00:41:20.048 --> 00:41:21.990 and walk through each of the steps, 00:41:21.990 --> 00:41:26.479 going from a light photon entering the device 00:41:26.479 --> 00:41:28.270 to charge being collected on the other side 00:41:28.270 --> 00:41:32.220 with a certain current voltage characteristic. 00:41:32.220 --> 00:41:34.234 And keep in mind that the total efficiency 00:41:34.234 --> 00:41:35.650 is going to be limited by whatever 00:41:35.650 --> 00:41:36.660 the worst performer is. 00:41:39.260 --> 00:41:43.440 And keep that picture in mind, too-- [INAUDIBLE] big advice. 00:41:43.440 --> 00:41:46.490 Customer needs-- the next is analyzing what 00:41:46.490 --> 00:41:48.770 makes your product special. 00:41:48.770 --> 00:41:52.720 So where is it going to fit into the big picture? 00:41:52.720 --> 00:41:54.730 Is it going to run with the big dogs? 00:41:54.730 --> 00:41:57.250 Is it going to be an on-grid application, 00:41:57.250 --> 00:41:59.110 in which case cents per kilowatt hour 00:41:59.110 --> 00:42:01.880 really matter-- the price for the electricity for a power 00:42:01.880 --> 00:42:03.190 purchase agreement? 00:42:03.190 --> 00:42:05.600 If you're just selling the module, maybe dollars per watt 00:42:05.600 --> 00:42:08.350 would be an important metric as well. 00:42:08.350 --> 00:42:10.840 Or are you going to one of these other niche markets 00:42:10.840 --> 00:42:11.686 right over here? 00:42:11.686 --> 00:42:13.310 And are you going to be a player there? 00:42:13.310 --> 00:42:15.450 How big is that market? 00:42:15.450 --> 00:42:17.910 These are some questions to ask. 00:42:17.910 --> 00:42:20.770 Cost-- all right, so now we know what our intended market is. 00:42:20.770 --> 00:42:23.460 We know what our product is going to look like. 00:42:23.460 --> 00:42:25.680 We know the physics behind it. 00:42:25.680 --> 00:42:28.430 In a bit, we'll know more about the manufacturing. 00:42:28.430 --> 00:42:29.930 We think about cost. 00:42:29.930 --> 00:42:32.620 And we talked briefly about this during class. 00:42:32.620 --> 00:42:35.160 We had more of an in-depth discussion with Doug. 00:42:35.160 --> 00:42:38.470 That Excel spreadsheet, by the way, will be available to you 00:42:38.470 --> 00:42:41.170 so you can look through it, and see how a cost analysis was 00:42:41.170 --> 00:42:43.680 done for crystalline silicon, and how you might adapt it 00:42:43.680 --> 00:42:45.030 to your technologies. 00:42:45.030 --> 00:42:47.770 But it's really important to perform a cost performance 00:42:47.770 --> 00:42:51.040 model for your technology so that you can understand what 00:42:51.040 --> 00:42:53.540 levers to pull, what levers need to be pulled, 00:42:53.540 --> 00:42:56.294 to increase your parameter of merit, 00:42:56.294 --> 00:42:57.960 whatever that parameter of merit happens 00:42:57.960 --> 00:43:02.120 to be for your potential customer need. 00:43:02.120 --> 00:43:04.620 Manufacturing technologies and scale really 00:43:04.620 --> 00:43:06.310 do play into this quite a bit. 00:43:06.310 --> 00:43:09.320 And for many technologies, or for many companies at least 00:43:09.320 --> 00:43:11.700 in the Silicon Valley area, there 00:43:11.700 --> 00:43:15.170 might be 50 companies working on the same material-- copper 00:43:15.170 --> 00:43:17.040 indium gallium diselenide, let's say, CIGS. 00:43:17.040 --> 00:43:19.040 But they each have their own deposition process, 00:43:19.040 --> 00:43:20.456 and they're each trying to develop 00:43:20.456 --> 00:43:23.390 their own pieces of equipment to manufacture this material. 00:43:23.390 --> 00:43:25.370 So understanding the basic differences 00:43:25.370 --> 00:43:28.175 between the different deposition systems is important. 