Siemens is the company that just can't resist.

The German industrial giant is considering purchasing solar cell maker Q-Cells, according to Reuters (via Forbes here.).

Earlier this month, Siemens bought solar thermal vendor Solel for $418 million. Earlier, it has bought an number of water companies and ramped up its investments in smart grid.

In a list of the top ten acquirers in greentech, we picked Siemens as number two, right behind General Electric.

This is a pattern you should get used to. Small, innovative startups often have tremendous technology, but they lack the capital, distribution networks and relationships to bring their ideas to fruition. Large conglomerates often fail to capitalize on the interesting stuff in their labs, but they do know how to buy stuff that seems to work and take it commercial. Thus, greentech will be a barbell market – a lot of small companies and a few large companies with not a lot of things in between.

As acquisitions spread, you can start to think of Silicon Valley as a farm system for conglomerates. That doesn't sit well with some: Didn't Silicon Valley win out over old-style conglomerates like Digital and IBM? Yes, but it doesn't mean it happens in every situation. Green startups are born to be bought.

And if Siemens isn't interested, start talking to Philips (two lighting acquisitions this year), Toshiba, TSMC, and Cisco Systems.

Arizona is California, when it comes to solar.

Pacific Gas & Electric announced it has signed a deal with Aqua Caliente Solar, a division of NextLight Renewable Power, to obtain 290 megawatts worth of power from a power plant to be built in Yuma County Arizona. The plant will start delivering power in 2012 and become fully operational by 2014. Thus, it won't help PG&E hit its "20 percent by 2010" goal but will be there for the 33 percent by 2020 goal.

PG&E earlier this year contracted with NextLight for 230 megawatts in a power plant to be built in Antelope Valley, California.

With its ample supplies of desert land and a comparatively smaller population, Arizona boosters have increasingly talked about being a venue for exporting power to California. In a sense, it's a continuation of what was accomplished with the Hoover Dam, which supplies water and power to the Southwest to regions that aren't even close to the river or the dam itself. Although some solar companies are putting power plants on land controlled by the Bureau of Land Management, others are looking at private plots of land. An auction of desert land in Arizona pitched as an ideal location for solar farms sold for $2.6 million at auction earlier this year.

Not only will it be big, it will involve the two main types of solar.

Acciona Solar Power, Clark Energy Group and the U.S. Army Corps of Engineers will begin development of a 1-gigawatt plus power plant at Fort Irwin in California this Thursday.

The plant will include both photovoltaic panels as well as mirrors and turbines for solar thermal power. Consider this the wave of the future. Some companies are already moving toward hybrid power plants which combine gas turbines with solar thermal systems to keep a more constant flow of power on cloudy days. A PV-thermal farm ideally will let landholders maximize their real estate by plunking down solar panels in corners of land where more thermal equipment might not make sense.

Acciona built Nevada Solar One, the 64-megawatt plant outside of Las Vegas that helped reinvigorate solar thermal in the U.S. It is building more plants in various global locations.

The Army considers it a pilot project to meet its energy policy, which calls for conservation and the promotion of alternative energy generation. (More details on the project at that link.) Like the U.S. Department of the Interior, which is setting aside land for solar power development, the military also intends to make some of its vast land holdings available for all types of renewable energy generation.

We reported earlier this week on the resurgence of venture capital investment in greentech. We broke it out sector-by-sector in this post. The graph above breaks it down year-by-year and looks at the recovery quarter by quarter

The chart below is another example of some of the work done in the Greentech Innovations Report – where we carefully track every VC deal in greentech as well as report on a different renewable energy topic every issue.

Investors channeled $575 million into 29 solar VC deals in the third quarter.  The investments spanned the solar sector and ranged from the fanciful (solar in space from SolarEn) to the sublime.  Notable in this data is the number of small investments - early stage VC investing is not dead.  Also notable are the 11 European and Asian investments, a larger than typical proportion.  European VC is alive and well.  The largest deal, Solyndra's $198 million, was a requisite piece of funding for Solyndra in order to garner their $535 million federal loan guarantee. 

Does the VC model still work in big solar? Can massively-funded VC startups like Nanosolar ($500M in VC) and Solyndra ($800M+ in VC) provide a reasonable multiple for their investors?  Or are the less capital intensive solar plays like SunRun or Enphase more suitable to the VC investor?  The next few quarters should give us some answers.

Uni-Chem, a maker of leather goods in South Korea, plans to set up a solar cell factory in Oregon, reported the Associated Press.

The company has apparently signed a memorandum of understanding with Hynix Semiconductor to buy Hynix's memory chip factory in Eugene for $50 million. Hynix, also based in Korea, closed the ten-year-old factory in September 2008 and laid off more than 1,000 employees when the memory business wasn't faring well.

Uni-Chem is interested in branching out to new business. It currently sells leather to Hyundai Motor and Kia Motors. The company also counts Burberry and Coach as customers.

Uni-Chem Chairman Lee Ho-chan told the AP that the company bought a 51 percent stake in Spire Solar Systems back in August. Spire is a subsidiary of Spire Corp., which set up the company to provide power project design and management services this summer after its joint venture with Taiwan-based Gloria Solar was dissolved, according to Spire's recent quarterly filing with the U.S. Securities and Exchange Commission.

Spire Corp., based in Bedford, Mass., sells factory equipment for making solar panels. 

I can't find any Spire announcement about Uni-Chem, and have put in a call to Spire.

"Separating the path of the photons from the path of the generated charge carriers."

