Austin-based HelioVolt Corporation has raised over $100 million in investment capital to finance production of copper indium gallium selenide (CIGS) solar cells. While CIGS might be less efficient than crystalline silicon solar cells, they're also cheaper, and HelioVolt's investors are banking on the cost-effectiveness of its FASSTTM technology, which prints the CIGS coating directly onto a wide variety of substrates. This technology was developed by HelioVolt CEO B.J. Stanbery. I recently interviewed B.J. at his office in Austin.
Jon Lebkowsky: How did you get the idea that led you to form HelioVolt?
BJ Stanbery: It's really the fulfillment of a thirty year professional commitment. When I started graduate school at the University of Washington in 1978, I was not only struggling with getting all my homework done for graduate school physics, but I was also struggling with more philosophical issues around raison d'être. It was just after the first oil crisis, which started in '76, then '77 was the depths of it, and in '78 things started to recover, but slowly. The whole energy issue was very much on my mind as I was trying to figure out how to use my talents and my skills and my interests.
Like most people, I excel at the things I'm most interested in. I was very interested then in solid state physics, and I had been working, throughout my last year as an undergraduate at the University of Texas, at the Fusion Research Center, the Tokamak lab. I thought about doing plasma physics. But in looking at the fundamental differenc between that kind of science, i.e. big science, and the opportunity to work with solar energy and photovoltaics, I found the latter much more appealing.
I felt I could be much more effective there as an individual contributor than on the area of solid state physics. This idea came to me as a consequence of a colloquium that was held by the physics department at the University of Washington, where the guest speaker was from Boeing. John Barton came and gave a talk about the solar power satellite, the SPS, which was the vision of making multi-square-mile collectors in space that would then microwave-beam the energy back down to earth to be collected in giant array fields of microwave antennas. That was a grand vision that I found very exciting. I had been trying to figure out how to get engaged in that field, and the week after John gave that talk, I called him up and asked him for a summer job. I had gotten more and more interested in solar energy.
In 1977, the U.S. Department of Energy had been formed, as the first new cabinet position in the executive branch of the U.S. government in decades, and the solar energy research institute, SERI, had been established. So I had decided that that was what I wanted to commit my career to, so I got a summer job in the summer of '78 with John Barton, and made my first solar cells that summer. That's where the dream started, and as a good scientist, and perhaps also just by nature, I tend to be a skeptic, so I felt very strongly that it didn't make sense to launch off into this kind of venture unless I really had a solution, so I spent a lot of time trying to understand the problem. Like most engineers, in the beginning, I thought the problem was technical. I started working on the kinds of things that engineers focus on, which is performance, and I made concentrator solar cells and all the different sorts of technologies, and by 1985, though we never published it until 1989, we established the world record in thin film solar cell efficiency, and held that record ever since.
Then I won a fellowship from the Boeing Company to MIT for several years, and was their outstanding engineer of the year in 1987. I wanted to do non-engineering things like project management and financial cost analysis, the kinds of things that make engineers dangerous. When I came back, they made me responsible for cost modeling for the technologies that we'd been developing. It was at that point I finally realized that the real problem, the real challenge of solar, was not performance, but cost-effective manufacturing. And that changed my career, when I finally did that analysis in 1990.
By that time I had figured out, from my point of view, a solution to the performance problem, and then we demonstrated that we could invoke a wide range of efficiencies, including the world record that we set, 25.8% conversion efficiency for a thin film dual junction cell. That's comparable to a combined cycle gas turbine. So at that point, in terms of thermodynamic efficiency, you can't really argue that solar's not good enough. You have to then focus on what I realized was the real problem, which was cost. At that point, I realized that I did not have in my professional toolbox the skill set required to develop or invent a new manufacturing process.
Because I was a physicist and a mathematician, I could model things well, I understood the device physics. In physics they teach you that thermodynamic functions are partial differentials of grand canonical partition functions, statistical mechanics, and that's not a very practical way to do almost any calculation in thermodynamics. So, in 1994, Boeing decided to get out of solar, and I decided to get out of Boeing. I went back to school, to the University of Florida to get a Ph.D., and I decided to get that in chemical engineering, since those are the kinds of skills that complemented what I already had in my toolbox, and that were necessary to invent a new chemical processing method for making these CIGS solar cells.
Jon Lebkowsky: Did that give you an insight also into storage?
BJ Stanbery: No. None whatsoever. All I know is that storage still costs too much, too.
Jon Lebkowsky: Isn't storage a significant issue or question mark - e.g. if you have many cloudy days?
