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.