Keeping An Eye On Boring Technology

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solar-boring-technology

Communications tools don’t get socially interesting until they get technologically boring.

-Clay Shirky

The same could be true of many kinds of technology.

What counts as boring?

The ubiquitous…the expected…the familiar.

This is a just catchy way of saying that new things only begin to produce an impact once they become sufficiently widespread that they no longer offer any novelty.

Exhibit A is solar energy.  I’ll forgive you for grumbling if you have heard this a hundred times before.  For all of my lifetime renewable energy has been the modern fountain of youth, always just beyond the horizon.  For as long as I can remember I’ve heard the rhetoric that we could a have cheap, clean, renewable supply of energy if only (the government, the oil industry, etc) would get out of the way.

And then of course there are the peak oilers and the Randian free marketers who believe that renewable energy is synonymous with government intervention, and who therefore insist that it will never EVER be viable.

***

Recently there was a brief period of decidedly non-boring irrational exuberance.  Venture capital flooded into the rebranded Green Energy sector, primarily chasing thin film solar panels.  The public excitement culminated in the Solyndra debacle of September 2011.  Solyndra declared bankruptcy after receiving $535m in government loan guarantees, sparking the usual political debate.

For me the hype cycle reached its peak a few years earlier when Nanosolar released video of its production equipment reeling off solar cells like newspaper off a printing press.  It claimed at the time that this $1.65m machine could print off 1GW of solar cells per year.  Even at the time the claim sounded outlandish.  Now it sounds downright absurd.

But this was after being named one of Time Magazine’s best inventions of 2008 and Popular Science’s 2007 Innovation of the Year.  At the time Nanosolar’s PR machine was on fire, and for anyone paying attention it certainly seemed like our clean energy future was just around the corner.

Unfortunately, that PR video seems to have been purged from the internet (similar stuff can still be found on youtube).  An article from gigaom associated with the press release still exists, though the embedded youtube player now features a dead link.

Why would Nanosolar kill the video?

Well, not too long thereafter they began churning through new CEOs.  Last year they took additional investment at a valuation that might as well have been $0 (a 97.5% decline). Then last week Nanosolar laid off 75% of its staff.

***

Even before Nanosolar made headlines, the public markets had already had their taste of solar excitement. I briefly owned a few shares of Suntech stock shortly after its IPO in late 2005.  I also remember following companies like First Solar and SunPower as they entered the market, and subsequently as their stock prices soared to astronomical levels.

Then came the crash.  Suntech has fallen from a peak of $85.16 per share in late 2008 to $1.46 as of this writing.  First Solar and SunPower are have both lost about 90% from their respective peaks.

Enter Boring Technology

If this was all you knew you would be inclined to believe that renewable energy is a pipe dream.  If you were coming from the perspective of a long term investor then that might be a fair assessment.

The same would be true if you are a tech news junkie.  Much of the interesting technology (read: proprietary technology) - the stuff the venture capitalists and the tech media get excited about – has failed to live up to the hype.  The cylindrical solar panels, roll-to-roll printing presses and organic dyes have all failed to generate any meaningful return on investment.

But even as the high profile companies have failed, stock prices have plummeted, and venture capital returns have disappointed; the market itself has become quite interesting.  What’s missing from the preceding story is the fact that the fancy technology has failed largely because – at least from a commercial perspective – the boring technology has left it in the dust.

In terms of technical efficiency all categories of solar technology have actually shown steady improvement.  But it’s the boring silicon wafer based technology that has been driving down manufacturing costs faster than everything else.  Over the past couple years the cost of crystalline silicon solar panels has plummeted.

Financially those manufacturers are still not doing much better than the nanosolars of the world.  Most of them have consistently lost money over the past couple years.  But at the same time shipments of solar panels have increased dramatically.  As of the end of 2012 global cumulative installed capacity for the first time exceeded 100GW.

For comparison, global cumulative installed capacity was less than 10GW at the end of 2007.  In 2012 a single company – Yingli Green Energy – produced about as much new capacity – 2.3GW – as the entire industry in 2007.

***

For a long time the political debate has been about if renewable energy would ever be viable.  It now seems like the more appropriate questions relate to when solar energy will reach grid parity.

To avoid sounding too much like a cheerleader I should acknowledge that grid parity is a notoriously fuzzy concept.  The calculation itself depends not only on the presumed costs of grid electricity and levels of solar irradiation (both of which obviously vary geographically), but also on financial assumptions like the discount rate (financing cost) and technical parameters like reliability (long-term performance degradation).

I poked around for both an optimistic and a skeptical take on grid parity but given the amount of wiggle room in the calculation I had trouble trusting any of them.  [If anyone can offer a reliable source please drop a link in the comments.]  Anecdotally the situation seems somewhat clearer.

***

To date Europe has been the leading market for solar panels due to generous subsidies.  In particular Germany has been the leading market perennially.  Germany has also steadily cut subsidies, demonstrating that subsidies can be scaled down without destroying the market.  Wikipedia offers a nice table showing the steady decline in so-called feed-in-tariffs (subsidies) from 2004 to present, and the increases in installed capacity despite those decreasing subsidies (here).

With every cut pundits have predicted that the market would crash – and indeed other markets have crashed as a result of subsidy mismanagement – yet in 2012 Germany remained the global leader in new capacity installation.  Elsewhere Spain was recently in the news as developers are putting in applications for new solar installations without benefit of subsidy.

Still subsidy cuts have indeed impacted demand as can be seen in the installation figures for 2012 – around 30GW – which represent only minimal growth over 2011.  That top-line figure masks a shift in demand.  The European market actually shrank by about 25% due to subsidy cuts while the rest of the world grew by over 60%.