00:43:28.175 --> 00:43:30.550 And we walked through that during our thin-films lecture. 00:43:30.550 --> 00:43:32.760 So again, you have access to this information, 00:43:32.760 --> 00:43:35.020 and you can parse through it in greater detail 00:43:35.020 --> 00:43:38.100 should you need to. 00:43:38.100 --> 00:43:40.100 Scaling of manufacturing-- we talked 00:43:40.100 --> 00:43:41.540 about resource availability. 00:43:41.540 --> 00:43:44.060 We even had an in-class debate about it, 00:43:44.060 --> 00:43:46.160 about cadmium tellurium. 00:43:46.160 --> 00:43:48.760 There are reports out there which you have access to, 00:43:48.760 --> 00:43:51.850 like this APS report on critical energy materials. 00:43:51.850 --> 00:43:55.680 And we understand that the manufacturing and reserves 00:43:55.680 --> 00:43:58.420 of these elements are not equitably distributed. 00:43:58.420 --> 00:44:01.050 In fact, they're concentrated in certain regions of the world. 00:44:01.050 --> 00:44:03.390 And so that might influence the ultimate potential 00:44:03.390 --> 00:44:05.220 of a certain technology to scale. 00:44:05.220 --> 00:44:08.040 And again, this is another intelligent set of questions 00:44:08.040 --> 00:44:09.730 that you can ask. 00:44:09.730 --> 00:44:12.450 We understand a bit about the market dynamics now. 00:44:12.450 --> 00:44:14.634 We understand this is price. 00:44:14.634 --> 00:44:16.050 We understand that there was a bit 00:44:16.050 --> 00:44:18.400 of a plateau in price in the mid 2000s, 00:44:18.400 --> 00:44:20.640 a precipitous drop over the last three years, 00:44:20.640 --> 00:44:25.490 and that's really changed the way that investments and equity 00:44:25.490 --> 00:44:27.090 look at the solar market. 00:44:27.090 --> 00:44:28.920 In the mid 2000s, it was all gangbusters. 00:44:28.920 --> 00:44:30.378 Everybody was really happy to throw 00:44:30.378 --> 00:44:31.910 any money they had at solar. 00:44:31.910 --> 00:44:35.090 Now people are a lot more selective 00:44:35.090 --> 00:44:37.020 in terms of what they invest in. 00:44:37.020 --> 00:44:41.250 And this trend of oversupply undersupply 00:44:41.250 --> 00:44:44.050 is probably going to continue for some time 00:44:44.050 --> 00:44:46.640 if the integrated circuit industry is any example 00:44:46.640 --> 00:44:47.510 and model. 00:44:47.510 --> 00:44:51.180 So we're likely to see this continue. 00:44:51.180 --> 00:44:52.779 What is your market timing? 00:44:52.779 --> 00:44:55.070 It might be a really good time to found an installation 00:44:55.070 --> 00:44:57.900 company right now, if you can scale, and grow quickly, 00:44:57.900 --> 00:44:59.890 and you have the right niche. 00:44:59.890 --> 00:45:04.100 But if you have a new idea for a thin-film absorber, 00:45:04.100 --> 00:45:05.990 it's important to think critically about 00:45:05.990 --> 00:45:08.820 where the market is going to go over the next few years, 00:45:08.820 --> 00:45:11.460 and how that impacts your strategy as a company. 00:45:11.460 --> 00:45:15.000 You might decide, well, the market's kind of cold right 00:45:15.000 --> 00:45:16.599 now for modules. 00:45:16.599 --> 00:45:18.140 So why don't we hold back on building 00:45:18.140 --> 00:45:22.740 that large-scale manufacturing plant until, say, 2014, 00:45:22.740 --> 00:45:24.830 and invest really heavily in R&D right now, 00:45:24.830 --> 00:45:28.990 and stay small, without the financial obligations 00:45:28.990 --> 00:45:31.300 of a big manufacturing line, until we really 00:45:31.300 --> 00:45:33.740 nail the technology, and have something good to go. 00:45:33.740 --> 00:45:35.770 And plus, think about our exit strategy. 00:45:35.770 --> 00:45:38.250 Maybe we won't ramp up to be a gigawatt or two gigawatt 00:45:38.250 --> 00:45:38.901 company. 