One of the refreshing things about interviewing T.J. Rodgers, CEO of Cypress Semiconductor, is that he's willing to speak his mind.
Net neutrality? It's un-American. Government-funded research projects? Mostly, they are flops. The clean tech energy boom? It's overblown. A libertarian, he has promoted a market-driven approach to expanding Silicon Valley for years.
He's in a slightly odd spot now. SunPower, a fast-growing manufacturer of solar panels, is a subsidiary of Cypress, and solar power is heavily subsidized. Rodgers admits it's a contradiction, but says the subsidies will decline as the cost of generating electricity the traditional way skyrockets.
Q: Give us the rundown on how SunPower became a subsidiary of Cypress.
Rodgers: SunPower we bought when they were a very small company, a few million dollars per quarter. I knew the founder, Dick Swanson, and they had a highly efficient solar cell. We invested a couple hundred million dollars and built the manufacturing plant.
One of the problems with a lot of these environmental ideas is that they are demos. Unless you can commercialize the technology, it doesn't have much impact. So we invested a couple of hundred million dollars in making the technology commercially available.
You've always been a big advocate of free-market policies and not having the government interfere. And yet solar is one of the most heavily subsidized industries out there. How do you square that with your own belief?
Rodgers: I'll agree with your general premise and the apparent contradiction there. Today, in the world, I would not call solar heavily subsidized. For example, in the second-largest market, which is Japan, the national subsidies ended last year. Japan did have a 10-yearlong subsidy to just start the industry. But today, the Japanese national government doesn't pay anything to subsidize.
There are a lot of con men in the solar industry who say a lot of things that are really, really, very wrong.
Now, the bad news is the reason that they don't have to pay anything is that power is so expensive over there. But on the other hand, that's just going to happen to everybody shortly. Power is going to become so expensive that the subsidies won't matter.
I don't like subsidies. I don't think the government ought to be taking money from people and giving it to other people, for any reason. If I had a choice to vote for getting rid of subsidies to corporations, including SunPower, I would vote for it. Having said that, the subsidies in Germany--I'm all for the German subsidies (laughs). I'm real happy to take money from the German government...I just don't like American subsidies. But I think you could probably credit national subsidies with an acceleration of something like 10 years (in) getting solar rolling.
How long will it be in the United States before we see solar energy at parity with regular electricity, and we can start eliminating the subsidies?
Rodgers: Right now, the subsidy for a (solar) system is about 30 percent, and our subsidy is basically the government, in the form of rebates and other incentives. If you pay $10,000 for a system, they will give you a rebate at $3,000, so you end up paying $7,000. That tells you right there that if the price of solar energy drops by 30 percent, it will stand on its own and it won't need to be subsidized anymore.
Dropping the price of solar energy by 30 percent is not a big stretch. We need more capacity online to get more silicon. One of the reasons solar energy costs as much as it does today is that there is not enough silicon. Solar energy actually is going to burn more silicon this year than semiconductors, so we need more silicon.
We also need it to be back at the price that it used to be at, which is about less than $40 per kilogram. It is up to as high as around $90. We need to be able to make solar cells that are thinner, reliably. The problem right now is that solar cells are in the order of 250 microns thick, and that uses a lot of silicon. It turns out you don't need that much silicon. The energy conversion pretty much happens in the skin of the wafer. That means we need better manufacturing equipment.
And we need higher efficiency (in converting sunlight into electricity). SunPower has demonstrated cells of 22 percent efficiency already. The energy that's in solar today is typically at 15 percent efficiency. Twenty-two percent is going to give you 50 percent more power from the same amount of silicon.
And the last point, which is surprising for me, is that we need to cut the cost of installing solar energy more than in half.
Do you mean the frames and other things that hold them on roofs?
Rodgers: Well, not even the frames. Right now?the modules are $3.50 to $4 a watt. Installed solar energy on your house is $8.50 a watt. Just to put it on your house doubles the price. We've got to fix that.
Are you guys looking at thin film at all or CIGS (a type of non-silicon solar cell promoted by HelioVolt and BP, among others)?
Rodgers: No, I am firmly convinced that silicon for the next decade is going to be the primary solar energy material for several reasons. One is reliability. Silicon has a reliability record which is unmatched by any other material. The second reason is efficiency. These CIGS materials have efficiencies that are under 10 percent, so we get more than two-and-a-half times of energy.
Some claim they are close to equal to silicon in terms of efficiency.
Rodgers: You go buy one. You know, that's another problem we've got in the industry. There are a lot of con men in the solar industry who say a lot of things that are really, really, very wrong.
What do you think of biodiesel and vegetable oil vehicles? I know it's not your business, but some people say there is a pretty strong case for those technologies.
