1 00:00:00,060 --> 00:00:02,490 The following content is provided under a Creative 2 00:00:02,490 --> 00:00:04,010 Commons license. 3 00:00:04,010 --> 00:00:06,340 Your support will help MIT OpenCourseWare 4 00:00:06,340 --> 00:00:10,710 continue to offer high-quality educational resources for free. 5 00:00:10,710 --> 00:00:13,320 To make a donation or view additional materials 6 00:00:13,320 --> 00:00:17,192 from 100s of MIT courses, visit MIT OpenCourseWare 7 00:00:17,192 --> 00:00:17,817 at ocw.mit.edu. 8 00:00:26,410 --> 00:00:28,480 PROFESSOR: I promised everybody that we 9 00:00:28,480 --> 00:00:32,240 would have the capability of testing 10 00:00:32,240 --> 00:00:34,510 a multi-junction solar cell. 11 00:00:34,510 --> 00:00:37,350 We've been working so far with a single-junction crystalline 12 00:00:37,350 --> 00:00:38,220 silicon. 13 00:00:38,220 --> 00:00:40,340 And just to refresh everybody about what 14 00:00:40,340 --> 00:00:44,750 a multi-junction device is, it is a high-efficiency concept. 15 00:00:44,750 --> 00:00:46,640 The efficiencies that are obtained 16 00:00:46,640 --> 00:00:49,850 under concentrated sunlight are above 40% 17 00:00:49,850 --> 00:00:52,500 now with some of these high-efficiency concentrated 18 00:00:52,500 --> 00:00:53,520 devices. 19 00:00:53,520 --> 00:00:57,840 And again, the way this concentrated device works 20 00:00:57,840 --> 00:01:00,380 is if you have, for example, germanium, gallium arsenide 21 00:01:00,380 --> 00:01:02,290 indium, gallium phosphide stack-- 22 00:01:02,290 --> 00:01:05,170 three different materials, three different band gaps ranging 23 00:01:05,170 --> 00:01:07,980 from somewhere in the range of 0.67 24 00:01:07,980 --> 00:01:11,970 eV all the way up to a few eV. 25 00:01:11,970 --> 00:01:14,640 The largest band gap is placed at the top, 26 00:01:14,640 --> 00:01:17,950 because the short wavelength light is absorbed by that one, 27 00:01:17,950 --> 00:01:20,740 and the longer wavelength lights go through and are absorbed 28 00:01:20,740 --> 00:01:22,970 by the layers underneath. 29 00:01:22,970 --> 00:01:26,650 So you can think about this as blue, orange, and red, 30 00:01:26,650 --> 00:01:29,680 if you like to see things in colors, the short wavelength 31 00:01:29,680 --> 00:01:33,010 light being the blue absorbed at the top, the sunlight obviously 32 00:01:33,010 --> 00:01:35,630 coming in through that side through the top, 33 00:01:35,630 --> 00:01:38,730 the middle cell absorbing the light somewhere in the middle 34 00:01:38,730 --> 00:01:42,010 of the solar spectrum, and the bottom cell into the reds. 35 00:01:42,010 --> 00:01:44,460 So the notion is to have a device that 36 00:01:44,460 --> 00:01:48,930 is capable of minimizing thermalization losses. 37 00:01:48,930 --> 00:01:52,610 So the short wavelength light, instead 38 00:01:52,610 --> 00:01:54,870 of being absorbed in a low bandgap material 39 00:01:54,870 --> 00:01:58,670 and generating a ton of heat in the process, 40 00:01:58,670 --> 00:02:02,440 is able to be absorbed very efficiently via that top cell. 41 00:02:02,440 --> 00:02:05,150 And only the longest wavelength light, the lowest energy light, 42 00:02:05,150 --> 00:02:07,850 makes it down to the small bandgap material underneath. 43 00:02:07,850 --> 00:02:11,080 So this is representative of the stack of materials 44 00:02:11,080 --> 00:02:11,702 that we have. 45 00:02:11,702 --> 00:02:13,160 I believe what we're going to do is 46 00:02:13,160 --> 00:02:15,680 do a direct comparison of silicon versus multi-junction. 47 00:02:15,680 --> 00:02:17,000 Is that right? 48 00:02:17,000 --> 00:02:19,790 Yeah, so right now we have installed the silicon devices. 49 00:02:19,790 --> 00:02:22,700 Those are the very nicely encapsulated ones. 50 00:02:22,700 --> 00:02:24,310 We had to change the light source. 51 00:02:24,310 --> 00:02:29,390 As you see now, we have a little bit of a flashlight there. 52 00:02:29,390 --> 00:02:31,360 Why is that? 53 00:02:31,360 --> 00:02:33,360 Why did we have to go from an LED, 54 00:02:33,360 --> 00:02:38,618 a monochromatic light source, to a broadband flashlight? 55 00:02:38,618 --> 00:02:40,284 AUDIENCE: Well, if the point is that you 56 00:02:40,284 --> 00:02:43,914 have these different absorbing layers that 57 00:02:43,914 --> 00:02:46,576 absorb different wavelengths of light, 58 00:02:46,576 --> 00:02:50,448 if you only put one [? group ?] like that, 59 00:02:50,448 --> 00:02:52,400 the other layers wouldn't have any effect. 60 00:02:52,400 --> 00:02:54,316 PROFESSOR: And it kind of defeats the purpose. 61 00:02:54,316 --> 00:02:56,800 Plus the current outputs of these three different cells 62 00:02:56,800 --> 00:02:58,900 have to be more or less matched. 63 00:02:58,900 --> 00:03:02,030 So because they're connected in series, 64 00:03:02,030 --> 00:03:06,530 if you have a poor performing cell-- or one component, one 65 00:03:06,530 --> 00:03:08,530 sub-cell, if you will-- that is generating 66 00:03:08,530 --> 00:03:10,600 a small amount of current, that will 67 00:03:10,600 --> 00:03:13,810 limit the combined current output of the entire stack. 68 00:03:13,810 --> 00:03:14,330 Good. 69 00:03:14,330 --> 00:03:16,788 So why don't we go ahead and connect them to our computers. 70 00:03:16,788 --> 00:03:19,020 We have our tech support staff available on call-- 71 00:03:19,020 --> 00:03:21,030 who just walked out, conveniently, 72 00:03:21,030 --> 00:03:23,330 but will be back momentarily. 73 00:03:23,330 --> 00:03:25,120 We'll connect them to our computers, 74 00:03:25,120 --> 00:03:27,910 fire it up, and team up with somebody 75 00:03:27,910 --> 00:03:29,930 if you don't happen to have a computer with you. 76 00:03:29,930 --> 00:03:32,650 We'll get this demo started. 77 00:03:32,650 --> 00:03:36,620 So the notion here is to first test the silicon-based device. 78 00:03:36,620 --> 00:03:38,120 Once we have a good working IV curve 79 00:03:38,120 --> 00:03:42,359 out of the silicon-based device, we'll take a pause. 80 00:03:42,359 --> 00:03:43,900 We'll talk about what we would expect 81 00:03:43,900 --> 00:03:45,800 to see from the multi-junction device 82 00:03:45,800 --> 00:03:46,970 when we hook that one up. 83 00:03:46,970 --> 00:03:49,950 So why don't we go to it and give it a shot. 84 00:03:57,570 --> 00:04:02,630 So let me dive into what is effectively 85 00:04:02,630 --> 00:04:07,100 our last in-class lecture before we 86 00:04:07,100 --> 00:04:10,680 are graced with some really nice presentations. 87 00:04:10,680 --> 00:04:12,310 I'm looking forward to those. 88 00:04:12,310 --> 00:04:15,390 So global trends-- what I decided 89 00:04:15,390 --> 00:04:18,860 to talk the last day about-- really 90 00:04:18,860 --> 00:04:20,829 we have a couple of topics left, which 91 00:04:20,829 --> 00:04:23,735 we don't have time to cover. 92 00:04:23,735 --> 00:04:25,110 We won't have time to cover both. 93 00:04:25,110 --> 00:04:27,068 We'll have time to cover one but not the other. 94 00:04:27,068 --> 00:04:31,070 And the two topics are the future of R&D in solar. 95 00:04:31,070 --> 00:04:33,370 And the other topic is solar in developing countries. 96 00:04:33,370 --> 00:04:36,340 And I think both are equally important. 97 00:04:36,340 --> 00:04:40,100 I decided to pick the former rather than the latter. 98 00:04:40,100 --> 00:04:42,740 Global investments, trends in solar and other renewables-- 99 00:04:42,740 --> 00:04:44,410 what I wanted to do was to briefly walk 100 00:04:44,410 --> 00:04:46,980 through some of the recent trends 101 00:04:46,980 --> 00:04:50,670 in R&D. So energy companies traditionally 102 00:04:50,670 --> 00:04:52,720 are not R&D spenders. 103 00:04:52,720 --> 00:04:55,760 They reinvest a very small fraction 104 00:04:55,760 --> 00:04:59,530 of their profits in R&D, in research and development. 105 00:04:59,530 --> 00:05:03,540 And solar, because it is far from grid parity right now-- 106 00:05:03,540 --> 00:05:06,700 factor of two or factor of three in terms of cost-- not price, 107 00:05:06,700 --> 00:05:12,050 cost-- we have to invest R&D to get the cost down. 108 00:05:12,050 --> 00:05:14,820 And this is both manufacturing innovation and, of course, 109 00:05:14,820 --> 00:05:17,020 engineering scientific innovation. 110 00:05:17,020 --> 00:05:19,130 So this right here is financial investment 111 00:05:19,130 --> 00:05:21,190 in clean energy, global trends by quarter. 112 00:05:21,190 --> 00:05:23,090 I decided to compile as much data 113 00:05:23,090 --> 00:05:25,300 as I possibly could into the slides 114 00:05:25,300 --> 00:05:27,150 so that you can go on afterward, if you're 115 00:05:27,150 --> 00:05:29,350 really interested in the topic, pursue it further. 116 00:05:29,350 --> 00:05:33,740 And what we see is as a rise overall of investment 117 00:05:33,740 --> 00:05:36,910 in so-called clean energy. 118 00:05:36,910 --> 00:05:39,850 And by and large, by the G20-- these 119 00:05:39,850 --> 00:05:44,850 are countries that have access to resources, to capital-- 120 00:05:44,850 --> 00:05:46,740 larger GDPs on average. 121 00:05:46,740 --> 00:05:51,970 You also see a trend and in non G20 countries, more recently, 122 00:05:51,970 --> 00:05:54,890 an uptick or recognition that this is an important area. 123 00:05:54,890 --> 00:05:57,410 And perhaps there's room to play, niches if you will, 124 00:05:57,410 --> 00:06:01,470 that certain countries can adopt that would provide 125 00:06:01,470 --> 00:06:03,070 a competitive advantage. 126 00:06:03,070 --> 00:06:05,110 This is an interesting chart as well. 127 00:06:05,110 --> 00:06:11,580 This shows the investment in-- I believe this is government R&D. 128 00:06:11,580 --> 00:06:14,400 Oh, this is financial sector investment only, 129 00:06:14,400 --> 00:06:16,370 excludes corporate and government R&D-- 130 00:06:16,370 --> 00:06:20,430 small distributed capacity in both-- so financial sector 131 00:06:20,430 --> 00:06:23,160 investment in the US and China. 132 00:06:23,160 --> 00:06:28,100 What we see in the US is relatively stable investment-- 133 00:06:28,100 --> 00:06:31,910 picked up in the mid 2000s, but relatively stable throughout. 134 00:06:31,910 --> 00:06:33,930 And in China, just a really steady 135 00:06:33,930 --> 00:06:36,840 increase here of a R&D funding. 136 00:06:36,840 --> 00:06:39,620 Note the role of the market in the United States. 137 00:06:39,620 --> 00:06:44,910 Right around '05 and '06, this was when the price of PV began 138 00:06:44,910 --> 00:06:46,560 to plateau. 139 00:06:46,560 --> 00:06:49,630 The costs continue coming down, but the price of PV modules 140 00:06:49,630 --> 00:06:53,820 began to plateau because of the silicon feedstock shortage. 141 00:06:53,820 --> 00:06:55,950 So people saw opportunity here, especially 142 00:06:55,950 --> 00:06:58,860 the financial sector, private capital, and said, 143 00:06:58,860 --> 00:07:01,970 hey, if prices are remaining high 144 00:07:01,970 --> 00:07:03,470 and the costs are coming down, that 145 00:07:03,470 --> 00:07:05,304 means our profit margin is growing. 146 00:07:05,304 --> 00:07:07,720 This is a good industry for us to get into-- a high profit 147 00:07:07,720 --> 00:07:09,030 margin industry. 148 00:07:09,030 --> 00:07:11,520 So there are many folks getting in because 149 00:07:11,520 --> 00:07:13,700 of that market condition. 150 00:07:13,700 --> 00:07:16,099 Some of them saw the future in the market and said, 151 00:07:16,099 --> 00:07:17,640 this is trending towards commodities. 152 00:07:17,640 --> 00:07:19,810 We have to adopt that mentality, and really 153 00:07:19,810 --> 00:07:23,080 squeeze every penny out of our cost structure that we can do. 154 00:07:23,080 --> 00:07:25,570 And others went into it thinking that this 155 00:07:25,570 --> 00:07:30,370 would be a bumper crop-- a really high yield investment. 156 00:07:30,370 --> 00:07:34,210 And then as the margins began to get squeezed, they got scared, 157 00:07:34,210 --> 00:07:35,640 and some pulled out. 158 00:07:35,640 --> 00:07:38,920 So it's an interesting trend, following the market 159 00:07:38,920 --> 00:07:40,880 perturbations in the United States 160 00:07:40,880 --> 00:07:43,390 and having this fluctuation. 161 00:07:43,390 --> 00:07:48,400 And in China, from what I can tell discussing with business 162 00:07:48,400 --> 00:07:52,350 leaders and politicians, a much more premeditated, 163 00:07:52,350 --> 00:07:55,980 long-term strategy saying this is a strategic industry 164 00:07:55,980 --> 00:07:57,150 for our country. 