(Martinot, 2010). This effectively shut the door on foreign capital in the country,
while China’s dominant wind manufacturers strengthened their domestic supply
chain and presence.
Chinese wind power developers also received 25-year fixed price contracts that
were set through a ‘concession’ programme (competitive bidding). Wind projects
had access to low-cost financing and after 2005, China began to publicly fund
R&D and projects with grants or favourable loan terms. China has also prioritized
reducing its overall energy intensity (the relationship between energy consumption
and GDP) and established goals for renewable energy development (Martinot, 2010).
Solar
Many examples of innovative emerging firms focusing on solar PV can be found
in the US, where First Solar, Solyndra, Sunpower and Evergreen, for example,
each developed state-of-the-art C-Si or thin-film solar technologies (Perlin, 1999).
First Solar emerged out of the search for commercialized cadmium telluride
(CdTe) thin-film solar PV panels and became a major US-based CdTe thin-film
producer. First Solar dominates the US market for thin-film solar PV panels and
has produced record-setting technology and low-cost manufacturing, which have
enabled the company to generate over US$2 billion in revenue each year since
2009. First Solar’s patents have extensive links to prior DOE research (Ruegg and
Thomas, 2011). The success of companies like First Solar was built over several
decades, during which VCs entered at a relatively late stage and exited soon after
the IPO was completed. Much of the risk of investing in First Solar was taken on
by the US government, which actively promoted their solar technology through
to commercialization. Subsidies supporting a domestic market and a market in
Europe, coupled to First Solar’s position as a dominant thin-film pro ducer make
it hard to imagine how such a company could fail. Yet the value extrac tion provided,
and even promoted, by equity-driven investment and compen sation methods ensures
that VCs, executives and top managers of firms can reap massive gains from stock
performance, whether short lived or not. This perverse incentive not only
redistributes the investment in innovation away from its other core stake holders
(governments, schools, workers), but it risks undermining firm performance.
Rather than make the risky investment in future innovation, those in positions of
strategic control squander resources in a search for financial returns (Hopkins and
Lazonick, 2012).
The story of another solar power technology company – Solyndra – provides
an important example of what happens if venture capital suddenly withdraws their
financial support. In 2009, Solyndra received a US$527 million loan guarantee from
the US DOE, as part of the American Recovery and Reinvestment Act, in order
to develop copper indium gallium (di)selenide (CIGS) solar panels. With the price
of raw silicon soaring (silicon is the primary ingredient of standard solar panels),
investing in high-tech CIGS made economic sense. Yet, a couple of years later,
the price of silicon collapsed, before Solyndra could capitalize on its investments.
The green entrepreneurial state 147
while China’s dominant wind manufacturers strengthened their domestic supply
chain and presence.
Chinese wind power developers also received 25-year fixed price contracts that
were set through a ‘concession’ programme (competitive bidding). Wind projects
had access to low-cost financing and after 2005, China began to publicly fund
R&D and projects with grants or favourable loan terms. China has also prioritized
reducing its overall energy intensity (the relationship between energy consumption
and GDP) and established goals for renewable energy development (Martinot, 2010).
Solar
Many examples of innovative emerging firms focusing on solar PV can be found
in the US, where First Solar, Solyndra, Sunpower and Evergreen, for example,
each developed state-of-the-art C-Si or thin-film solar technologies (Perlin, 1999).
First Solar emerged out of the search for commercialized cadmium telluride
(CdTe) thin-film solar PV panels and became a major US-based CdTe thin-film
producer. First Solar dominates the US market for thin-film solar PV panels and
has produced record-setting technology and low-cost manufacturing, which have
enabled the company to generate over US$2 billion in revenue each year since
2009. First Solar’s patents have extensive links to prior DOE research (Ruegg and
Thomas, 2011). The success of companies like First Solar was built over several
decades, during which VCs entered at a relatively late stage and exited soon after
the IPO was completed. Much of the risk of investing in First Solar was taken on
by the US government, which actively promoted their solar technology through
to commercialization. Subsidies supporting a domestic market and a market in
Europe, coupled to First Solar’s position as a dominant thin-film pro ducer make
it hard to imagine how such a company could fail. Yet the value extrac tion provided,
and even promoted, by equity-driven investment and compen sation methods ensures
that VCs, executives and top managers of firms can reap massive gains from stock
performance, whether short lived or not. This perverse incentive not only
redistributes the investment in innovation away from its other core stake holders
(governments, schools, workers), but it risks undermining firm performance.
Rather than make the risky investment in future innovation, those in positions of
strategic control squander resources in a search for financial returns (Hopkins and
Lazonick, 2012).
The story of another solar power technology company – Solyndra – provides
an important example of what happens if venture capital suddenly withdraws their
financial support. In 2009, Solyndra received a US$527 million loan guarantee from
the US DOE, as part of the American Recovery and Reinvestment Act, in order
to develop copper indium gallium (di)selenide (CIGS) solar panels. With the price
of raw silicon soaring (silicon is the primary ingredient of standard solar panels),
investing in high-tech CIGS made economic sense. Yet, a couple of years later,
the price of silicon collapsed, before Solyndra could capitalize on its investments.
The green entrepreneurial state 147