It’s a journalistic cliché to pile on the top 10 lists at the end of the year and we’re not above year-end clichés. But here’s the problem -- if we were to list the top 10 greentech investments of the year for 2008 we’d end up with nine solar deals and a biofuels deal which is kind of repetitive and not at all representative of the greentech sector. So we’ll indulge ourselves, enlarge the list, and make room to include a water deal, a lighting deal, an automotive deal and a smart grid investment. And allow us to announce… The Top 21 Greentech Deals of 2008 As in 2007, solar was the dominant investment driver in greentech with more than a dozen solar firms winning funding rounds greater than $100 million. These large funding rounds occurred in the first three quarters of the year and for obvious reasons -- we are probably not going to see that kind of flurry for a while. Enormous funding rounds are not the typical M.O. for VCs -– building proprietary semiconductor factories is not what VCs consider “capital efficient.� But this size investment is required to work out the not trivial technical risks as well as scale to the production capacity needed to compete in this market. Large capital requirements loomed regardless of PV material system being funded whether it was CIGS (Nanoslar, Miasolé, SoloPower, Solyndra, etc.), CadTel (AVA Solar), or amorphous silicon (Optisolar). These terms applied for solar thermal as well (eSolar, Brightsource, Solar Reserve, Solel). This same capital intensity and scale was seen in the liquid fuels investments of Range Fuels and Amyris. VC investment in cleantech in 2009 won’t be as dramatic as 2008 but will remain a brightspot in the VC universe. We expect a drop in the dollar amount but the number of deals should hold steady with a focus on storage, smart grid and energy efficiency. Click here to view the full list.

CSP Concentrating Solar Power

Despite the staggering capital requirements for the plant build-out, VCs have invested enormous amounts of early-stage funding in parabolic troughs, power towers, and Stirling engines. Once the technology is worked out, the challenge for these firms in 2009 is the financing of these billion dollar projects. VCs can’t do that without help from banks, PE investors, and government.

Ausra:  Utility-scale solar thermal using a parabolic trough-based system with a “compact linear fresnel reflector" used in conjunction with a yet undisclosed thermal storage technology.  Their most recent funding round was $60.6 million from KERN Partners, Generation Investment Management, Starfish Ventures, Khosla Ventures, and KPCB. Ausra’s first commercial CLFR project, in Australia, will augment power production at an adjacent conventional power station. The firm is also developing a 177MW CLFR power plant for PG&E in central California.

BrightSource Energy: Brightsource Energy is developing utility-scale heliostat/power tower plants using high-temperature solar thermal technology. In its prior incarnation 20 years ago as Luz, the team built over 350MW of solar thermal generation capacity. The firm has raised more than $150 million from investors including VantagePoint Venture Partners, Google.org, BP Alternative Energy, StatoilHydro Venture, Black River, Morgan Stanley, DBL Investors, Draper Fisher Jurvetson, and Chevron Technology Ventures. It has a PPA in place with California utility PG&E for 900MW of thermal power. Like any solar thermal technology driving a steam turbine the firm needs direct uninterrupted sunshine preferably at altitude, access to water, and access to transmission lines.

eSolar: With an April 2008 $130 million investment from Google.org, Idealab, and Oak Investment Partners, eSolar is building large scale (>46MW) heliostat/power tower systems. They claim that their differentiators include the use of smaller mirrors, designing the components to fit efficiently into shipping containers to keep transportation costs low, and pre-assembly at the factory to minimize on-site labor, resulting in a capital cost reduction compared to existing solar thermal power plants. eSolar has signed a PPA with SCE to build 245MW of concentrating solar plants in the Antelope Valley region of Southern California.

Heliofocus: In 2008 Heliofocus received a $20 million investment from Israel Corp Green (ICG) and Musea Ventures. Claiming high optical and high thermal efficiency, the company's system uses a large parabolic dish concentrating sunlight onto a receiver that feeds a turbo generator. HelioFocus looks to build both small modular plants as well as combined cycle solar power plants. 

Unlike dish Stirling, HelioFocus uses a gas turbine that can hybridize with natural gas.

Infinia: Infina closed a $57 million B Round in 2008 from investors Foxconn, GLG Partners, Vulcan Capital, Khosla Ventures, EQUUS Total Return, Idealab, and Power Play Energy. Infina uses a “free-piston" Stirling engine with a dish concentrator to produce 3kW of AC power. In 2007 Infinia acquired Stirling Cycles, a Stirling engine developer, as part of its $9.5 million Round A. (Stirling Cycles had been incubated by Idealab.) Targeted applications are micro-CHP, remote power, and tactical power.

