Konarka Finding New Partners for Power Plastic, But Faces Major Market Hurdles

Konarka Technologies, the Lowell, MA-based developer of flexible materials that convert light into electricity, is showing how everyday items like handbags and umbrellas can be turned into power generators. But the eight-year-old firm will need to collect a lot more juice before it can become a commercial success.

The company—which has raised $150 million from private investors—has revealed at least five new partners or customers over the past year who are integrating the firm’s so-called “Power Plastic” into such products as handbags that store solar energy to recharge electronic devices and patio umbrellas that provide electricity for laptops and the like. The latest deal was an agreement revealed last week in which Enviromena Power Solutions, of the United Arab Emirates, is evaluating the materials for use in shade structures used in deserts. And last month the firm hit the one-year anniversary of the opening of its 250,000-square-foot manufacturing facility in New Bedford, MA. Yet many of the products into which its solar materials are being integrated remain in development, and actual production activities haven’t gone into full swing in New Bedford.

Konarka makes photovoltaic modules from organic polymers rather than silicon or other traditional semiconductors, putting it on the cutting edge of solar cell development. Its materials are unusual in the solar business because they’re not marketed for use in standard solar panels on roofs, which typically are made from cheaper, more efficient substances, such as polycrystalline silicon. The firm’s products, however, are lightweight and flexible enough to be used on the outer surfaces of products such as bags and canopies and umbrellas.

Still, the jury is out about whether the appeal of such products will be powerful enough to convert privately held Konarka into a profitable business. There’s a continuous effort at the company to make its organic photovoltaics more efficient at converting light into electricity and to make them last longer than the current shelf life of three to five years. Meantime, the company’s West Coast rival, El Monte, CA-based startup Solarmer Energy, says that it has developed the most efficient organic solar cells in the world. And industry reports indicate that multi-national corporations with deeper pockets than Konarka and Solarmer have entered the fray in developing organic photovoltaics.

“Long-shot is a very good word for” companies like Konarka and Solarmer, said Johanna Schmidtke, an analyst for Lux Research, which recently completed a report that described all the leading developers of organic photovoltaics (sometimes called OPVs) as long-shots for success. “Whether or not they succeed in the long term is still a question; certainly in the short term it’s in the development phase—it’s not really in the full commercialization phase.”

Lux reported that despite Konarka’s progress in finding partners and Solarmer’s success in setting efficiency records, there are no clear leaders in the organic photovoltaic market. While organic solar cells have potential in the building materials and consumer electronics industries, the research firm says that no definite market for the materials has been established. And there are large corporations such as Toray Industries, Sharp Electronics, and Samsung that have begun developing organic photovoltaics, making the destinies of smaller firms like Konarka even tougher to predict. “When you finally get to the real commercialization of OPVs—if that happens—the [companies] that are putting out those products may not be the ones that you hear about today,” Schmitdke said.

Neuber's bag picture

At Konarka, the focus is on ramping up commercialization of the firm’s solar plastic more than worrying about potential competition from large corporations, according to Therese Jordan, the company’s vice president of business development. This year Konarka has begun shipping organic photovoltaics to customers such as Germany-based Neuber, which is making handbags that use the materials for recharging portable devices like MP3 players, and SkyShades, a Longwood, FL, firm that integrates the materials into umbrellas used for patio and café tables. Other new partners such as Enviromena and Florida-based Arch Aluminum & Glass Company haven’t yet started commercializing products made with the solar plastic.

Jordan said that while near-term demand will come from solar-recharging applications such as the Neuber handbag, Konarka’s materials will turn up within three to five years on shade structures, carports, and glass for buildings. (Part of the advantage of the firm’s organic photovoltaics, she said, is that they can generate electricity from natural or indoor lighting as well as from indirect and low-light sources.)

On the R&D front, Konarka is pursuing both internal efforts and external collaborations to improve the durability and efficiency of its materials. The University of Massachusetts and academics at German research institutions are among its partners.

To be clear, Konarka and its fellow developers of organic PV cells aren’t the only players in the solar market with major challenges ahead. Reduced demand for solar cells over the past year and a glut of supply have driven down prices for PV modules by about 40 percent, according to Lux. Spain and Germany have cut government subsidies for purchasing solar technology. In Massachusetts, the down market for solar cells has spelled trouble for Evergreen Solar (NASDAQ:ESLR), a maker of crystalline silicon PV modules, according to recent newspaper reports.

Power Plastic Roll

It’s tough to tell where Konarka stands financially, since the private company does not disclose financial information such as sales and its available cash. But Konarka’s Jordan hinted that commercial success could be just around the corner. “Watch us in the next two years,” she said, noting that the company has been expanding its business development efforts globally and plans to continue to add commercialization partners. “2010 and 2011 are going to be big years for us.”

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