165 00:07:57,150 --> 00:07:58,650 We are going to invest in it. 166 00:07:58,650 --> 00:08:01,150 And this is of fundamental national importance. 167 00:08:01,150 --> 00:08:03,690 So a little bit of difference in the investment strategies 168 00:08:03,690 --> 00:08:04,190 of the two. 169 00:08:04,190 --> 00:08:06,950 The EU is a little bit in between-- a mixed bag. 170 00:08:06,950 --> 00:08:10,200 Again, this uptick in the middle of the 2000s, 171 00:08:10,200 --> 00:08:17,650 but a continued investment in PV and renewables. 172 00:08:17,650 --> 00:08:22,610 This shows the investment type by sector, broken down 173 00:08:22,610 --> 00:08:25,850 on the right-hand side between the renewable energy types. 174 00:08:25,850 --> 00:08:28,810 So you have wind, solar, other renewables, biofuels, 175 00:08:28,810 --> 00:08:34,049 and so-called negawatts, so-called energy efficiency. 176 00:08:34,049 --> 00:08:37,059 And on the left-hand side, we have the different types 177 00:08:37,059 --> 00:08:40,830 of investment into clean tech. 178 00:08:40,830 --> 00:08:42,860 And interestingly, here in the United States-- 179 00:08:42,860 --> 00:08:46,430 this is in 2009-- venture capital 180 00:08:46,430 --> 00:08:51,470 is comprising a surprising total of the investment 181 00:08:51,470 --> 00:08:54,360 in renewable energy. 182 00:08:54,360 --> 00:08:57,090 And in terms of the sector itself, 183 00:08:57,090 --> 00:08:59,400 we can see solar here in the United States comprising 184 00:08:59,400 --> 00:09:02,670 a large percentage, again, of the total investment. 185 00:09:05,202 --> 00:09:07,660 I want to bring caution to one data point up there-- Spain. 186 00:09:07,660 --> 00:09:10,810 That was a little bit of a short-term fluke. 187 00:09:10,810 --> 00:09:14,380 The Spanish government instituted a feed-in tariff 188 00:09:14,380 --> 00:09:17,260 similar to what Germany has implemented, 189 00:09:17,260 --> 00:09:18,920 but a little less successfully. 190 00:09:18,920 --> 00:09:20,560 Let me dive into the details. 191 00:09:20,560 --> 00:09:22,830 Germany did a careful market analysis, 192 00:09:22,830 --> 00:09:24,480 was the first to move into the space, 193 00:09:24,480 --> 00:09:28,649 and began dominating the market for PV-- 50% of PV installed. 194 00:09:28,649 --> 00:09:30,690 So if Germany set the price a little differently, 195 00:09:30,690 --> 00:09:32,720 the PV market would adjust accordingly. 196 00:09:32,720 --> 00:09:35,310 Spain, a new entrant, seeing Germany's success, 197 00:09:35,310 --> 00:09:36,630 decided to replicate it. 198 00:09:36,630 --> 00:09:39,340 The first time they attempted a feed-in tariff, 199 00:09:39,340 --> 00:09:41,065 their feed-in tariff came in too low, 200 00:09:41,065 --> 00:09:43,440 and the market looked at Spain, shrugged their shoulders, 201 00:09:43,440 --> 00:09:45,980 and continued installing in Germany. 202 00:09:45,980 --> 00:09:48,060 The second time they decided to come in, 203 00:09:48,060 --> 00:09:51,450 they put their feed-in tariff a little bit too high. 204 00:09:51,450 --> 00:09:53,700 And as a result, the market said, really, you kidding? 205 00:09:53,700 --> 00:09:55,260 OK, we go there and install. 206 00:09:55,260 --> 00:09:58,480 And there was a slush of modules over to Spain, 207 00:09:58,480 --> 00:09:59,770 flooding the market. 208 00:09:59,770 --> 00:10:02,800 And over a period of about a year to two years, 209 00:10:02,800 --> 00:10:05,020 they got much more than they bargained for. 210 00:10:05,020 --> 00:10:07,940 In other words, they had many, many more modules installed 211 00:10:07,940 --> 00:10:09,430 than they had expected. 212 00:10:09,430 --> 00:10:10,980 And now the government has to pay out 213 00:10:10,980 --> 00:10:14,060 to these installed systems. 214 00:10:14,060 --> 00:10:15,700 They have to pay out a certain rate 215 00:10:15,700 --> 00:10:17,350 based on the feed-in tariff. 216 00:10:17,350 --> 00:10:20,100 And it was more than they expected to have to pay out. 217 00:10:20,100 --> 00:10:21,810 Then the financial crisis hits. 218 00:10:21,810 --> 00:10:23,600 So it was a little bit of a disaster, 219 00:10:23,600 --> 00:10:26,400 because they ended up killing the program, 220 00:10:26,400 --> 00:10:29,340 killing in the process about 10 years of work 221 00:10:29,340 --> 00:10:32,010 to design the program, 10 years of institution building 222 00:10:32,010 --> 00:10:34,950 to think about how to create a feed-in tariff for Spain, 223 00:10:34,950 --> 00:10:38,350 and without the desired result, which 224 00:10:38,350 --> 00:10:43,330 was a slow, steady increase of the photovoltaic installations 225 00:10:43,330 --> 00:10:45,780 in Spain and hence, the local industry. 226 00:10:45,780 --> 00:10:47,430 So it was a little bit of a flash 227 00:10:47,430 --> 00:10:50,690 in the pan-- a huge market that burst very suddenly, 228 00:10:50,690 --> 00:10:53,160 and then quickly extinguished itself. 229 00:10:53,160 --> 00:10:54,880 So it's a good example of how not 230 00:10:54,880 --> 00:10:59,400 to perform a feed-in tariff, how not to design a feed-in tariff. 231 00:10:59,400 --> 00:11:06,530 So in 2009, that was the end of the bumper year investment. 232 00:11:06,530 --> 00:11:09,240 Spain also did something that was pretty nasty 233 00:11:09,240 --> 00:11:11,770 from a government policy point of view. 234 00:11:11,770 --> 00:11:15,073 They decided to retroactively change their feed-in tariff. 235 00:11:15,073 --> 00:11:15,980 AUDIENCE: Ooh. 236 00:11:15,980 --> 00:11:18,690 PROFESSOR: Ooh, so a feed-in tariff 237 00:11:18,690 --> 00:11:22,190 is a contract between the government-- 238 00:11:22,190 --> 00:11:24,340 or the utility-- and the installer, 239 00:11:24,340 --> 00:11:26,400 saying that we will pay a certain amount per year 240 00:11:26,400 --> 00:11:27,820 for a number of years. 241 00:11:27,820 --> 00:11:31,970 And to go back on that, renege on the feed-in tariff-- 242 00:11:31,970 --> 00:11:34,200 that's a no-no. 243 00:11:34,200 --> 00:11:36,680 It undermines market confidence. 244 00:11:36,680 --> 00:11:40,650 So the PV module prices-- I just wanted 245 00:11:40,650 --> 00:11:42,410 to highlight this slide once again, 246 00:11:42,410 --> 00:11:44,604 to highlight the market conditions that are 247 00:11:44,604 --> 00:11:45,770 being experienced right now. 248 00:11:45,770 --> 00:11:54,010 We had, in the mid 2000s, a rise in, or fairly steady prices. 249 00:11:54,010 --> 00:11:56,880 And meanwhile, costs were coming down. 250 00:11:56,880 --> 00:11:59,100 This, by the way is price, but in thin films 251 00:11:59,100 --> 00:12:01,240 for solar cad-tel, these blue dots 252 00:12:01,240 --> 00:12:02,720 here being crystalline silicon. 253 00:12:02,720 --> 00:12:05,390 And the prices remained fairly steady. 254 00:12:05,390 --> 00:12:10,320 And then in, say, 2008 to 2011, prices 255 00:12:10,320 --> 00:12:12,100 have dropped precipitously. 256 00:12:12,100 --> 00:12:15,960 The 2011 numbers here are at or slightly below $1. 257 00:12:15,960 --> 00:12:18,520 So you can see, for somebody who is 258 00:12:18,520 --> 00:12:20,890 being driven by market conditions, 259 00:12:20,890 --> 00:12:22,580 this is extremely unsettling. 260 00:12:22,580 --> 00:12:27,989 And it causes capital to fluctuate back and forth. 261 00:12:27,989 --> 00:12:29,780 Now the same thing-- what is happening here 262 00:12:29,780 --> 00:12:31,390 in the solar modules, the inverse 263 00:12:31,390 --> 00:12:33,660 is happening in the installations. 264 00:12:33,660 --> 00:12:36,620 So the installers are seeing the price of their modules go down 265 00:12:36,620 --> 00:12:38,590 and the price of their installations 266 00:12:38,590 --> 00:12:40,874 declining steadily, but more or less 267 00:12:40,874 --> 00:12:43,290 staying fixed because of the investment tax credit staying 268 00:12:43,290 --> 00:12:46,382 fixed and so forth in the US, and utility prices rising. 269 00:12:46,382 --> 00:12:48,590 And so the installers are saying, hey, this is great. 270 00:12:48,590 --> 00:12:50,520 So their profit margins are really big. 271 00:12:50,520 --> 00:12:52,950 Warning to anybody trying to get into the sector right 272 00:12:52,950 --> 00:12:55,422 now-- think carefully about these market dynamics 273 00:12:55,422 --> 00:12:56,880 in the United States and in Europe, 274 00:12:56,880 --> 00:12:58,990 and how that will affect your business. 275 00:12:58,990 --> 00:13:01,550 If you're trying to get into the solar absorber, 276 00:13:01,550 --> 00:13:03,212 as in module, manufacturing business, 277 00:13:03,212 --> 00:13:05,670 or if you're trying to get into the equipment manufacturing 278 00:13:05,670 --> 00:13:08,480 business, or in the installation side in the grid, 279 00:13:08,480 --> 00:13:10,530 think about how these market dynamics are 280 00:13:10,530 --> 00:13:14,069 going to affect your business as it grows and tries to gain 281 00:13:14,069 --> 00:13:15,360 a foothold in this environment. 282 00:13:15,360 --> 00:13:16,985 It's a great time to be a new installer 283 00:13:16,985 --> 00:13:19,089 company, but in three or four years, when we're 284 00:13:19,089 --> 00:13:20,630 in an under-supplied condition again, 285 00:13:20,630 --> 00:13:24,340 and prices might even go up, what then? 286 00:13:24,340 --> 00:13:26,700 So think about these topics. 287 00:13:29,490 --> 00:13:33,000 We're talking about renewable energy R&D and the technology 288 00:13:33,000 --> 00:13:33,500 pipeline. 289 00:13:33,500 --> 00:13:35,860 So it's important to recognize the path 290 00:13:35,860 --> 00:13:37,320 that many of these new technologies 291 00:13:37,320 --> 00:13:41,380 take to go from concept or idea into full-scale manufacturing. 292 00:13:41,380 --> 00:13:46,230 So in general, this is the path followed in the United States. 293 00:13:46,230 --> 00:13:49,690 And we have technology research happening in places like this, 294 00:13:49,690 --> 00:13:51,140 at MIT. 295 00:13:51,140 --> 00:13:54,890 The roll-out, in other words, the installations 296 00:13:54,890 --> 00:13:58,490 and large-scale manufacturing on the other side. 297 00:13:58,490 --> 00:14:04,000 And there are many funding sources available for that-- 298 00:14:04,000 --> 00:14:06,750 not so much this last one here in the United States, 299 00:14:06,750 --> 00:14:09,120 but maybe in Australia or Europe, 300 00:14:09,120 --> 00:14:11,354 in select regions of the US. 301 00:14:11,354 --> 00:14:13,520 This technology development right here in the middle 302 00:14:13,520 --> 00:14:15,690 has been what is referred to as the Valley of Death. 303 00:14:15,690 --> 00:14:18,190 Does anybody know why-- what that means, Valley of Death? 304 00:14:18,190 --> 00:14:19,812 What is it? 305 00:14:19,812 --> 00:14:22,020 AUDIENCE: A period when it's difficult to get funding 306 00:14:22,020 --> 00:14:23,302 from any source. 307 00:14:23,302 --> 00:14:25,760 PROFESSOR: It's a period when it's difficult to get funding 308 00:14:25,760 --> 00:14:26,426 from any source. 309 00:14:26,426 --> 00:14:29,060 Now imagine you're a group of postdocs and students 310 00:14:29,060 --> 00:14:29,760 in the lab. 311 00:14:29,760 --> 00:14:32,040 You come up with a new, fancy technology, 312 00:14:32,040 --> 00:14:34,000 and you can't quite get the venture 313 00:14:34,000 --> 00:14:36,160 capital or private equity necessary to kick off 314 00:14:36,160 --> 00:14:38,370 your company. 315 00:14:38,370 --> 00:14:41,350 That would be one mini-valley of death. 316 00:14:41,350 --> 00:14:44,680 It's fairly avoided here in US. 317 00:14:44,680 --> 00:14:48,070 Good ideas have a tendency to get funded at that stage. 318 00:14:48,070 --> 00:14:50,174 But if you don't get funded, then the postdoc 319 00:14:50,174 --> 00:14:51,840 gets another position over here, becomes 320 00:14:51,840 --> 00:14:53,890 a professor at university across the country. 321 00:14:53,890 --> 00:14:56,640 The student goes off and does a postdoc in another place. 322 00:14:56,640 --> 00:14:59,665 And all of a sudden, three, five, six months later, 323 00:14:59,665 --> 00:15:01,040 the venture capital swirls around 324 00:15:01,040 --> 00:15:02,748 to the professor, who's still here at MIT 325 00:15:02,748 --> 00:15:05,321 and kind of has a hollowed-out group at this point, and says, 326 00:15:05,321 --> 00:15:06,320 wow that's a great idea. 327 00:15:06,320 --> 00:15:07,361 I'd like to invest in it. 328 00:15:07,361 --> 00:15:09,290 Where's your team? 329 00:15:09,290 --> 00:15:10,390 Yeah, poof. 330 00:15:10,390 --> 00:15:14,180 So that's one possible mechanism wherein technologies 331 00:15:14,180 --> 00:15:16,300 don't make it forward. 