Luz II: (an engineering and R&D subsidiary of Brightsource Energy) converts water to superheated steam in a heliostat/power tower architecture. The firm's first installation is being built in Israel as a pilot plant. A series of 100MW and 200MW commercial solar power plants are scheduled to come on line in 2010.

Menova Energy:  Canadian CSP firm with at least $3.6M in VC funding and Canadian government funding.

RawSolar: The company's flagship product is a tracking mirrored parabolic dish that captures sunlight to produce steam or hot water.

Skyfuel: Parabolic trough solar collectors using light weight and potentially lower cost reflectors and materials. The company's reflective silvered-polymer film coating material allows for the elimination of glass mirrors in CST applications. It closed a $17 million Round B in April of 2008 led by Leaf Clean Energy.

Solar & Environmental Technologies: China-based CSP start-up reportedly with $3M from Hong Kong’s Entropy Ventures.

Solar Systems: Privately held Australian firm with a $100M investment from Australian utilities and private investors is currently using a dish-based CPV system but moving towards a power tower architecture(?).  Solar Systems will work on the Alice Springs solar power station, which is proposing to produce 1800 megawatt-hours of electricity per year, as well as the 154MW, $420M NW Victorian project (using heliostats). Solar Systems placed a large (350MW 10 year) order with Spectrolab for III/V cells.

Solel: Israel’s Solel designs, manufactures and installs parabolic trough solar fields for large scale power generation as well as manufactures solar thermal receivers which use a synthetic oil as the heat transfer fluid. Ecofin, a U.K.-based investment manager, invested $105 million in Solel in early 2008. The company claims to have had over $450 million in backlog in 2008.

Sopogy: While most CSP companies focus on large-scale power generation, Sopogy is targeting “Micro CSP" in ranges from 200kW to 20MW with applications ranging from power generation to AC to process heat. Too large for small residences, too small for utilities, the size is just right for industry, apartment houses, and campuses. It raised ~$9 million in 2008 from Ohana Holdings, Bethel Tech Holdings, Energy Industries Holdings, Kolohala Holdings, Black River Asset Management, et al. Hawaii’s state legislature approved ~$35 million in bonds for Sopogy to build and operate a local solar plant. The firm looks to close another VC round in early 2009.

Starpoint Solar: Starpoint Solar has developed a Stirling Dish technology claiming to generate electricity at half the cost of other solar technologies with production costs equal to new gas-fired power plants.  Starpoint is negotiating an LOI for a PPA with Inland Energy. The firm is looking to raise $10M to construct a 4-unit demonstration solar field and prepare for its initial 50MW solar plant.

Stirling Energy Systems: SES proposes to build 30,000 40 foot-wide mirrored dishes focused on 25kW Stirling engines in California’s Imperial Valley to fulfill a contract with San Diego Gas & Electric, enabling SDG&E to meet their 2010 RPS. Transmitting the power will depend on whether Sunrise Powerlink, a proposed 1,000MW power line, gets approved and built. In April of 2008, Irish developer and operator, NTR bought a stake from initial investors for $100 million and will supposedly be investing another $100 million in 2009. Stirling has a contract to provide 300MW to SDG&E by the end of 2010, and an additional 600MW if and when Sunrise is built.

Sundrop Fuels: Solar thermal systems that produce hydrogen and electricity via Solar Reduction of Carbon Dioxide, or Solarec.  According to Venture Beat, Sundrop received a $20M investment from KPCB in early 2008 and is also backed by Sun Mountain Capital and Oak Investment Partners.

That wraps up our series on solar startups.  Check out the other parts of the series here:

• Part 1: Wafered Silicon, Installers, Financiers, Balance of Systems
• Part 2: CPV
• Part 3: Next-Gen PV
• Part 4: Thin Film
• Part 5: Solar AC and CHP

Let us know if we've missed any, your picks for winners and losers, and any comments you might have.

