Why did solar cell company Konarka fail?

Bic Stevens can remember his first glimpse at some dazzling solar power technology developed at the University of Massachusetts Lowell back in 2001. Scientists had produced a “little quarter-sized solar cell, entirely out of plastic, and it made a little propeller go,” Stevens says. The appeal of a “dirt-cheap,” pliable, and easy-to-manufacture solar material was that almost anything, from the roof of a bus to the top of an Army tent, could start generating electricity from the sun.

Stevens put the first $50,000 into creating a company that would commercialize the UMass research, and helped recruit a Nobel prize winner in chemistry to advise the new venture, Konarka Technologies. (The company was named after a temple in India built to honor the sun god Surya.)

Over the next 11 years, Konarka raised $170 million from private investors including Chevron Corp.; secured millions in grants, tax credits, and loans from Republican and Democratic administrations in Massachusetts and Washington; bought an old Polaroid plant in New Bedford to make its “Power Plastic”; hired and then laid off 100 employees; and filed for bankruptcy protection in early June. Konarka’s creditors will meet Tuesday to discuss the disposition of the company’s assets.

Unlike another New England company that is being sold for parts, Providence video game start-up 38 Studios, Konarka was the kind of company that fit perfectly into this region’s research-and-design sweet spot.

While 38 Studios employed artists and game designers to craft a digital fantasy realm, Konarka built a team of PhD’s in chemistry and materials science to develop a solar cell with a wide array of practical uses.

And while 38 Studios was led by a novice entrepreneur, retired Red Sox star Curt Schilling, Konarka’s chief executive, Howard Berke, was a serial entrepreneur who’d previously been involved with videoconferencing and medical imaging companies. 38 Studios was banking on a Hollywood-style blockbuster. Konarka was applying brainpower to bring a scientific breakthrough to market.

So what happened at Konarka?

Employees and investors alike were attracted by the idea of cranking out inexpensive, flexible solar material using a “roll-to-roll” process similar to printing.

But, says Dan Roach, an early Konarka employee, “the unanswered question was always how efficient the product would be” — that is, how much of the available sunlight could it turn into electricity?

Another issue was how long Konarka’s Power Plastic would last, since plastic tends to degrade in sunlight. “If there was a case study written about Konarka,” says Roach, “it might say that this left the academic lab too early. A lot of the venture capital money was spent doing research, and not developing the product.”

While the Army tested Konarka materials for use atop tents, and the company pitched a transparent version of Power Plastic for use on buildings’ windows, only two products ever saw the light of day. One was a $180 messenger bag, made by a German retailer, that used Konarka material on the front flap to recharge digital cameras and mobile phones inside. And an Australian company called Sky Shades put Konarka’s material on top of a $10,000 patio umbrella, the SolarBrella, which could supply juice to laptops and other portable electronics. Konarka’s factory in New Bedford was largely idle.

The last outside money that Konarka raised came in 2010, when Konica Minolta Holdings of Japan invested $20 million. When I visited Konarka later that year, the company said the efficiency of its solar cells was still at 3 to 4 percent, while traditional silicon cells were able to hit 15 to 20 percent.

But Berke was selling the vision: “Imagine putting a plastic strip on the back of a smart card and having it power a display on the front.” (He declined to comment for this story.)

“It was hard for Konarka to find that unique place where its product would win out over the alternatives,” says Jonathan Melnick, an analyst who tracks the solar industry at Boston-based Lux Research. “They were very good at raising money, but they almost raised so much that it became a hindrance. It forced them to go to market before they were really ready.”

Daniel Cohen, a former Konarka scientist, says that his team had managed to achieve 9 percent efficiency in the lab earlier this year. “We had good things to show investors,” he says, “and we had more orders in the first month of 2012 than all of 2011.” A partnership with 3M was in the works, too. It felt like the company might pull a rabbit out of a hat once again.

But on May 23, Berke called a company meeting and told employees that Konarka hadn’t been able to raise more money, and would cease operations. (Coincidentally, Schilling laid off 38 Studios’ employees the following day.)

Could someone — perhaps even Berke — acquire Konarka’s assets at a bankruptcy sale and continue investing in the technology? I think it’s possible. Melnick at Lux Research says, “There’s certainly some value in their intellectual property, but whoever acquires it just needs to have a longer vision for when they’d expect to turn a profit. It’s not going to be in two years.

During this year’s presidential contest, Mitt Romney will no doubt be asked about the $1.5 million grant the state gave Konarka in 2003, when he was governor.

And his successor, Deval Patrick, will most likely lose $3.3 million in taxpayer money that his administration lent Konarka to set up its New Bedford plant. Both governors clearly envisioned that a solar material that could be plastered on just about anything would create plenty of jobs in the state.

But, says Stevens, “it was a very tough nut to crack. You look at the amount of money that has gone into the solar industry, and you see it’s a very hard business unless you’re incredibly good and incredibly lucky.”