Its 2012, just over 100 years after Henry Ford figured out how to take a product that was essentially handmade, expensive and a play thing for the well to do and produce it on a production line. In so doing he figured out how to manage the problems of tolerance and standardized the units of production turning it into a game changing transportation solution for millions of Americans. As he worked his way through these issues, redefining how a new type of factory production should work, inventing supply chain logistics and bringing down the time to produce a vehicle, he also decided in a stroke of brilliance to double the wages of his workforce because of the economies of scale that he had gained thus creating a market of consumers who could afford his new product, the Model T. I’m not sure anyone has ever counted the number of inventive steps he made on the way to becoming the Ford Motor Company, but it was probably hundreds if not thousands of small innovations that gave us the car industry as we know it today. This didn’t happen over a lifetime either, it happened in under 10 years.
And my point is?
Today we have a problem that looks exactly like the one Henry Ford faced a hundred years ago. Except this time it is the Solar Power Industry. Half the cost of installed panels is in the installation according to the Rocky Mountain Institute. The cost of panels has been coming down for years and now the installation is more than the cost of the panels themselves. This will hamper the technology from dropping in price to the point where it is a mass commodity that we all want to install on our roofs which can reduce the load on the central power grid substantially, reduce greenhouse gas emissions dramatically, reduce our dependence on foreign oil and create a lower cost of living for Americans. In addition it will make our economy more globally competitive again as our cost of living increases will be slowed down and help to reduce the ever faster growing national debt.
We need a low cost solar solution to change the trajectory of the US economy just like the automobile did 100 years ago and just like that innovation, this one needs to be individually funded and owned by consumers without government interference so that enterprises can do what enterprises do best, which is to innovate under market competition to create the most efficient solar industry possible. By all accounts, it should become the largest industry in the USA with a potential market size of $2-3 trillion dollars over the next 20-30 years as we create micro-power stations out of every one of the 114 million households and 4.7 million commercial buildings.
The problem is that solar panels are for the most part installed by contractors and handymen, hand making the frames and assembling the wiring and connections, then hand checking it all works. It relies on the individual skills of a not so consistent trade instead of the quality assurance of a single mass production line. Each individual system today has to be custom designed and fitted to every house, using panels that are not built to a common standard. Can you see the parallel to Henry Ford’s innovations to create a new affordable car for the masses in this description of the solar power industry? It is going to require a combination of innovation to the physical structure and installation, the business model of the installer as small business operating essentially in a craft manner and a radical scaling of the industry just as computers did to the semiconductor industry to create a radical disruption of this cottage industry to the point where it becomes efficient and so cheap that you might just as well plaster your whole roof with panels and produce twice the power you need.
The problem is fairly well defined however complex it might be because of the number of innovations that have to happen almost simultaneously.
Larry Keeley of the Doblin Group says that one type of innovation creates incremental improvement, but three or more type’s produce disruptive innovation. We need three or more to make the solar industry viable for the masses.
Where is Henry Ford in 2012 when you need him?
Henry Ford whispering in the ear of his friend Thomas Edison. I wonder if he was telling him “A hundred years from now they are going to need my thinking in your industry! You’ll see.”