Solar Technology: Cutting Costs the Unsexy Way

This article has 8 comments:

•  
  Paul Saxton

  Mar 04 12:54 PM

  My Website
  Hello, it is very exciting to see that finally, after may years and many billion, or tens of billions of investor dollars spent on trying to change the laws of physics, the industry for alternatives is approaching reality based decision making processes.
  
  Additionally, what needs to be said is the potential to not only take cost out of the inmplementation process for PV installations; but to also talk about reducing the overall SIZE of the PV installation to begin with. What we are talking about it this. The most prudent and economically effective step a person can take is to get emergy efficient BEFORE sizing the PV installation. Since we are talking solar and solar typically is used, at least in this instance, to generate electricity, we should be talking about reducing electricity demand and, thus, consumption.
  
  THIS is where we come in. This is the nitch that will propel Enercon International and all properly focused energy conservation companies into the foreseeable future.
  
  Regardless of the whizbang technologies out there...NONE are as energy dense as the quickly diminishing cheap fossil fuels that we are all addicted to and spoiled by. So, getting efficient; downsizing your demand and making a HUGE addition to your bank acount balance in the process is the smartest sustainable and profitable investment a decision maker can make today!
  
  Paul Saxton
  Chairman/CEO
  Enercon International
•  
  Paul
  Passarelli

  Mar 04 12:57 PM

  My Website
  Nuthin' un-sexy about reducing install costs. That's why we've examined the install issue closely. Our panels go up at the rate to hundreds of kW per man-day. Why? Because they are 8-12 ft wide and 20 feet long. How's that possible? They aren't PV modules, they aren't even PV.
  
  Our concentrating thermal panels are in the $100 per m^2 price range and weigh about a pound per sq ft. By reducing the number of connection points by a factor of 30, it's easy to see how the cost of installation is slashed.
  
  Since you want electricity, we bring that heat into an Organic Rankine Cycle engine and turn a real generator. Inverters used with PV modules last about 6-7 years and currently cost $800/kW. Generators have superior overload capability, last 30,40,50 years and cost about $50/kW.
  
  Given those major advantages, you're likely to want to cover as much of your roof as possible, that's a natural response. What we find is that the limit you'll now be faced with is the building's existing electrical service, or your transformer vault.
•  
  tessant

  Mar 04 06:13 PM

  My Website
  solar! it will make a comeback this year!
  
  -scott
  growthportfolio
•  
  IE Solar

  Mar 04 07:56 PM

  My Website
  An interesting article, but misses the mark big time.
  
  The typical residential solar install costs roughly $8.00 per watt installed. Of that $5.00 is materials cost. The remaining $3.00 pays for the contractor's direct labor, indirect labor, the assorted insurances required, contract administration, rebate administration and the cost of Sales and Marketing. If your lucky you might have a few bucks actually hit the bottom line as profit. The thought that somehow a elaborate ERP solution will somehow squeeze out additional profit or cost savings to the customer is a bit naive.
  
  Let me explain:
  
  A Solar Installation is not overly complex. Compared to other construction fields, it would probably be equivalent to a door and window contractor. The real trick to success is to have all of the proper doors and windows for the job tightly scheduled to arrive at the start of construction. It is possible to engineer the other associated hardware, shims, hinges, down to the penny. I'm sure it is possible to check every door and window for level and squareness to optomize shim expenditures but the level of engineering required does not justify cost. The problem is solved by having trained installers with well stocked vans.
  
  Granted, there are some larger installers that may need ERP. Akena is publicly traded and we can see they turn their inventory maybe twice a year. They have an inventory problem. Maybe an MRP / ERP will help, or maybe it will add another layer of overhead and complexity on an already top heavy company.
  
  Our company is perfectly happy managing our inventory with QuickBooks and Excel and turning the inventory 40x per year. A few basics diciplines and a lot of product knowledge in the procurement function goes a long way towards success.
  
  Bruce Whitehill CPIM
  Materials Manager
  Independent Energy Systems
•  
  vitamin_j

  Mar 05 01:33 PM
  Mr. Whitehill, I found your comment very interesting.
  
  I'm wondering: are you implying that Akeena is, in your opinion, a "top heavy" company? If so, could you elaborate on why you believe this? Is it specific to their "inventory problem," or general to the company as a whole (sales, marketing operation, etc.)? Thank you very much for your insights.
  
  -A small-time Akeena investor
•  
  IE Solar

  Mar 06 01:43 PM

  My Website
  The top heavy comment comes from the fact that from Q2 '07 to Q3 '07 the selling and admin expense jumped from 3.6 Million to 5.3 Million in a Quarter where the Sales only increased a half a million.
  The Q3 loss was 3.7 Million, I'm sure the additional 1.7 million of Selling and Admin expense was overhead, probably a lot of it un-necessary (possibly and overblown ERP exercise). Check the Income statement quarterly data.
  
