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Association for Small Business & Entrepreneurship 35th Annual Conference
Entrepreneurship Opportunities in the Solar Industry
Douglas Causey, Adjunct Instructor
Jackson State University
Department of Entrepreneurship and Professional Development
douglas.c.causey@jsums.edu
(601) 979-3326
Vershun L. McClain, Ph.D., Visiting Assistant Professor
Jackson State University
Department of Entrepreneurship and Professional Development
vershun.l.mcclain@jsums.edu
(601) 979-1038
Mary M. White, Associate Professor and Chairperson
Jackson State University
Department of Entrepreneurship and Professional Development
Mary.m.white@jsums.edu
(601) 979-2541
Donald Causey, Assistant Professor
Jackson State University
Department of Entrepreneurship and Professional Development
Donald.causey@jsums.edu
(601) 979-3326
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Entrepreneurship Opportunities in the Solar Industry
Abstract
According to Schumpeter, a great economist, technology revolution can create “gales of creative
destruction” that may result in the elimination of existing industries that are replaced by new ones
which offer more sustainable and profitable opportunities (Schumpeter, 1942). This paper postulates
that rapid improvements in solar energy technology represent a rare opportunity to create structural
change in the electricity generation industry while providing the United States with sustainable,
competitive energy alternatives and entrepreneurs with enormous wealth creation opportunities.
Specific topics addressed are current and emerging solar energy technologies, estimated market scale
and outlook, and potential entrepreneurship opportunities.
Introduction
Currently, leadership in the U. S. has made energy independence a strategic initiative. The
United States depends on foreign countries for two-thirds of its needs. President Obama believes our
excessive reliance upon traditional hydrocarbons is unsustainable (Obama, 2009). Thus, he has made a
commitment to renewable energy. Technology changes, coupled with strong interest in using green
energy technology, have made solar energy a priority area for renewable energy development.
Technology in the Solar Industry
Albert Einstein had a keen interest in solar energy technology; he received a Nobel Prize for
work in this area in 1958 (Solar Energy Industries Association). Since that time solar energy technology
has been evolving to address the issues of high installation costs and non-competitive power costs when
compared to traditional sources of energy such as oil and natural gas. The recent escalation of global
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energy prices combined with a renewed interest in green technologies that address such issues as global
warming have fueled tremendous interest and growth in solar energy technology. As shown in
Attachment I, solar technologies began in the 1950’s and accelerated during the energy crisis of the
1970’s. The cost to produce solar energy has decreased from 30 times the traditional cost of energy
generation to less than 3 times the traditional cost (Energy Information Administration/Electric Power
Annual, 2007). Although these improvements are significant, barriers exist that prevent the industry
from gaining truly widespread adoption. Currently, less than one percent of all electric power in the
United States is generated from solar energy. Some barriers that have prevented greater penetration of
the market are inefficient photovoltaic (PV) cell technology, high silicon wafer costs, high installation
costs, and slowly developing regulatory and tax policies.
Many of these barriers are being addressed by emerging technologies. The emerging
technologies include, but are not limited to, increased photovoltaic (PV) cell efficiency, use of solar
thermal collectors to provide low temperature heat for heating and cooling systems, use of energy
concentration systems to heat other fluids that may be used in turbine generation systems, passive solar
systems, solar ovens, and thin wafer technologies. Many of these technologies address the following
areas for improvement: better materials science so that solar energy collection efficiency increases from
around 22 percent (compared to 16 percent in the past) (Davidson, 2007); greater applications such as
space heaters, and heating and cooling systems for commercial and residential uses; time sensitive
energy release systems so that solar energy is used to heat or cool during optimum time periods; mobile
appliances and other devices that can be used for heating or cooling such as crock pots, small ovens, and
others; and energy storage technology that enables optimal energy collection times combined with
energy storage for later transmission to a local or national grid.
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Some organizations such as the Department of Energy, Applied Materials, Sun Power, and First
Solar are doing research in some of these areas (Davidson, 2007). However, solar energy technology is
clearly a burgeoning area for entrepreneurs to exercise their creative energies. The driver for large
research investments in the solar energy field is the enormous potential market that is ready and
waiting for new sources of clean energy technology.
Attachment I
Historical Timeline of Events
50’s 60’s-70’s 80’s-90’s 2000-2010
First photovoltaic (PV) Energy crisis increases First solar energy generator Emerging PV technology
device developed by Bell interest and use of solar station (SEGS) built leads to greater efficiency
Labs energy technology and solar energy becomes
more competitive with
traditional energy sources
Einstein received Nobel Cost for solar generation is Nine plants built in California Rapid growth of solar
Prize for energy power 30 times traditional costs using SEGS technology energy market, ranging
research from 40-50%
New technology leads to Global warming increases
significant decline in solar emphasis on renewable
costs generation energy
Source: Solar Energy Industries Association
Market Scale and Outlook
The total electricity energy generation market in the United States is approximately 4.2 Billion
megawatt hours in 2007 (Energy Information Administration/Electric Power Annual, 2007). Solar energy
represents less than 2 percent of this market. However, the solar energy market is growing because new
technologies are pushing the cost of solar energy generation to equal or less than traditional energy cost
generation. For example, First Solar is projecting that their cost of energy generation will approach $1.19
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per watt using thin film technology versus a cost of $2.80 per watt for traditional technology. The U. S.