332 00:15:16,300 --> 00:15:19,100 And so keeping the team together is extremely important. 333 00:15:19,100 --> 00:15:20,730 The second Valley of Death can happen 334 00:15:20,730 --> 00:15:22,980 right between technology development and manufacturing 335 00:15:22,980 --> 00:15:24,880 and scale-up. 336 00:15:24,880 --> 00:15:26,726 We've seen some of these. 337 00:15:26,726 --> 00:15:28,600 We've seen pictures of some of the factories. 338 00:15:28,600 --> 00:15:31,150 They're around here in the countryside. 339 00:15:31,150 --> 00:15:35,430 These are oftentimes $10s, more likely $100s 340 00:15:35,430 --> 00:15:37,720 of millions investments. 341 00:15:37,720 --> 00:15:39,990 And venture capital funds tend to be 342 00:15:39,990 --> 00:15:42,420 on the order of $100s of millions to $1 billion. 343 00:15:42,420 --> 00:15:46,986 They don't like investing in large asset goods. 344 00:15:46,986 --> 00:15:48,610 They don't like investing in factories. 345 00:15:48,610 --> 00:15:50,568 They'd rather invest in a small group of people 346 00:15:50,568 --> 00:15:54,490 with the computers set in their garage, 347 00:15:54,490 --> 00:15:57,460 maybe put in a couple $10s of thousands 348 00:15:57,460 --> 00:15:59,374 and turn around, profit of a few million. 349 00:15:59,374 --> 00:16:00,790 That's the type of investment that 350 00:16:00,790 --> 00:16:02,940 makes a lot of sense for venture capital. 351 00:16:02,940 --> 00:16:05,540 When you start investing in fixed goods-- in brick 352 00:16:05,540 --> 00:16:09,470 and mortar-- you need other forms of financing. 353 00:16:09,470 --> 00:16:11,180 And some countries around the world 354 00:16:11,180 --> 00:16:13,910 have been very adept in providing this financing. 355 00:16:13,910 --> 00:16:15,660 China, in particular, has done a great job 356 00:16:15,660 --> 00:16:18,990 at making that type of financing available for companies 357 00:16:18,990 --> 00:16:21,180 that are small and looking to expand. 358 00:16:21,180 --> 00:16:23,430 But in the United States, it's very difficult 359 00:16:23,430 --> 00:16:27,720 to access these essentially money from banks, especially, 360 00:16:27,720 --> 00:16:29,200 for new technology. 361 00:16:29,200 --> 00:16:31,595 The bank will say, well, why am I investing in you? 362 00:16:31,595 --> 00:16:32,970 I could be investing in something 363 00:16:32,970 --> 00:16:36,080 that's much more sure of a bet-- today's technology, instead of 364 00:16:36,080 --> 00:16:37,932 investing in something risky. 365 00:16:37,932 --> 00:16:40,390 So the government has stepped in with a variety of programs 366 00:16:40,390 --> 00:16:43,730 to try to ease that inefficiency in the market. 367 00:16:43,730 --> 00:16:45,890 And so one of the means are loans-- 368 00:16:45,890 --> 00:16:48,884 loan guarantee program, for example, is one mechanism. 369 00:16:48,884 --> 00:16:50,425 There is a [? sunPATH ?] program that 370 00:16:50,425 --> 00:16:52,320 is coming down the pipeline as well. 371 00:16:52,320 --> 00:16:54,480 So we have venture capital and private equity, 372 00:16:54,480 --> 00:16:56,520 but that can only take you so far, typically. 373 00:16:56,520 --> 00:16:59,420 They invest a few $10s of millions, 374 00:16:59,420 --> 00:17:02,480 in a few rare cases, a few $100s of millions. 375 00:17:02,480 --> 00:17:05,630 But then they reach the end of their credit line, if you will. 376 00:17:05,630 --> 00:17:08,030 They exhaust their ability to invest. 377 00:17:08,030 --> 00:17:10,599 And what's needed to expand manufacturing 378 00:17:10,599 --> 00:17:12,770 is typically on the order of $100s of millions 379 00:17:12,770 --> 00:17:16,720 to billions of dollars to reach 100s of megawatts-- gigawatt 380 00:17:16,720 --> 00:17:17,439 scale. 381 00:17:17,439 --> 00:17:19,980 So that's the second big Valley of Death in the United States 382 00:17:19,980 --> 00:17:21,000 that exists. 383 00:17:21,000 --> 00:17:25,730 And the way some companies are transitioning 384 00:17:25,730 --> 00:17:28,400 across that valley-- they find a variety of means. 385 00:17:28,400 --> 00:17:29,610 Some go overseas. 386 00:17:29,610 --> 00:17:31,925 They say, hey, the Central Bank of China 387 00:17:31,925 --> 00:17:33,300 is willing to invest money in me. 388 00:17:33,300 --> 00:17:34,190 I go there. 389 00:17:34,190 --> 00:17:35,650 I set up manufacturing. 390 00:17:35,650 --> 00:17:39,520 Other companies, small companies, might say, well, GE, 391 00:17:39,520 --> 00:17:42,010 you have a big finance group within your big umbrella 392 00:17:42,010 --> 00:17:42,710 company. 393 00:17:42,710 --> 00:17:43,757 Why don't you buy us? 394 00:17:43,757 --> 00:17:45,340 And then we can gain access to capital 395 00:17:45,340 --> 00:17:48,330 and expand our manufacturing plant. 396 00:17:48,330 --> 00:17:53,050 Others form partnerships with banks. 397 00:17:53,050 --> 00:17:57,149 It's a mixed set of business strategies. 398 00:17:57,149 --> 00:17:59,690 But if you look around at some of the start-up companies that 399 00:17:59,690 --> 00:18:03,830 are now entering small-scale production, 400 00:18:03,830 --> 00:18:06,330 this is where the business side of creativity comes in play. 401 00:18:06,330 --> 00:18:08,746 And that's where you really need a good business developer 402 00:18:08,746 --> 00:18:10,480 at hand to arrange those deals for you. 403 00:18:13,390 --> 00:18:18,290 In terms of where the money is, in terms of clean tech 404 00:18:18,290 --> 00:18:23,170 in general, these are some figures in terms of 2009 data. 405 00:18:23,170 --> 00:18:27,010 I'm sure we can get some more up-to-date figures as well. 406 00:18:27,010 --> 00:18:28,920 And in terms of growth and investment, 407 00:18:28,920 --> 00:18:32,330 we see some countries that might be rather surprising in terms 408 00:18:32,330 --> 00:18:35,570 of the five-year growth of investment in renewables. 409 00:18:35,570 --> 00:18:37,900 Obviously, if you start from a very small number, 410 00:18:37,900 --> 00:18:40,370 you can grow pretty quick in terms of percents. 411 00:18:40,370 --> 00:18:42,950 But it's still interesting to see the development 412 00:18:42,950 --> 00:18:46,670 of some countries here. 413 00:18:46,670 --> 00:18:48,800 This is sobering. 414 00:18:48,800 --> 00:18:53,440 So this is the US government R&D by budget function '55 415 00:18:53,440 --> 00:18:57,662 to '97, the most comprehensive data set I could find. 416 00:18:57,662 --> 00:18:59,120 I'm sure that there are graphs that 417 00:18:59,120 --> 00:19:00,286 extend this into the future. 418 00:19:00,286 --> 00:19:02,390 If you happen to have one, I'd be happy to see it. 419 00:19:02,390 --> 00:19:04,600 But the basic story of this graph 420 00:19:04,600 --> 00:19:08,390 is the following-- the lion's share of R&D 421 00:19:08,390 --> 00:19:11,300 is going to the Defense Department, 422 00:19:11,300 --> 00:19:12,890 so the Army Research Office, Office 423 00:19:12,890 --> 00:19:17,050 of Naval Research, DARPA-- that's the advanced research 424 00:19:17,050 --> 00:19:20,960 program-- a variety of night vision labs, and so forth. 425 00:19:20,960 --> 00:19:24,976 These are a variety of defense R&D. And there is trickle down. 426 00:19:24,976 --> 00:19:27,350 There's some trickle down of technologies being developed 427 00:19:27,350 --> 00:19:31,870 in defence into civilian uses. 428 00:19:31,870 --> 00:19:33,730 And so I don't want to point to this 429 00:19:33,730 --> 00:19:35,730 and say it's a bogey man-- by no means. 430 00:19:35,730 --> 00:19:37,890 But it does indicate national priorities 431 00:19:37,890 --> 00:19:39,470 in terms of R&D research. 432 00:19:39,470 --> 00:19:41,110 The other big one is health. 433 00:19:41,110 --> 00:19:43,570 So NIH, National Institutes of Health-- 434 00:19:43,570 --> 00:19:45,040 that's growing and expanding. 435 00:19:45,040 --> 00:19:47,620 It's very easy to go to congresspeople 436 00:19:47,620 --> 00:19:50,792 and senators who might be advancing in their years, 437 00:19:50,792 --> 00:19:53,000 and say, hey, we need money for Alzheimer's research, 438 00:19:53,000 --> 00:19:56,130 or we need money for cancer research. 439 00:19:56,130 --> 00:19:57,010 It resonates. 440 00:19:57,010 --> 00:19:59,770 It's easy to convince people of that. 441 00:19:59,770 --> 00:20:04,010 Energy is small, traditionally. 442 00:20:04,010 --> 00:20:08,380 Let me dive forward into this going a little bit further. 443 00:20:08,380 --> 00:20:12,920 This is non-defense R&D funding pushed out to 2004. 444 00:20:12,920 --> 00:20:15,510 Again, you can see health really driving things. 445 00:20:15,510 --> 00:20:20,070 Energy, traditionally-- in the Jimmy Carter years right 446 00:20:20,070 --> 00:20:22,270 around here, it expanded a bit. 447 00:20:22,270 --> 00:20:23,437 This was a renewables burst. 448 00:20:23,437 --> 00:20:25,645 That's where the National Renewable Energy Laboratory 449 00:20:25,645 --> 00:20:28,090 was founded, originally called the Solar Energy Research 450 00:20:28,090 --> 00:20:30,080 Institute or SERI. 451 00:20:30,080 --> 00:20:33,530 And then got crimped down again and really experienced 452 00:20:33,530 --> 00:20:38,660 a bit of a pinch in the US right when solar was really 453 00:20:38,660 --> 00:20:40,600 beginning to take off in Japan. 454 00:20:40,600 --> 00:20:43,750 So this is when solar cell production by Sharp 455 00:20:43,750 --> 00:20:48,139 was really beginning to climb in the late '90s and early 2000s. 456 00:20:48,139 --> 00:20:49,680 And then, of course, Germany followed 457 00:20:49,680 --> 00:20:51,140 and the rest of the world. 458 00:20:51,140 --> 00:20:54,140 So we've been a little bit behind, step by step. 459 00:20:54,140 --> 00:20:58,420 And the interesting thing that many people have looked into 460 00:20:58,420 --> 00:21:02,140 is, what sort of correlation exists between US government 461 00:21:02,140 --> 00:21:04,994 R&D spending and output of new ideas. 462 00:21:04,994 --> 00:21:07,160 And the output of new ideas, the metric that they're 463 00:21:07,160 --> 00:21:09,580 using for this are patents. 464 00:21:09,580 --> 00:21:11,346 So you could dispute that. 465 00:21:11,346 --> 00:21:13,595 You could say, well, patents aren't the best indicator 466 00:21:13,595 --> 00:21:14,410 of new ideas. 467 00:21:14,410 --> 00:21:16,197 Sometimes new ideas are diffuse benefits, 468 00:21:16,197 --> 00:21:18,280 and they help all industries, but you can't really 469 00:21:18,280 --> 00:21:19,630 patent the idea. 470 00:21:19,630 --> 00:21:23,530 Fine, but this is, I think, the most quantitative comparison 471 00:21:23,530 --> 00:21:25,310 that folks have performed. 472 00:21:25,310 --> 00:21:27,816 This is an interesting study where 473 00:21:27,816 --> 00:21:29,690 folks looked at the number of patents granted 474 00:21:29,690 --> 00:21:34,440 and energy R&D funding and plotted it 475 00:21:34,440 --> 00:21:37,040 as a function of year, and saw a strong correlation 476 00:21:37,040 --> 00:21:41,360 between uptick of national priority and government 477 00:21:41,360 --> 00:21:44,260 funding and innovation. 478 00:21:44,260 --> 00:21:46,350 So this was the first wave of innovation 479 00:21:46,350 --> 00:21:50,750 in energy, and in PV specifically, 480 00:21:50,750 --> 00:21:53,600 in the late 1970s when the OPEC oil crisis hit in the United 481 00:21:53,600 --> 00:21:56,000 States and there was a big push for renewable energy 482 00:21:56,000 --> 00:21:56,500 development. 483 00:21:56,500 --> 00:21:57,984 Yes, question. 484 00:21:57,984 --> 00:22:00,140 AUDIENCE: Just patents in energy or-- 485 00:22:00,140 --> 00:22:03,620 PROFESSOR: Yeah, exactly, so these are pushed down. 486 00:22:03,620 --> 00:22:07,390 And we can dive into patents just for PV, 487 00:22:07,390 --> 00:22:08,700 which is this graph right here. 488 00:22:08,700 --> 00:22:11,270 And this is an updated version of that earlier 489 00:22:11,270 --> 00:22:13,560 study by Dan Kammen. 490 00:22:13,560 --> 00:22:16,550 This earlier stuff study by Robert Margolis. 491 00:22:16,550 --> 00:22:19,460 Robert Margolis is now at NREL, National Renewable Energy 492 00:22:19,460 --> 00:22:23,110 Laboratory, and he works on market assessment there. 493 00:22:23,110 --> 00:22:25,890 Gregory Nemet was a student at the time 494 00:22:25,890 --> 00:22:29,140 with Dan Kammen, produced this wonderful continuation 495 00:22:29,140 --> 00:22:33,140 of the study published a few years later. 