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Monday, January 28, 2008

How To Deploy Solar Electric Systems

Response to Eric Janszen
This article " “The Next Bubble: Priming the Markets for Tomorrow’s Big Crash,” Harper’s, February 2008. touts renewable energy as the next bubble. I beg to differ.

Since I have education in business and economics, and a background in solar energy going back 26 years, I have to weigh in on this one. First of all what Eric Janszen is describing is not the healthy functioning of the economic system. It is actually what happens when the system is pervaded by corruption. These vulture capitalist tendencies are not a part of what sustains a free market economy. They are what destroys it.

The excessive, non-economic profits, (as they are called in business school) are making ruthless, immoral people fabulously wealthy while robbing society of its vitality. Don't get me wrong, I support a free market economy that operates within bounds that reflect the values of fair play, and healthy societal functioning. But when we get desensitized to the shady operators and dirty tricks that are at the root of these bubbles we are writing the epitaph of a free, prosperous society.

If the clean energy revolution falls into this same trap, we are finished. Because this is one issue which is not simply about consumerism, or the latest trend or the coolest new gizmo. This is about survival. If we don't truly allow the innovators to rise to the top, then we can kiss civilization goodbye, because the alternative is depopulation on a massive scale. James Lovelock, author of the Gaia hypothesis is predicting that this depopulation will kill off 5 1/2 billion people, leaving the earth with a sparsely populated impoverished habitat. He is also predicting that it is inevitable. He may be right if we don't clean up our act in terms of the systems that we use to solve our problems. This means government and economics.

The words of Franklin Delano Roosevelt come to mind: "We have always known that heedless self-interest was bad morals; we know now that it is bad economics."

I am not a Libertarian or any other kind of ideologue. I am a student and practitioner of innovation, business, economics, history and a developer of solar energy technology for 26 years. I have a Masters degree in business and have built numerous highly successful solar energy products and installations. Because of this experience I conclude that the main impediments to implementing the transition to a solar/renewable energy economy occur because renewables do not easily fit alongside the highly vested monopolistic interests of our current energy providers. As a result I have been developing products that will take these monopolistic dinosaurs out of the loop. Competition is the only thing that will force them to change.

Eric Janszen responds:

Date Posted:
January 26, 2008

J Cole,
Solar is economical for consumers buy and run but not for producers to market, sell, install, etc. Is there no business model that works for the industry? Solar vs oil/gas is the difference between buying commoditized audio products (made in China) from a retail distributer at the local mall or the high end audio solutions (Made in USA) at the one high end audio reseller in a region. It comes down to demand, economies of scale, cost, price, cost benefit, marketing costs, cost of sales, etc. If oil were $200/bbl many home builders would include your solar products as a feature and an add on option for existing homes to reduce dependence on grid electticity would take off. Also, with economies of scale, off peak solar can feed back into the grid. A floating tariff that raises imported oil gradually to $200 will make this business model work for your industry.

Reply from Jonathan Cole, January 28th :

What you say is true that "It comes down to demand, economies of scale, cost, price, cost benefit, marketing costs, cost of sales, etc." However that is a general statement that does not address the specifics of how products are engineered to serve the user purpose as well as the economic purpose. At this time, all solar electric installations are one-of-a-kind custom designed installations. Like the early days of the automobile industry where every car was coach-built. How many cars would be sold today if each one was unique? Until we mass produce modularized energy appliances with low installation & maintenance costs, and high durability, we cannot make the change to distributed (the most efficient) solar electric systems.
Jonathan Cole