Department of Energy (DOE) is projecting that solar energy cost generation will equal traditional cost by
2015. Thus, competitive solar energy prices are expected to drive solar energy usage from 13 billion
watts to 40 billion watts in about 3 years. This represents a compounded annual growth rate of
approximately 45 percent. Estimated growth rates have ranged from 40 to 50 percent for the solar
energy generation market. Another measure of market growth is the number of PV cell shipments per
year. The numbers of shipments in the United States has increased at over 50 percent annually for the
past 10 years (Energy Information Administration/Electric Power Annual, 2007). As new applications
continue to develop, the market growth trend should remain very strong. Recent tax incentives and
other programs introduced at the state and federal level are designed to increase the penetration of
solar and other alternative fuels into the energy industry (Solar Energy Industries Association, 2009).
Entrepreneurship Opportunities
The growth in the solar energy generation industry represents many new opportunities for
entrepreneurs. One does not have to obtain an engineering degree or some other technical background
to seize upon these opportunities in this industry. They span the entire value chain from PV cell
production equipment manufacturing to management of the national energy grid system. The
opportunities include original equipment manufacturing, PV manufacturing, PV product testing and
delivery, PV cell installation and servicing, new energy storage devices, mobile solar energy based
appliances, management of the solar energy supply to the national grid system, development of
alternative materials to produce wafers or semiconductors, energy usage monitoring devices,
development of heating and cooling systems, development of new hot fluids for cogeneration or
electrical turbines systems, and many others. All of the opportunities can be categorized into three
major categories associated with the energy generation value chain: reduce the cost of power
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generation, improve the speed and reliability of power generation, and expand the opportunities to
apply renewable, sustainable energy technology to new applications across the value chain. Some
general examples of these opportunities are shown in Attachment II. Each area of the value chain offers
business venture opportunities that can create value using one or more of the three major categories.
Attachment II
Opportunity Recognition
Solar Energy Generation Value Chain
Equipment to PV Cell PV Cell Energy Energy Capture & National Grid Regenerative
Manufacture Manufacture Installation Generation Storage Management Technology
PV cells Development
Source or Semiconductor Cell installation- Conversion from Storage systems Monitor energy Improve collection
manufacture materials commercial, traditional flows efficiency
equipment improvement residential technology to
solar energy
Product Reduce cell size New Scale-up Improve capture Energy trading and Value chain cost
testing applications opportunities for efficiency arbitrage efficiency
-Thin wafers existing systems opportunities
-HVAC
-Nanotechnology
-Home
appliances
Manufacturing Lower Support services Transmission New materials
operations manufacturing Network technology
improvement costs -Maintenance Management
and repair
-Warranty
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Cross Value Chain Opportunities
Training of customers, employees, etc.
Operating procedures, manuals development
Value chain integration
Consulting services
Photovoltaic (PV) Cell Equipment Manufacturing
This opportunity pertains to the sourcing of critical inputs necessary to build and operate plants
that produce PV cells. The requirements for these plants will grow as the number of PV panel shipments
continue to expand. Opportunities for entrepreneurs include procurement, training, servicing
equipment, operating businesses as original equipment manufacturing representatives, and distributing
or marketing PV cells from the plant to wholesalers and other customers. Entrepreneurs may also get
involved in applying lean manufacturing and six sigma processes to improve the operation of the
manufacturing processes.
PV Panel Shipments Distribution
This opportunity involves the establishment and operation of distribution networks to supply a
rapidly growing market. This includes warehousing product, inventory management, supply chain
management, and product support (packaging, handling damaged goods, and other activities).
Integrating information systems to manage the supply chain is also included in this category.
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PV Panel Installation
This opportunity requires the entrepreneur to establish a business that will procure panels for
direct installation in residential or commercial buildings. The commercial buildings could include schools,
apartment complexes, office buildings, and small shopping centers. This business could be established
using a variety of arrangements with a local utility such as direct purchase of panels from the utility then
installation, or simply allow the utility to purchase all equipment and supplies so that the entrepreneur
can focus on installation and service. Duke Energy has established an arrangement of this type with
entrepreneurs in the North Carolina marketplace (Duke Energy, 2009). This program could well be the
precursor to many similar approaches to building out the solar panel installation market. The solar
energy technology is also focused on supplying other energy intensive systems such as HVAC systems
and mobile appliances. As these technologies develop new opportunities will emerge for entrepreneurs.
