Differentiation vs Importance

Upon re-reading my last post, I realized that I was fairly unclear about a few important points and that it could easily be misinterpreted as saying I was against renewable energy.

To clarify:

• There is differentiation between traditional grid sources and renewables 
• There is clearly differentiation here beyond price: CO2 generation, fuel security at the very least.
• That differentiation becomes more important as regulatory structures (carbon tax or cap & trade), popular opinion, regional politics or peak oil make it so.

• There is differentiation between various renewable sources (E.g. solar thermal vs solar PV vs wind vs biofuels vs tidal)
• Each technology has characteristics that differentiate it from other technologies: where it can be located, is it distributable, is it carbon free or carbon neutral, social justice concerns (e.g. does it raise food costs, impacting the poor?), impact on wild life and local ecosystems, etc.
• Different vendors of a particular renewable source, though, are largely, I think, competing on price / kW. I'm sure there are exceptions.

• Saving the world as a niche - It is big enough
• Taking 2009 total power usage as 3297 TWh, 90% of which is from non-renewable sources.
• A 30% reduction in demand (989 TWh) from conservation, assuming all existing renewable generation stays in place, still leaves 1978 TWh of non-renewable energy that could be replaced by renewables. 
• Put in terms of solar PV installations, that's $5780 Billion... That's a huge market.

My original point was:

• I decided I wanted to focus on conservation not because renewables are unimportant or non-viable, but because conservation is a higher leverage route to sustainability.
• Differentiation between solar PV generation companies seemed, in the long run, to be a commodity situation where price ruled.

Can renewable energy be differentiated?

When the solar market was hot I, like probably half the people in the Bay Area, was thinking about a career in solar. I thought about this a bit and concluded that this would be the wrong place for me because I could not figure out how it could be differentiated enough to yield an interesting marketing job.


Can renewables be differentiated?
Renewables, at the end of the day, are just another source of power. Power is a commodity.
Can a commodity be differentiated?
Or is it solely about $ / unit?

If you put it against grid connected power, then it is about $/kWh. It's a race to the bottom.
It's about being the cheapest because all the power is interchangeable.

If you put it against something else, then you have a niche and can be differentiated some other way.
For example: off grid development.
Are you the most rugged? Portable? Reliable? Efficient (kW/m2)? Flexible? Available in all weather conditions? Backup-solution-ready? Affordable (if you're off grid b/c no one can afford to build a grid)? Difficult to steal? Easy to install and maintain?

Or the "save the planet" green niche.
It's really important, but still a niche today.

Are these niches big enough to support a business in the US?
I think many people are counting on it getting really big... though there is a question of how realistic that is because of the scale of the problem...


If you don't want the niches, can you create differentiation where it doesn't exist with renewables and ride that to financial success?

• BloomBox seems to be trying and making quite a mindshare grab despite being an order of magnitude too expensive ($/kW peak capacity).
• Lobbying for feed-in tariffs, rebates and marketing solar based on these.  

Ok. Maybe this is more interesting than I originally gave credit for.

Two and a half kinds of differentiation

There are two and a half ways to approach a product which you want people to buy:

1) Be differentiated
Create a product that meets some need in a way that no one else does. You have to be:

• Smart
• Lucky
• Persistent
• Some combination of all of the above 

oh... and the bar keeps moving because once you find that need, more people will follow...

2) Be cheap
Be the least expensive option on the market.
This is a kind of differentiation but one that is difficult to maintain because:

• Lots of people know how to do it
• It saps the resources you need to run your business

Do it to the logical extreme and eventually you are nothing but "cheap" (which is not always good enough to buy).

2.5) Create differentiation where it doesn't really exist
Be loud!
This includes things like:

• Fancy packages
• Clever names
• Massive ad campaigns (ala Cola Wars).
• Rent seeking behaviors

This seems to be a popular option but, when exposed for what it is, I think most people think it smells funny.

Each has it's place and clearly can be successful. I prefer seeking to be differentiated.
Understanding what people really need by looking for the patterns underneath what they say they want is quite interesting sometimes.