496 00:22:33,140 --> 00:22:39,270 And again, broke it down into specific technologies, 497 00:22:39,270 --> 00:22:41,770 including photovoltaics, and saw, again, 498 00:22:41,770 --> 00:22:43,910 some correlation between the number of patents 499 00:22:43,910 --> 00:22:49,150 and public R&D. In the mid 2000s, this really-- the number 500 00:22:49,150 --> 00:22:52,270 of patents and started to grow as startup companies got 501 00:22:52,270 --> 00:22:53,070 into the fray. 502 00:22:53,070 --> 00:22:55,770 Remember when prices stayed flat and costs continued 503 00:22:55,770 --> 00:22:58,620 coming down, and those margins increased, a bunch of players 504 00:22:58,620 --> 00:23:01,094 got into that space and said, we could make money. 505 00:23:01,094 --> 00:23:02,510 So a number of patents were filed. 506 00:23:02,510 --> 00:23:04,820 A number of startup companies got off the ground. 507 00:23:04,820 --> 00:23:06,350 Again, funding-patent correlation 508 00:23:06,350 --> 00:23:08,510 for energy in general-- I provide you the data. 509 00:23:08,510 --> 00:23:10,301 You can dive into it in more detail if you, 510 00:23:10,301 --> 00:23:14,930 not only PV but other technologies-- interesting. 511 00:23:14,930 --> 00:23:16,650 Global trends in venture investing-- 512 00:23:16,650 --> 00:23:18,360 since venture investing is important 513 00:23:18,360 --> 00:23:21,344 for you specifically, it's one of the pathways 514 00:23:21,344 --> 00:23:22,760 to get ideas out of the university 515 00:23:22,760 --> 00:23:25,460 and into a startup company. 516 00:23:25,460 --> 00:23:27,730 We talked about this so far. 517 00:23:27,730 --> 00:23:33,400 And OK, so we're diving a little bit deeper here. 518 00:23:33,400 --> 00:23:37,610 This is for the venture capital private equity financing 519 00:23:37,610 --> 00:23:40,260 by sector in 2009, looking specifically 520 00:23:40,260 --> 00:23:42,560 at solar in the United States, comprised 521 00:23:42,560 --> 00:23:43,940 a large fraction of it. 522 00:23:43,940 --> 00:23:46,330 Solar continues to comprise a large fraction of venture 523 00:23:46,330 --> 00:23:48,890 investment, surprisingly, despite the market conditions 524 00:23:48,890 --> 00:23:49,910 right now. 525 00:23:49,910 --> 00:23:52,880 Because folks, especially in the VC community, 526 00:23:52,880 --> 00:23:55,870 are looking at today's market as an opportunity. 527 00:23:55,870 --> 00:23:58,630 They think that if enough people are scared out of the market, 528 00:23:58,630 --> 00:24:00,630 that they'll be able to remain there and pick up 529 00:24:00,630 --> 00:24:01,464 the good ideas. 530 00:24:01,464 --> 00:24:04,130 And if they're only a little bit smarter than their competition, 531 00:24:04,130 --> 00:24:06,380 they can pick up the right companies 532 00:24:06,380 --> 00:24:08,415 and the right sections of the value chain-- 533 00:24:08,415 --> 00:24:10,540 maybe an equipment manufacturer, maybe an installer 534 00:24:10,540 --> 00:24:13,470 with a new idea-- and avoid some of the pain that's 535 00:24:13,470 --> 00:24:16,010 going on right now in wafer fabrication and cell 536 00:24:16,010 --> 00:24:18,860 fabrication upstream. 537 00:24:18,860 --> 00:24:23,610 This was the VC investment in solar right 538 00:24:23,610 --> 00:24:28,220 here in those boom years that I mentioned. 539 00:24:28,220 --> 00:24:33,080 So during the years when prices started to plateau because 540 00:24:33,080 --> 00:24:35,940 of the silicon feedstock shortage in the mid 2000s, 541 00:24:35,940 --> 00:24:38,526 you saw this massive uptick of investment 542 00:24:38,526 --> 00:24:39,650 in venture capital funding. 543 00:24:39,650 --> 00:24:41,960 That scale is in millions of dollars. 544 00:24:41,960 --> 00:24:46,750 You're exceeding $1 billion of VC funding in solar in 2007. 545 00:24:46,750 --> 00:24:49,670 And that trend continued in 2008. 546 00:24:49,670 --> 00:24:52,150 So still to this day, we're seeing 547 00:24:52,150 --> 00:24:57,085 $100s of millions plowed into solar by venture capital funds. 548 00:24:57,085 --> 00:24:59,300 It's interesting, really interesting. 549 00:25:02,384 --> 00:25:04,550 The number of startup companies in the United States 550 00:25:04,550 --> 00:25:06,530 has proliferated. 551 00:25:06,530 --> 00:25:08,800 There are, I think, somewhere on the order 552 00:25:08,800 --> 00:25:12,730 of over 200 solar startup companies worldwide. 553 00:25:12,730 --> 00:25:15,260 There are a few that have failed. 554 00:25:15,260 --> 00:25:20,230 So Wakonda, Solasta, SV Solar, Synergen, Optisolar, Solyndra, 555 00:25:20,230 --> 00:25:23,906 SpectraWatt, Evergreen Solar-- these are all I'd 556 00:25:23,906 --> 00:25:25,530 say failed companies, by the definition 557 00:25:25,530 --> 00:25:26,850 of failure-- bankruptcy. 558 00:25:26,850 --> 00:25:29,390 I mean, by that metric, so is United Airlines failed, 559 00:25:29,390 --> 00:25:30,830 and American Airlines failed. 560 00:25:30,830 --> 00:25:32,160 They're still around. 561 00:25:32,160 --> 00:25:35,410 They restructured under bankruptcy protection. 562 00:25:35,410 --> 00:25:37,480 Some have closed their doors entirely. 563 00:25:37,480 --> 00:25:40,870 Other ones have restructured, or are in the process 564 00:25:40,870 --> 00:25:42,520 of restructuring. 565 00:25:42,520 --> 00:25:45,700 Why each of these companies have failed? 566 00:25:45,700 --> 00:25:47,100 Different reasons. 567 00:25:47,100 --> 00:25:51,500 You can't claim that each one had the exact same trajectory. 568 00:25:51,500 --> 00:25:54,490 But you can definitely point to certain market conditions 569 00:25:54,490 --> 00:25:58,100 as influencing or precipitating the failure. 570 00:25:58,100 --> 00:25:59,930 Let me be more specific. 571 00:25:59,930 --> 00:26:05,820 These companies right here are all wafer or thin-film device 572 00:26:05,820 --> 00:26:07,450 and module manufacturers. 573 00:26:07,450 --> 00:26:09,751 They're the upstream components. 574 00:26:09,751 --> 00:26:11,250 These aren't installation companies. 575 00:26:11,250 --> 00:26:12,990 These aren't installers failing. 576 00:26:12,990 --> 00:26:16,040 These are upstream manufacturers failing-- 577 00:26:16,040 --> 00:26:19,220 and a few high-profile ones at that. 578 00:26:19,220 --> 00:26:21,820 So that was precipitated by the recent market conditions-- 579 00:26:21,820 --> 00:26:24,980 the capital crunch. 580 00:26:24,980 --> 00:26:28,030 It begins with some of the companies, 581 00:26:28,030 --> 00:26:31,470 say OptiSolar in 2009, I believe. 582 00:26:31,470 --> 00:26:34,350 They were a company that was producing amorphous silicon 583 00:26:34,350 --> 00:26:34,860 modules. 584 00:26:34,860 --> 00:26:36,359 And as we studied amorphous silicon, 585 00:26:36,359 --> 00:26:39,482 the efficiencies are low, right? 586 00:26:39,482 --> 00:26:41,190 The amorphous silicon module efficiency's 587 00:26:41,190 --> 00:26:42,940 on the order of 6%. 588 00:26:42,940 --> 00:26:44,980 And they said, well, never mind that our cost 589 00:26:44,980 --> 00:26:46,240 structure's a little high. 590 00:26:46,240 --> 00:26:48,480 We're going to scale up like nobody's business. 591 00:26:48,480 --> 00:26:50,710 We're going to ramp up manufacturing capacity 592 00:26:50,710 --> 00:26:53,920 to over a gigawatt, and do it really, really quick. 593 00:26:53,920 --> 00:26:55,770 And just by sheer scale alone, we'll 594 00:26:55,770 --> 00:26:58,790 be able to drive down costs and get us to the point 595 00:26:58,790 --> 00:27:01,570 where we're competitive on a cents per kilowatt hour basis 596 00:27:01,570 --> 00:27:03,290 with crystalline silicon. 597 00:27:03,290 --> 00:27:05,500 There's a great business plan in theory. 598 00:27:05,500 --> 00:27:08,650 But what happened to them was, when they went out 599 00:27:08,650 --> 00:27:11,280 to try to raise money, they couldn't find any right 600 00:27:11,280 --> 00:27:11,835 around 2008. 601 00:27:11,835 --> 00:27:14,337 It was the beginning of the financial crisis. 602 00:27:14,337 --> 00:27:15,920 So they had the business plan in mind. 603 00:27:15,920 --> 00:27:17,220 And on paper, it looked great. 604 00:27:17,220 --> 00:27:19,900 But when it came time to raise the funding to grow, 605 00:27:19,900 --> 00:27:24,020 they didn't have it, even though they had a guaranteed 606 00:27:24,020 --> 00:27:27,635 customer-- PG&E. That was the Pacific Gas 607 00:27:27,635 --> 00:27:29,459 and Electric, the California utility. 608 00:27:29,459 --> 00:27:31,000 They just could not get the financing 609 00:27:31,000 --> 00:27:34,170 to expand their factory. 610 00:27:34,170 --> 00:27:36,040 So what ended up happening was they folded, 611 00:27:36,040 --> 00:27:42,240 sold the supply stream, if you will, to First Solar, 612 00:27:42,240 --> 00:27:44,220 who picked it up for pennies on the dollar. 613 00:27:44,220 --> 00:27:50,190 And First Solar modules ended up going in the PG&E field 614 00:27:50,190 --> 00:27:52,970 installations, instead of the OptiSolar amorphous silicon. 615 00:27:52,970 --> 00:27:55,910 Each company has its own story, and have 616 00:27:55,910 --> 00:27:58,470 failed for different reasons. 617 00:27:58,470 --> 00:28:01,520 What's clear is also, there are more failed start-ups coming. 618 00:28:01,520 --> 00:28:04,050 This is a time of a financial pain for them. 619 00:28:04,050 --> 00:28:07,370 The prices are very, very low. 620 00:28:07,370 --> 00:28:12,120 And there are a few people who are tracking these startup 621 00:28:12,120 --> 00:28:12,677 companies. 622 00:28:12,677 --> 00:28:14,510 I would say Eric Wesoff from Greentech Media 623 00:28:14,510 --> 00:28:16,290 is probably one of the most active 624 00:28:16,290 --> 00:28:19,680 in publishing his insights. 625 00:28:19,680 --> 00:28:22,600 That said, there are many promising companies among here, 626 00:28:22,600 --> 00:28:26,090 and some of these, hopefully, will become household names 627 00:28:26,090 --> 00:28:31,440 for good reasons in the future, as they have an innovation that 628 00:28:31,440 --> 00:28:34,269 significantly drives down cost over their competitors. 629 00:28:34,269 --> 00:28:36,060 We're going to get to that in a few slides. 630 00:28:36,060 --> 00:28:38,920 We're going to talk about how to evaluate a company. 631 00:28:38,920 --> 00:28:40,850 Because it's going to be important for you-- 632 00:28:40,850 --> 00:28:42,600 near term because you might want a job, 633 00:28:42,600 --> 00:28:45,240 or you might want to form your own company, 634 00:28:45,240 --> 00:28:48,620 long term because you might become an investor in PV. 635 00:28:48,620 --> 00:28:51,190 And you have to figure out what types of companies make sense 636 00:28:51,190 --> 00:28:53,660 to invest in, and which don't. 637 00:28:53,660 --> 00:28:56,160 In terms of startup companies in the New England area, 638 00:28:56,160 --> 00:29:01,390 we often think of ourselves as kind of maybe second fiddle 639 00:29:01,390 --> 00:29:02,590 to Silicon Valley. 640 00:29:02,590 --> 00:29:04,310 But there's a lot going on in the region, 641 00:29:04,310 --> 00:29:05,910 and a lot of good work. 642 00:29:05,910 --> 00:29:08,750 So if you go to cleanenergycouncil.org cluster 643 00:29:08,750 --> 00:29:11,950 map, you'll see a map of the local clean tech 644 00:29:11,950 --> 00:29:13,332 companies in the region. 645 00:29:13,332 --> 00:29:14,956 I'll leave this slide up there, since I 646 00:29:14,956 --> 00:29:17,850 see a few of you jotting notes. 647 00:29:17,850 --> 00:29:20,700 It's a useful map, and you can select by sector 648 00:29:20,700 --> 00:29:24,510 as well, if you look at solar, look at biofuels, and so forth. 649 00:29:28,980 --> 00:29:31,770 Trends in renewable energy manufacturing-- this slide 650 00:29:31,770 --> 00:29:34,400 is a little bit outdated, but it's the Greentech Media 651 00:29:34,400 --> 00:29:38,610 research map of manufacturing in the United States 652 00:29:38,610 --> 00:29:41,210 of the different solar technologies-- 653 00:29:41,210 --> 00:29:42,310 again, a bit outdated. 654 00:29:42,310 --> 00:29:44,680 There are a few companies that have changed. 655 00:29:44,680 --> 00:29:48,350 But it gives you a sense of what the distribution is. 656 00:29:48,350 --> 00:29:50,305 What are the latest trends of manufacturing 657 00:29:50,305 --> 00:29:51,180 in the United States? 658 00:29:51,180 --> 00:29:52,045 The latest trends of manufacturing, 659 00:29:52,045 --> 00:29:54,050 if I were to point to a few of them-- 660 00:29:54,050 --> 00:29:57,770 Mississippi has emerged as a big manufacturing state. 