Dougas Hutchings founded Picasolar as a graduate student at the University of Arkansas

Douglas Hutchings and his colleagues at Picasolar had honed a chemical process to generate more power from solar panels, and, in the early 2010s, raised more than $4 million from the federal government and equity investors.

But before manufacturers of solar panels would give it a try, they wanted proof the technology could scale up to meet the needs of mass production.

So, the company decided to build a plant of its own, said Hutchings, co-founder and CEO of Picasolar, based in Fayetteville, Ark. By 2019, Picasolar had picked out sites, identified key vendors and even landed a commitment from a China-backed solar company to invest $6 million in the plant, Hutchings said.

But growing tensions in the U.S.-China trade dispute prompted the would-be investor to pull back until things settled down, said Hutchings, whose unlikely story as an inventor/entrepreneur starts on a farm in rural Arkansas, where he grew up.

“I was like, ‘How long can a trade war take? Surely this will be done in a couple months.’ Here we are, a year or so later.”

Solar power is booming in the United States. The country is on pace to install 13.7 gigawatts of solar energy in 2020, according to the U.S. Energy Information Administration. The total in 2019 was 13.3 megawatts, according to a report by energy consulting firm Wood Mackenzie in conjunction with the Solar Energy Industries Association.

But as U.S.-based solar innovators like Hutchings strive to bring products to market, they face an inchoate policy environment that can frustrate their ambitions and turn off would-be investors. Democrat and Republican administrations flip-flop on how and how much to support a U.S. solar industry. In addition, incumbent utilities interested in blocking or controlling solar innovation sometimes have outsize power in state and local regulatory environments, say experts.

“The improvements in solar have come so fast in the last several years that it’s just a situation where our policy is not prepared to take advantage of the potential,” said John Quigley, a former environmental regulator and current director of the Center for Environment, Energy and Economy at Harrisburg University of Science and Technology, based in Pennsylvania’s state capital.

Arkansas boasts 238.37 megawatts of solar power, with another 704 megawatts expected to come online in the next five years, according to the solar association. Solar currently provides about 0.5% of the state’s electricity, compared to 1.8% for the U.S. overall.

China’s is the world’s solar industry powerhouse, and most silicon cells are made there. The cells are the building blocks of solar panels; they are sandwiched between glass and aluminum in solar modules, commonly referred to as solar panels. The modules also are made in China. Thanks to tariffs put in place by the Trump Administration, module factorieshave been sprouting up around the U.S., including one in Huntsville, Ala., that opened in early 2019. Operated by South Korea-based LG Electronics, it employs 160 people and produces panels with an efficiency rating between 19.3% and 20.2%, according to LG spokesperson Roberto Munoz.

Picasolar aims to add a percentage point to a panel’s efficiency rating, which translates into a 5% boost in overall efficiency, Hutchings said. SBIR, the federal government’s Small Business Innovation Research program, estimated in 2015 that the technology could save the average Gigawatt scale solar panel manufacturer up to $120 million annually.

Learning To Apply Science

“A 5% improvement doesn’t always sound like a lot. But when these things are out there for 30 to 50 years generating power, it can have a large impact economically,” said Hutchings, who became fascinated by sustainability while growing up on a farm in Mena, Ark. near the Texas border.

After graduating from Hendrix College in Conway, Arkansas, Hutchings headed to graduate school at the University of Arkansas in Fayetteville. He earned a doctorate in early detection of breast cancer through microwave processing but took a course in entrepreneurship in 2009 and 2010 that opened his eyes to opportunities in water, agriculture and energy.

Energy was the closest fit for his background, while solar boasts potential for tremendous growth, he said. He and his co-founders wrote the business plan for Picasolar while still in graduate school. They went on to become grand prize winner of MIT’s Clean Energy Prize.

Picasolar is based on a chemical process that can be applied to silicon in existing factory settings, either after the silicon cells are finished or before they are sandwiched into modules. The process allows the silicon to collect more electrons, so that panels can convert more of the sun’s energy into electricity, known as solar efficiency. 

The company’s plan was to become a manufacturer of equipment for its process, a relatively capital-intensive path. Along the way, it raised $1.7 million from private investors and was awarded more than $1.3 million through the federal SunShot initiative, Hutchings said. But progress did not come as quickly as expected and private capital became harder to find.

Of course, there’s no assurance that Picasolar’s innovation will work and will find a market. But sometimes, companies with innovations that do have a viable market founder in what’s called the DeepTech capital gap. “Fundamentally, the DeepTech capital gap appears as soon as government grants end and continues through the mid-to-late stage fundraising cycle, where commercial success is more obvious and a variety of investors participate,” noted Different Funds’ DeepTech report.

If Picasolar had been able to bring that Chinese investor into a deal, it would have been beating the odds.

