SolarWindow update
21st July 2016 |
Starting on 14 July, SolarWindow shares slumped – falling from $3.83 at the close on 13 July to a low of $2 on 18 July, before bouncing back to $2.89 by the close on the 18th.
There was no specific news item to justify this fall as far as we can deduce, but we can conclude that the recent capital raising, which may indicate a slightly longer lead time to commercialisation, may be to blame.
Some of the worries investors have expressed about SolarWindow and small companies in general, are that they may not have the capital required to remain in business. By raising an additional $4.3 million in fresh funds that worry is removed for SolarWindow. This money is earmarked to finance an expanded Cooperative Research and Development Agreement (CRADA) with the US Department of Energy’s National Renewable Energy Laboratory.
In the company’s own words:
Our CRADA focuses on the commercialization of SolarWindow products and includes the following initiatives:
• Build large scale SolarWindow units in preparation for manufacturing and eventual sale to customers
• Develop a SolarWindow product to retrofit the more than 5 million commercial buildings in the U.S. alone
• Advance our proprietary interconnection system for easy connection of SolarWindow into building electrical systems
This is not the first time the share has pulled back violently, but it does break the progression of higher reaction lows evident since late 2014. That kind of technical damage will take time to repair. The most likely scenario, now, is for an additional bounce, followed by potentially lengthy ranging before a medium-term demand-dominated environment can be reasserted.
Looking beyond this unexpected gyration the company is moving towards commercialisation, and with a research arrangement with the US National Renewable Energy Laboratory it does have the technology to back up its claims. Therefore it is worth keeping a close eye on the shares for evidence that others share this view – and particularly so if this week’s lows hold on any additional pullback.
For now, I’m moving it to a HOLD.
On a related note, we conducted an interview with the CEO of SolarWindow recently. It was a fascinating insight into the workings, operations and aims of the business. I share our full conversation with you below.
Best,
Eoin Treacy,
Investment Director, Frontier Tech Investor
SolarWindow CEO John Conklin
Interview conducted 1 July 2016
Q: The facts are pretty stark: two-thirds of the electricity generated in the US is derived from fossil fuels, which are responsible for 99% of greenhouse gas emissions. Meanwhile, in a single week, the sun produces 1,000 times the energy that oil, natural gas and coal do in a full year – combined. We’re now in 2016, and we still haven’t come up with a solar technology that can get rid of this overwhelming dependence on fossil fuels. Why is that?
A: I think it’s a function of three aspects. Two of them play on each other, and one is something we struggle with globally.
The two aspects related to each other is that the area required for photovoltaic modules to provide meaningful power to offset the energy or electricity demand that a power plant can generate is a substantial, large size of property. Coupled with that is the cost.
We’re now seeing technologies where the cost is coming down on PV [photovoltaic] deployment. The area, however, is still something that we’re struggling with, because we’re trying to make best use of property without taking away valuable property assets. At play are some of our reserves and what may be national forests or acreage.
The other aspect is that we have tremendous volatility in oil prices. It provides us with an opportunity to look hard at other renewable and alternative forms of energy.
An oil price slump may be a boom for solar. When we see prices come down, certainly it affects the market. But we also get a little complacent. When the prices start coming back up, we then make an aggressive move to look at ways that we can replace oil.
The global PV outlook is going to be strengthened by the need to step away from oil or fossil-burning fuels and power plants, and also by policies to reduce the carbon foot print and reduce greenhouse gases. So I think you’re going to see a more aggressive swing towards solar photovoltaic as an alternative to fossil-fuel-burning power plants. It’s still going to take a little bit of time, although the pace has stepped up considerably.
Q: I presume there’s a fossil-fuel lobby that’s been standing in the way of solar becoming much more widespread.
A: I think so. That’s a pretty large and powerful lobby that certainly is in front of countries and governments, not just the US or the UK but globally. Lobbying certainly has a big impact.
Q: You mention that space, cost, and oil price volatility are standing in the way of solar energy’s development. How is SolarWindow offering an attractive alternative to all of that?