BJ Stanbery: If you want to look at an ideal solution, the availability of cost-effective storage historically has driven the entire development of the industry. That would fundamentally change the utility industry, if we had cost-effective storage. Not just solar. So, in fact, what changed the market for solar dramatically was when people abandoned the notion that they needed to include storage in a system, and instead started creating developed inverter technology to take the DC electricity coming out of the photovoltaic devices, convert it into AC electricity, and then connect these systems to the grid, so that the grid then acted as a market, if you will - an exchange mechanism for the electricity. The explosion in the PV industry occurred when people abandoned the notion that PV had to be used with batteries to store the electricity.
Jon Lebkowsky: A PV unit that is installed on a house can be just a node on the grid, that's actually feeding industry back into the grid?
BJ Stanbery: When the home is using less than that system is creating, yes, it can. That also is a different kind of challenge to the utility infrastructure, because our utility infrastructure is based on a model of central power generation, and transmission and distribution back out to the buildings where most electricity is used. The widespread deployment of solar creates a far more distributed generation infrastructure, which creates some topological problems for the utility industry, if the smaller systems are not interfaced properly, and if appropriate technologies for managing large volumes of distributed power generation are not developed. And that is still an issue which has yet to be fully and appropriately addressed.
Jon Lebkowsky: There are transmission issues, aren't there? How to sustain transmission over something that is more like a network?
BJ Stanbery: That's sort of what I'm talking about, the transmission issues. It's really the generation management, and there are issues.
Jon Lebkowsky: What you're creating now is an alternative to grid-connected systems?
BJ Stanbery: No, I very much believe that the paradigm of the future is grid-connected systems, because it obviates the need for storage. If you sit around and wait for that industry to develop low-cost electrical storage before PV gets deployed broadly, I'm afraid you may be waiting a long time. It doesn't make sense, either.
Jon Lebkowsky: Somebody told me he thought the utilities were concerned that, to the extent that PV becomes more widespread in its use, that they can sell less, that people can go off-grid or consume less.
BJ Stanbery: I've heard that concern before, and I think it's overblown. Let me explain that. That doesn't mean that there aren't people in the utility industry that are worried about that. But I think they haven't thought it through yet. The issue of management of distributed power generation, of transmission and distribution, the one that you raised, is really more substantive when it becomes widely adopted. Let me be a little Socratic about this and ask you a question: why do utility companies include in their bill little inserts that offer to pay you to put in a thermostat or improve the energy-efficiency of your system, to subsidize a new furnace, a new hot water heater? Why would they do that? Those same things reduce demand for what they're selling?
Jon Lebkowsky: My assumption has always been that, since many utilities are public utilities, city-owned or city operated, that they put the citizen first, a citizen as opposed to a consumer. That they're not really trying to maximize their profit, but they're trying to create more of a public good. Am I way off base there?
BJ Stanbery: Noble, but perhaps a tad naïve. I have a different theory of why they do it. They actually made quite a study of it. They call it demand-side management. From their point of view, what they're actually trying to do is to avoid demand increasing at a rate that requires them to finance substantial investment in new infrastructure. They're avoiding having to go out, raise money, and invest it in new power plants - there's so much risk tied up in that, if you look at how long it takes, how much money it costs, how capital-intensive it is. It gets complicated because it's different regulated and non-regulated environments. In the regulated environments, historically the utility industry has been capped in the rate of return on equity that they can get, at a very low level, from regulators, and how much they can get for capital investment in generation capacity. A utility doesn't make much money off of doing that, whereas the regulators have always allowed them to pass on the cost of fuels to the consumers through a fuel surcharge. So they have a fixed and very low rate of return on investment and capital equipment, and they get to attach a profit margin onto increasing fuel costs. So guess what? Anything like solar that's all capital and no fuel doesn't in a regulated environment like that look very attractive to utility companies, which makes their stock look not so attractive on the equity markets. There's a number of things going on there, but I think with demand side management what they're trying to do is to avoid new capital investment, particularly nowadays. There's been kind of a bad history, for example, with nuclear power plants, people investing billions and billions in nuclear power plants. For example, in Washington state, they had a statewide bond fund, they had a couple of big nuclear power plants that they funded down the Columbia River. They built most of it, and then they stopped. The political environment changed, and they could no longer finish them and no longer operate them, and they never got their money. They defaulted on the bonds. So utility companies are kind of like elephants, they have a long memory, in that regard. So they tend to recognize that there's a lot of risk associated with major capital investment.
Jon Lebkowsky: James Lovelock recently said in a Rolling Stone interview that he thought we would inevitably have to turn to nuclear energy now. Do you agree with that? Do you think he's barking up the wrong tree, that we can proliferate solar generation to the extent that we wouldn't have to think so much about a nuclear alternative?
BJ Stanbery: I'm not dogmatic about there being only one solution. To the contrary, I think that we need a portfolio of solutions in order to possibly cope with the challenge ahead of us. My prediction is that the demand for energy is going to soar because of the incipient - and now well under way - development of highly populous countries, like India and China. The cost of energy is going to soar. So a lot of things that were uneconomical will become affordable. You see that already in the price of gas increasing… it's not over, is my best guess.
