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George Monbiot’s recent guardian article got me thinking about the nature of research and development in the photovoltaic industry and how R&D has been impacted by feed-in tariffs in Europe.

Having worked in photovoltaic research both in a university laboratory and industry I have some experience of R&D. The field of photovoltaics certainly falls into the category of applied research, meaning that the ultimate goal is not only to gain new knowledge, but to bring new products onto the market that improve the world around us. To achieve this however, there is a long journey that must be undertaken – getting a new technology onto the market is a multi-stage process.

Of course every new idea is different, and no new technology undergoes the same journey (whatever people say, there is no clear line between the terms ‘research’ and ‘development’). There are some features however, that are common in technology commercialization processes:

At the beginning is painstaking fundamental research in a laboratory. This may not even involve making a prototype but for example may simply consist of measuring an effect in some new material. Many, many ideas are proposed, tried and rejected for every idea that makes it past the first step. This is the most creative part of the process, which is why it attracts so many brilliant minds, but the most that can be achieved here in real terms, is some suggestion that a concept has a chance in the outside world.

From the initial conception of a new technology, extensive tests must be carried out in the lab to show feasibility of the idea. Once all the tests that can be done in a laboratory have been done, it is time for the research to outwards and beyond, and into the development stage. The challenge is to take the small-scale prototype closer and closer to what might be considered a real product using a real manufacturing process. In the photovoltaic cells, those made in the laboratory are often tiny (smaller than a postage stamp) and fabricated using methods that are totally unsuitable for large-scale production.

Laboratory research however, is relatively very cheap compared to the later stages of development. The big hurdle for scientists is to find the money to pay for the next step in the development journey.

Whilst more money in basic research is always welcome, there are a number of defined funding bodies that scientists can apply to for laboratory research. UK universities have so far been fairly successful in attracting funding to expand research for renewable energy research in recent years. What is much less clear however, is who will pay for the later stages of development when a technology is ready to leave the lab, but still has someway to go before it is proven on a large scale. Often there are a lot of big technical challenges to go from small to large-scale manufacturing, and one can never be sure that it will be viable at all until you try. With new types of solar cells, often this expansion happens in several stages, with multiple, progressively larger production lines being built. It can get VERY expensive.

This gradual scaling up of a laboratory process is not usually paid for by government sponsored R&D programs – building a manufacturing plant is seen as a commercial exercise. Scientists are therefore forced to go to the private sector and do battle with venture capitalists and the like to get the necessary funding. For this reason, many promising technologies never make it out of universities at all.

The painful truth is that the scale-up process is absolutely critical to getting a technology onto the market. Without this step you may as well not have bothered inventing the technology in the first place. I know from experience that there are hundreds of extremely exciting new types of solar cells sitting waiting in laboratories around the world. The bottleneck is and always has been raising finance for the expensive scale-up process.

In the last few years however, since 2004-5, there has in fact been a remarkable inflow of venture capital money in solar energy. Certainly not all, but many solar companies have managed to raise money to take their technologies from the lab to manufacturing. Venture capitalists (particularly from Silicon Valley) and corporations across the world have poured billions into the hands of solar cell scientists to take their technology on to the next step.

What caused this sudden surge in investment in solar energy? Certainly it wasn’t a shortage of revolutionary ideas for solar cells – the concepts that were given financing have been around since the 1970s. My belief is that it was a direct result of the German feed-in tariff that was implemented in its current form in 2004, shortly before the investment frenzy began.

Almost overnight, Germany became the single largest solar energy market in the world, and has remained so ever since. In 2009, over 60% of all the world’s solar panels were installed in Germany. The feed-in tariff guarantees a market for solar energy products and this is exactly what investors are looking for to reduce the risk of a new technology. There will always be technical risk, but the feed-in tariff means that at least if a new technology does work, investors can be sure there will be someone to buy it.

Many of these internationally funded new solar panel companies decided to build their first production lines in Germany. Examples of such companies are First Solar, Nanosolar, Avancis, Q-Cells, Sunfilm, Signet Solar, ErSol, Johanna Solar… I could go on. Each of these companies has raised hundreds of millions of dollars to build factories that produce new types of solar panels. Even the companies not located in Germany have all open their first sales office there.

Of course not all these companies will be successful, in fact Sunfilm recently announced it would go into administration, but that is the nature of developing technologies. The process of designing and inventing a new factory, and then using it to make good reliable solar panels takes such a long time. Despite this, First Solar has just entered the S&P500 with billions in annual revenue, and several others are in their footsteps. There is risk, but without trying you don`t have a chance. The prize is great for those who succeed, and often the experience an expertise gained in failure is not without value.

My opinion is that the feed-in tariff is great for encouraging investment in the scale-up stage of R&D, which is very poorly funded in the UK. Laboratory research will continue, and governments should not cut back spending on universities. However, if a government wants this early stage research to eventually make an impact on the economy, they have to find a way to support expansion stage R&D, and introducing a feed-in tariff is very good way to do this.

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