B.C.’s Green Hope Fades

Day4 Energy | BCBusiness
Day4’s solar electricity panels were popular in Europe until subsidies started to dry up and competition all but destroyed its market.

Day4 Energy has fallen a long way from when it was expected to lead B.C.’s clean technology industry into a bright cleantech future. A home-grown manufacturing company, it fell victim to economic turmoil and ferocious competition.

Sad to see that Day4 Energy is on its sickbed; with a share price sliding to below 3 cents, the former cleantech darling is facing de-listing from the Toronto stock exchange.  

This solar-power developer was once the great “green” hope in B.C. and a company that would spearhead the province’s clean technology sector into becoming a world leader.

But it appears, instead, that it fell victim to the Vancouver disease – a rapid rise on the stock market based on enthusiasm, and then an almost-as-rapid fall when that enthusiasm wanes.

Unlike most clean-technology startups that remain small and scratch for development money from angel and venture capital investors, Day4 went into the sector big by creating a stock market listing. Founded by, among others, John MacDonald, of MacDonald Dettwiler and Associates (MDA) fame, the company was determined to stake its claim in the burgeoning demand for alternative energy.

It produced solar electricity panels that were popular in Europe until subsidies started to dry up and competition from cheaper production in China all but destroyed its market.

There are a couple of lessons to take away from this sad story.

One is that subsidies, while often required to get an industry going, aren’t enough to keep it going. A large part of the market came from Germany, which was on an aggressive campaign to go as green as possible over the past decade. But the troubles around the Euro upset that strategy; Germany could no longer afford the subsidies that fueled the campaign. Other countries, such as Spain, were also in this game, and the outcome was similar.

Another lesson is that solar-panel production, while seemingly futuristic and technological, is really a plain, old manufacturing industry, and manufacturing industries have been declining all over North America in recent years.

Much of this is because China, which manufactures almost everything for the world these days, was able to use its cheap labour force to undercut all other manufacturers. It flooded the market with lower cost solar panels.

Further, electrical power from solar panels is quite expensive compared to alternatives such as wind power. With the world teetering on the edge of recession again, and Europe probably in one, return on investment becomes far more important to power users than environmental benefits. Hence, they run to the lowest cost solution.

I’m sure Day4 isn’t dead yet, and may yet revive when economic conditions improve. But I suspect it will have to perform some serious innovation of its technology and business model for that to happen.