Rodgers: Biodiesel is a great concept. You can grow your gas and then burn it, and grow it again and burn it, and grow it again. You've got to (adopt) the process to where you're not adding extra carbon to the environment. The question is, can you do it economically? I don't want to second-guess the people that are trying--I'm not an expert--and they'll surprise you when they do. Who is to say that there isn't a yet-to-be-invented, fast-growing genetically modified plant that produces an extraordinary amount of oil that couldn't be used for a significant fraction of power in the United States?
The sad story about ethanol (is that) it has been subsidized too much. There is an ethanol company in the Midwest that receives an extraordinary amount of government subsidies, and some say the subsidies are greater than the cost of production. And to me, that kind of puts a taint on alcohol, although alcohol mixed with gasoline is obviously a fuel, and it's obviously a fuel that works well.
Three years ago, I was asking people in Silicon Valley what they thought about energy investing and only a few seemed interested. Nobody is interested. Has it become overheated?
Rodgers: It is overheated. The hype is extraordinary. It's the worst they've seen in years in Silicon Valley. One of the reasons it's overheated is the economic payback could be astronomical. I mean we talk about Silicon Valley, where the silicon business is about $200 billion a year. The commercial electricity business--that is, the utility business--is $1 trillion a year.
And that's just in the U.S.
Rodgers: Right. Worldwide, it's five times bigger. So the opportunity is awesome, and SunPower was the first solar company from Silicon Valley to go public, and they have a market capital of $2 billion. Sand Hill Road has taken note of that. I heard stories that over $500 million has been invested in energy.
Like your competitor Nanosolar (a CIGS company). It got $100 million to build a factory. That's a lot for a small company.
Rodgers: I read the Nanosolar story, and I thought it was embarrassing. And all I could think of is that they could rename the company NanoDollar, because that's all they are going to be left after we get done kicking their butt. They clearly are way ahead of themselves in the hype.
The sad story about ethanol (is that) it has been subsidized too much.
We will see how well they can build a factory. It took us three years to build a factory, and I have been building manufacturing plants for 20 years. Their technology is?we will see if it demonstrates high efficiency. They say that they are going to take on (Japanese giant) Sharp and build a bigger plant than Sharp. (Nanosolar CEO R. Martin Roscheisen read the comment and declined to comment.)
On a completely different topic, what do you think of Net neutrality?
Rodgers: This is where basically the Net is not allowed to discriminate? I think it's an obscenity. I think people that have paid for the wires and cables should able to charge whatever they want for their product. And for other people to come in and force companies to run their businesses and set their prices is absurd. If some of those companies came into being by virtue of a government monopoly--the old AT&T comes to mind--then fine. But to go and tell companies what they can and cannot charge money for--that's un-American. It's against freedom. It's just bad news.
We're seeing governments around the world--China, Singapore and India--invest heavily in R&D and building tech industries. Has the federal government done enough when it comes to funding fundamental scientific research?
Rodgers: This is the same question I have heard about 500 times. Most government "investments" in technology are total wastes of money. The Chinese government's investments in technology have been a waste of Chinese money, and the concept that we somehow must have our own boondoggles is our own waste of taxpayers' money.
How about DARPA, though? I mean, was that a waste too?
Rodgers: DARPA had some programs that were interesting. But the fact that you can name a program that probably wouldn't have (otherwise) qualified for investment and that wasn't a total waste, doesn't mean we have to do more of that. Where does that come from? The government shouldn't be investing in science; it hasn't got a clue. Science is something that works on the laws of nature, not on the laws of politics. You can't make something happen in Tennessee because the senator in Tennessee wants to invest in it. It is just a stupid way to waste money, and we ought to stop talking about it.
If you go to Stanford University, you can hear every professor complain that they are spending one-third of their time looking for grant money. It takes a lot of their time. Having more government funding...
Rodgers: Well, first of all you might ask, why does a Stanford professor think that they have the right to get taxpayers' money? Where did that come from?
By the way, I am much more sympathetic to government investments in university research than money that goes to corporations. It's not because I see huge amounts coming out of universities, but that research typically is the vehicle by which students are trained. For example, my research at Stanford, although an attempt was made to commercialize a part of it, none of it ever became commercial. It didn't matter. I walked out of Stanford with a Ph.D. I knew how to make transistors, and then I came into the "real world."
If not governments, then who?
Rodgers: Well, my company contributes to the universities. Not on a grand scale, but we have these relationships with several universities, and we support a few students with a bunch of professors. Typically, what we see is a good idea and we get more information on a good idea, and we see the ability to hire that good student. That's more important to us really than what that student does.