00:45:38.901 --> 00:45:41.150 Maybe instead it's more important to form partnerships 00:45:41.150 --> 00:45:43.605 with companies that are manufacturing cad-tel or CIGS 00:45:43.605 --> 00:45:44.380 right now. 00:45:44.380 --> 00:45:45.755 So our business developer's going 00:45:45.755 --> 00:45:48.510 to spend more time chatting with the business 00:45:48.510 --> 00:45:52.740 developers of First Solar and other companies. 00:45:52.740 --> 00:45:54.990 We also know a bit about the financial incentives 00:45:54.990 --> 00:45:57.949 from Germany and some of the largest PV markets 00:45:57.949 --> 00:45:58.490 in the world. 00:45:58.490 --> 00:46:01.640 We know that China is going to ramp up significantly 00:46:01.640 --> 00:46:04.800 in terms of installations over the next few years. 00:46:04.800 --> 00:46:08.640 We know that the United States will, as well, as the prices 00:46:08.640 --> 00:46:10.180 continue to come down. 00:46:10.180 --> 00:46:13.280 These are the PV feed-in tariff rates 00:46:13.280 --> 00:46:15.430 shown in blue and red for different types 00:46:15.430 --> 00:46:20.140 of installations, blue being the large, freestanding systems, 00:46:20.140 --> 00:46:24.110 the red being mostly rooftop mounted systems. 00:46:24.110 --> 00:46:26.590 So we saw that the feed-in tariff rate in Germany 00:46:26.590 --> 00:46:28.220 has come down versus time. 00:46:28.220 --> 00:46:31.260 And the average electricity price has gone up. 00:46:31.260 --> 00:46:34.860 So we can begin predicting what the role of market subsidies 00:46:34.860 --> 00:46:38.880 will be when we try to roll out our technology onto the grid. 00:46:38.880 --> 00:46:41.160 And we can plot this, and see how that will impact 00:46:41.160 --> 00:46:43.570 our business model as well. 00:46:43.570 --> 00:46:46.470 And lastly, we know that about 99% of the solar panels 00:46:46.470 --> 00:46:49.570 have yet to be made. 00:46:49.570 --> 00:46:52.190 99% of the solar panels have yet to be made. 00:46:52.190 --> 00:46:54.300 So there's a lot of potential here. 00:46:54.300 --> 00:46:57.300 This, again, going back to the very first lecture, where 00:46:57.300 --> 00:46:59.410 we had new energy installations, new 00:46:59.410 --> 00:47:02.120 PV installations growing significantly. 00:47:02.120 --> 00:47:04.320 Convergence is coming. 00:47:04.320 --> 00:47:07.700 Who's going to comprise-- who's going to the bridge that gap? 00:47:07.700 --> 00:47:11.300 Who is going to be the maker of the technology that 00:47:11.300 --> 00:47:15.740 will ultimately bring PV to a massive scale in the grid? 00:47:15.740 --> 00:47:17.950 That's for you to decide. 00:47:17.950 --> 00:47:21.660 So other intangibles in terms of evaluating companies 00:47:21.660 --> 00:47:24.890 would include the team, especially the leadership team. 00:47:24.890 --> 00:47:26.340 What is their track record? 00:47:26.340 --> 00:47:29.890 What is their philosophy of running the company? 00:47:29.890 --> 00:47:32.070 The financing that's available-- how much cash 00:47:32.070 --> 00:47:35.680 is at hand-- the patent portfolio, how protected 00:47:35.680 --> 00:47:37.300 are they, and so forth. 00:47:37.300 --> 00:47:40.510 Patents, by the way vary in importance from the US 00:47:40.510 --> 00:47:42.112 to certain other regions of the world. 00:47:42.112 --> 00:47:43.820 It's very important in the US and Europe, 00:47:43.820 --> 00:47:45.780 less important in China. 00:47:45.780 --> 00:47:46.890 But it depends. 00:47:46.890 --> 00:47:50.090 If a certain idea is patented, you 00:47:50.090 --> 00:47:51.890 will have difficulty accessing that market. 