Who Are the Dotcoms of Greentech and Who Is Next to Go?

With the radical shifts at OptiSolar and eSolar, it’s pretty safe to say we are living in the dotcom era of greentech. Not the good part of the equation where money is flowing and everyone is a billionaire on paper. We’re in the downside of the era, where companies will have to shrink, change their business plans and in many cases go out of business.

Boom and bust cycles have existed for centuries. What makes the particular era more dotcom than most, however, is the prevalence of companies that seem to exist mostly on opportunity, hope, connections and marketing. That’s not necessarily a bad thing. However, managerial expertise and “execution” can be difficult foundation upon which to grow a business, particularly in a such a research-intensive world like energy. In other words, these are companies whose selling point is the “Silicon Valley Model” rather than a product itself. Remember Imperium Renewables, the biodiesel company backed in part by expertise from the software world? They were an early signal of the trend.

Take OptiSolar. The company was only founded in 2005. By 2007, it had signed two of the largest contracts ever to build and maintain solar energy power plants. By 2011, it wanted to have a factory that would employ 2,000 and cover one million square feet, making it one of the largest PV manufacturers in the U.S. Arnold Schwarzenegger came to open their factory. OptiSolar was on 60 Minutes. The rapid rise, however, was not based on superior technology or a secret sauce. OptiSolar’s panels and manufacturing process is somewhat generic. If you wanted a polar opposite of First Solar, it’s OptiSolar.

Approximately two weeks after the 60 Minutes profile, the company laid off half off its staff.

Now eSolar. The company grew out of a earlier project to build solar thermal systems on residences. It then shifted to developing power towers, similar to what BrightSource engineers had been working on for years. It got money from Bill Gross, he of Idealab. It then got money from Google (which a few weeks later also invested in BrightSource). eSolar promised to deliver the cheapest solar thermal technology in the world.

A great ambition, but without Bill Gross and Google, would it have received the same level of attention.

The interesting part is that OptiSolar and eSolar are likely the lucky ones. OptiSolar sold many of its assets to First Solar (savor the irony) and eSolar sold the rights to projects to NRG Group and will continue to sell equipment.

So who’s next? Concentrator companies. The number of solar concentrator companies has mushroomed in the past three years. Most have technology that is tough to distinguish from nearby competitors. The market in many ways boils down to “my Fresnel is better than yours.” Worse, utilities have signaled they don’t have a lot of interest in concentration for now. Expect some of the biggest collapses here over the next six months.

Algae. Four years ago, there were only a handful of algae companies—Solazyme, GreenFuel Technologies, LiveFuels, Solix. Now there are over 50. Most say they will grow algae in bioreactors. I even heard of one outfit, concocted on Wall Street several months ago, that wants to take its real estate expertise to become an algae power. Many of the new companies will shift into becoming “equipment providers” or will offer “complete growing solutions” instead of making fuel. Those listed above seem far better positioned than most to survive.

The CIGS companies—HelioVolt, Nanosolar, Solyndrya, SoloPower—are all coming to market during one of the worst downturns in years. Even more ominous, they will have to compete against well-funded CIGS and CIS efforts from the likes of Honda and BP. Some of them may not make it. In the defense of the CIGS companies, all of them have deeply invested in technology and R&D. There’s not a member of the list above that got into the market by merely latching onto an idea. Hence, expect to see collapses, but not necessarily dot com style meltdowns.

Electric car companies. This is another one of those situations where a multitude of companies are chasing a market that makes a lot of sense on paper. Too bad it doesn’t exist yet. Think, the Norwegian commuter car company, could become the first victim. Better Place could also face tough times—electric filling stations again are a great idea, but they may not be needed until 2017. By then, the money could have run out.

Although some see Tesla Motors as an example of Silicon Valley excess, in my opinion they’ve actually seem to have made the transition into a real car company. They are producing cars, have hired industry veterans and are selling product. Tesla also came up with the idea of getting around the high expense of batteries by focusing on sports cars first. It was a genius move. Thus, if they fail, it will be because the challenge was too great.