Conversion to Solar Energy Generation
The transition from traditional energy sources to solar powered systems will require installing,
replacing, or modifying the equipment and infrastructure within the electrical industry. Entrepreneurs
can perform a vital role assisting with planning and implementing these energy systems conversion
projects. Other opportunities will emerge in the area of sizing the solar system and expanding it as
commercial needs grow. This ability to right size the new system to an old system could represent a
challenging and interesting business opportunity.
Energy Captivation and Storage
Once the energy has been generated, the electrons have to be captured and used or stored.
Opportunities will exist to improve efficiency of energy captivation and storage during this crucial step in
the value chain. This process will also enable the global movement of energy across networks, or the
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national grid, to improve the efficiency of energy use across the country. Also, technologies will be
developed to enable energy captivation across different appliances or platforms such as fixed storage
units, mobile devices, as well as traditional panels. Effective management of the flow of energy from
the storage unit to the national grid is another fruitful area of consideration.
National Grid Management
Once the individual solar systems are installed and operational, power will be generated from
multiple sources. Some of that power will be consumed immediately, the remainder may be sent to
higher demand locations for consumption. This global energy exchange should present opportunities for
managing the network, participating in energy exchange and trading arrangements, and possibly
identifying arbitrage opportunities. This downstream opportunity is far from developed but should
present yet another area for wealth creation.
Technology Regeneration
Once the entire industry has achieved significant scale on the operational level, new
opportunities for increasing efficiency and effectiveness will emerge. The solar energy industry will
continue its path of evolution toward better technology that should be integrated across the entire
system. Once again, new entrepreneurship opportunities should emerge from this process. As change is
implemented across the entire system, that change will precipitate the need to reconsider all of the
individual value chain areas for additional improvement opportunities. This virtuous cycle may continue
for many years.
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Cross Chain Opportunities
While the case for opportunities clearly exist within each of the value chain areas, there is yet
another group of opportunities that can be identified by evaluating the overall chain as an integrated
whole. Evaluating this chain in such a manner reveals opportunities for training through out the system,
opportunities to develop operating procedures and manuals at all levels, opportunities to troubleshoot
and smooth out the performance of the entire system and to enhance integration. These examples are
but a few of the many system-wide opportunities that may emerge. Astute entrepreneurs will identify
opportunities to create consulting firms and other service organizations, such as internet information
providers targeted to improve the value chain. These consultants will become integral to maintaining
the virtuous cycle of change previously mentioned in this article. The opportunities will also shift as the
industry evolves through the traditional business cycle of industry growth, maturation, and decline. This
industry is clearly a long way from finishing the rapid growth stage and should present enormous
opportunities for aspiring entrepreneurs.
Conclusion
There is significant entrepreneurial opportunities within solar industry. “The global production
value of the photovoltaic industry in the past five years has constantly performed at a compound annual
growth rate of 35 percent, Ellick Liao, COO of Taipei, Taiwan-based Gintech, said in an October 2008
speech at the Taiwan International Photovoltaic Forum. “Five years ago, most experts predicted that
solar power would only…become a mainstream [fixture of] the global power supply after the year
2035.” Liao targets 2015 as a more likely date for that to happen (Baldwin, 2009).
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References
Applied Materials (2009). Retrieved June 25, 2009 from http://www.appliedmaterials.com.
Baldwin, H. (2009, June 04). Opportunities in solar: The push for renewable energy is pulling
manufacturers into the market for photovoltaic cells. EMSNOW. Retrieved June 25, 2009 from
www.emsnow.com/npps/story.cfm?id=39721.
Davidson, P. (2007, August 26). Forecast for solar power: Sunny. USAToday. Retrieved June
25, 2009 from www.usatoday.com/tech/science/environment/2007-08-26_N.htm.
Duke Energy (2009). Retrieved June 25, 2009 from http://www.duke-energy.com.
Energy Information Administration/Electric Power Annual 2007, p. 16.
First Solar. (2009). Retrieved June 25, 2009 from http://www.firstsolar.com
Obama, B. (2009). Inauguration address, January 20. 2009.
Poole, B. (2008, September 26). Tax credit extension brightens solar outlook. Tuscon Citizen.
Retrieved June 25, 2009, from http://www.tusconcitizen.com.
Schumpeter, J. (1942). Capitalism, Socialism and Democracy. New York: Harper and Brothers.
5th ed. London: George Allen and Unwin, 1976.
Solar Energy Industries Association. (2009). Retrieved June 25, 2009 from http://www.seia.org.
U. S. Department of Energy. (2009). Retrieved June 25, 2009 from http://www.eere.energy.gov.
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