00:47:51.890 --> 00:47:54.800 You will have difficulty selling product into that market, 00:47:54.800 --> 00:47:57.550 even though you can continue to sell a product into markets 00:47:57.550 --> 00:48:00.032 that value patents less in IP. 00:48:00.032 --> 00:48:01.490 So let's go through a few examples. 00:48:01.490 --> 00:48:03.950 I'm going to throw a couple of examples at you real quick, 00:48:03.950 --> 00:48:07.612 and just spout off the first ideas that come to you. 00:48:07.612 --> 00:48:09.070 How would you analyze this company? 00:48:09.070 --> 00:48:10.430 Solar paint. 00:48:10.430 --> 00:48:13.410 All right, so I have my big spray paint system here, 00:48:13.410 --> 00:48:16.430 and I go to the side of the house, and I go shh. 00:48:16.430 --> 00:48:19.300 And that saves me a bundle on installation costs. 00:48:19.300 --> 00:48:19.800 It's easy. 00:48:19.800 --> 00:48:21.410 You can do it yourself, and you just 00:48:21.410 --> 00:48:24.970 connect a few wires and voila, you have solar electricity. 00:48:24.970 --> 00:48:27.886 What would be your first instinct? 00:48:27.886 --> 00:48:29.010 AUDIENCE: How does it work? 00:48:29.010 --> 00:48:31.470 PROFESSOR: How does it work? [CLAPPING] Bravo, bravo. 00:48:31.470 --> 00:48:32.860 What is the physics behind it? 00:48:32.860 --> 00:48:34.360 How do you separate charge? 00:48:34.360 --> 00:48:39.860 If you go back to this right over here-- light absorption, 00:48:39.860 --> 00:48:41.402 charge excitation is important. 00:48:41.402 --> 00:48:43.110 What's the [? bang-up ?] of the material? 00:48:43.110 --> 00:48:47.340 How does it excite charge inside of the material? 00:48:47.340 --> 00:48:49.390 Where's charge separated? 00:48:49.390 --> 00:48:51.740 How do carriers reach those separation points? 00:48:51.740 --> 00:48:53.720 You're just spraying on one homogeneous layer? 00:48:53.720 --> 00:48:54.595 Did I get that right? 00:48:54.595 --> 00:48:56.402 There's not two layers? 00:48:56.402 --> 00:48:57.360 Does it phase separate? 00:48:57.360 --> 00:48:58.279 How does that work? 00:48:58.279 --> 00:48:59.820 And in charge collection, how are you 00:48:59.820 --> 00:49:01.610 collecting the charge over that massive area? 00:49:01.610 --> 00:49:02.720 What are your resistive losses? 00:49:02.720 --> 00:49:03.340 And so forth. 00:49:03.340 --> 00:49:06.255 You're equipped now to ask those questions 00:49:06.255 --> 00:49:07.380 as a result of this course. 00:49:07.380 --> 00:49:08.570 That's pretty awesome. 00:49:08.570 --> 00:49:11.640 You think about it, you're pretty empowered. 00:49:11.640 --> 00:49:13.760 So it could work. 00:49:13.760 --> 00:49:15.260 Solar paint could very well work. 00:49:15.260 --> 00:49:17.930 So it's important not to ride into this discussion 00:49:17.930 --> 00:49:20.320 on a high horse and say ooh, won't 00:49:20.320 --> 00:49:21.510 work because of x, y and z. 00:49:21.510 --> 00:49:23.009 It's important to keep an open mind, 00:49:23.009 --> 00:49:25.110 because new ideas are really quite startling, 00:49:25.110 --> 00:49:27.220 and they can be game changing. 00:49:27.220 --> 00:49:29.842 But it's important to have a critical yet respectful 00:49:29.842 --> 00:49:30.550 approach to this. 00:49:30.550 --> 00:49:32.570 A critical mind is always a good thing 00:49:32.570 --> 00:49:35.280 to have on your shoulders. 00:49:35.280 --> 00:49:37.970 Wundermaterial-- so I'm arriving to you, and I say, 00:49:37.970 --> 00:49:39.840 this is the wonder material. 00:49:39.840 --> 00:49:43.050 It's all earth abundant, totally scalable, 00:49:43.050 --> 00:49:45.302 but I'm not going to tell you what it is. 00:49:45.302 --> 00:49:47.260 So you're going to have to invest in my company 00:49:47.260 --> 00:49:50.050 because I have this great team right here-- a great team 00:49:50.050 --> 00:49:52.050 coming from Intel. 