While nearly all the players in the solar industry count the recent extension of the U.S. investment tax credit as a win, perhaps no group stands to benefit more from this legislative victory than utility companies. Previously, utilities were subject to an exemption barring them from taking advantage of a 30 percent investment tax credit for solar power projects. This exemption effectively eliminated utilities from owning solar power stations outright, forcing them instead to buy solar-generated electricity from third-party financiers under power purchase agreements. Utilities were also bound on the other side by state renewable portfolio standards, especially in states with solar cutouts. These two forces left some utilities in a precarious position -- unable to include solar power stations as a capital asset for rate-basing, but forced to pay higher-than-avoided cost prices for electricity. Lifting the public utility exemption, which lets utilities take advantage of the 30 percent investment tax credit, will make solar power system economics more attractive for utilities than in the past. Tax equity potential combined with the continued downward march in module average selling prices and cheaper, faster installation methods may provide the necessary groundwork for a shift in how utilities relate to the rest of the solar industry. The most significant aspect of this is the allowance the exemption’s elimination gives utilities to start acting like, well… utilities. In nearly all states, utilities participate in a tightly regulated process that determines the return on equity they are able to receive for a given asset investment. Return on equity is recouped from consumers in the form of a tariff on top of the electricity rate. Rate-basing is standard practice, but can only be done when the target asset is under utility control. With solar this was previously not the case. Instead of owning projects outright, the exemption forced utilities to enter into power purchase agreements with solar financing companies like SunEdison. The new legislative regime may force a shift in utility renewables strategy, moving them from electricity buyers to system buyers. With this shift it is likely utilities will start buying solar power systems outright from turnkey project developers, effectively cutting out the third-party financiers that have become so prevalent in the past four or five years. This is a net benefit for the solar industry. First, it will get utilities to think constructively about including solar power in their asset portfolio. Second, it will allow more projects to be built, giving domestic solar suppliers a market potentially on par with those of their German and Spanish counterparts. Getting utilities to think constructively about solar power is crucial for increasing the penetration of solar power in the domestic generation portfolio. Utilities must now face crucial questions regarding the integration of solar power into their preexisting load. This will likely lead to an increase in the deployment of next-generation transmission and distribution capabilities as well as the increasing use of smart grid technologies to manage a hybridized load portfolio. Ultimately, lifting the utility exemption may be the single best thing for the domestic solar industry. Utilities, which have always had access to lower-than-average costs of capital will be able to outcompete third-party financiers in this increasingly dry credit market. This means more projects will get built at lower prices, but with stable and known rates of return. A little certainty is good for any industry, but especially for one that has gone so long without it.

I’m still chasing down confirmation on these items, so take them with a grain of salt, and feel free to contact me if you know otherwise. wesoff@greentechmedia.com

1. Skyline Solar, a low-concentration PV firm using silicon helmed by Bob MacDonald (formerly of SolFocus) has reportedly closed a $25 million round from New Enterprise Associates. Word has it that despite jittery market conditions, there was a minor bidding war between NEA and another top tier VC firm.

Interestingly, NEA is a backer of SolFocus, a high-concentration PV firm as well as an investor in Solar Junction, a stealth startup fabricating III-V materials for CPV. This leaves NEA rather exposed in the zero billion-dollar CPV market. Calls and emails to the company and NEA were not returned.

2. On the subject of SolFocus, investment banker and VC sources tell me that they are meeting with limited success in closing their next round. And that’s not good news for the large head count, high burn-rate HCPV firm. SolFocus has done a lot of things right as they try to enter and help create the CPV market but they need cash to keep it going. A few months ago they claimed they would soon close a $60 to $80 million round.

3. Lastly, the Tesla news keeps on coming. After the company's recent product delays and boardroom carnage it is said that Elon Musk, the visionary now-CEO and backer of the firm is going to have to add a considerable amount ($35 million) of his personal fortune to keep the company going. This is in addition to the approximately $50 million of his own cash he’s already contributed.

