A few weeks ago, an obscure Chinese company, DeepSeek, caused panic in the internet technology business by offering almost the same product for a lot less. The big guys in the business, of course, pooh-poohed the new entrant and the market recovered, sort of. Technological change in energy takes longer, and is less sudden. But it happens as evidenced by two recent announcements.

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Second, a Japanese company announced a breakthrough in the production of solar cells called perovskite (named after a Russian mineralogist in the 19th century). And the Japanese government has decided to back the development and commercialization effort. Years ago, scientists touted perovskite cells for their greater efficiency and they envisioned buildings curtained with thin sheets of perovskite, and even perovskite window shades, but the substance proved difficult to work with and unstable when exposed to the weather. The Japanese firm, Sekusui Chemical, a plastics manufacturer, thinks it has solved important production challenges, and will attempt to produce a thin, flexible product that can be wrapped around buildings. But the product will, initially, be three times as expensive as conventional solar. So far, potential Chinese competitors have stuck to perovskites in rigid, flat glass, but they could always move into the new field, produce at huge volumes, and take the market. Sekusui can’t dawdle. But, you say, three times too expensive? Well, if solar technology history is a guide, it won’t be three times too expensive for long. Furthermore, a flexible solar film really is a new product that does what rigid solar panels cannot. People will buy it. Not only to be first on the block, but to use it where conventional solar does not fit. This means even more markets for solar.

Now a thought for the fossil fuel business. Your competition utilizes technology to dramatically lower costs and to develop new products and customers. Fracking, the most touted oil and gas technology in ages, was first thought of in the 1860s, developed in the 1940s, and was commonplace by the 1980s. Since then what’s new? To have innovated similarly to the solar industry, the fossil fuel industry in the past decade would have had to develop a car that ran at 200 mpg or an electric generator that emitted no gases and converted all ash into useful chemicals. Could they have done so? We don’t know but we do think that they weren’t trying. And that is going to be the problem in the future. The competition is innovating but the fossil fuel industry is not. No problem, the competitors are small? Probably what the dinosaurs thought when they eyed those pesky little mammals.

By Leonard Hyman and William Tilles for Oilprice.com

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