00:49:52.050 --> 00:49:55.240 I used to be a head manager at a national laboratory. 00:49:55.240 --> 00:49:56.110 I know my stuff. 00:49:56.110 --> 00:49:57.140 I really know my PV. 00:49:57.140 --> 00:49:59.910 I can wow you with a few presentations about PV device 00:49:59.910 --> 00:50:02.030 physics, and talk all this fancy stuff. 00:50:02.030 --> 00:50:04.090 But you're going to have to invest in my company 00:50:04.090 --> 00:50:07.090 based in a few SCM images, plain-view SCM 00:50:07.090 --> 00:50:09.095 images of the material structure, 00:50:09.095 --> 00:50:10.970 just to prove that I can actually deposit it. 00:50:10.970 --> 00:50:13.094 But I'm not going to tell you what the material is, 00:50:13.094 --> 00:50:15.570 because US VC's could run off with my idea 00:50:15.570 --> 00:50:17.275 and go sell it to somebody else. 00:50:17.275 --> 00:50:19.486 So I'm going to hold that very close to my chest. 00:50:19.486 --> 00:50:20.610 Do you invest in me or not? 00:50:24.467 --> 00:50:26.300 AUDIENCE: Depends on what you're asking for. 00:50:26.300 --> 00:50:27.350 PROFESSOR: Depends on what you're asking. 00:50:27.350 --> 00:50:29.280 Depends how much you're asking for. 00:50:29.280 --> 00:50:31.010 That was a real situation. 00:50:31.010 --> 00:50:32.200 I was in that room. 00:50:32.200 --> 00:50:34.160 I was evaluating that company. 00:50:34.160 --> 00:50:37.780 And as a scientist in that room, I was, like, are you serious? 00:50:37.780 --> 00:50:40.405 You can't be serious. 00:50:40.405 --> 00:50:41.780 The venture capitalists, however, 00:50:41.780 --> 00:50:44.550 thought differently, and said, look, the team is really good. 00:50:44.550 --> 00:50:51.050 And for reasons that were described-- 00:50:51.050 --> 00:50:53.160 I can't get into all of them without giving 00:50:53.160 --> 00:50:55.910 the details away-- there were reasons 00:50:55.910 --> 00:50:58.902 for investing in that particular case, in that company. 00:50:58.902 --> 00:51:01.135 And even though the physics was not understood, 00:51:01.135 --> 00:51:03.510 and even though the ultimate efficiency potential was not 00:51:03.510 --> 00:51:07.280 understood, the VC firm made an investment. 00:51:07.280 --> 00:51:10.240 So far it's been going OK with that company. 00:51:10.240 --> 00:51:13.720 So just to point out that this is 00:51:13.720 --> 00:51:16.780 a base, a foundation of which to make decisions. 00:51:16.780 --> 00:51:20.910 It's not a prescription upon which to make decisions. 00:51:20.910 --> 00:51:22.610 A lot of things factor in. 00:51:22.610 --> 00:51:23.840 Use your best judgment. 00:51:23.840 --> 00:51:26.930 You're the one best equipped to make those decisions. 00:51:26.930 --> 00:51:30.720 Path forward-- this is kind of my last few words 00:51:30.720 --> 00:51:33.930 on the soapbox before I hand over the microphones to you. 00:51:33.930 --> 00:51:36.320 The path forward, from my perspective-- 00:51:36.320 --> 00:51:41.240 the markets are going to drive a lot of the public story. 00:51:41.240 --> 00:51:44.720 But you know that cost matters more than price. 00:51:44.720 --> 00:51:47.950 Price is the short-term market pull. 00:51:47.950 --> 00:51:51.530 During the mid 2000s-- actually, down here 00:51:51.530 --> 00:51:54.610 when the price was still very, very high, 00:51:54.610 --> 00:52:00.200 solar was kind of this hippie, tree-hugging group of nerds 00:52:00.200 --> 00:52:02.510 that would get together at the Muddy Charles 00:52:02.510 --> 00:52:05.260 and come up with the facts-based analysis, which formed the MIT 00:52:05.260 --> 00:52:07.590 Energy Club-- really small thing. 