A: Space and cost are two of the big factors that play off one another. If we look at tall towers and skyscrapers, there’s very little space on the rooftop of a tall tower. That space is compromised by all the equipment that’s required to operate that building. There are HVAC systems, elevator shafts, and other electrical and mechanical components that take up the rooftop space. In an average 50-story building, you’re looking at anywhere from 5,000 to 8,000 square feet of space.
Consider the amount of [land] that we would need to offset for a tall tower and skyscraper. For every 50-story skyscraper that takes up six acres, we’d quickly utilise all the valuable park area in all of our cities for just a few skyscrapers, and then quickly run out. We’d then have to look at adjacent land, and then at the transmission cost associated with getting that power to that skyscraper for that land.
Then consider the acreage of glass on all four sides of a skyscraper. When we look at the next-generation skyscraper, a 50-story skyscraper has nearly six acres of glass.
SolarWindow provides the asset of utilising vertical space to turn tall towers into electricity generators – with a less than one-year-modelled financial payback – and does not affect the valuable urban land in those cities around the world.
Q: So the cost of it is amortised over one year?
A: That’s correct. When we consider the cost of a window, and we factor in the cost of SolarWindow to be applied to that window, and we look at a modest increase in electricity rates from year one through year 25, and in the US we consider the energy credits, we’re looking at less than a one-year-modelled financial payback for a 50-story building over a period of time.
Q: Can you explain how the idea for SolarWindow first came about?
A: It actually goes all the way back to around 2008. When the company was working on its motion power technology, a board member had an idea regarding an OLED device that generated electricity. The thought was, if we can generate electricity using the OLED concept, can we scale it and apply it to glass to generate electricity?
The objective then became, in 2009, to develop a coating that would generate a little bit of electricity on a glass surface. That really was a proof of concept: can we put down this coating and generate that little spark that gives us the incentive that says “We can really do this”? From there, how can we then further develop the technology, scale it up for windows, and then use the business model of putting those windows into tall towers and skyscrapers?
I took over in February of 2010 and put together the development plan and all the stages from that proof of concept to where we currently are today.
Q: Can you give a ballpark idea of what it would cost for a building to get SolarWindow?
A: It’s going to be a function of the size of the building. Let’s consider just a window. For us, price point is extremely important. Our goal for SolarWindow is to keep a price point that is at or less than a 10% add-on to the cost of a regular window. That factor helps us model out the less than one-year payback.
Q: So we’re talking a 10% higher price than a regular window?
A: Yes, that’s our goal. That’s a function of the type of window that’s going to be installed: whether we’re looking at some of the double-pane windows that we see, or the triple-pane windows in Europe and now in the United States, and how we coat that SolarWindow on those windows’ interior surfaces, and the power that is to be generated – which will be specified by the architect. That’s where the cost model plays a role. That is our goal, and we’re working very hard towards that goal.
Q: What’s the potential for this technology? Do you think one day we’ll be seeing a large proportion of the five million commercial buildings in the US switching over to your product?
A: We’re looking at a global flat-glass market worth over $8.3 billion. When we break that down into area of glass, we’re looking at about 89 billion square feet of glass, or in metric terms, about 8.3 billion square metres. That is a huge market potential.
We’d look at where that glass is needed. It’s in measures of buildings replacing windows, and part of our research shows that 97% of the buildings out there will be replacing windows. We see that as a huge market potential for not just new construction, but also replacement windows.
We mustn’t forget about retrofits, where buildings have already placed their window and do not want to miss out on the opportunity to turn those windows already in place into electricity-generating SolarWindow. We’re working on a veneer that would go over those existing windows, and in a “plug-n-play” concept, connect directly to that window to generate power for fixtures, lights, computers, PCs, etc.
When we look at the UK, Germany, France the US, Canada, all the major cities play a role in that. But let’s not just consider the big cities, because we see tall towers in other cities — in areas like Scottsdale, Arizona, which has buildings that are perfect for SolarWindow.
The decision on how and when to deploy will be a function of our strategic partners in the glass industry. Let’s face it, they know where the buildings are going up. Their orders for buildings going up in a year are already being processed. And they know where the new buildings are going to be going up, say, five to six years from now. So teaming with those glass companies allows us to work with them in a worldwide deployment on where those buildings are going to be, or where those buildings need to have replacement windows.
