Solyndra is getting a lot of headlines, but the company’s high-profile implosion is the symptom of a renewable energy industry rationalization that has been long anticipated. It shouldn’t be a surprise or generate excessive hand wringing.
Whether it’s solar, bioenergy, power storage or any other cleantech vertical, there will be a lot of dead bodies littered across the market in the next 12 to 18 months. That is just a fact, and a natural outcome of an industry (finally) maturing.
Most importantly, it is a signal that we are moving from a period of technology innovation to one of market innovation, and therefore true mass adoption. And with mass adoption, the focus of corporate communications is necessarily shifting toward building brand credibility, loyalty, engagement and awareness.
The companies that have the strongest brand coming out of the industry consolidation cage match will be best positioned to be the last brands standing. Many executives I speak with expect only a handful of brands to survive the shake-out of each sector. The stakes are high, as brand equity has many implications: lower cost of capital, lower cost of customer acquisition, the potential to charge a premium, etc.
Brand ≠ Hype
But make no mistake, many of the companies that are perceived as having the strongest renewable energy brands today in fact do not.
Often funded by Silicon Valley investors used to the hype cycle and quick returns of media, ecommerce and high-tech companies, many of the cleantech brands now considered the darlings of their respective sectors will soon enough be dead and gone, or acquired for pennies on the dollar by existing conglomerates.
A strong brand is not just about hyping awareness, it is about delivering on your promises — to achieve business milestones, to hold up your end of a strategic channel partnership, to nurture employees, to provide a return for investors and to provide a benefit to society (economic, environmental or otherwise).
Many of today’s renewable energy brands have over-promised, and just as many if not more have under-delivered. Caveat emptor.
The Impact of China and “The Strategics”
While it is still too early to make iron-clad declarations of winners and losers, already some of the brands that will survive are starting to rise to the surface. Some of them are new, and some of them are familiar.
In the electric vehicle industry, for example, Tesla appears to have survived its start-up origins to evolve into an automotive brand with staying power, while the likes of Chevrolet and Nissan seem to have shifted laterally early enough to have carved out a future niche as well.
Similarly, multinationals in other sectors — chemicals, fuels, generation, transmission, infrastructure — are starting to play an increasingly prominent role in the looming brand wars, and may end up being the de facto renewable energy brands of the future. With market conditions buffet the renewable energy sector, many of these strategics smell good deals and are becoming more acquisitive.
At any rate, it seems fair to say that some of the ultimate brand winners will be ones we may not even know of yet, while others will belong to existing Fortune 500 companies, who buy early leaders, then apply their significant marketing muscle to enhance them further or subsume them entirely.
The other question hanging out there: where will the leading brands reside?
Given the emergence of China and Brazil as important players and the fact that the developing world is ripe for renewable energy deployment, it remains to be seen if the winning brands will be the usual suspects from Europe, the United States or Japan, or whether the companies will be based in the developing world.
Some brands from China seem poised for leadership. But will they have the foresight to invest strategically in brand enhancement on a global scale, something corporate culture there has not traditionally valued?
We will see. In the meantime, let the brand wars begin.
(This post also appeared on GreenBiz.com)