00:52:07.590 --> 00:52:11.180 And then right when the prices began to stabilize 00:52:11.180 --> 00:52:15.380 and there was this view that energy was a huge gold 00:52:15.380 --> 00:52:19.490 mine waiting to be explored, a massive amount of interest 00:52:19.490 --> 00:52:21.970 came into the field-- and growth, accordingly. 00:52:21.970 --> 00:52:23.610 And it was good. 00:52:23.610 --> 00:52:27.360 But in the 2008 and so forth, we had this precipitous drop 00:52:27.360 --> 00:52:30.200 in prices, as well as the collapse of finance 00:52:30.200 --> 00:52:32.320 to allow these technologies to scale up. 00:52:32.320 --> 00:52:35.030 The Valley of Death widened and deepened a bit, if you will. 00:52:35.030 --> 00:52:38.195 And suddenly, energy looked a lot more precarious. 00:52:38.195 --> 00:52:40.240 I started having students come into my office 00:52:40.240 --> 00:52:44.010 doing interviews, saying what sort of career can I have here? 00:52:44.010 --> 00:52:45.470 Tell me, seriously, are their jobs 00:52:45.470 --> 00:52:47.307 waiting for me when I exit? 00:52:47.307 --> 00:52:48.890 The reality is, there are jobs waiting 00:52:48.890 --> 00:52:50.991 for bright, smart people regardless of the market 00:52:50.991 --> 00:52:51.490 condition. 00:52:51.490 --> 00:52:52.760 There were jobs back here. 00:52:52.760 --> 00:52:55.180 There will be jobs in the future as well, if you're 00:52:55.180 --> 00:52:57.530 good at what you do and you ask the right questions, 00:52:57.530 --> 00:52:58.946 conduct good experiments, and know 00:52:58.946 --> 00:53:00.360 how to disseminate your work. 00:53:00.360 --> 00:53:03.280 But this is kind of a return to the roots 00:53:03.280 --> 00:53:05.410 now, where we have people who are in solar 00:53:05.410 --> 00:53:10.650 and interested in solar who are really there for the long run. 00:53:10.650 --> 00:53:12.780 And so knowing the market conditions really 00:53:12.780 --> 00:53:14.800 helps you put everything into perspective, 00:53:14.800 --> 00:53:18.450 and see how the situation might evolve going forward. 00:53:18.450 --> 00:53:22.800 In terms of tipping point, it's largely agreed upon 00:53:22.800 --> 00:53:27.300 that $1 a watt system installed is really 00:53:27.300 --> 00:53:28.470 where we want to head to. 00:53:28.470 --> 00:53:30.860 So we know the cost right now of manufacturing 00:53:30.860 --> 00:53:32.360 a PV module of crystalline silicon 00:53:32.360 --> 00:53:33.651 is on the order of $1 per watt. 00:53:33.651 --> 00:53:35.570 And if you're inventing a new technology, 00:53:35.570 --> 00:53:38.262 you have to do half of that. 00:53:38.262 --> 00:53:40.720 And crystalline silicon has a roadmap to get to about $0.50 00:53:40.720 --> 00:53:43.385 per watt peak by 2020, 2025. 00:53:43.385 --> 00:53:45.260 And so if you're developing a new technology, 00:53:45.260 --> 00:53:47.720 you have to undercut that and some way, shape or form. 00:53:47.720 --> 00:53:49.140 And you can do that in a variety of ways-- 00:53:49.140 --> 00:53:50.220 improving the efficiency. 00:53:50.220 --> 00:53:52.594 There's a lot of headroom in efficiency-- lot of headroom 00:53:52.594 --> 00:53:56.640 there-- maybe at manufacturing scale and so forth. 00:53:56.640 --> 00:53:59.930 But if a technology, some technology by 2020, 00:53:59.930 --> 00:54:04.760 can get to $1 a watt installed, we're looking at, by 2030, 00:54:04.760 --> 00:54:07.160 a pretty massive, good penetration of PV 00:54:07.160 --> 00:54:08.860 across the United States. 00:54:08.860 --> 00:54:10.240 And that's just the start of it. 00:54:10.240 --> 00:54:14.090 The US is just the drop in the bucket. 00:54:14.090 --> 00:54:15.780 This is the world. 00:54:15.780 --> 00:54:18.390 There's a lot of people-- 1.6 billion of them, 00:54:18.390 --> 00:54:20.530 approximately-- without electricity right now. 00:54:20.530 --> 00:54:21.760 They're coming online. 