If you look at nuclear alone, there's a fascinating analysis that I recommend anyone who wants to be well-informed on this subject read, on the web site of Nathan Lewis of The Lewis Group at Cal Tech. He's a professor of chemistry there, National Academy of Sciences… he's made a hard core, scientific assessment of what energy sources are known to humanity that are available on the terawatt scale at which we consume power. Currently, humanity consumes about thirteen terawatts of power, in all forms, including food, fuels, electricity, everything: you name it. By 2012, I think his numbers were that we're going to need fifteen. And by 2050, I think we're going to need 28 terawatts.
Jon Lebkowsky: That's a factor of global development, an upscaling of lifestyles.
BJ Stanbery: And it even makes assumptions about improved conservation and improved efficiency. So it's not a wild-eyed, crazy estimate. The fact is that nuclear alone cannot solve this energy crisis. It can be an element in the portfolio of solutions that are required. But solar does not solve all the problems either, until we solve the cost-effective energy storage problem. Part of the reason is that it's not a fuel. If you look at Nate Lewis's website, there are really only six forms of power known to humanity that are available on the Terawatt scale. One of them is thermonuclear, but all we know how to do with that is blow things up, so it doesn't really count. I used to work on fusion research - that was thirty years ago, and they still haven't solved that one. Not saying they won't someday, but it doesn't look like it's around the corner. The other five include the usual suspects: coal, gas, oil; and then nuclear fission and solar. That's it, there's really only five that are applicable to solving this problem and increasing our resource. That's why I think that a portfolio solution is inevitable. Solar, in constrast to the other four, is not a fuel.
Jon Lebkowsky: How about geothermal, how would that figure in?
BJ Stanbery: Not available on a terawatt scale. There's not enough of it available.
Jon Lebkowsky: Would it have an appreciable impact?
BJ Stanbery: I recommend that you look at his data, and make your own assessment of that. I just think that he did a very legitimate job, a very hard-nosed, scientific assessment of it, instead of being political about it. So these are the numbers to work with, in my opinion.
When it comes to providing energy for transportation, that becomes, with our current infrastructure, a challenge, because solar is a very dilute source of energy, it's a kilowatt per square meter. There's a lot of it - a kilowatt per square meter over one square kilometer is a gigawatt of power, and on the illuminated half of the earth, that's 117,000 Terawatts continuously. So there's a huge amount of power, but it's very dilute.
Jon Lebkowsky: With solar power, your car would have to be really big and flat.
BJ Stanbery: Exactly! If you wanted to be anything other than what solar cars are now, which are glorified solar bicycles, really. Cars just don't cover enough area.
Jon Lebkowsky: Maybe you should just put a sail on your car.
BJ Stanbery: Probably, until the wind dies. Most people aren't willing to take that risk.
I don't think solar is a panacea. I do think that solar will be a continually larger and larger fraction, as we go forward through the centuries, but part of that is going to be from solving these ancillary problems, with low cost storage, and in the case of transportation systems, it also has to be lightweight.
There are other options. There are ways to use solar power to create fuels, and that may be a viable solution. One that I'm particularly fond of myself is methane as an energy source. It doesn't take as much energy as hydrogen to form, and maybe we can figure out a closed cycle solution to taking the carbon that we burn and turning it back into methane fuel. Methane is, after all, natural gas. So ifwe could use solar to recombine waste carbon to form synthetic natural gas, I can see a future where we would have potentially a closed cycle system, where the issue with carbon can be solved in terms of carbon dioxide in the air. But we shall have to see.
Jon Lebkowsky: You're building with FAAST technology. Did you originally plan to just license the technology and not manufacture it?
BJ Stanbery: No, I originally envisioned manufacturing and not licensing, and have never looked at a licensing model, because there's just too much value on the table, and too much investment required to develop a manufacturing technology.
Jon Lebkowsky: You're going to manufacture here?
BJ Stanbery: First factory, yes. Our intentions are to expand globally.
Jon Lebkowsky: How difficult has it been for you to gain acceptance for this idea as a viable business? Obviously, today, th ere is widespread acceptance, and Heliovolt is considered a leader, not just with this particular kind of technology and product, but also more generally a leader in clean energy business overall, in creating a credible environment for it. Did you have an uphill battle for acceptance, for a solar business.
