The idea sparking the latest technology rush is as old as
sun: solar cell energy.
After years of shying away from funding solar cell energy
start-ups because of high costs, venture capitalists are
tripping over themselves to sign up the most promising
many of them in Silicon Valley.
Breakthroughs in solar technology, favorable policy
Democratic presidential hopeful Sen. John Kerry, disgust
dependence on foreign sources of oil, and skyrocketing
energy worldwide are all playing a role.
``There's clearly something going on here,'' says Erik
partner at Mohr Davidow Ventures who is prowling for
investments, after he was asked by his firm to get up to
Straser recently considered investing in San Jose's
hot solar cell start-up, but hesitated after extensive
another venture capital firm, Vantage Point, had been eyeing
deal and moved in to snag it. Vantage Point now has a team
partners focused on solar and other clean technologies.
This year, State Treasurer Phil Angelides has announced a
billion plan to use the state's pension funds to invest in
environmental technologies, and $200 million has been
start-ups. And there's new buzz from Sacramento about a
proposal by Gov. Arnold Schwarzenegger, which would pay $1
in rebates for solar cell technology to be used on a million
California rooftops beginning next year.
Solar investment still makes up a tiny part of overall VC
investing, but money going into clean technologies is
data on venture investments to solar start-ups is sketchy,
committed to clean technology companies is increasing. It
about 2.4 percent of the total venture capital invested last
compared with 0.8 percent in 1999, according to Ron Pernick
Edge, a research group. About $300 million was invested in
technologies during the first quarter of this year, with $59
going to energy-related deals, according to Cleantech
The deals in solar cell technology, anecdotally at least,
the rise. Over the past few months alone, a slew of
boasting new solar technologies are announcing new fundings.
It's all attracting a new generation of entrepreneurs.
39-year-old Sunil Paul, founder of anti-spam company
which he sold recently for $390 million. He has since
two solar cell companies and can't get enough. He wants to
companies, he says, that go ``beyond just making money.''
He has started a Bay Area energy forum for entrepreneurs
others called the ``Power Lunch,'' with the aim of exploring
and other alternative energy ideas.
Driving much of the excitement is a risky quest by
companies to bring about drastic cost reductions. All solar
companies rely on the same photovoltaic process: Sunlight in
form of photons hits a light-absorbing semiconductor
material in the
solar cell, exciting electrons and thus allowing them to
flow out of
the cell in the form of an electrical current.
Alternatives to silicon
Traditionally, solar cell manufacturers relied on costly
as the semiconductor. But the physical limits of silicon --
crystal form is bulky and inflexible -- have kept solar
times more expensive than traditional sources of energy for
To overcome the cost, subsidies and government
helped support growth in the solar cell industry output of
percent a year. Economies of scale are reducing costs up to 7
percent a year, but the progress is too slow to make solar
competitive without subsidies.
So scientists are exploring some more revolutionary
and they're making progress.
The new companies are doing away with silicon. One is
which uses thin films of a copper alloy (called CIGS)
deposited on a
flexible metal. The process has already been used
produce cheap, high-quality hard disks for disk drives.
Chief Executive David Pearce -- who looks the part of
environmental executive with green shirt, hazel green eyes
green and yellow business card -- used the technology at a
optical-components company he founded. Now, he says, he's
``supremely confident'' he can apply it to solar and expects
product to be on the market by the first quarter of next
Then there are more radical efforts, including those of
Nanosolar, Konarka and Nanosys, using nanotechnology
create flexible solar cell sheets that can be mass produced
promise to rival the cost of traditional energy sources. The
products should be on the market in about two years.
Their semiconductor cells are one-thousandth the width of
silicon, made instead of particles of titanium oxide or
are then printed on a metal roll in the form of a thin
Arno Penzias, a Nobel Prize winner for physics, who is
partner with New Enterprise Associates, and has invested in
realizes the bet is risky.
``More people have lost money in bets against silicon
know,'' he says.
But then you're talking a huge possible payback: The
is about $1 trillion.
The companies that are busy recalibrating the multiple
chemical processes are sure to argue that their way is best.
Pernick says it's too early to say: ``We don't know yet
which one is
going to win out at the end of the day,'' he says.
Nanosolar, for instance, has developed a semiconductor
which saves it from the disadvantages of the usual wet
that could start leaking on a rooftop after a few years.
response, says it has made good headway on creating a
Both plan to print out their cells on large swathes of
Martin Roscheisen, chief executive of Nanosolar, hopes to
raw uninstalled cost of solar electricity down to about 40
cents per watt by 2006, from the $2.75 per watt cost reached
traditional solar manufacturers. This would bring the price
below most other grid sources, such as natural gas.
``The demand would be infinite,'' says Nanosolar investor
Lagod. ``We think its achievable. That's why we're excited
Also driving the lower cost would be Nanosolar's ability
cell foil in large quantities. It could cover whole parking
be painted on the side of buses and cars. And by 2006,
could have the capacity to produce enough energy to make up
percent of the global solar cell market, according to
Worldwide, solar is a $7 billion a year business,
industry experts. The world's largest player, Japan's Sharp,
controls about a third of total solar cell output.
Other big players are making moves. General Electric
bought Astropower, a solar power leader, and last month said
hopes to boost solar energy sales to $1 billion by the end
Nanosolar's Roscheisen embodies the new interest among
Valley veterans in solar. Roscheisen, 35, was an early
pioneer, having sold Internet company eGroups to Yahoo for
million in 2000 during what he says was ``my other life.''
Kicking around for his next business idea, he found most
and Internet technologies were well covered by other
he noticed how much he was paying for inefficient heating
at the gas pump to fill up the guzzling Mercedes-Benz G500
from Sequoia venture capitalist Michael Moritz. Traveling
and inquiring about how to develop better energy sources, he
upon the idea for Nanosolar.
For Roscheisen, the change of industries is a family
His great great grandfather founded Germany's first regional
electricity utility, still powering Bavaria today -- but
he first built a construction company.
Roscheisen says it was almost impossible to raise money
back in 2002 when he first came up with the solar idea.
considered solar uninvestable,'' he says. Now he's gotten
from big-name VC firms, and Monday plans to announce a $10
grant from the Department of Defense's research arm, DARPA.
To the contrary, he says, the industry plays to Silicon
strength -- taking a technology developed first outside --
case, Japan and Germany -- but adapting it in a more
way: ``This is what Silicon Valley is great at.''
Here are some of the start-ups in the solar cell
have received venture capital funding recently.
||New Enterprise Associates, Draper Fisher Jurvetson,
Partech, Vanguard Ventures, SDL Ventures, Prime New
Good Energies, Presidio Venture Partners|
||Garage Technology Ventures, Vantage Point, Firelake
||$5 million, $10 million research grant*
||US Venture Partners, Benchmark, Firelake Capital;
the Department of Defense's research arm, provided the
||$55 million, ** $15 million in grants and research
||Lux Capital, Polaris Venture Partners, Venrock
**grants and deals with DuPont, Intel, Matsushita
||$2 million, round will be closed within next month,
according to company co-founder, John Sedgwick
Source: Companies, funding announcements