SBIR estimated in 2015 that Picasolar’s technology could save the average gigawatt scale solar panel manufacturer up to $120 million annually.

A Stark Choice In Presidential Candidates

Policy headwinds against solar innovators start at the top, where the upcoming presidential election poses starkly different choices. 

In 2017, incumbent President Donald Trump pulled the U.S. out of the Paris climate accords, which commit nations to cut emissions of greenhouse gases, an effort expected to involve greater reliance on solar and other renewable sources of electricity. And he has been a booster for the coal industry, which has nonetheless continued to fade under his watch. U.S. coal consumption fell 14.8% in 2019, according to the EIA.

Trump enacted tariffs on foreign-made solar panels in 2018, prompting a flurry of investment in U.S. plants. But the tariffs – set to expire in 2021 – were criticized for driving up the cost of installation, a bigger source of jobs in the United States. A February report by industry nonprofit The Solar Foundation said installation and project development accounted for nearly two-thirds of U.S. solar jobs in 2019, or 65%, while 14% were in manufacturing. 

Former Vice President Joe Biden has called for rejoining the Paris accords and moving the United States to 100% clean energy by 2050 through a slew of incentives and requirements. Critics, including the Trump campaign, have said his plans would be too costly and pose a threat to economic growth.

Tax policy also is uncertain. Solar installations currently benefit from a solar investment tax credit that was extended in 2015. But the credit will drop in value from 26% in 2020 to 22% in 2021. In the absence of another extension, the credit phases out for residential installations after 2021 and drops to a permanent 10% for commercial installations. Total solar installations in the United States are expected to fall next year to 11.8 gigawatts, according to the EIA.

Regardless of what happens at the federal level, a patchwork of state and local policies could still hamper investment, particularly on the installation side. States have encouraged solar and other renewable energy sources by requiring that they provide a growing share of power. But environmental advocates say incumbent utilities tilt the laws in ways that frustrate the solar industry.

Slowing Solar In Residential Areas

In some areas, for example, state rules block homeowners from putting up panels that are financed by third-party installers, said Greer Ryan, an energy policy analyst at the Center for Biological Diversity, an environmental advocacy group based in Tucson, Arizona. The installer absorbs the cost of the panels and the homeowner signs a long-term contract to buy the power they produce, with any excess sold back into the grid.

“This is particularly common in the Southeast,” Ryan said of the rules. 

Zoning laws, meanwhile, may frustrate so-called community solar projects, which are carried out by a group of homeowners or businesses, she said. 

“We have the technology to make this transition,” Ryan said. “It’s really policy and, to a certain extent, economic barriers that are standing in our way. And I think that will be true for new and emerging solar technologies as well.”

Looking To Pivot Again

Hutchings remains committed to the technology. With its factory plan on hold, Picasolar is focused on licensing its technology to manufacturers, Hutchings said.

“The nice thing about solar is, if someone has a technological advantage, everyone moves to implement it,” Hutchings said.

It’s not the first time he’s hit a big roadblock in his entrepreneurial dreams. Before launching Picasolar in 2013, Hutchings started a company that patented a cheaper way to make silicon cells.

“The challenge was, companies were ramping up all the existing production, so the sales pitch was, “I know you just spent a couple hundred million on your manufacturing. Here’s a better way to do it,’” he said. “As you can imagine, that was a tough sell.”

“The good news with solar is that it’s not a limited-time market opportunity,” said Hutchings, noting the company’s early backers motivate him to continue. “I still believe there is an economic opportunity there.”

The Future For Energy Entrepreneurs

The company is still pre-revenue, he said, but it has had ripple effects. A former employee, Corey Thompson, for example, went on to start a company called WattGlass. Also based in Fayettville, Wattglass uses nanoparticles to make an anti-reflective glass coating that improves solar-panel efficiency.

Other researchers and entrepreneurs are pushing for even bigger gains in efficiency.

“I think it’s a very exciting time in solar right now,” said Michael Heben, a physics professor and director of the Wright Center for Photovoltaics Innovation and Commercialization at the University of Toledo in Ohio. His research focuses on using cadmium telluride and a group of materials known as metal halide perovskites in place of silicon, which he argued is reaching its limits.

“The problem is that this needs to be done in a much faster time scale,” said Heben, noting the challenge of adopting renewables in areas like heavy industry, which relies primarily on natural gas to generate heat.

But with solar power already so cheap, it can be hard for alternative technologies to break in, said Steve Capanna, director of U.S. climate policy and analysis for the Environmental Defense Fund, an advocacy group based in New York City. 

Innovators may need additional incentives to help speed up advances not just in solar, but also in wind and energy storage.

“I don’t think we should rest on our laurels with the technologies that we have,” Capanna said. “We should give the same opportunity to the technologies that we know we’ll need in the future.”

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