As you might expect China is one of the big growth markets, having repeatedly increased government targets for both the short term and the intermediate term.  While politically motivated demand from China can’t offer much insight into what unmolested markets would look like, at least it does suggest that demand will not disappear in the short term.

***

It is also worth noting that 2012 was also a record year for wind energy.  A few highlights:

  • Wind energy was the largest source of new capacity in the US at 13.2GW installed

    • over 60 GW cumulative US capacity
    • 3.4% of all US electricity generation from 11/2011-10/2012
      • excludes majority of new 2012 capacity which was predominantly installed in Q4
  • 44.7 GW installed globally in 2012 
  • Global cumulative capacity of 282 GW

I am emphasizing solar only because I think its potential impact is more interesting over the long run.  The trend in wind energy is towards increasingly massive towers with enormous turbine blades that harvest wind more efficiently.  That means that wind projects run into more NIMBY concerns, and require more advance planning, greater scale and greater capital investment.  All else equal, the modularity of solar panels should make them more viable in the long run.

Nevertheless, in the past few years wind energy has quietly become a legitimate power source in its own right.

Marginal Change vs Absolute Change

Ok, I don’t want to sound like too much of a treehugger so let’s be clear about what we are talking about here…

None of the above has anything to do with climate change.  Even if we had an endless supply of free solar panels, installing enough of them to replace existing fossil fuel infrastructure would still require more labor than I’m willing to try even imagining.

It is rather shortsighted though to dismiss a given technology on the basis that it won’t single-handedly solve climate change.  The energy debate is seething with such arguments that conflate marginal change with absolute change.  For example, this article I bookmarked a while back uses climate change models to argue that the world in 2030 won’t be all that different from today:

In 2008, all of the countries in the world got 12.9 percent of their energy from renewable sources, not counting nuclear energy. By 2030, more than half of the scenarios showed the world getting about 17 percent of its energy from those sources. That amount of change isn’t piddling. But it doesn’t represent a massive shift in lifestyle, either. If you’re one of those people who feels a little let down by the distinct lack of flying cars in your life, get used to disappointment. In 2030, we probably won’t even all be driving electric cars.

If your standard is flying cars then you deserve to be disappointed.  Setting that point aside, and setting aside the other half of the scenarios that the author ignores (presumably because they didn’t suit her argument)…this kind of analysis simply doesn’t correspond to the way people actually experience “massive shift(s) in lifestyle”.

The thing is, we don’t necessarily experience change when it actually happens.  Some changes sneak up on you and you don’t recognize them until well after the fact.  Others changes are expected well in advance and are old news by the time they actually arrive.

What we actually experience are the shifts from impossible to novel, and from novel to boring.  A shift becomes subjectively real when we are forced to incorporate it into our mental models.  One way of thinking about this is that anticipated changes are integrated into our normalcy field.

I don’t have an ipad but I know enough people who do that they are no longer novel.  I am quite confident that I won’t notice whenever tablets next gain another 10% market share on traditional laptops.

What was the market share of hybrid vehicles in 2012?  Wikipedia tells me the answer is 3%.  Does that surprise you? Do you care?  Chances are you don’t.

The fact is that unless you closely follow a given industry you are pretty oblivious to incremental advances in market penetration.  You perk up and notice when something changes from impossible to possible, and from possible to mundane…and that is about the extent of it.

***

This is the difference between a marginal change and an absolute change.  Tablets are a long way from replacing desktop computers, but they are already boring.  Likewise, we may be many decades away from renewable energy even beginning to replace fossil fuels, but I would argue that we are not so far away from renewable energy becoming boring.

For solar power boring means we know what to do with it: how to manufacture it, how to install it, how to integrate it with existing infrastructure and so on.  Boring means manufacturers have moved from experimentation to innovation, execution and scaling.  Boring is when you can buy it at Walmart.  In other words, it means the industry has matured.

In a sense what Clay Shirky was saying is that communication technologies don’t become socially interesting until they become platforms.  That is until they become pervasive and stable enough for other people to rely upon them and build upon them.

So what would it mean for people to rely upon renewable energy?

It certainly won’t be a free energy utopia.  As with the flying cars, if utopia is your standard then you deserve to be disappointed.  But it also won’t be a minor change.  Consider the following:

  • What if energy policy was no longer an ideological issue because the options were proven?
    • How might partisan divisions shift?
  • What if the influence of the fossil fuel industries was significantly reduced?
    • What if people could no longer blame everything on the influence of the fossil fuel lobbies?
      • What industry would be next in line as the de facto scapegoat?
  • What if long-term control over physical resources wasn’t perceived as a matter of national security?
  • What if rural land recaptured some of its value?
  • What if you never had to hear the phrase “peak oil” again?
    • What if energy no longer felt scarce?
    • What perceived scarcity would replace it?
  • What if people simply believed (nevermind the absolute reality) that energy is like iPads?
    • That at the margin we can have as much as we choose to buy?

Whatever your answers to the questions above, if they only represent minor changes then you aren’t really using your imagination.

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  • Alex R

    Try living on solar panels, batteries, and wood heat.  It’s interesting, and already viable.  Electricity feels limited, but not exactly scarce.  You’re constantly aware of what uses it.  Optimizing your energy use becomes a critical part of your daily schedule.  

    When you go back to the grid, you realize that energy does NOT feel scarce, whatsoever.  Electricity and petroleum are still absurdly cheap. 

    Glad to see you’re writing again :)

  1. photo courtesy of MTSOfan

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