00:54:21.760 --> 00:54:25.910 And they're driving the majority of the growth in CO2 emissions. 00:54:25.910 --> 00:54:29.160 Majority of the growth comes from two points-- one, 00:54:29.160 --> 00:54:32.117 we're outsourcing our CO2. 00:54:32.117 --> 00:54:34.700 If you look at the amount of CO2 the United States contributes 00:54:34.700 --> 00:54:36.716 to the world, it might be 1/5, but if you 00:54:36.716 --> 00:54:39.090 look at all the manufactured goods, all the clothes we're 00:54:39.090 --> 00:54:41.950 wearing right now, all of the apparatus that we're using, 00:54:41.950 --> 00:54:44.120 these were manufactured probably not in the US, 00:54:44.120 --> 00:54:46.050 but they're here for our consumption and use. 00:54:46.050 --> 00:54:47.360 We own that carbon. 00:54:47.360 --> 00:54:48.780 That's our carbon. 00:54:48.780 --> 00:54:50.030 We're responsible for it. 00:54:50.030 --> 00:54:51.657 So our footprint increases further. 00:54:51.657 --> 00:54:52.990 So we're outsourcing the carbon. 00:54:52.990 --> 00:54:55.240 It's growing in certain developing regions 00:54:55.240 --> 00:54:56.360 that are exporting to us. 00:54:56.360 --> 00:54:58.532 And secondly, they're also growing. 00:54:58.532 --> 00:54:59.490 They're also consuming. 00:54:59.490 --> 00:55:02.070 They're also getting cars, and computers, and so forth. 00:55:02.070 --> 00:55:07.950 So there's an overall growth of consumption around the world. 00:55:07.950 --> 00:55:10.390 We agree that climate change is an issue. 00:55:10.390 --> 00:55:12.380 And we look at the solar insolation map, 00:55:12.380 --> 00:55:15.530 and we say, wow, compared to certain minerals, 00:55:15.530 --> 00:55:20.490 or rare earths, or petroleum, this is fairly equitably 00:55:20.490 --> 00:55:21.430 distributed. 00:55:21.430 --> 00:55:25.196 Even regions, say in Patagonia or up in northern Europe, 00:55:25.196 --> 00:55:26.820 compared to the Equator-- we're looking 00:55:26.820 --> 00:55:30.090 about a 3x, maybe 4x delta in solar resource, 00:55:30.090 --> 00:55:33.860 not a million to 1. 00:55:33.860 --> 00:55:36.340 We're looking at a 4x delta in solar resource, which 00:55:36.340 --> 00:55:39.340 is not that big of a spread. 00:55:39.340 --> 00:55:43.300 And furthermore, if we go back and look at the countries that 00:55:43.300 --> 00:55:46.490 are really coming online, just using 00:55:46.490 --> 00:55:49.385 this loose parameter of human development index 00:55:49.385 --> 00:55:51.890 that we referred to on the first day of class, 00:55:51.890 --> 00:55:54.840 we can see that the countries with the largest solar resource 00:55:54.840 --> 00:55:57.550 base-- several of them also happen 00:55:57.550 --> 00:56:00.890 to be countries that are on the path toward development, 00:56:00.890 --> 00:56:02.511 on the path toward consumption. 00:56:02.511 --> 00:56:04.760 And solar can really have an impact in those countries 00:56:04.760 --> 00:56:06.800 to improve the quality of life, and also 00:56:06.800 --> 00:56:09.240 reduce carbon emissions overall in the world. 00:56:09.240 --> 00:56:11.280 So what role can you play? 00:56:11.280 --> 00:56:14.180 I mean, I think important things to keep in mind 00:56:14.180 --> 00:56:19.410 is, we're really at the beginning of solar. 00:56:19.410 --> 00:56:23.320 We have a lot of headroom to grow. 00:56:23.320 --> 00:56:27.300 I think the amount of venture capital investment loss so far 00:56:27.300 --> 00:56:29.070 due to failed companies is a drop 00:56:29.070 --> 00:56:31.054 in the bucket compared to GDP. 00:56:31.054 --> 00:56:32.470 It's a drop in the bucket compared 00:56:32.470 --> 00:56:33.635 to military investments. 