By Frank Andorka, Senior Correspondent
At Intersolar North America two weeks ago, I sat down with Martin Hermann, founder and CEO of 8minutenergy Renewables on the heels of their announcement of their Eagle Shadow Mountain project, which was signed at a flat rate of $23.76 per megawatt-hour throughout its 25-year PPA term, or 2.3 cents per kilowatt-hour. In Part 1 of our discussions, Martin Hermann and I talked about just how low he thinks module prices can go. In Part II, which will be posted later this week, Martin Hermann discussed the tariffs and their overall effect on the U.S. solar industry. Here is what he had to say in Part I of our discussions.
Frank Andorka, Senior Correspondent: (FA): Module costs just seem to keep coming down. Is there a place where they stop? I heard someone say that it’s all well and good that prices keep coming down, but you have to be worried that at some point, you have to be able to make money making modules. Where do you see prices going from here?
Martin Hermann (MH): I don’t worry about that issue. After all, if prices go so low, we’ve solved one of humanity’s great problems, right? And I liken it to WiFi. In so many places, WiFi is free, and yet companies have still figured out how to make a business out of it. The way you capture value just changes. So I don’t worry about module prices going too low.
I come from the semiconductor industry, and you’re not seeing the same steep decline that you see in Moore’s Law. I’ve said this for years: The technology still has a long way to go. We are where the semiconductor industry was in the mid-90s. There’s a long way to go – which is why we’re so bullish on the U.S. industry.
FA: You said there’s a long way to go technologically. What’s the next big breakthrough?
MH: I don’t see breakthroughs. I see evolutionary progress. And it’s not as if we don’t know what will happen in the next five years. It’s just a matter of what will happen first and in what sequence they will happen.
Before 2015, you had two technologies: cyrstalline and cadium telluride. Now you have five to seven technologies maturing at the same time, and they can mature because the market is big enough for them to do so simultaneously. And we’ll see more diversification as the market continues to grow.
It puts more responsibility on the developers to make informed decisions because each of these technologies has its pros and cons. We’re going to see developers be forced to become more sophisticated in the way they do business because there will be a lot more ways we can drive down costs – and it’s going to be incumbent on us to do it.
FA: What is it that 8minutenergy knows that now other developers are going to have to learn?
MH: We’ve always been a company that has tried to understand technology even before they go to production, so we don’t need to wait for the data sheet from the manufacturer. We’ve always tried to get under the hood of technology before we have to make a decision about it. We understand it first and then we have built-in design automation processes and tools to harvest what we learn and turn it into design software designed to allow us to promote growth.
Also, as an independent developer, we can take more risks than others can.
It puts more responsibility on the developers to make informed decisions because each of these technologies has its pros and cons. We’re going to see developers be forced to become more sophisticated in the way they do business because there will be a lot more ways we can drive down costs – and it’s going to be incumbent on us to do it.
FA: How do you manage that risk? After all, we’ve seen plenty of developers take risks, and a lot of them end up going belly up.
MH: You have to look at the technology much earlier so that you can determine what is worth taking a risk on and what is not. If you can understand the ingredients and everything that goes into the technology, then you can make judgments about whether it’s a risk worth taking or not.”