Q: When is SolarWindow going into manufacturing, and will you be doing it with an equity partner or are you contracting a factory to manufacture it?
A: Our goal is to have a commercial-ready SolarWindow by year-end 2017. That’s predicated on two very important aspects.
The first is aligning that technology with strategic partners in the glass manufacturing and the fabrication industries – and also with the chemical industries that assist us with the coatings we put on that glass.
Overall, it really is a function of us licensing our IP and know-how to the glass industries, where they can integrate our process directly into their process – [to avoid us] incurring a tremendous capital expense for development. [We would] actually be utilising their infrastructure to bring SolarWindow to their process, so that it is coated directly on the glass prior to them either fabricating a window or shipping that glass to a fabricator for them to build the window.
Q: So you’re going to be working in tandem with glass manufacturers?
A: Yes, and fabricators. Those are the companies that actually build the windows. They put the casings on. When we look at curtain walls inside a building, those are the companies that come up with the fabricated panels that can be installed in a building.
Q: You think you’ll be able to meet this 2017 timetable? You’re optimistic?
A: I am. We have been working with a number of companies in the glass industry. We’ve been in some deep discussions, and those discussions have been going on for quite some time now.
Q: You announced in March that you’ve entered Phase III of cooperative research with the US Department of Energy. How much has the US government invested in the commercialisation of SolarWIndow, if anything?
A: The United States government has not provided us any money for the development of SolarWindow. This has all been funded by SolarWindow, and all the development has been designed and orchestrated by SolarWindow Technologies. Everything that we’ve done at the National Renewable Energy Laboratory and everything we’re going to be doing at NREL under our Phase III Cooperative Research and Development agreement is a chartered plan that we have developed and presented to them and that they have bought into in assisting us with it. So all of the funds that have gone into the cooperative research and development at the NREL have been 100% from SolarWindow.
Q: You announced in a press release in June that you’d raised $4.3 million in capital. Are you anticipating another round of funding?
A: Yes. One of my major goals in commercialisation is to raise capital to help us execute our build-out of SolarWindow. I’m in a perpetual state of looking at how to raise capital, and that’s really a function of two aspects.
First, I want to do it in a way that is engaging for the company and for the investor. Second, I want to raise capital using innovative ways. If you look back at our earlier press releases, we’ve actually raised capital using our own self-directed private placement. We opened it up to existing shareholders, and of course the public was also invited. The latest round was a private placement specific for raising the additional capital.
Raising capital is always top on my list in maintaining shareholder value. I’m very critical about conventional ways of raising capital, because it is not always in the best interest of the shareholder. I don’t want to have a negative effect on the liquidity of a shareholder’s position in the company. These innovative ways allow me to continue going forward with that in mind.
There will be another round. The timing has not yet been determined. The best time to raise capital is when you have capital in the bank. I’ve already kicked off that review, and am looking at the approach and timing as we speak.
Q: Is there a company out there that represents competition to what you’re doing, or that you consider a dangerous rival to your future growth?
A: There are, and I don’t ignore them. I keep my finger on the pulse of companies or even research institutions that are attempting to do what we do.
One of them is Heliatek. It does something similar to what we do, although the colour that they’re using is a bit different. Their big application is in electronic displays, e-readers and tablets, and they’re attempting to come into the building sector.
There’s another company that I don’t consider a competitor, but actually as what may be a good teaming opportunity: Onyx Solar.
There are a couple of other companies that use dye-sensitised solar cells: DyeTec Solar and G24i Power – although dye-sensitised solar cells are very different from the OPVs [organic photovoltaics] that we’re developing.
They each have their market. They’re each working in a direction.
What‘s important is that our technology has been developed with the window in mind since inception. This hasn’t been a technology that has evolved into, say, a technology for e-readers or tablets, the thought being: “Hey, if we can put it on a tablet, let’s put it on a window.” Since I’ve come on board, the whole concept has been centred on developing SolarWindow for the window industry. We’ve kept in mind the design, fabrication and production of windows in the development of the SolarWindow process. That’s a very important distinguishing factor that separates us from all the others.
