Even so, the president of Solaria is the first to admit the funding environment is tough and that the reticence of general partners may signal the end of the long solar bubble.
During an appearance at the Cooley Clean Energy & Technologies Conference, Sharma (pictured) told me he sees few, if any, additional investments in panel makers. The industry is bifurcated into big, established companies with significant market share and young startups with substantial cash to build out their manufacturing.
New panel technologies take a long time to gestate and it is hard to see a new wave of money chasing these fundamental innovations, Sharma said.
The explanation for the shift is simple. A great many VCs fear a wave of cheap Chinese modules will wash over the world market, making it hard for producers in other countries to survive. Many VCs also have solar panel investments that have cost them more money and more time than anticipated.
“It’s very black and white,” says Sharma. “It’s a painful time for them.”
Investment numbers from the third quarter support his claim. Investments in energy-generating companies fell 39% to $204 million, even though the number of deals rose. Ten solar deals (included in the total) raised $150 million, a far cry from the $1.8 billion raised in the third quarter of 2007, which may have been the peak of the bubble.
Future investment opportunities may rest with solar subsystems: components such as microinverters and monitoring systems that combine hardware and software, Sharma said.
Think capital efficiency.