In the recent surge in interest in the clean technology and energy investment area, we're constantly surprised by the number of startups in the area focused on some aspect of the industry. Recently, we learned about Solarmer Energy, a spinout of UCLA, which is developing flexible solar panels, and caught up with Woolas Hsieh, President and Founder of the firm and Dina Lozofsky, VP, Corporate Development at the firm to hear more about its emerging technology.
Let's start on the technology side--can you tell us about the technology, and its origins?
Dina Lozofsky: The technology, very simply, is solar panels made from polymers. We refer to them as plastic solar panels. The original technology was developed at UCLA by Professor Yang Yang. We have a long relationship with them, and have been funding research in their labs, and have a continuing relationship. However, we are also further developing the technology ourselves. It's very simple, from the technical perspective. We've got active polymers, an N-type and P-type polymer, which, when mixed together, absorbs sunlight and turns it into electricity. Those polymers are sandwiched between electrodes on a substrate. It's very simple and straightforward, and the key to the technology is how you put the layers together, the architecture of the layers, and the materials themselves.
Where is the technology now, and is it on the market yet?
Dina Lozofsky: It's not quite there yet. We have the champion efficiency for small cells, at 6.77 percent efficiency as certified by NREL, the National Renewable Energy Laboratory. We're the only firm which has gotten to that achievement level, and into pilot scale manufacturing. We're doing our development in El Monte, and we think we'll be operational by the beginning of next year, and full scale by the end of 2010, with product launch in 2011.
How did this go from technology in a lab at UCLA, to a company?
Willis Hsieh: When I first met Dina, she was a technology transfer associate at UCLA, and she helped us get our license to the technology. About a year later, we recognized that it was very important to also have the patent, and Dina joined us. Our company was privately funded by our partners. We have three partners--two are bankers, and one is an entrepreneur and self-made millionaire, Edward Chen, who is our Chairman and CEO. Edward became a millionaire when he was in Taiwan, trading electronic chips, and since then he has built three companies in the computer industry. One was developed into a silicon-based, solar panel manufacturer, and is now one of the top ten manufacturers in the world. All of his companies are listed companies in Taiwan.
We identified Dr. Yang Yang's technology and thought that this might be the next generation material for solar panels, due to its cost superiority and ease of integration. We thought of all kinds of possibilities for potential applications, all of which are weaknesses for silicon-based panels. Silicon-based solar panels are too expensive--you've seen the price of the materials go from $300 per kg down to $70 per kg, but it's unpredictable--just like fossil oil, and also too expensive. That makes solar panels as a product not competitive at all, if you removed government subsidies. The other thing is that silicon-based solar panels have proven to be only viable on rooftop applications right now, instead of being integrated into many consumer products, including windows. We believe that plastic solar cells will be uniquely competitive in windows applications, which we believe will be coming out in 2012, based on our own schedules.
Base on all of this, we set up Solarmer, recruited the research and development staff, and are now in the last stage of pilot line manufacturing. We hope to finish our pilot manufacturing by the first quarter of 2010, and then start trial manufacturing and mass production by the end of the year. We hopefully will have our first production year in 2011.
It's interesting to see that you have initially targeted the consumer electronics market, how decided to go after that market?
Woolas Hsieh: One of the first things, when we decided to set up the company, was to determine what markets we wanted to address. We knew that there was a long way to go, as far as the technology was concerned, due to low efficiency and lifetimes. We also sensed that we needed to generate immediate revenues. We identified several consumer applications, which were based on a large area, had a low demand for electricity, and where we could be competitive. We identified solar bags, cell phones, and recreational tents, the three big areas we're pursuing at this time.
You mention lifetime, we've heard that there are some lifetime issues with the technology?
Dina Lozofsky: Yes, the lifetime issue is that basically, these materials degrade when exposed to moisture, and oxygen. The issue is finding the best barrier and encapsulation to protect the panels that are out there, to give enough of a lifetime. There are materials out there, but the costs are prohibitive. We're looking for the best answer for that cost/performance balance. That's not something we're doing internally, we're actually looking for partners to help us on this. That's one reason that Woolas mentions cell phones. They've got a relatively small area, and their lifetime requirements are very, very low--because with most cell phones, due to how carriers market their plans, you only buy then to use for about two years. It's a good application from that perspective. In addition to that, we're looking at smart fabrics. Right now, the lifetimes we have seen under accelerated conditions are about 1 year, and we need to get to 18 months by mid-2010. For our production launch, we think we'll be able to do that.
What are uses in smart fabric applications?
Woolas Hsieh: We certainly feel that flexible solar cells, particularly our plastic solar cells, are very competitive. It's not something that other materials like solar cells can compete with, in terms of flexibility and cost. The usage in tens and clothing are potentially very important applications, and we're uniquely positioned to take advantage of that market.
Dina Lozofsky: The reason we can do this, is because our solar panels can come in different colors--greens, reds, purples--because of the material we're using. That gives attractiveness, and removes some of the stigma that solar panels are ugly. They can then be incorporated into tents, bags, and clothing as part of a design.
How has the experience been taking the technology out of the lab into the market?
Woolas Hsieh: (chuckles) I don't think we are out of it, I think we're in the middle of it. The initial expectation was that it was probably do-able, but as soon as we started, we found that technology itself is just part of the puzzle. We also realized that the technology is quite young, and it takes more than just that technology we licensed to make it a product. Another challenge was helping mature our engineers and scientists, so that they can think in terms of economic value, instead of just pursuing scientific achievements. We have been very fortunate we've had good scientists who have been able to do that, and aren't just crazy scientists. As a team, we've been able to leverage our managerial experience from all other fields, and nurture and development managerial skills to help our innovation management internally, and for project management. We've used things like Six Sigma tools, and applied those to every step of development, and that has proven to be very effective. The other thing, is that we've always been on schedule, which is remarkable considering our technology, and under budget. If you compare us to one of our larger competitors, Konarka, they've spend hundreds of millions of dollars to develop a similar material, but their best material is only at 6.44 percent efficiency, and they developed that just last year. They certified in May, and we certified a month later at 6.77 percent efficiency. But, ours only took 18 months to develop, where theirs tool close to nine years. They've also spent $150M, versus us, where we've only spent $8M to date. We have 25 people, 16 of them in engineering, where they have over 150 people and offices across the world.
What's the next steps for the company?
Woolas Hsieh: We're focused on competing our pilot line, which is already financed. What we're looking at right now in the next year are two things--one is manufacturing strategic partners, where we are looking at companies in Europe and Asia, and partiuclarly in China. We're also looking to raise $10-$15M for our first mass production facilities, which will be our B round, and hope to complete that within the next twelve months. We're also continuing to look at capacity, adding capabilities to design and manufacture our production systems.
We're also hiring. Our company has grown from just 6 people two years ago, to now 25 people. We're continuing to look for good talent to join us. Positions are available on our web site, but we're particularly looking for engineers that have a background in manufacturing as we ramp. We're also looking on the business side in marketing, but are being very careful there in hiring.