661 00:29:57,770 --> 00:29:58,270 Why? 662 00:30:01,150 --> 00:30:03,560 First off, who's from the Southeast here? 663 00:30:03,560 --> 00:30:04,780 Show of hands-- one, two. 664 00:30:04,780 --> 00:30:09,270 All right, what do you have in this region right around here 665 00:30:09,270 --> 00:30:13,530 that the rest of the country doesn't have? 666 00:30:13,530 --> 00:30:15,491 AUDIENCE: [INAUDIBLE]. 667 00:30:15,491 --> 00:30:17,490 PROFESSOR: Close, coal-- you have a lot of coal. 668 00:30:17,490 --> 00:30:20,420 You have nuclear as well. 669 00:30:20,420 --> 00:30:22,950 The TVA-- does anybody know what the TVA is? 670 00:30:22,950 --> 00:30:24,690 Tennessee Valley Authority-- that's 671 00:30:24,690 --> 00:30:29,760 a big public works project, in fact, that got started. 672 00:30:29,760 --> 00:30:33,550 It provides low-cost electricity to this entire region 673 00:30:33,550 --> 00:30:35,866 right up here, including northern Mississippi, 674 00:30:35,866 --> 00:30:37,490 including some of the northern portions 675 00:30:37,490 --> 00:30:40,920 of the far Southeast states. 676 00:30:40,920 --> 00:30:45,340 Bottom line-- you have depressed wages, by and large, 677 00:30:45,340 --> 00:30:48,720 in these rural communities, and low-cost electricity-- which 678 00:30:48,720 --> 00:30:51,180 if labor and utilities matter-- which 679 00:30:51,180 --> 00:30:54,940 it does in solar manufacturing-- it's ripe for manufacturing. 680 00:30:54,940 --> 00:30:59,040 And you have many startup companies-- Stion, Calisolar, 681 00:30:59,040 --> 00:31:02,000 Twin Creeks, and others that have moved into the Mississippi 682 00:31:02,000 --> 00:31:07,910 region in very recent months for that reason. 683 00:31:07,910 --> 00:31:13,440 You have Suniva was based in Georgia, Atlanta. 684 00:31:13,440 --> 00:31:15,410 Ohio still continues to be. 685 00:31:15,410 --> 00:31:20,010 The Northwest as well-- cheap hydro, not exactly cheap wages, 686 00:31:20,010 --> 00:31:21,340 but cheap hydro. 687 00:31:21,340 --> 00:31:27,780 And the technologies do tend to stay closer to the places 688 00:31:27,780 --> 00:31:28,900 where they are born. 689 00:31:28,900 --> 00:31:30,800 You can see in the San Francisco Bay Area, 690 00:31:30,800 --> 00:31:34,020 there's a propensity to form startup companies 691 00:31:34,020 --> 00:31:37,960 in new technologies as well as in the Massachusetts area. 692 00:31:37,960 --> 00:31:42,310 So these are focusing on some of the medium-scale manufacturers. 693 00:31:42,310 --> 00:31:44,670 In terms of manufacturing support, 694 00:31:44,670 --> 00:31:46,450 this is what local state governments 695 00:31:46,450 --> 00:31:49,930 are doing to help form new companies in the United States. 696 00:31:49,930 --> 00:31:52,676 You have, as well, a variety of mechanisms-- grants, loans, 697 00:31:52,676 --> 00:31:54,675 tax credits, and so forth for new factories that 698 00:31:54,675 --> 00:31:56,280 are trying to start up. 699 00:31:56,280 --> 00:32:00,020 So keep that in mind if you're going for it. 700 00:32:00,020 --> 00:32:07,350 And market incentives-- in terms of the three-- Germany, US, 701 00:32:07,350 --> 00:32:11,660 and China-- you also have to consider Korea, Japan, India, 702 00:32:11,660 --> 00:32:13,930 Brazil, other countries as well in this mix, 703 00:32:13,930 --> 00:32:15,800 if you really want a global perspective. 704 00:32:15,800 --> 00:32:17,670 But this dumbs it down to three. 705 00:32:17,670 --> 00:32:20,160 In terms of what incentives are available 706 00:32:20,160 --> 00:32:23,854 for different countries, there is 707 00:32:23,854 --> 00:32:25,270 a plethora of different incentives 708 00:32:25,270 --> 00:32:28,750 which can help the market pull. 709 00:32:28,750 --> 00:32:31,970 OK, so we go back and have a clearer picture 710 00:32:31,970 --> 00:32:35,620 of what's happening, at least in the US with its investment-- 711 00:32:35,620 --> 00:32:38,340 the VC investments as well as manufacturing, 712 00:32:38,340 --> 00:32:40,040 the next step on the state level. 713 00:32:40,040 --> 00:32:41,900 So we're collecting some data points there. 714 00:32:44,720 --> 00:32:46,020 This is interesting. 715 00:32:46,020 --> 00:32:50,274 If your money is from the bank, let's say, 716 00:32:50,274 --> 00:32:51,940 and you're paying an interest rate on it 717 00:32:51,940 --> 00:32:53,880 and you want to start a new factory, 718 00:32:53,880 --> 00:32:57,244 but then your local inspector comes back to you and says, 719 00:32:57,244 --> 00:32:59,660 well, we're going to have to delay by three months because 720 00:32:59,660 --> 00:33:01,210 of reason x, y and z. 721 00:33:01,210 --> 00:33:05,617 Now you're paying interest on the money, potentially. 722 00:33:05,617 --> 00:33:07,450 But you're not generating profits off of it. 723 00:33:07,450 --> 00:33:10,350 So delays cost money. 724 00:33:10,350 --> 00:33:11,700 Project delays cost money. 725 00:33:11,700 --> 00:33:13,260 It's also an opportunity cost. 726 00:33:13,260 --> 00:33:19,190 And so there was a study done a few years ago 727 00:33:19,190 --> 00:33:22,460 looking into why it is that renewable energy projects are 728 00:33:22,460 --> 00:33:23,270 delayed. 729 00:33:23,270 --> 00:33:26,600 And they came up with some interesting region-dependent 730 00:33:26,600 --> 00:33:28,850 conclusions as a result of this study-- 731 00:33:28,850 --> 00:33:32,090 whether it's transmission limitations-- Texas, there have 732 00:33:32,090 --> 00:33:35,810 even been cases in New York of transmission lines 733 00:33:35,810 --> 00:33:39,960 having limited capacity for renewables-- financing 734 00:33:39,960 --> 00:33:43,300 constraints, power purchase agreement weaknesses, 735 00:33:43,300 --> 00:33:46,640 permitting-- that could be a big slow down if that's not 736 00:33:46,640 --> 00:33:50,450 streamlined-- financing and permitting, 737 00:33:50,450 --> 00:33:53,180 and negligible local market. 738 00:33:53,180 --> 00:33:55,550 And again, we see the TVA popping up 739 00:33:55,550 --> 00:33:58,350 here as a negligible market for the renewables, 740 00:33:58,350 --> 00:34:00,830 because, well, you have cheap electricity. 741 00:34:00,830 --> 00:34:03,120 It's hard to compete against that. 742 00:34:03,120 --> 00:34:07,170 But in other states with more sun and more expensive 743 00:34:07,170 --> 00:34:09,690 electricity, there's the potential to install it. 744 00:34:09,690 --> 00:34:12,370 But you may be limited, in fact, by the grid. 745 00:34:12,370 --> 00:34:14,035 There's a big new study released, 746 00:34:14,035 --> 00:34:16,830 I believe it was this week, by the MIT Energy Initiative 747 00:34:16,830 --> 00:34:19,966 on the future of the grid. 748 00:34:19,966 --> 00:34:20,465 Yeah. 749 00:34:20,465 --> 00:34:21,860 AUDIENCE: Could you say again what PPA stands for? 750 00:34:21,860 --> 00:34:23,800 PROFESSOR: Power Purchase Agreement-- 751 00:34:23,800 --> 00:34:28,139 so that's the incentive mechanism whereby 752 00:34:28,139 --> 00:34:30,650 you can begin putting the solar panels on your roof, 753 00:34:30,650 --> 00:34:33,345 and the installer pays for the panels, 754 00:34:33,345 --> 00:34:35,719 gets the money from the bank, installs them on your roof. 755 00:34:35,719 --> 00:34:37,552 You sign the contract to pay a certain price 756 00:34:37,552 --> 00:34:42,870 for the electricity over the next 12, 15, 20 years. 757 00:34:42,870 --> 00:34:49,139 So global trends in R&D-- this is, again, 758 00:34:49,139 --> 00:34:53,100 a data dump of several sources, one from the NSF showing 759 00:34:53,100 --> 00:34:57,415 industry R&D expenditures, government, federal government, 760 00:34:57,415 --> 00:34:57,915 and other. 761 00:34:57,915 --> 00:34:59,360 You can see in the United States-- 762 00:34:59,360 --> 00:35:00,890 this is across all sectors here-- 763 00:35:00,890 --> 00:35:04,310 but really an inversion of the role of industry 764 00:35:04,310 --> 00:35:05,880 and federal government. 765 00:35:05,880 --> 00:35:09,630 So when you hear MIT, for instance, 766 00:35:09,630 --> 00:35:11,870 going after large companies and saying hey, 767 00:35:11,870 --> 00:35:14,620 you should invest in R&D here at MIT, 768 00:35:14,620 --> 00:35:17,750 this is one of the fundamental driving forces-- 769 00:35:17,750 --> 00:35:22,250 this inversion here, the decline of federal government spending. 770 00:35:22,250 --> 00:35:28,440 And as well, has resulted in MIT looking elsewhere 771 00:35:28,440 --> 00:35:30,170 for funding, not only industry. 772 00:35:32,700 --> 00:35:37,690 The greatest gains in R&D intensity in terms of the R&D 773 00:35:37,690 --> 00:35:39,590 expenditure have been in Asia. 774 00:35:39,590 --> 00:35:41,710 You can see on the right-hand side of this chart, 775 00:35:41,710 --> 00:35:45,470 China, Japan, and Korea increasing the expenditure 776 00:35:45,470 --> 00:35:48,130 from 1997 to 2007. 777 00:35:48,130 --> 00:35:50,900 This was right before the financial crisis hit. 778 00:35:50,900 --> 00:35:54,260 In the US, holding relatively constant as a percentage, 779 00:35:54,260 --> 00:35:55,175 as a share of GDP. 780 00:36:00,180 --> 00:36:03,210 Science and engineering interest in Asia-- 781 00:36:03,210 --> 00:36:05,410 this is science and engineering degrees 782 00:36:05,410 --> 00:36:07,570 as the percentage of new degrees. 783 00:36:07,570 --> 00:36:10,840 You can see over here we have Germany, Korea, and China. 784 00:36:10,840 --> 00:36:12,050 Germany makes a lot of sense. 785 00:36:12,050 --> 00:36:17,880 The Germans have about 44,000 engineering jobs in renewables 786 00:36:17,880 --> 00:36:20,020 right now that are unfilled. 787 00:36:20,020 --> 00:36:21,540 So they need people. 788 00:36:21,540 --> 00:36:26,640 They need people to go to Germany to get high-tech jobs. 789 00:36:26,640 --> 00:36:29,890 China is a bit more precarious, in the sense 790 00:36:29,890 --> 00:36:32,360 that the supply and demand is much more evenly matched. 791 00:36:32,360 --> 00:36:36,000 And the growth of both are increasing at steady rates. 792 00:36:36,000 --> 00:36:38,780 So if the growth of manufacturing and R&D 793 00:36:38,780 --> 00:36:40,980 does not continue to rise in China, 794 00:36:40,980 --> 00:36:43,270 there's going to be an oversupply of people. 795 00:36:43,270 --> 00:36:46,260 And that can lead to a number of problems. 796 00:36:46,260 --> 00:36:48,650 And so it's very important for China 797 00:36:48,650 --> 00:36:52,260 over the next several years to keep a strong, steady handle 798 00:36:52,260 --> 00:36:54,174 on this growth, to make growth manageable. 799 00:36:54,174 --> 00:36:55,340 It's a good problem to have. 800 00:36:55,340 --> 00:36:56,860 It's managing success. 801 00:36:56,860 --> 00:36:59,480 But it could also lead to some catastrophic consequences 802 00:36:59,480 --> 00:37:03,260 if the system gets out of balance. 803 00:37:03,260 --> 00:37:06,030 In the United States, well, I believe 804 00:37:06,030 --> 00:37:07,950 this data came from 2005. 805 00:37:07,950 --> 00:37:11,624 That was at the height of financial engineering. 806 00:37:11,624 --> 00:37:13,040 I would hope that this number here 807 00:37:13,040 --> 00:37:15,780 has increased a bit since the collapse 808 00:37:15,780 --> 00:37:18,920 of the financial markets, and a recognition 809 00:37:18,920 --> 00:37:22,020 that there are productive ways of investing 810 00:37:22,020 --> 00:37:25,850 one's talents and mental gifts. 811 00:37:25,850 --> 00:37:28,330 Global research output shifts towards Asia. 812 00:37:28,330 --> 00:37:32,110 This is global research R&D, share of science 813 00:37:32,110 --> 00:37:33,910 and engineering articles. 814 00:37:33,910 --> 00:37:38,040 So if you're starting from a small amount and growing, 815 00:37:38,040 --> 00:37:42,500 you're going to be, if you just look in a percentage basis, 816 00:37:42,500 --> 00:37:47,430 by necessity taking away a share of the pie from another entity. 817 00:37:47,430 --> 00:37:52,330 So as China grows, India grows, the rest of the world grows. 818 00:37:52,330 --> 00:37:56,450 The share of science and engineering articles in the US 819 00:37:56,450 --> 00:37:59,130 and in the EU begin to drop-- essentially 820 00:37:59,130 --> 00:38:02,090 the dominant players-- and in Japan as well. 821 00:38:02,090 --> 00:38:04,300 Now, that's not necessarily a bad thing 822 00:38:04,300 --> 00:38:07,720 if the quality of the articles is maintained, 823 00:38:07,720 --> 00:38:10,410 and the total number of articles continues to expand, 824 00:38:10,410 --> 00:38:15,120 and we have the capacity to keep up with the information. 