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Investors burned as Konarka enters liquidation

07 Jun 2012

Organic PV company demonstrates that $200 million and a Nobel prize are no guarantee of commercial success.

Konarka Technologies, the heavily financed company at the forefront of organic photovoltaics (OPV) development that was co-founded by a Nobel laureate, has filed for chapter 7 bankruptcy in its home state of Massachusetts.

The demise of the firm represents a significant failure for its investors, which included the energy companies Chevron and Total alongside several venture capitalists. Together, they have invested close to $170 million in Konarka over the past decade.

Among those with their fingers burned are Vanguard Ventures, New Enterprise Associates, 3i, Good Energies and the Massachusetts Green Energy Fund, who have taken part in one or more of at least seven rounds of financing. The most recent of those, in December 2009, raised $23.8 million, and came just a year after a $45 million private investment by Total.

According to the company’s filing with the US Bankruptcy Court in Massachusetts, Konarka has liabilities of between $10 million and $50 million, and at least 200 creditors, but its assets are listed at less than $0.5 million, with virtually all of the invested cash now burned through.

Because the bankruptcy is taking place under “chapter 7” proceedings, the company’s operations have ceased. The hazardous chemicals that Konarka required to produced its OPV films were due to be removed from the company’s premises on June 7, while a trustee has been appointed with the task of liquidating the company’s assets – which include a roll-to-roll OPV manufacturing site that Konarka claimed to offer annual production capacity of 1 GW.

Efficiency claims come to nought
Earlier this year, Konarka said that its next-generation cells had demonstrated a conversion efficiency of 9%, with the result certified by Newport Corporation’s photovoltaics testing laboratory.

But with investors no longer prepared to throw money at the company, and Konarka seemingly unable to scale up production of high-efficiency films, that impressive “champion cell” result counted for little. Now Newport, through its Oriel Products division, is one of the company’s many creditors. That list also includes Materion, Ocean Optics, Synrad, Thorlabs and Novaled, among many others.

Howard Berke, the Konarka CEO, said in a statement on the chapter 7 filing: “Konarka has been unable to obtain additional financing, and given its current financial condition, it is unable to continue operations. This is a tragedy for Konarka’s shareholders and employees, and for the development of alternative energy in the US.”

But unlike most of the solar industry’s list of recent bankruptcies, the demise of Konarka cannot be laid at the door of cheap crystalline silicon modules from Chinese companies. Despite its undoubted promise, and the emergence of some niche applications, the ongoing issues to have dogged OPV – highlighted in an optics.org report last year - include long-term chemical stability of the technology, problems scaling up to volume production, and an inability to convert champion cell figures into reliable product performance.

“Technically unsavvy investors”
Analysts at Lux Research have long suggested that the claimed benefits of OPV – largely the promise of cheap solar power produced by a lightweight, flexible film – have been overplayed. Subsequent to Konarka’s bankruptcy filing, Lux’s Jonathan Melnick delivered this withering assessment:

“Driven by the promise of cheap, printed solar modules that can be made colorful and transparent, technically unsavvy investors rushed to invest in [Konarka] to the tune of $170 million, with an additional $30 million coming from grant funding.”

“Konarka took that investment and built what it claimed was a 1 GW manufacturing line, although the line would certainly never come close to that capacity. With ten times higher cost, and ten times lower efficiency and lifetime compared to alternative solar technologies, the math never added up for Konarka’s ‘Power Plastic’,” the analyst added.

“While in the middle of yet another funding round, Konarka finally ran out of money, showing that $200 million just doesn’t get one as far as it used to. Now creditors are left to sell off the pieces to recoup a fraction of their sunken investment as Konarka blames the collapse on an inability to raise more funding.”

Melnick’s final analysis is that Konarka was actually far better at raising money than it was at solar module development. The analyst believes that the company never had a credible path towards a viable technology, while Lux’s prediction of an OPV market worth a meager $159 million in 2020 paints a worrying picture for those still chasing this market.

“Konarka won’t be the last to run out of investors required to be as long on patience as they are blessed with money,” Melnick warned. “Buyers and investors beware.”

Konarka CEO Berke co-founded the company with Alan Heeger in 2001, just a year after the latter was awarded a share of the 2000 Nobel prize in chemistry for the discovery of conductive polymers, which form the basis of OPV technology.

Berke still holds out some hope that the company’s technology will live on in some form, even suggesting the possibility of a rescue by the Chinese government, which he says has shown interest in Konarka previously. But Berke himself will not be party to any such discussions – under chapter 7 rules, any rescue deal must be evaluated by the trustee.

Schaefter und Kirchhoff GmbHSPECTROGON ABEaling UGAVANTES BVEdmund OpticsSensofar MetrologySpectrum Scientific Inc. -  SSI Optics
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