Friday, September 18, 2009

The niche for a polymer solar thermal collector

The International Energy Agency Task Force on solar thermal equipment (Task 37), has a subtask to investigate the use of polymers in solar thermal collectors. Ironically, while they were writing this our team in Detroit, Toronto and Ohio were putting to test what they were studying. The result is that Power Panel may be the first polymer panel to come to market. As the task force notes, "the full potential of polymeric materials can only be used when several product functions are integrated into a single component in a fundamentally new design." We agree. They came to the same conclusion as did our founders that the traditional design of collectors was not suitable. A new approach was required. Our panel forgoes the use of tubing or multiple layers of materials for collection, rather it uses a proprietary flow pattern and a single sheet of thin aluminum to collect thermal energy. The result is that we have a panel that is 1/4 of the weight and has very few parts. The panel comes out of a mold in one piece, an aluminum sheet is inserted, then glass, then connectors and voila, a solar thermal collector is made. Simplicity means that there are fewer pieces to fit and thus it can be made quickly and with little effort. It also means that there are fewer joints, welds and fasteners, dramatically improving the durability of the product. So this panel is lighter, more durable and is easier to manufacture. Though easier, in small volumes of production it is not less expensive than cheap panels from China, or those from large scale production facilities in Europe, though this panel is already price competitive (thus has great scope to further reduce costs with higher production volumes).

If the key to entering the market is to find a niche, than what is the niche for a lighter, simpler and more durable solar thermal collector?

The first niche may be the D-I-Y solar community. Not only are the panels lighter, but they use simple drain-back and unpressurized plumbing. Simple PVC plumbing can be used and thus even business geeks like me can install them and so solar fanatics can too. The polymer tanks that we offer only take 15 minutes to assemble, then simple fittings eliminate most real wiring jobs. These 35 lb panels can be hand lifted onto a roof. This is an interesting community to first market to, as they are the markets "Mavens" (to borrow the term from Malcolm Gladwell, or its Hebrew roots). If a company can earn their trust and support than these mavens will promote your product and their third party credibility can lend much to that company's brand.

Other niches may include where shipping costs are a factor, or where added durability is essential.

The issue with the durability marketing is that it is difficult for a small and new company to earn the trust of customers that we will be around long enough to honour a warranty. For us to do so requires us to borrow the clout from a stalwart in the market. If a partner with clout were to sell our panels and guarantee the warantee than we could enter the durability niche. (which is a very good competitive edge).

Shipping is another area. The obvious market in this niche is remote areas, such as rural Africa, Northern Canada, or mountainous areas in Asia. These panels are very well suited to be Base of the Pyramid solar thermal collectors if higher production volumes can lower their cost. Until then for the less price sensitive but shipping constrained niche is another ideal niche for this product.

In summary, the three niches for the Power Panel polymer solar thermal panel are:
1. DIY solar enthusiasts
2. Extreme climactic applications needing greater durability
3. Limited shipping locales

Saturday, September 5, 2009

Rocking the boat with a hybrid solar thermal and PV panel

One of my current projects is working with Power Panel, a Detroit based start-up solar equipment manufacturer. They have created a polymer solar thermal collector. An interesting aspect of this product is that it has been designed accommodate a PV module that can be inserted into the collector. Because of the unique design this allows that PV to be cooled as heat is collected in the same panel. Ingenious!

(photo: Power Panel collectors on the roof of Next Energy, where the company's R&D facility is located in Detroit, Michigan)

Although this is novel, novelty is a challenge as it has created a new product category. The market for solar equipment is divided between photovoltaics and solar thermal collectors. The distribution channels for each are different. There tends to be a separate value chain for each. Incentive schemes support one or the other. For example, when we begin to speak with parties about our product inevitably the question, "how much per watt?" is asked. A solar thermal collectors price can be divided by the amount of power it can product and this metric can also be used for photovoltaics, so this industry metric is quite prevalent. But, in our case one panel produces two types of energy, thermal and electricity, so the formula becomes $cost/(thermal output + electricity output), which crudely brings us to (say a price of $600/panel) $600/(600 watts+42 watts) = $0.93/Watt. The problem here is this measure cannot then be used to compare to any other product, so we need a new measure to compare our product.

The problem of introducing a product that creates a new product category is one that is well documented. Clayton Christensen might call this a disruptive innovation, as it is a product that changes the dynamics of competition and introduces new features that are fundamentally different to what is available now. He suggests that such products tend to enter the market in niche areas. An obvious niche for our product is where there is limited collection area (roof or ground area for the panels). Because our product collects two types of energy, we can collect more energy per square foot (area) than other products.* Once a product establishes a base in a niche area it can then start to enter into more mainstream market categories. This creep into the mainstream is assisted by cost improvements with scale and by the development of distribution channels and product familiarization. This approach is generally deemed to be more successful as a new entrant can otherwise be quashed by an incumbent who has market power in its main customer base, so the game is to find a niche where the new product does offer particularly appealing attributes and where incumbents are less interested and are willing to cede.

So what is our niche? (more to follow in a subsequent post)

* This discussion ignores the other disruptive aspect of this product, that it is a polymer collector that takes much less material and can achieve great economies in scaled manufacturing and is much lighter and easier to work with. I'll leave that discussion for a later post, so that the hybrid issue can be adequately explored.