825 00:38:15,120 --> 00:38:17,480 So there's a threshold, or a limit, to how much 826 00:38:17,480 --> 00:38:19,740 we can absorb-- how much new information 827 00:38:19,740 --> 00:38:21,550 we can absorb per unit time. 828 00:38:21,550 --> 00:38:23,925 So people are working on more sophisticated ways 829 00:38:23,925 --> 00:38:25,800 of gathering and assembling this information, 830 00:38:25,800 --> 00:38:27,760 especially using computers nowadays, 831 00:38:27,760 --> 00:38:31,560 that can help expedite R&D. So a number 832 00:38:31,560 --> 00:38:34,790 of trends happening on the scientific side-- you're 833 00:38:34,790 --> 00:38:37,620 involved with that. 834 00:38:37,620 --> 00:38:40,880 High-tech trade balances continue to widen. 835 00:38:40,880 --> 00:38:44,590 This is the trade balance in high technology goods, US 836 00:38:44,590 --> 00:38:46,390 and China. 837 00:38:46,390 --> 00:38:50,550 And so obviously, Chinese economy 838 00:38:50,550 --> 00:38:53,810 is trending away from-- still heavily invested 839 00:38:53,810 --> 00:38:56,240 in raw materials-- but trending away 840 00:38:56,240 --> 00:38:59,160 from that toward high-tech manufactured goods. 841 00:38:59,160 --> 00:39:03,800 And the US entering a region of trade deficit 842 00:39:03,800 --> 00:39:06,170 as a result of purchasing those products. 843 00:39:06,170 --> 00:39:09,230 So these are all trends that have policymakers, 844 00:39:09,230 --> 00:39:12,830 in particular, concerned, and looking 845 00:39:12,830 --> 00:39:15,300 at the future of global competitiveness. 846 00:39:15,300 --> 00:39:17,560 Technology evaluation-- let me spend 847 00:39:17,560 --> 00:39:20,240 a couple of words bringing all of what I've just said, 848 00:39:20,240 --> 00:39:23,720 and everything over the entire course, home to you. 849 00:39:23,720 --> 00:39:27,230 So far we've talked about these things in very ethereal terms. 850 00:39:27,230 --> 00:39:28,300 It's useful information. 851 00:39:28,300 --> 00:39:31,800 It will prove useful once you begin applying it. 852 00:39:31,800 --> 00:39:34,710 But we want to run through a quick, little scenario 853 00:39:34,710 --> 00:39:36,860 right here, where you're asked to evaluate a new PV 854 00:39:36,860 --> 00:39:37,620 technology. 855 00:39:37,620 --> 00:39:38,200 Why? 856 00:39:38,200 --> 00:39:40,020 Well, you might be applying for a job at this company, 857 00:39:40,020 --> 00:39:41,478 and they say they have the greatest 858 00:39:41,478 --> 00:39:42,550 thing since sliced bread. 859 00:39:42,550 --> 00:39:44,374 And you want to put on your thinking cap, 860 00:39:44,374 --> 00:39:46,040 and evaluate whether that's true or not. 861 00:39:46,040 --> 00:39:48,070 You might have a new idea or new innovation. 862 00:39:48,070 --> 00:39:51,100 And you're trying to make the tough call-- do I go forward 863 00:39:51,100 --> 00:39:52,812 and establish a company off of this idea? 864 00:39:52,812 --> 00:39:55,270 Or do I have to go back and turn the crank a few more times 865 00:39:55,270 --> 00:39:58,220 to come up with the next better idea that's 866 00:39:58,220 --> 00:40:00,400 more worthy of investment? 867 00:40:00,400 --> 00:40:01,487 You could be an investor. 868 00:40:01,487 --> 00:40:03,070 You could have money at your disposal, 869 00:40:03,070 --> 00:40:05,170 and you could decide what company to invest in 870 00:40:05,170 --> 00:40:06,610 or what not to invest in. 871 00:40:06,610 --> 00:40:08,440 So how do you go about this? 872 00:40:08,440 --> 00:40:11,220 I'd say three fundamental components. 873 00:40:11,220 --> 00:40:13,666 And venture capitalists might disagree with me, 874 00:40:13,666 --> 00:40:15,540 or other people who have different skill sets 875 00:40:15,540 --> 00:40:16,690 might disagree with me. 876 00:40:16,690 --> 00:40:20,160 But me, from this perspective as an engineer, 877 00:40:20,160 --> 00:40:22,210 I say first analyze the physics. 878 00:40:22,210 --> 00:40:24,590 Figure out how this technology works. 879 00:40:24,590 --> 00:40:26,929 Because if you understand how the technology works, 880 00:40:26,929 --> 00:40:29,220 you can understand some of the fundamental limitations. 881 00:40:29,220 --> 00:40:31,050 You can understand efficiency limits. 882 00:40:31,050 --> 00:40:33,270 And you can predict, based on pattern recognition, 883 00:40:33,270 --> 00:40:36,320 how hard is it going to be to obtain or to approach 884 00:40:36,320 --> 00:40:38,620 those limitations? 885 00:40:38,620 --> 00:40:41,280 Analyze the cost scale potential, 886 00:40:41,280 --> 00:40:44,970 meaning the potential to scale up, and manufacturing. 887 00:40:44,970 --> 00:40:47,639 This is really more in the engineering science side. 888 00:40:47,639 --> 00:40:49,180 And we've been getting more into this 889 00:40:49,180 --> 00:40:51,190 during the second and third parts of the course. 890 00:40:51,190 --> 00:40:52,500 And analyze markets-- this is definitely 891 00:40:52,500 --> 00:40:53,950 the third part of the course. 892 00:40:53,950 --> 00:40:56,520 So this begins to pull it all together. 893 00:40:56,520 --> 00:40:59,210 Let's start with analyzing the physics. 894 00:40:59,210 --> 00:41:00,780 We talked about conversion efficiency 895 00:41:00,780 --> 00:41:02,160 being a strong lever for cost. 896 00:41:02,160 --> 00:41:05,050 That's way we're analyzing conversion efficiency. 897 00:41:05,050 --> 00:41:07,890 The way I would recommend analyzing any PV technology 898 00:41:07,890 --> 00:41:10,004 that they throw at you would be thinking 899 00:41:10,004 --> 00:41:11,920 about conversion efficiency in terms of output 900 00:41:11,920 --> 00:41:13,400 energy versus input energy. 901 00:41:13,400 --> 00:41:15,799 And think about losses along each step of the way. 902 00:41:15,799 --> 00:41:18,340 If you have time with the R&D department, sit down with them. 903 00:41:18,340 --> 00:41:20,048 Sit down with some of the chief engineers 904 00:41:20,048 --> 00:41:21,990 and walk through each of the steps, 905 00:41:21,990 --> 00:41:26,479 going from a light photon entering the device 906 00:41:26,479 --> 00:41:28,270 to charge being collected on the other side 907 00:41:28,270 --> 00:41:32,220 with a certain current voltage characteristic. 908 00:41:32,220 --> 00:41:34,234 And keep in mind that the total efficiency 909 00:41:34,234 --> 00:41:35,650 is going to be limited by whatever 910 00:41:35,650 --> 00:41:36,660 the worst performer is. 911 00:41:39,260 --> 00:41:43,440 And keep that picture in mind, too-- [INAUDIBLE] big advice. 912 00:41:43,440 --> 00:41:46,490 Customer needs-- the next is analyzing what 913 00:41:46,490 --> 00:41:48,770 makes your product special. 914 00:41:48,770 --> 00:41:52,720 So where is it going to fit into the big picture? 915 00:41:52,720 --> 00:41:54,730 Is it going to run with the big dogs? 916 00:41:54,730 --> 00:41:57,250 Is it going to be an on-grid application, 917 00:41:57,250 --> 00:41:59,110 in which case cents per kilowatt hour 918 00:41:59,110 --> 00:42:01,880 really matter-- the price for the electricity for a power 919 00:42:01,880 --> 00:42:03,190 purchase agreement? 920 00:42:03,190 --> 00:42:05,600 If you're just selling the module, maybe dollars per watt 921 00:42:05,600 --> 00:42:08,350 would be an important metric as well. 922 00:42:08,350 --> 00:42:10,840 Or are you going to one of these other niche markets 923 00:42:10,840 --> 00:42:11,686 right over here? 924 00:42:11,686 --> 00:42:13,310 And are you going to be a player there? 925 00:42:13,310 --> 00:42:15,450 How big is that market? 926 00:42:15,450 --> 00:42:17,910 These are some questions to ask. 927 00:42:17,910 --> 00:42:20,770 Cost-- all right, so now we know what our intended market is. 928 00:42:20,770 --> 00:42:23,460 We know what our product is going to look like. 929 00:42:23,460 --> 00:42:25,680 We know the physics behind it. 930 00:42:25,680 --> 00:42:28,430 In a bit, we'll know more about the manufacturing. 931 00:42:28,430 --> 00:42:29,930 We think about cost. 932 00:42:29,930 --> 00:42:32,620 And we talked briefly about this during class. 933 00:42:32,620 --> 00:42:35,160 We had more of an in-depth discussion with Doug. 934 00:42:35,160 --> 00:42:38,470 That Excel spreadsheet, by the way, will be available to you 935 00:42:38,470 --> 00:42:41,170 so you can look through it, and see how a cost analysis was 936 00:42:41,170 --> 00:42:43,680 done for crystalline silicon, and how you might adapt it 937 00:42:43,680 --> 00:42:45,030 to your technologies. 938 00:42:45,030 --> 00:42:47,770 But it's really important to perform a cost performance 939 00:42:47,770 --> 00:42:51,040 model for your technology so that you can understand what 940 00:42:51,040 --> 00:42:53,540 levers to pull, what levers need to be pulled, 941 00:42:53,540 --> 00:42:56,294 to increase your parameter of merit, 942 00:42:56,294 --> 00:42:57,960 whatever that parameter of merit happens 943 00:42:57,960 --> 00:43:02,120 to be for your potential customer need. 944 00:43:02,120 --> 00:43:04,620 Manufacturing technologies and scale really 945 00:43:04,620 --> 00:43:06,310 do play into this quite a bit. 946 00:43:06,310 --> 00:43:09,320 And for many technologies, or for many companies at least 947 00:43:09,320 --> 00:43:11,700 in the Silicon Valley area, there 948 00:43:11,700 --> 00:43:15,170 might be 50 companies working on the same material-- copper 949 00:43:15,170 --> 00:43:17,040 indium gallium diselenide, let's say, CIGS. 950 00:43:17,040 --> 00:43:19,040 But they each have their own deposition process, 951 00:43:19,040 --> 00:43:20,456 and they're each trying to develop 952 00:43:20,456 --> 00:43:23,390 their own pieces of equipment to manufacture this material. 953 00:43:23,390 --> 00:43:25,370 So understanding the basic differences 954 00:43:25,370 --> 00:43:28,175 between the different deposition systems is important. 955 00:43:28,175 --> 00:43:30,550 And we walked through that during our thin-films lecture. 956 00:43:30,550 --> 00:43:32,760 So again, you have access to this information, 957 00:43:32,760 --> 00:43:35,020 and you can parse through it in greater detail 958 00:43:35,020 --> 00:43:38,100 should you need to. 959 00:43:38,100 --> 00:43:40,100 Scaling of manufacturing-- we talked 960 00:43:40,100 --> 00:43:41,540 about resource availability. 961 00:43:41,540 --> 00:43:44,060 We even had an in-class debate about it, 962 00:43:44,060 --> 00:43:46,160 about cadmium tellurium. 963 00:43:46,160 --> 00:43:48,760 There are reports out there which you have access to, 964 00:43:48,760 --> 00:43:51,850 like this APS report on critical energy materials. 965 00:43:51,850 --> 00:43:55,680 And we understand that the manufacturing and reserves 966 00:43:55,680 --> 00:43:58,420 of these elements are not equitably distributed. 967 00:43:58,420 --> 00:44:01,050 In fact, they're concentrated in certain regions of the world. 968 00:44:01,050 --> 00:44:03,390 And so that might influence the ultimate potential 969 00:44:03,390 --> 00:44:05,220 of a certain technology to scale. 970 00:44:05,220 --> 00:44:08,040 And again, this is another intelligent set of questions 971 00:44:08,040 --> 00:44:09,730 that you can ask. 972 00:44:09,730 --> 00:44:12,450 We understand a bit about the market dynamics now. 973 00:44:12,450 --> 00:44:14,634 We understand this is price. 974 00:44:14,634 --> 00:44:16,050 We understand that there was a bit 975 00:44:16,050 --> 00:44:18,400 of a plateau in price in the mid 2000s, 976 00:44:18,400 --> 00:44:20,640 a precipitous drop over the last three years, 977 00:44:20,640 --> 00:44:25,490 and that's really changed the way that investments and equity 978 00:44:25,490 --> 00:44:27,090 look at the solar market. 979 00:44:27,090 --> 00:44:28,920 In the mid 2000s, it was all gangbusters. 980 00:44:28,920 --> 00:44:30,378 Everybody was really happy to throw 981 00:44:30,378 --> 00:44:31,910 any money they had at solar. 982 00:44:31,910 --> 00:44:35,090 Now people are a lot more selective 983 00:44:35,090 --> 00:44:37,020 in terms of what they invest in. 984 00:44:37,020 --> 00:44:41,250 And this trend of oversupply undersupply 985 00:44:41,250 --> 00:44:44,050 is probably going to continue for some time 986 00:44:44,050 --> 00:44:46,640 if the integrated circuit industry is any example 987 00:44:46,640 --> 00:44:47,510 and model. 988 00:44:47,510 --> 00:44:51,180 So we're likely to see this continue. 989 00:44:51,180 --> 00:44:52,779 What is your market timing? 990 00:44:52,779 --> 00:44:55,070 It might be a really good time to found an installation 991 00:44:55,070 --> 00:44:57,900 company right now, if you can scale, and grow quickly, 992 00:44:57,900 --> 00:44:59,890 and you have the right niche. 