On The Frontier
  Views From The Leading Edge
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At the Cusp of a New History
Richard G. Parks
July 14, 2009
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There are times when something fundamental changes in human affairs. We live in such a time. Many of the old familiar patterns are gone, swept away by the tumult of recent economic and political events.

Even when this, the worst downturn since the Great Depression, finally ends and prosperity returns, the world we inhabit will not be the one we so recently left behind. The great arc of two timelines, the world as it was and the world as it will be have intersected, colliding in the present. We stand at the cusp of a new history, not quite sure of where we've been and not at all certain of where we're going.

Some choose to be pessimistic about the changes taking place and some elect to be optimistic. Being an inventor, I tend to hold a positive view of change. But whether you are a pessimist or an optimist (or just don't care either way) one thing is certain - this new world will be different.

In a very real sense we have just entered the 21st Century, almost a decade after the calender event itself. Those who lived during the first years of the 20th Century could not have imagined the enormous forces of change that had been unleashed. It took two world wars and a worldwide depression in between before the true outlines of the last century became apparent. And longer still before the world we regard as "normal" became a reality.

Amidst the great changes now taking place, the production of energy verges on a great upheaval. With the inevitable decline of old energy production methods brought about by geologic, economic, political and environmental factors, a new and exciting era of enormous, untapped renewable energy resources and opportunities is dawning.

In many ways, this transition period in energy production methods is reminiscent of exploration of new and uncharted territory in the American West during the early 19th Century. The pessimists among us will no doubt be quick to point out that the new era will also see many of the same kinds of follies as happened in that earlier frontier expansion.

But this new age will also be characterized by unanticipated discoveries and inexhaustible supplies of energy that will usher in a period of growth and wealth creation greater than any in previous human history.

However unpredictable the near future may be, it's already possible to see, albeit dimly, the shape of some things to come. An online discussion of the financial outlook for one of the renewables (solar) recently caught my attention.

Phil LoPiccolo, Editor-in-Chief of Solid-State Technology says that according to Stephen O'Rourke, Managing Director, Deutsche Bank Securities, speaking at a SEMI New England "Wafers to Wall Street" Breakfast Forum (Sept. 19, 2007 near Boston), "The cost to produce electricity with solar PV technology should reach grid parity with traditional utility electricity generation in five to eight years."

ORourke views this time frame as a conservative scenario. "Once this [parity] occurs, the industry will likely take off on its own merits without the need for incentives. The key factor is that the US solar PV electricity generation cost curve for known solar PV cell technologies is expected to drop from roughly 25¢-30¢/kWh today to about 10¢/kWh by 2020. As the price drop continues, the price for solar generated electricity will transition through what is commonly referred to as grid price parity or “convergence”. (approximately 15¢/kWh)

Meanwhile, average retail prices of conventionally generated electricity in the United States will rise from 8.6¢/kWh (where it was in 2006) to potentially more than 20¢/kWh by 2020, depending on cost projections for conventionally generated electricity increases ranging from 4%-7%."

Solar Industry Finance and Stock Performance

Wall Street analyst: Take long view on solar PV
Date: September, 2007
(by Phil LoPiccolo, Editor-in-Chief, Solid-State Technology

Two things about this article stood out in stark relief for me. The first is the date. This forecast was issued in September 2007, just as the current recession began and we were all blissfully unaware of the cliff ahead. At that time the solar "boom" was underway and the market was peaking. Prediction of a collapse, though counter intuitive then, could not have been more timely. The "Shake-Out Trough" in the graphic strongly coincides with the current recession.

The other surprise was the overall shape of the finance and stock performance curve in the graphic. I saw this very same curve ten years ago just after the dotcom market collapsed! It chronicled the ultimate rise of the Internet industry.

The curve appeared in an online analysis of Internet activity. Though widely panned and discounted at the time, as it turned out, the curve was very close to the actual performance of the Internet market in the years following its publication. I see many of the very same forces at work in the renewable energy industry today.

This type of curve diagrams the birth of a new industry. On the left side of the graphic is the classic unsustainable "bubble" portion of the curve. This is followed by the inevitable collapse trough and then the long, slow climb-out, after which activity finally exceeds the levels of the bubble years. The key to all this is the understanding that later sustainable activity is fundamentally different from the activity during the bubble years.

Innovative new products and services play a big role in the development of a sustainable market in any new industry. At the time I first saw this curve, Google was just two years old and almost nobody foresaw the major force it would become in the future online market. At that time, Microsoft ruled with an iron hand and no Internet startup could possibly challenge this hegemony. Fast forward to 2009 when Google confronts Microsoft at every turn, with the latter struggling to keep up.

The same thing is going to happen in the renewable energy market. The bubble is already behind us and we are experiencing the collapse trough now. As new, innovative products come online in the period ahead and the renewable energy market develops, companies we've never heard of will overtake and then eventually surpass today's market leaders.

Many changes are in store as the great arc of history continues its sweep into the new century, carrying us along with it.