BJ Stanbery: There's no question that, when I founded the company back in 2001, when I would pitch investors about investing in a solar company, the most common response was "Why?" But that was back when oil was thirtysomething a barrel, but as it started to catapult, and as global warming became more of an issue, and as carbon cap and trade systems were established in Europe, the Kyoto Protocol… all of those things created - I hate to use the trite phrase, but it was a perfect storm. Finally the forces started to come together to create an environment where at least the more progressive people, thinking ahead, started to think "maybe there's something here, maybe there is a real business opportunity." Part of that is because the business opportunity was demonstrated as a consequence in other countries, as a consequence of their subsidy programs for solar. It started in Japan in the late 90s. Then it followed in the early 90s. I think what investors saw was that, while the cost of solar was subsidized, there was a dramatic huge increase in demand. Between '97 and 2006, the rate of increase of global demand for solar increased every year. In other words, the RATE of increase increased. Historically it was 17%-18% a year back in the 70s and 80s. When it started to go up in the 90s, it was 25%, the 28%, and 32%... and then in 2006 it was over 50% annual increase. I think that was not sustained in 2007, because of a resource shortage in polysilicon. When financial investors recognized that the cost of solar was not going down, but the demand was going up because the effective cost to consumers was going down, because of the subsidy programs. It gave them the data and the understanding that there was this huge price elasticity in demand, and frankly it generated the data requisite to quantify that, and allow investments to say "Wait, there's a huge investment opportunity here" - because right now solar is a fraction of 1% of all electricity generated. That global market for generation is hundreds of billions of dollars a year. A large fraction of that growing number of demand for a total amount of electricity consumed, and amount of money spent on electricity, could be captured by solar. So it was recognized as a huge growth opportunity, the sort of thing venture capitalists like to invest in. That's dues to the effect of subsidy programs, in my opinion. Because of those subsidy programs in Japan, Japan then dominated the market, and then when Germany created their subsidy programs, Germany now dominates the market. I mean, the manufacturers in those countries, and now the largest manufacturer in the world is Sharp.
Jon Lebkowsky: There's a message in there.
BJ Stanbery: There is a message in there. It's economic development. It's develop your industrial base, and become part of this next generation industry. That's one of the things that's achieved by investing in market growth through a subsidy program for a fledgling industry. This is, in my opinion, proven, and when you look at the overall returns, in terms of jobs that are created and wealth that's created, it's a smart investment.
Jon Lebkowsky: You're wanting to create building-integrated photovoltaics. In doing that, are you having to work with the building industry to develop methodologies for including photovoltaics in construction?
BJ Stanbery: Yes, very much so.
Jon Lebkowsky: How is that going? Are they very receptive?
BJ Stanbery: The building and construction materials industry, and the building industry in general is huge, a multi-trillion dollar industry globally, and it tends to be highly regionalized. It has lots and lots of players, so it's not like, for example, the nuclear power plant industry, where there are about three companies in the world that make nuclear power plants. It creates a real challenge from a business development point of view. The other thing about that industry is that it's a very mature industry, so I think the answer is that it's very complex. There are players in that industry that recognize the opportunity to incorporate technology in order to make themselves more competitive in the market, and there are others that just aren't that aggressive.
Jon Lebkowsky: More conservative.
BJ Stanbery: Yes, and they're just not that interested. They don't recognize any threat to their existing business, and they're not that ambitious about growing it significantly.
Jon Lebkowsky: But it seems to me that building is going to be transformed radically. Energy will be part of it, but also methods of construction, and new flexibility in construction. Flexible homes that you can build and extend.
BJ Stanbery: Building tends to be a bit of a craft industry in many ways, potentially the home building part of it. From a cost point of view, there's an existing drive that will only expand to increase the level of preconstruction, manufacturing of components and subsystems for buildings, which will make them more flexible in terms of using standard, modular type components for the construction. That doesn't have to imply boring architecture, in my opinion. It implies, rather, standard building blocks. So I think the combination of that trend, combined with sustainability, because the impact that we have on our natural resources as the rest of the globe expands, in terms of forestry and things like that is just devastating and unsustainable.
Jon Lebkowsky: Building zero-impact homes is really complex.
BJ Stanbery: Yes, it's very complex, but I think you're going to see more and more of a motion toward that, and that will include energy efficiency, energy conservation, and onsite energy generation, particularly by solar.
Jon Lebkowsky: One final, quick question - how close are you to actual production, and seeing your photovoltaic product moving to consumers, and into homes?
BJ Stanbery: Well, we'll be building full-scale prototypes, so I'll get to see it this year. But they won't be on homes until next year. We'll be doing some outside testing and deployment in certain locations, just for testing and pilot purposes this year, and next year you'll see that product flow into the market. And over the next few years, I think you'll see a huge explosion of installations of our technology into homes, hopefully around Texas, and the rest of the world.
Here's a fun calculation:
How much indium is required to produce a cell that can generate 1 watt of power using the CIGS technology?
Multiply that by 10^12 (a trillion) to find the amount required to generate a Terawatt (~10% of humanity's current power consumption).
Compare that to the amount of indium present in the Earth's crust.
There was a talk at Caltech last fall, partly about the additional constraint that any new energy solution must ultimately be massively scalable, which means it must use only earth abundant materials. Here's the video link (RealMedia):