00:56:33.635 --> 00:56:35.010 It's drop in the bucket to things 00:56:35.010 --> 00:56:37.700 that we consider important, and especially the quality 00:56:37.700 --> 00:56:39.070 of life in the world. 00:56:39.070 --> 00:56:41.530 So it's important to keep that in perspective. 00:56:41.530 --> 00:56:44.360 We need to maintain momentum in capital innovation culture. 00:56:44.360 --> 00:56:45.890 That's what we have here. 00:56:45.890 --> 00:56:48.300 It's growing in other places around the world as well. 00:56:48.300 --> 00:56:50.300 It's important to foster that growth, 00:56:50.300 --> 00:56:53.610 and evolve into a global society where 00:56:53.610 --> 00:56:55.860 we have connections and shared connections 00:56:55.860 --> 00:56:58.550 with groups around the world, shared interests, and can 00:56:58.550 --> 00:57:01.132 leverage each other's strengths. 00:57:01.132 --> 00:57:02.840 The rest of the world is catching up fast 00:57:02.840 --> 00:57:03.965 with increased competition. 00:57:03.965 --> 00:57:06.990 That's why isolation won't work in this case. 00:57:06.990 --> 00:57:10.950 We do need increased R&D efforts on key targets. 00:57:10.950 --> 00:57:13.450 I think better investments and smarter choices of technology 00:57:13.450 --> 00:57:14.117 is important. 00:57:14.117 --> 00:57:15.950 And hopefully, over the course of the class, 00:57:15.950 --> 00:57:18.360 you're equipped with several of the tools 00:57:18.360 --> 00:57:21.700 to make those types of decisions yourself. 00:57:21.700 --> 00:57:24.390 We also need to change the way we innovate. 00:57:24.390 --> 00:57:28.300 Pooled resources, collaborative efforts, 00:57:28.300 --> 00:57:32.530 improved industry-university lab relations-- which in the US 00:57:32.530 --> 00:57:35.320 are somewhat at a precarious state because of differences 00:57:35.320 --> 00:57:37.820 in priorities between publications and IP protection 00:57:37.820 --> 00:57:39.640 and so forth. 00:57:39.640 --> 00:57:41.660 Direct to manufacturing innovations-- 00:57:41.660 --> 00:57:44.340 instead of always thinking that startup companies are 00:57:44.340 --> 00:57:46.660 the only route, thinking in terms of how do I 00:57:46.660 --> 00:57:49.444 get this technology into a large established company in the US? 00:57:49.444 --> 00:57:51.610 That's a route that we don't think about very often, 00:57:51.610 --> 00:57:53.620 but could have a huge impact, and certainly has 00:57:53.620 --> 00:57:56.030 an impact in Germany. 00:57:56.030 --> 00:57:57.821 The need for a steady predictable market-- 00:57:57.821 --> 00:58:00.320 all right, I think I might be asking too much in this bullet 00:58:00.320 --> 00:58:00.510 point. 00:58:00.510 --> 00:58:01.450 But it would be nice. 00:58:01.450 --> 00:58:04.680 And certainly policy can play a large role in that. 00:58:04.680 --> 00:58:06.660 We have enough unpredictability with oversupply 00:58:06.660 --> 00:58:07.510 and undersupply. 00:58:07.510 --> 00:58:09.760 We don't need the politicians getting into it as well, 00:58:09.760 --> 00:58:11.489 and changing their minds every two years. 00:58:11.489 --> 00:58:13.030 And investment in education as well-- 00:58:13.030 --> 00:58:15.680 the right type of basic education-- so you can get 00:58:15.680 --> 00:58:16.950 involved a number of ways. 00:58:16.950 --> 00:58:19.099 And I encourage you to do so. 00:58:19.099 --> 00:58:20.390 I thank you for your attention. 00:58:20.390 --> 00:58:22.570 And I wish you the best of fortunes going forward. 00:58:22.570 --> 00:58:24.390 Please feel free to call me whenever you have a need. 00:58:24.390 --> 00:58:26.056 And I look forward to your presentation. 00:58:26.056 --> 00:58:27.490 So be well. 00:58:27.490 --> 00:58:28.090 Thanks. 00:58:28.090 --> 00:58:31.740 [APPLAUSE]