Wednesday, April 12, 2017

Betting on the Wrong Technology and the Renewable Energy Sector

In the Seven Ways to Fail Big article by Paul Carroll and Chunka Mui, they describe the big factors or moves that push an entity to fail.  The one that I thought was the most interesting for our current time period is betting on the wrong technology.  Technological innovation is happening at an accelerated rate; it seems that businesses are finding it harder to choose on what technology to bet on. A company may develop a product for many years only to find that the product has become impracticable in the current consumer environment or another company has created a better similar product. 

The energy sector, especially renewable energy, seems primed to experience this type of failure because technology is constantly changing in a short period of time. For example, in Japan a company named NGK has crafted its business by mass-producing batteries which use molten sulfur and molten sodium, rather than lithium. NGK was originally a company that produced spark plugs, but has branched off into other technology areas.  These types of batteries are more efficient and can be used as an energy storage unit for solar panels.  The company has been developing these batteries over the last decade, and has been heavily subsided by the Japanese government. NGK is betting that their battery will be superior to the competition, in terms of safety, maintenance costs, and compatibility with other products (especially in the field of wind and solar power storage).  

However, NGK’s batteries face steep competition. Samsung and LG have made great advances in lithium-ion battery production, and the lithium battery has become more attractive to both homeowners and companies in the renewable energy area. Sulfur-sodium batteries have a limited storage capability when used with solar and wind energy and can combust at high temperatures, making the product less attractive to consumers. Industry experts have found that betting on batteries as a solution to energy storage is wrong. Rather hydroelectric storage is the future of energy storage. Hydroelectric storage is cheaper and longer lasting than batteries without the pollution created from mining battery materials. 

Even though signs show that molten sulfur-sodium batteries are not the future of energy storage, NGK seems to be pushing forward. Toshiyuki Mima, a researcher in the company, said “Demand will come—maybe around 2020. Our job now is to plant the seeds, and prepare so that we are ahead of the competition when the market grows.”

NGK is hopeful that the company has not bet on the wrong technology, and wasted years of resources. However, with a technology environment that is changing so fast they may not be able to salvage the work they have completed in the last decade.   


Article used and quoted from: https://www.wsj.com/articles/japan-battery-maker-hopes-charge-into-future-wont-fall-flat-1477479565?reflink=e2twsc

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