Most of Silicon Valley focuses on the cost of the photovoltaic module, and how to bring that down. In fact, most of Silicon Valley focuses on how to fundamentally change the basic technology of the module - from crystalline silicon based to thin film deposition. Very sexy. And very risky. And currently breaking the back of more than one company and investor who is trying. What's worse, the module is only 30-50% of the per kwh cost anyway.
In the meantime, the cost of solar on a per kwh basis has continued to improve, primarily on the back of unsexy work on the integration and installation side, as well as the growing size of the average photovoltaic installation. This is despite the increase in average module prices in recent years, driven by the silicon shortage.
Cleantech Blog has written about the concern that the real make or break for solar economics is how much power you get out of the system, not just the cost per watt of the panels. We believe that installation and design decisions are the make or break for that variable, not the technology choice. We have also written on the topic of integration and installation, and the need for better data and monitoring on the back end, like our friends at Fat Spaniel are improving, to inform the analysis.
But what about the analysis on the front end of the installation process? Everyone in the industry knows that installation is a large portion of the upfront costs, and everyone knows that how well you design your solar system has large implications for the economics of your installation.
So how do we actually streamline solar from the front end? Well, it's happening. The solar decision making software tools are slowly developing. There are a number of products available now to streamline the modeling and estimation of solar installation costs and performance, and make the end user and installer's life easier: including products like CPF Tools, OnGrid, and PVOptimize, which range from spreadsheets to on demand services. My favorite is CPF Tools, by Clean Power Finance, and I had a chance to meet with a couple of their executives, including Joseph Brakohiapa, the other day to discuss what they are doing. For one, they have married solar estimation and modeling tools with an on-demand MRP system for solar installers. I certainly believe in on demand software, and it's hard to see how modeling tools without links into your inventory and proposal systems can actually take much cost out. And second, they are working to integrate those tools into the financing model for small scale solar loans. When coupled with backend monitoring like Fat Spaniel's, I can see the path for real progress - and possibly more importantly, I can see a way for both the installer and the end customer to finally begin to manage risk and cut costs.
From monitoring, to ERP, to decision support and business intelligence. No industry in today's world can scale without it. It's time the solar sector grows up.
Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, a blogger for CNET's Cleantech blog, and the Chairman of Cleantech.org.