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Why Confirmation Bias is Dangerous in the Solar Industry

Confirmation bias is the tendency for people to seek out information that confirms their views – the attempt to eliminate confirmation is the number one goal of classic market research and the analyst's confirmation bias is the first target of this effort.

The market research discipline is an art/science that studies the behavior of an industry over time using quantitative metrics.  To a market researcher, the longer the trend line the better, and the more consistently the data has been gathered – better still.  The point of gathering sufficient data in a specific way is to eliminate bias – the bias of the analyst, the bias of the survey participants and hopefully, the bias of the end user of the research (though this last goal is very hard to achieve).  Take it from Sun Tzu, whose century’s old The Art of War still serves as the basis for most business books and strategies.  From The Art of War: “Measurement owes its existence to Earth; Estimation of quantity to Measurement; Calculation to Estimation of quantity; Balancing of chances to Calculation; and Victory to Balancing of Chances.”  Also from The Art of War, “Now the general who wins a battle makes many calculations in his temple ere the battle is fought.  The general who loses a battle makes but few calculations beforehand.  Thus do many calculations lead to victory and few calculations to defeat: how much more no calculation at all!  It is by attention to this point that I can foresee who is likely to win or lose.”

Given the long hard road that the terrestrial solar industry has faced for ~40 years, a tendency to seek out the miracle of a market or a technology that will ensure success is understandable.  Avoiding this thinking is almost impossible when it is supported by a steady stream of extremely positive PR.  It seems as if every day a new multi-megawatt market is discovered supported by visionary forecasts that are difficult to disbelieve for several reasons the most dangerous of which is the desire to believe that they are true.

One of the most dangerous and recent beliefs was that prices, as they began to decrease significantly in 2009, were progress on the road to grid parity.  Many industry participants were steadfast in their stated belief that these prices represented progress even as margins for manufacturers thinned and failures began mounting.  Even now, as the PV industry consolidation continues and as it begins effecting balance of system manufacturers and demand side participants as well as cell and module manufacturers, the low system prices – which would not be possible without cell/module prices that are too low – are touted as progress.  Many fear that if prices stabilize or increase the PV industry will take a nosedive into failure.  Confirmation bias also serves to support negative views, and is equally dangerous in this regard.

It is one thing to turn a brave face to the world and another thing entirely to only seek out information that supports closely held views or hopes.  When marketing statements become truth, good choices often turn by the wayside.  The current situation with HP and its acquisition of Autonomy may provide an example of what happens when believing what you want to be true takes the place of objectivity.  In market research a clear rule is that if the analyst cannot eliminate their own bias he/she cannot effectively conduct the analysis and … should not do so. 

The solar industry – and all its technologies – is still at the beginning of a long, hard battle to replace subsidized conventional energy as the primary electricity producing technology.  As if this were not difficult enough, in this fight it faces other renewable technologies, public opinion, utility pushback and its own need to prove itself the cheapest energy source and to do so without subsidies. This goal has turned the solar industry against itself, dividing it into demand/supply warring camps. 

When an industry turns on itself there are no winners. At some point solar industry participants need to get back to their shared goals one of the most important of which is to slow or stop or ameliorate the destruction of the global environment before it is too late.  While the industry argues, and the climate change naysayers naysay, the ice is melting, the oceans are rising, the air in some regions remains close to un-breathable, extreme weather events become more common and more solar industry participants go out of business stranding the very technology that is part of the solution. 

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