993 00:44:59,890 --> 00:45:04,100 But if you have a new idea for a thin-film absorber, 994 00:45:04,100 --> 00:45:05,990 it's important to think critically about 995 00:45:05,990 --> 00:45:08,820 where the market is going to go over the next few years, 996 00:45:08,820 --> 00:45:11,460 and how that impacts your strategy as a company. 997 00:45:11,460 --> 00:45:15,000 You might decide, well, the market's kind of cold right 998 00:45:15,000 --> 00:45:16,599 now for modules. 999 00:45:16,599 --> 00:45:18,140 So why don't we hold back on building 1000 00:45:18,140 --> 00:45:22,740 that large-scale manufacturing plant until, say, 2014, 1001 00:45:22,740 --> 00:45:24,830 and invest really heavily in R&D right now, 1002 00:45:24,830 --> 00:45:28,990 and stay small, without the financial obligations 1003 00:45:28,990 --> 00:45:31,300 of a big manufacturing line, until we really 1004 00:45:31,300 --> 00:45:33,740 nail the technology, and have something good to go. 1005 00:45:33,740 --> 00:45:35,770 And plus, think about our exit strategy. 1006 00:45:35,770 --> 00:45:38,250 Maybe we won't ramp up to be a gigawatt or two gigawatt 1007 00:45:38,250 --> 00:45:38,901 company. 1008 00:45:38,901 --> 00:45:41,150 Maybe instead it's more important to form partnerships 1009 00:45:41,150 --> 00:45:43,605 with companies that are manufacturing cad-tel or CIGS 1010 00:45:43,605 --> 00:45:44,380 right now. 1011 00:45:44,380 --> 00:45:45,755 So our business developer's going 1012 00:45:45,755 --> 00:45:48,510 to spend more time chatting with the business 1013 00:45:48,510 --> 00:45:52,740 developers of First Solar and other companies. 1014 00:45:52,740 --> 00:45:54,990 We also know a bit about the financial incentives 1015 00:45:54,990 --> 00:45:57,949 from Germany and some of the largest PV markets 1016 00:45:57,949 --> 00:45:58,490 in the world. 1017 00:45:58,490 --> 00:46:01,640 We know that China is going to ramp up significantly 1018 00:46:01,640 --> 00:46:04,800 in terms of installations over the next few years. 1019 00:46:04,800 --> 00:46:08,640 We know that the United States will, as well, as the prices 1020 00:46:08,640 --> 00:46:10,180 continue to come down. 1021 00:46:10,180 --> 00:46:13,280 These are the PV feed-in tariff rates 1022 00:46:13,280 --> 00:46:15,430 shown in blue and red for different types 1023 00:46:15,430 --> 00:46:20,140 of installations, blue being the large, freestanding systems, 1024 00:46:20,140 --> 00:46:24,110 the red being mostly rooftop mounted systems. 1025 00:46:24,110 --> 00:46:26,590 So we saw that the feed-in tariff rate in Germany 1026 00:46:26,590 --> 00:46:28,220 has come down versus time. 1027 00:46:28,220 --> 00:46:31,260 And the average electricity price has gone up. 1028 00:46:31,260 --> 00:46:34,860 So we can begin predicting what the role of market subsidies 1029 00:46:34,860 --> 00:46:38,880 will be when we try to roll out our technology onto the grid. 1030 00:46:38,880 --> 00:46:41,160 And we can plot this, and see how that will impact 1031 00:46:41,160 --> 00:46:43,570 our business model as well. 1032 00:46:43,570 --> 00:46:46,470 And lastly, we know that about 99% of the solar panels 1033 00:46:46,470 --> 00:46:49,570 have yet to be made. 1034 00:46:49,570 --> 00:46:52,190 99% of the solar panels have yet to be made. 1035 00:46:52,190 --> 00:46:54,300 So there's a lot of potential here. 1036 00:46:54,300 --> 00:46:57,300 This, again, going back to the very first lecture, where 1037 00:46:57,300 --> 00:46:59,410 we had new energy installations, new 1038 00:46:59,410 --> 00:47:02,120 PV installations growing significantly. 1039 00:47:02,120 --> 00:47:04,320 Convergence is coming. 1040 00:47:04,320 --> 00:47:07,700 Who's going to comprise-- who's going to the bridge that gap? 1041 00:47:07,700 --> 00:47:11,300 Who is going to be the maker of the technology that 1042 00:47:11,300 --> 00:47:15,740 will ultimately bring PV to a massive scale in the grid? 1043 00:47:15,740 --> 00:47:17,950 That's for you to decide. 1044 00:47:17,950 --> 00:47:21,660 So other intangibles in terms of evaluating companies 1045 00:47:21,660 --> 00:47:24,890 would include the team, especially the leadership team. 1046 00:47:24,890 --> 00:47:26,340 What is their track record? 1047 00:47:26,340 --> 00:47:29,890 What is their philosophy of running the company? 1048 00:47:29,890 --> 00:47:32,070 The financing that's available-- how much cash 1049 00:47:32,070 --> 00:47:35,680 is at hand-- the patent portfolio, how protected 1050 00:47:35,680 --> 00:47:37,300 are they, and so forth. 1051 00:47:37,300 --> 00:47:40,510 Patents, by the way vary in importance from the US 1052 00:47:40,510 --> 00:47:42,112 to certain other regions of the world. 1053 00:47:42,112 --> 00:47:43,820 It's very important in the US and Europe, 1054 00:47:43,820 --> 00:47:45,780 less important in China. 1055 00:47:45,780 --> 00:47:46,890 But it depends. 1056 00:47:46,890 --> 00:47:50,090 If a certain idea is patented, you 1057 00:47:50,090 --> 00:47:51,890 will have difficulty accessing that market. 1058 00:47:51,890 --> 00:47:54,800 You will have difficulty selling product into that market, 1059 00:47:54,800 --> 00:47:57,550 even though you can continue to sell a product into markets 1060 00:47:57,550 --> 00:48:00,032 that value patents less in IP. 1061 00:48:00,032 --> 00:48:01,490 So let's go through a few examples. 1062 00:48:01,490 --> 00:48:03,950 I'm going to throw a couple of examples at you real quick, 1063 00:48:03,950 --> 00:48:07,612 and just spout off the first ideas that come to you. 1064 00:48:07,612 --> 00:48:09,070 How would you analyze this company? 1065 00:48:09,070 --> 00:48:10,430 Solar paint. 1066 00:48:10,430 --> 00:48:13,410 All right, so I have my big spray paint system here, 1067 00:48:13,410 --> 00:48:16,430 and I go to the side of the house, and I go shh. 1068 00:48:16,430 --> 00:48:19,300 And that saves me a bundle on installation costs. 1069 00:48:19,300 --> 00:48:19,800 It's easy. 1070 00:48:19,800 --> 00:48:21,410 You can do it yourself, and you just 1071 00:48:21,410 --> 00:48:24,970 connect a few wires and voila, you have solar electricity. 1072 00:48:24,970 --> 00:48:27,886 What would be your first instinct? 1073 00:48:27,886 --> 00:48:29,010 AUDIENCE: How does it work? 1074 00:48:29,010 --> 00:48:31,470 PROFESSOR: How does it work? [CLAPPING] Bravo, bravo. 1075 00:48:31,470 --> 00:48:32,860 What is the physics behind it? 1076 00:48:32,860 --> 00:48:34,360 How do you separate charge? 1077 00:48:34,360 --> 00:48:39,860 If you go back to this right over here-- light absorption, 1078 00:48:39,860 --> 00:48:41,402 charge excitation is important. 1079 00:48:41,402 --> 00:48:43,110 What's the [? bang-up ?] of the material? 1080 00:48:43,110 --> 00:48:47,340 How does it excite charge inside of the material? 1081 00:48:47,340 --> 00:48:49,390 Where's charge separated? 1082 00:48:49,390 --> 00:48:51,740 How do carriers reach those separation points? 1083 00:48:51,740 --> 00:48:53,720 You're just spraying on one homogeneous layer? 1084 00:48:53,720 --> 00:48:54,595 Did I get that right? 1085 00:48:54,595 --> 00:48:56,402 There's not two layers? 1086 00:48:56,402 --> 00:48:57,360 Does it phase separate? 1087 00:48:57,360 --> 00:48:58,279 How does that work? 1088 00:48:58,279 --> 00:48:59,820 And in charge collection, how are you 1089 00:48:59,820 --> 00:49:01,610 collecting the charge over that massive area? 1090 00:49:01,610 --> 00:49:02,720 What are your resistive losses? 1091 00:49:02,720 --> 00:49:03,340 And so forth. 1092 00:49:03,340 --> 00:49:06,255 You're equipped now to ask those questions 1093 00:49:06,255 --> 00:49:07,380 as a result of this course. 1094 00:49:07,380 --> 00:49:08,570 That's pretty awesome. 1095 00:49:08,570 --> 00:49:11,640 You think about it, you're pretty empowered. 1096 00:49:11,640 --> 00:49:13,760 So it could work. 1097 00:49:13,760 --> 00:49:15,260 Solar paint could very well work. 1098 00:49:15,260 --> 00:49:17,930 So it's important not to ride into this discussion 1099 00:49:17,930 --> 00:49:20,320 on a high horse and say ooh, won't 1100 00:49:20,320 --> 00:49:21,510 work because of x, y and z. 1101 00:49:21,510 --> 00:49:23,009 It's important to keep an open mind, 1102 00:49:23,009 --> 00:49:25,110 because new ideas are really quite startling, 1103 00:49:25,110 --> 00:49:27,220 and they can be game changing. 1104 00:49:27,220 --> 00:49:29,842 But it's important to have a critical yet respectful 1105 00:49:29,842 --> 00:49:30,550 approach to this. 1106 00:49:30,550 --> 00:49:32,570 A critical mind is always a good thing 1107 00:49:32,570 --> 00:49:35,280 to have on your shoulders. 1108 00:49:35,280 --> 00:49:37,970 Wundermaterial-- so I'm arriving to you, and I say, 1109 00:49:37,970 --> 00:49:39,840 this is the wonder material. 1110 00:49:39,840 --> 00:49:43,050 It's all earth abundant, totally scalable, 1111 00:49:43,050 --> 00:49:45,302 but I'm not going to tell you what it is. 1112 00:49:45,302 --> 00:49:47,260 So you're going to have to invest in my company 1113 00:49:47,260 --> 00:49:50,050 because I have this great team right here-- a great team 1114 00:49:50,050 --> 00:49:52,050 coming from Intel. 1115 00:49:52,050 --> 00:49:55,240 I used to be a head manager at a national laboratory. 1116 00:49:55,240 --> 00:49:56,110 I know my stuff. 1117 00:49:56,110 --> 00:49:57,140 I really know my PV. 1118 00:49:57,140 --> 00:49:59,910 I can wow you with a few presentations about PV device 1119 00:49:59,910 --> 00:50:02,030 physics, and talk all this fancy stuff. 1120 00:50:02,030 --> 00:50:04,090 But you're going to have to invest in my company 1121 00:50:04,090 --> 00:50:07,090 based in a few SCM images, plain-view SCM 1122 00:50:07,090 --> 00:50:09,095 images of the material structure, 1123 00:50:09,095 --> 00:50:10,970 just to prove that I can actually deposit it. 1124 00:50:10,970 --> 00:50:13,094 But I'm not going to tell you what the material is, 1125 00:50:13,094 --> 00:50:15,570 because US VC's could run off with my idea 1126 00:50:15,570 --> 00:50:17,275 and go sell it to somebody else. 1127 00:50:17,275 --> 00:50:19,486 So I'm going to hold that very close to my chest. 1128 00:50:19,486 --> 00:50:20,610 Do you invest in me or not? 1129 00:50:24,467 --> 00:50:26,300 AUDIENCE: Depends on what you're asking for. 1130 00:50:26,300 --> 00:50:27,350 PROFESSOR: Depends on what you're asking. 1131 00:50:27,350 --> 00:50:29,280 Depends how much you're asking for. 1132 00:50:29,280 --> 00:50:31,010 That was a real situation. 1133 00:50:31,010 --> 00:50:32,200 I was in that room. 1134 00:50:32,200 --> 00:50:34,160 I was evaluating that company. 1135 00:50:34,160 --> 00:50:37,780 And as a scientist in that room, I was, like, are you serious? 1136 00:50:37,780 --> 00:50:40,405 You can't be serious. 1137 00:50:40,405 --> 00:50:41,780 The venture capitalists, however, 1138 00:50:41,780 --> 00:50:44,550 thought differently, and said, look, the team is really good. 1139 00:50:44,550 --> 00:50:51,050 And for reasons that were described-- 1140 00:50:51,050 --> 00:50:53,160 I can't get into all of them without giving 1141 00:50:53,160 --> 00:50:55,910 the details away-- there were reasons 1142 00:50:55,910 --> 00:50:58,902 for investing in that particular case, in that company. 1143 00:50:58,902 --> 00:51:01,135 And even though the physics was not understood, 1144 00:51:01,135 --> 00:51:03,510 and even though the ultimate efficiency potential was not 1145 00:51:03,510 --> 00:51:07,280 understood, the VC firm made an investment. 1146 00:51:07,280 --> 00:51:10,240 So far it's been going OK with that company. 1147 00:51:10,240 --> 00:51:13,720 So just to point out that this is 1148 00:51:13,720 --> 00:51:16,780 a base, a foundation of which to make decisions. 1149 00:51:16,780 --> 00:51:20,910 It's not a prescription upon which to make decisions. 1150 00:51:20,910 --> 00:51:22,610 A lot of things factor in. 1151 00:51:22,610 --> 00:51:23,840 Use your best judgment. 1152 00:51:23,840 --> 00:51:26,930 You're the one best equipped to make those decisions. 1153 00:51:26,930 --> 00:51:30,720 Path forward-- this is kind of my last few words 1154 00:51:30,720 --> 00:51:33,930 on the soapbox before I hand over the microphones to you. 1155 00:51:33,930 --> 00:51:36,320 The path forward, from my perspective-- 1156 00:51:36,320 --> 00:51:41,240 the markets are going to drive a lot of the public story. 1157 00:51:41,240 --> 00:51:44,720 But you know that cost matters more than price. 