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DYESOL: PARTNERING TO HARNESS THE POWER OF THE SUN

In 2012, Australia-based Dyesol was poised to be the world's foremost producer of building materials coated with dye-sensitized solar cells (DSC). Dye-sensitized solar cells were a new type of low-cost thin-film solar cell that could generate electricity from sunlight in much the same way as plants conduct photosynthesis. In plants, chlorophyll in the leaves absorbs sunlight and uses it to convert water and carbon dioxide into carbohydrates and oxygen. In DSCs, leaves are replaced by porous titania nano-structures, and the chlorophyll is replaced by a long-lived dye. Though this entailed a two-step photovoltaic process (compared to the one-step process of conventional photovoltaics), it had the potential to be less expensive in both inputs and manufacturing processes than traditional solar cells. Perhaps even more important, it could be engineered into tough, flexible sheets that were much more aesthetically pleasing than large roof panels or farms of solar panels. DSC technology could be incorporated directly into buildings, and could even be transparent. In 2012, the energy conversion efficiency of DSCs were still less than some other thin-film solar cells, but it was a technology that was still very early in its development cycle and many scientists believed it held great promise for delivering clean energy at a cost that was competitive with the generation of electricity from fossil fuels.

History of Dyesol and DSSC Technology

In the 1960s, scientists realized that illuminated organic dyes could generate electricity using oxide electrodes, and throughout most of the 1970s and 1980s scientists attempted to develop this process into a true "artificial photosynthesis." However, their efforts resulted in technologies with such poor efficiency levels they were abandoned. Then in 1988, at the cole Polytechnique Fdrale de Lausanne, scientist Michael Grtzel discovered a nanotechnology to make artificial photosynthesis work. He created a sponge with an extremely thin layer of pigment that increased the surface area to capture more light, and therefore improved the efficiency of the cell. Working with Brian O'Regan, he invented the Grtzel cell, an early version of a dye solar cell (Grtzel would later win the 2010 Millennium Technology prize for the invention).

Sustainable Technologies International (STI), Greatcell Solar, and cole Polytechnique Fdrale de Lausanne subsequently worked for the next fourteen years on developing the technology into a commercializable form. It soon became clear that investors were not enthusiastic about funding STI's efforts to build large-scale manufacturing facilitiesthe investment was seen as too risky. Thus the small coalition of organizations decided to change their approach, and founded Dyesol in 2004 to act as a supplier of the technology to other corporations that would utilize it in commercial applications. Dyesol began forming joint ventures with industrial organizations in key markets in hopes of accelerating the adoption of the technology. Two of its most notable joint ventures were with Tata Steel and Pilkington.

Joint Ventures with Tata Steel and Pilkington

Tata Steel was the fifth-largest steelmaker in the world with $26 billion in revenues in 2011, and was also a subsidiary of the TATA Group, an extremely large, diversified, and revered India-based multinational conglomerate. A partnership with Tata Steel would give Dyesol access to capital and manufacturing expertise, while also raising awareness of DSC technology and promote adoption of the technology across multiple international markets. In 2011, Dyesol and Tata Steel Europe announced that they had developed the world's largest DSC module, printed onto steel in a continuous line. By 2012, TATA-Dyesol "Solar Steel" roofing was already being installed on the Sustainable Building Envelope Centre in Shotton, Wales.

While such a joint venture offered a strong mechanism for leveraging the DSC technology, there was also some risk that Tata Group's chemical business would eventually learn to reverse engineer Dyesol's dye product and find ways to circumvent Dyesol's patents. If this happened, Dyesol could potentially find itself tied up in a long and expensive litigation battle against an opponent with much deeper pockets.

Pilkington was a multinational glass manufacturer with revenues of $373million in 2011, headquartered in St. Helens, United Kingdom. It had become famous (and successful) through its development of the Float Glass Process in the 1950sa revolutionary way of manufacturing high-quality flat glass by floating molten glass over molten tin. It subsequently licensed this process to manufacturers around the world. In 2006, Pilkington was acquired by Nippon Sheet Glass (NSG) of Japan, and together they formed the largest sheet-glass maker in the world.

Under the terms of the deal, Pilkington's North America division and Dyesol would form a 50/50 joint venture called DyeTec Solar. DyeTec Solar would use Dyesol's DSC coating on architectural glass to create photovoltaic functionality. Similar to the Tata partnership, Pilkington's coated sheet-glass products would be marketed to customers who valued solar energy, but sought the architectural aesthetics of glass. However, coated sheet-glass solar panels had never before been utilized in the commercial market, so the market reception was highly uncertain.

Looking to the Future

Some managers within the company felt that rather than focusing on large joint venture projects that would require significant time and investment on Dyesol's part, the company should focus instead on liberally licensing the technology to numerous manufacturers who could incorporate DSC technology into their substrates. Others, however, felt that given the nascent state of the market for DSC technology, to rely on licensees to commercialize the technology would be a mistakelicensees might lack the incentive to promote the technology adequately, or to ensure the quality of the applications within which it was used.

Questions

1.What were the advantages and disadvantages of Dyesol's venture with Tata Steel?

2.What were the advantages and disadvantages of Dyesol's venture with Pilkington?

3.Should Dyesol look to aggressively form licensing agreements (or other types of alliances) with other firms?

4.What mechanisms do you believe should be in place to help ensure that Dyesol's objectives (and those of its partners) are met in its collaborative relationships?