  The Inventory problem (check the balance sheet quarterly data). Over the course of '07 the inventory went from 1.8 Million to 6.6 Million (nearly 4x) in a time when sales only doubled. Apparently the inventory was funded with debt (debt up to 4.9 million from 530K) and AP up from 4 million to nearly 9 million.
  
  If the trends seen quarter to quarter on these debt, inventory, and admin expense numbers don't improve and keep trending in the wrong direction, look out.
  
  Or I could be completely off base and these investments were sound, setting up Akeena for growth. The '07 financials will be interesting.
  
  I think the fundamental problem with Akeena might be a management team made up of mostly Software guys, trying to make a go of it in a hardware / construction based business. Vaporware doesnt exist in this industry, it doesnt produce Kwh.
•  
  vitamin_j

  Mar 07 01:04 PM
  Thanks for the response. I am definitely watching those SGA expenses - I don't see how they can improve much in Q4, however I think they will improve over the year. Taking the Q3 call at face value, about a million of their loss (working from memory, not reference) resulted from their mispricing - they expected panel prices to drop over the year, and panel prices did not. Forgive my inexperience, but is that an ERP problem, or just an unfortunate economic call on their part? They also had problems with sales commissions and with installers working overtime - essentially, too much business, too few installers = lots of overtime. Also stock compensation for their departing CFO, among others. Growing the business in that state is a recipe for growing losses, I agree, but I tend to attribute it to growing pains, a temporary state, etc. I believe more "steady state" quarters are on the way that will show better results.
  
  I will take a look at those inventory figures - that's very interesting, and a question I hadn't considered enough, or perhaps not in the right way. I'd also note that they are clearing inventory to make way for their new panels, so I expect that to also weigh on Q4.
  
  I hold some AKNS, so I tend to believe that they made good investments for growing the company long term - they opened a lot of offices in '07. They say each office takes 6-12 months to really get up and running, so I anticipate that those 6 or so offices will stop dragging and start showing more results. I also think that they've got a marketing/sales operation that's sized for the larger company they anticipate being, say by the end of this year. It's an aggressive approach, for sure, but I knew I was buying aggressive when I bought this one.
  
  I also tend to buy into their story about the Andalay panel - it will reduce costs, time, and bring licensing money that will bolster the bottom line. I do however wonder if it's the competitive advantage they claim - after all, REC Solar has come out with a "Solarak" system that also reduces installation costs - so once everyone has an efficient system, then where is Akeena? But I don't know any more about that REC system than what the PR says right now. Maybe Andalay is still the best design out there. At the least it will help Akeena get installation costs down.
  
  Also - is Andalay the "vaporware" you're talking about? I'm about as far from the Valley as you can be, so maybe the term is lost on me. But Andalay exists and is going into the OS, so to speak. Or do you mean the "patent pending" aspect of it? Or some larger metaphorical usage of "vaporware"?
  
  Finally, longer term, I think Akeena will do best if they focus more on being a design company, and not stake their business solely on the "hardware / construction" aspect you mention. That's the way they're trending with Andalay, and they need to keep that up if they're going to make it longterm (or get bought by someone with that view). For example, before someone installs a system on their house, have a thorough energy audit, do everything possible to boost efficiency, so you install the Kws you reasonably need (maybe that's already industry practice). Or with coming things like plug-in hybrids - they need to (maybe they are) get an integrated/plug n play/andalay style carport charging station. Partner with General Motors on it. Basically, diversify, partner, license - think there's a lot with efficiency, monitoring, allocating (a non-technician talking here), financing, carbon-auditing, consulting, and more that would go hand-in-hand with small, distributed PV systems - and that could help buffer them against the ups and downs of the installation business.
  
  Thanks again for your previous response.
•  
  GoSolar

  Mar 28 06:58 PM
  IE Solar
  I'm surprised with your comment “that you can run business with Excel and Quick-books”.
  if your plan to run a small business, one or two installations per week that's maybe the case, otherwise if you want to build scalable / multimillion dollar business you must (yes must)
  use ERP and automation,, think about transactions per watt,,, quotations, inventory management, planning, accounting,,
  I'm working in the high-tech industry for many years , started from small startup to sizeable company, no way we could support the business without ERP and other software tools
  
  p.s. remember that this is relatively new industry , many people from different industries are moving is, this is really good , so far all the good people who worked in this industry for the last 20 years
  did not change much
  Have nice weekend.