1158 00:51:44,720 --> 00:51:47,950 Price is the short-term market pull. 1159 00:51:47,950 --> 00:51:51,530 During the mid 2000s-- actually, down here 1160 00:51:51,530 --> 00:51:54,610 when the price was still very, very high, 1161 00:51:54,610 --> 00:52:00,200 solar was kind of this hippie, tree-hugging group of nerds 1162 00:52:00,200 --> 00:52:02,510 that would get together at the Muddy Charles 1163 00:52:02,510 --> 00:52:05,260 and come up with the facts-based analysis, which formed the MIT 1164 00:52:05,260 --> 00:52:07,590 Energy Club-- really small thing. 1165 00:52:07,590 --> 00:52:11,180 And then right when the prices began to stabilize 1166 00:52:11,180 --> 00:52:15,380 and there was this view that energy was a huge gold 1167 00:52:15,380 --> 00:52:19,490 mine waiting to be explored, a massive amount of interest 1168 00:52:19,490 --> 00:52:21,970 came into the field-- and growth, accordingly. 1169 00:52:21,970 --> 00:52:23,610 And it was good. 1170 00:52:23,610 --> 00:52:27,360 But in the 2008 and so forth, we had this precipitous drop 1171 00:52:27,360 --> 00:52:30,200 in prices, as well as the collapse of finance 1172 00:52:30,200 --> 00:52:32,320 to allow these technologies to scale up. 1173 00:52:32,320 --> 00:52:35,030 The Valley of Death widened and deepened a bit, if you will. 1174 00:52:35,030 --> 00:52:38,195 And suddenly, energy looked a lot more precarious. 1175 00:52:38,195 --> 00:52:40,240 I started having students come into my office 1176 00:52:40,240 --> 00:52:44,010 doing interviews, saying what sort of career can I have here? 1177 00:52:44,010 --> 00:52:45,470 Tell me, seriously, are their jobs 1178 00:52:45,470 --> 00:52:47,307 waiting for me when I exit? 1179 00:52:47,307 --> 00:52:48,890 The reality is, there are jobs waiting 1180 00:52:48,890 --> 00:52:50,991 for bright, smart people regardless of the market 1181 00:52:50,991 --> 00:52:51,490 condition. 1182 00:52:51,490 --> 00:52:52,760 There were jobs back here. 1183 00:52:52,760 --> 00:52:55,180 There will be jobs in the future as well, if you're 1184 00:52:55,180 --> 00:52:57,530 good at what you do and you ask the right questions, 1185 00:52:57,530 --> 00:52:58,946 conduct good experiments, and know 1186 00:52:58,946 --> 00:53:00,360 how to disseminate your work. 1187 00:53:00,360 --> 00:53:03,280 But this is kind of a return to the roots 1188 00:53:03,280 --> 00:53:05,410 now, where we have people who are in solar 1189 00:53:05,410 --> 00:53:10,650 and interested in solar who are really there for the long run. 1190 00:53:10,650 --> 00:53:12,780 And so knowing the market conditions really 1191 00:53:12,780 --> 00:53:14,800 helps you put everything into perspective, 1192 00:53:14,800 --> 00:53:18,450 and see how the situation might evolve going forward. 1193 00:53:18,450 --> 00:53:22,800 In terms of tipping point, it's largely agreed upon 1194 00:53:22,800 --> 00:53:27,300 that $1 a watt system installed is really 1195 00:53:27,300 --> 00:53:28,470 where we want to head to. 1196 00:53:28,470 --> 00:53:30,860 So we know the cost right now of manufacturing 1197 00:53:30,860 --> 00:53:32,360 a PV module of crystalline silicon 1198 00:53:32,360 --> 00:53:33,651 is on the order of $1 per watt. 1199 00:53:33,651 --> 00:53:35,570 And if you're inventing a new technology, 1200 00:53:35,570 --> 00:53:38,262 you have to do half of that. 1201 00:53:38,262 --> 00:53:40,720 And crystalline silicon has a roadmap to get to about $0.50 1202 00:53:40,720 --> 00:53:43,385 per watt peak by 2020, 2025. 1203 00:53:43,385 --> 00:53:45,260 And so if you're developing a new technology, 1204 00:53:45,260 --> 00:53:47,720 you have to undercut that and some way, shape or form. 1205 00:53:47,720 --> 00:53:49,140 And you can do that in a variety of ways-- 1206 00:53:49,140 --> 00:53:50,220 improving the efficiency. 1207 00:53:50,220 --> 00:53:52,594 There's a lot of headroom in efficiency-- lot of headroom 1208 00:53:52,594 --> 00:53:56,640 there-- maybe at manufacturing scale and so forth. 1209 00:53:56,640 --> 00:53:59,930 But if a technology, some technology by 2020, 1210 00:53:59,930 --> 00:54:04,760 can get to $1 a watt installed, we're looking at, by 2030, 1211 00:54:04,760 --> 00:54:07,160 a pretty massive, good penetration of PV 1212 00:54:07,160 --> 00:54:08,860 across the United States. 1213 00:54:08,860 --> 00:54:10,240 And that's just the start of it. 1214 00:54:10,240 --> 00:54:14,090 The US is just the drop in the bucket. 1215 00:54:14,090 --> 00:54:15,780 This is the world. 1216 00:54:15,780 --> 00:54:18,390 There's a lot of people-- 1.6 billion of them, 1217 00:54:18,390 --> 00:54:20,530 approximately-- without electricity right now. 1218 00:54:20,530 --> 00:54:21,760 They're coming online. 1219 00:54:21,760 --> 00:54:25,910 And they're driving the majority of the growth in CO2 emissions. 1220 00:54:25,910 --> 00:54:29,160 Majority of the growth comes from two points-- one, 1221 00:54:29,160 --> 00:54:32,117 we're outsourcing our CO2. 1222 00:54:32,117 --> 00:54:34,700 If you look at the amount of CO2 the United States contributes 1223 00:54:34,700 --> 00:54:36,716 to the world, it might be 1/5, but if you 1224 00:54:36,716 --> 00:54:39,090 look at all the manufactured goods, all the clothes we're 1225 00:54:39,090 --> 00:54:41,950 wearing right now, all of the apparatus that we're using, 1226 00:54:41,950 --> 00:54:44,120 these were manufactured probably not in the US, 1227 00:54:44,120 --> 00:54:46,050 but they're here for our consumption and use. 1228 00:54:46,050 --> 00:54:47,360 We own that carbon. 1229 00:54:47,360 --> 00:54:48,780 That's our carbon. 1230 00:54:48,780 --> 00:54:50,030 We're responsible for it. 1231 00:54:50,030 --> 00:54:51,657 So our footprint increases further. 1232 00:54:51,657 --> 00:54:52,990 So we're outsourcing the carbon. 1233 00:54:52,990 --> 00:54:55,240 It's growing in certain developing regions 1234 00:54:55,240 --> 00:54:56,360 that are exporting to us. 1235 00:54:56,360 --> 00:54:58,532 And secondly, they're also growing. 1236 00:54:58,532 --> 00:54:59,490 They're also consuming. 1237 00:54:59,490 --> 00:55:02,070 They're also getting cars, and computers, and so forth. 1238 00:55:02,070 --> 00:55:07,950 So there's an overall growth of consumption around the world. 1239 00:55:07,950 --> 00:55:10,390 We agree that climate change is an issue. 1240 00:55:10,390 --> 00:55:12,380 And we look at the solar insolation map, 1241 00:55:12,380 --> 00:55:15,530 and we say, wow, compared to certain minerals, 1242 00:55:15,530 --> 00:55:20,490 or rare earths, or petroleum, this is fairly equitably 1243 00:55:20,490 --> 00:55:21,430 distributed. 1244 00:55:21,430 --> 00:55:25,196 Even regions, say in Patagonia or up in northern Europe, 1245 00:55:25,196 --> 00:55:26,820 compared to the Equator-- we're looking 1246 00:55:26,820 --> 00:55:30,090 about a 3x, maybe 4x delta in solar resource, 1247 00:55:30,090 --> 00:55:33,860 not a million to 1. 1248 00:55:33,860 --> 00:55:36,340 We're looking at a 4x delta in solar resource, which 1249 00:55:36,340 --> 00:55:39,340 is not that big of a spread. 1250 00:55:39,340 --> 00:55:43,300 And furthermore, if we go back and look at the countries that 1251 00:55:43,300 --> 00:55:46,490 are really coming online, just using 1252 00:55:46,490 --> 00:55:49,385 this loose parameter of human development index 1253 00:55:49,385 --> 00:55:51,890 that we referred to on the first day of class, 1254 00:55:51,890 --> 00:55:54,840 we can see that the countries with the largest solar resource 1255 00:55:54,840 --> 00:55:57,550 base-- several of them also happen 1256 00:55:57,550 --> 00:56:00,890 to be countries that are on the path toward development, 1257 00:56:00,890 --> 00:56:02,511 on the path toward consumption. 1258 00:56:02,511 --> 00:56:04,760 And solar can really have an impact in those countries 1259 00:56:04,760 --> 00:56:06,800 to improve the quality of life, and also 1260 00:56:06,800 --> 00:56:09,240 reduce carbon emissions overall in the world. 1261 00:56:09,240 --> 00:56:11,280 So what role can you play? 1262 00:56:11,280 --> 00:56:14,180 I mean, I think important things to keep in mind 1263 00:56:14,180 --> 00:56:19,410 is, we're really at the beginning of solar. 1264 00:56:19,410 --> 00:56:23,320 We have a lot of headroom to grow. 1265 00:56:23,320 --> 00:56:27,300 I think the amount of venture capital investment loss so far 1266 00:56:27,300 --> 00:56:29,070 due to failed companies is a drop 1267 00:56:29,070 --> 00:56:31,054 in the bucket compared to GDP. 1268 00:56:31,054 --> 00:56:32,470 It's a drop in the bucket compared 1269 00:56:32,470 --> 00:56:33,635 to military investments. 1270 00:56:33,635 --> 00:56:35,010 It's drop in the bucket to things 1271 00:56:35,010 --> 00:56:37,700 that we consider important, and especially the quality 1272 00:56:37,700 --> 00:56:39,070 of life in the world. 1273 00:56:39,070 --> 00:56:41,530 So it's important to keep that in perspective. 1274 00:56:41,530 --> 00:56:44,360 We need to maintain momentum in capital innovation culture. 1275 00:56:44,360 --> 00:56:45,890 That's what we have here. 1276 00:56:45,890 --> 00:56:48,300 It's growing in other places around the world as well. 1277 00:56:48,300 --> 00:56:50,300 It's important to foster that growth, 1278 00:56:50,300 --> 00:56:53,610 and evolve into a global society where 1279 00:56:53,610 --> 00:56:55,860 we have connections and shared connections 1280 00:56:55,860 --> 00:56:58,550 with groups around the world, shared interests, and can 1281 00:56:58,550 --> 00:57:01,132 leverage each other's strengths. 1282 00:57:01,132 --> 00:57:02,840 The rest of the world is catching up fast 1283 00:57:02,840 --> 00:57:03,965 with increased competition. 1284 00:57:03,965 --> 00:57:06,990 That's why isolation won't work in this case. 1285 00:57:06,990 --> 00:57:10,950 We do need increased R&D efforts on key targets. 1286 00:57:10,950 --> 00:57:13,450 I think better investments and smarter choices of technology 1287 00:57:13,450 --> 00:57:14,117 is important. 1288 00:57:14,117 --> 00:57:15,950 And hopefully, over the course of the class, 1289 00:57:15,950 --> 00:57:18,360 you're equipped with several of the tools 1290 00:57:18,360 --> 00:57:21,700 to make those types of decisions yourself. 1291 00:57:21,700 --> 00:57:24,390 We also need to change the way we innovate. 1292 00:57:24,390 --> 00:57:28,300 Pooled resources, collaborative efforts, 1293 00:57:28,300 --> 00:57:32,530 improved industry-university lab relations-- which in the US 1294 00:57:32,530 --> 00:57:35,320 are somewhat at a precarious state because of differences 1295 00:57:35,320 --> 00:57:37,820 in priorities between publications and IP protection 1296 00:57:37,820 --> 00:57:39,640 and so forth. 1297 00:57:39,640 --> 00:57:41,660 Direct to manufacturing innovations-- 1298 00:57:41,660 --> 00:57:44,340 instead of always thinking that startup companies are 1299 00:57:44,340 --> 00:57:46,660 the only route, thinking in terms of how do I 1300 00:57:46,660 --> 00:57:49,444 get this technology into a large established company in the US? 1301 00:57:49,444 --> 00:57:51,610 That's a route that we don't think about very often, 1302 00:57:51,610 --> 00:57:53,620 but could have a huge impact, and certainly has 1303 00:57:53,620 --> 00:57:56,030 an impact in Germany. 1304 00:57:56,030 --> 00:57:57,821 The need for a steady predictable market-- 1305 00:57:57,821 --> 00:58:00,320 all right, I think I might be asking too much in this bullet 1306 00:58:00,320 --> 00:58:00,510 point. 1307 00:58:00,510 --> 00:58:01,450 But it would be nice. 1308 00:58:01,450 --> 00:58:04,680 And certainly policy can play a large role in that. 1309 00:58:04,680 --> 00:58:06,660 We have enough unpredictability with oversupply 1310 00:58:06,660 --> 00:58:07,510 and undersupply. 1311 00:58:07,510 --> 00:58:09,760 We don't need the politicians getting into it as well, 1312 00:58:09,760 --> 00:58:11,489 and changing their minds every two years. 1313 00:58:11,489 --> 00:58:13,030 And investment in education as well-- 1314 00:58:13,030 --> 00:58:15,680 the right type of basic education-- so you can get 1315 00:58:15,680 --> 00:58:16,950 involved a number of ways. 1316 00:58:16,950 --> 00:58:19,099 And I encourage you to do so. 1317 00:58:19,099 --> 00:58:20,390 I thank you for your attention. 1318 00:58:20,390 --> 00:58:22,570 And I wish you the best of fortunes going forward. 1319 00:58:22,570 --> 00:58:24,390 Please feel free to call me whenever you have a need. 1320 00:58:24,390 --> 00:58:26,056 And I look forward to your presentation. 1321 00:58:26,056 --> 00:58:27,490 So be well. 1322 00:58:27,490 --> 00:58:28,090 Thanks. 1323 00:58:28,090 --> 00:58:31,740 [APPLAUSE]