And the hits just keep on coming. Pure-play ethanol company VeraSun sent out a press release late Thursday night announcing they retained Morgan Stanley to help "evaluate strategic alternatives." That's pennies-on-the-dollar talk if I've ever heard it. VeraSun's stock price dropped 75 percent on Wednesday on news the company will post losses of $63 million to $103 million dollars this quarter because of its failed corn purchasing strategy. The beleaguered ethanol company exited its short positions after corn jumped from $6 per bushel in May to over $8 per bushel in July, and started buying up contracts at the then-market price. VeraSun got caught with overpriced contracts when corn darted below $5 per bushel in August. In an 8-k filing the company submitted to the SEC on Tuesday VeraSun said "we expect to record average corn prices of between $6.75 and $7.00 per bushel during the third quarter of 2008," well above the prevailing market rate. The same day the company announced it would offer 20,000,000 shares of common stock to gain back some of the money it lost in the botched corn trades. Unfortunately for VeraSun, this was not the week to raise capital. Investors started a bolt for the exit once they learned the company needed to raise money to sustain its substantial losses. Two days later VeraSun has withdrawn its share offering - perhaps a more "strategic" deal is in the offing. However, if neither lenders nor the U.S. Government were willing prop up Lehman Brothers, you can bet Hank Paulson won't give VeraSun even a passing thought as he crunches through his morning meusli. I wouldn't be surprised if VeraSun goes down the strategic alternative road sometime in the next week. Whether that's bankruptcy or acquisition remains to be seen. Morgan Stanley, it's underwriter and advisor, looks headed for the same path tonight as the investment bank reportedly mulls a 49 percent offer from China's CIC. This mess is far from over. And greentech companies in the project development and construction stage, with their large capital requirements and low revenues, will feel the pinch over the next few weeks. Developing...

The financial crisis has claimed its first major energy casualty. Warren Buffet beat out French energy giant EDF to buy cash-strapped Constellation Energy for a pittance this evening. The utility and power trading company's stock dove 58 percent over three days this week, pushed down by liquidity fears and a downgraded credit rating. Sound familiar? Buffet's MidAmerican Energy will buy Constellation for $4.7 billion after Constellation's board rejected an offer from EDF, which owns 9 percent of the power trader, for a $500 million cash infusion. Though Constellation owned a physical asset base of roughly 9,000 MW they marketed closer to 32,000 MW to commercial and industrial customers. They are also the country's sixth largest wholesale power marketer. However, because their assets under contract far exceeded their physical assets (and because their physical assets were mostly minimally-profitable baseload capacity), the company needed to generate cash for more contracts somewhere. So Constellation sought more and more capital to develop their oversees commodity trading business while taking on more debt to finance these upstream operations. Soon, the company's trading partners were voicing concerns that Constellation wouldn't be able to make good on its supply contracts. Finally, although Constellation was able to secure a $2 billion credit facility from lenders, the potential that a credit downgrade to junk status would cost the company another $1.6 billion in collateral sent investors running for the exits this week. I think I've heard this one before. Didn't these people learn anything from Enron? Energy trading without a physical asset base or easy access to credit is a recipe for failure. With the Libor hitting record highs this week, all was lost for Constellation. I hope Constellation CEO Mayo Shattuck is ready to trade Baltimore crabs for Omaha steak.

British VC firm Wheb Ventures is raising what will become the EU's largest dedicated greentech fund. The fund has already raised £57 million from some of the UK's wealthiest investors, including Rolls-Royce chairman Simon Roberston and Lord Jacob Rothschild. Wheb plans to pick up another £100 million from institutional investors and sovereign wealth funds as the firm seeks to tweak its investment profile. Launched in 2005 with an initial fund of £24 million, Wheb Ventures has invested in companies like fluXXion and Exosect that focus on water filtration, metals recycling, environmentally benign pesticides, and energy efficiency. With 3i out of the early stage game, Wheb can now claim the mantle of Europe's leading greentech VC. Despite a dismal VC environment in Europe this year, energy and greentech fundings have been on the rise over there. While Wheb's past plays have leaned toward the enviro-tech side of the industry, the building up of new markets in areas where Europeans have traditionally been strong may play a role in shaping their new investment portfolio. AMI and smart grid technologies are becoming big business in the U.S., though companies like Switzerland's Landis + Gyr have played a significant role in developing this market. Europe is also strong in PV technology and engineering and is a global leader in ocean and wind power technology. However, to really take advantage of Europe's engineering strengths, Wheb needs to follow the path of American VCs into university labs. Whether the traditionally guarded EU universities will let them in is another story. Ben Goldmsith, a Wheb partner, has said the firm is "aiming for a portfolio balanced between early stage venture and businesses at a more advanced stage of growth." While many VC firms maintain executives-in-residence to help guide new startups, or even to install as CEOs, Wheb Ventures has an entirely different card up its sleeves. The firm's sister company is Ruston WHEB, a leading executive search firm in the greentech sector. With openings at "Fast Growing Clean Technology Company" and "CHP Technology Company", its not inconceivable that Wheb Ventures sources a lot of its placement deals in house. But hey, the devil you know...