"Decoupling the optical and electronic pathways."

That's what Solasta is trying to do.

The Newton, Mass.-based solar firm was founded in 2006 with A round funding from Kleiner Perkins. KP has a few of those stealth solar firms including Alta Devices and Solexel, none of whom appear on the portfolio portion of its website. In addition to VC funding from KP, Solasta has received more than $3 million in two DOE grants. 

With technology and founding personnel in the form of three physics professors from Boston College (Michael J. Naughton, CTO,  Zhifeng Ren and Krzysztof Kempa), Solasta is using amorphous silicon and carbon nanotubes on a glass substrate in an attempt to create more efficient solar cells that are simple and inexpensive to manufacture.  Solasta is joined by at least 35 other VC-funded next-gen solar firms with similar goals. Most of whom will meet with limited commercial success.

Solasta is currently helmed by former KPCB Executive-in-Residence Mike Clary who has led other advanced technology companies such as GMZ Energy and Nanostar.

According to the executive summary in a February 2009 DOE report, Solasta:

"Provides a photovoltaic medium with independent optical and electronic pathways, separating the photo from the voltaic with respect to required thickness of
photovoltaic absorber material. It does so with innovations in both light and charge collection."

The amorphous-silicon "nanocoax" structure increases current and potentilally lowers materials cost. The company (which is hiring engineers) claims the process could increase the efficiency of conventional amorphous silicon PV by up to 150 percent.

CTO Naughton further explained Solasta's process in an email:

"In contrast to the numerous nanowire solar cell approaches under development, Solasta's Nanocoax, which is literally a nanoscale coaxial cable (think cable TV), requires photogenerated electrons and holes to travel only nanoscopic distances before reaching metallic electrodes. This significantly lowers carrier recombination, allowing more current to get out, and thus higher efficiency, even for noncrystalline materials like (but not restricted to) a-Si. Light collection is controlled by the Nanocoax vertical height, while the charge travels short distances horizontally (radially). This separation of the 'photo-' from the '-voltaic' solves the thick-vs-thin conundrum of solar power, and allows Solasta to use films even thinner than 'thin film,' further lowering cost and weight."

A startup with a new technology in solar can try to become a PV panel supplier like Solyndra or Nanosolar – but that takes hundreds of millions of dollars, could take a decades and cost thousands of innocent lives. The company could try to go the route that 1366 Technologies is trying – selling add-on processes that fits into existing manufacturing schemes.  Or a startup can license its technology and that is currently Solasta's vision.

I spoke with the CEO and CTO this morning. "We look to license the technology to enable a step up in efficiency and to allow companies to differentiate," Clary said. Clary also envisioned a "software model" for the license, where successive generations of the Solasta technology would continue to flow through through their liscensees.

Naughton added that this was "an architecture, not a materials process," and that the firm was "not at all restricted to a-Si."

The startup is currently seeking more funding and my sources tell me that VantagePoint Venture Partners is taking a closer look.

SunPower's Doug Rose, the senior director of technology strategy, presented at the Silicon Valley PV Society in a talk titled, "Technology and Economics of High Efficiency c-Si PV." Of course, the thrust of the talk was the strength of SunPower's high-efficiency solar cells and panels, and the impact of efficiency on the cost and payback of a solar system.

The high efficiency of SunPower's solar cell stems in most part from its back-contact technology – a technology pioneered by founder Dick Swanson in the early 1980s at Stanford with low-cost manufacturing breakthroughs in 2001. The back contact design avoids gridlines on the front of the cell so there's no metal obscuring the cell and therefore more light gets converted to power. According to Rose, other design advantages are gained from the back-contact architecture – it allows better optimization of the front surface through texturing, an optimized backside mirror, localized contacts, and obviously backside gridlines.

The all back-contact cells allow SunPower to get to median production efficiency of 22 percent at the cell level. And while they're at it – cell thicknesses in the 150 micron range at about 6 grams of silicon per watt.

Rose raised the question: "How can high efficiency cells be cost effective? You're not using the same platform as everyone else." The response was: "Sunpower spends a little more in cell processing to deliver savings across the value chain."

That's the value proposition of high efficiency cells. The cells are more expensive but cost savings are realized all down the line. 

So how much exactly is this "efficiency bonus?"

According to research performed by crack Greentech Research analyst Shyam Mehta – gains in efficiency drive cost reductions at all steps of manufacturing on a $/W basis, from feedstock cost to module conversion – a 1 percent improvement in efficiency leads to a 5 percent to 7 percent decrease in fully loaded module cost. (Shyam's most recent report is on PV Manufacturing in the US and can be found here). His efficiency thesis is charted below:

In a solar market where prices are plunging, margins are crumbling and market consolidation is on the horizon – how much of a premium can SunPower command for its high-end product? A banker friend believes the dollar per watt premium is only 10 percent to 20 percent over conventional silicon or thin film PV.  With SunPower at a less than $2 per Watt module price in the fourth quarter of 2009 and some c-Si vendors below $1.50 per Watt – can SunPower command a 35 percent premium?

SunPower believes it can. My banker friend says no.

Here are some of the benefits of higher efficiency and the SunPower cell structure:

• Lower area-related costs
• Reduced installation costs
• Reduced shipping costs
• Reduced Balance of Plant (BOP) costs
• Allows more Watts in area-constrained sites, which reduces the $/W cost of project costs such as sales, permitting, design, etc.
• Delivers more energy per rated watt because of a better temperature coefficient, low light performance, broad spectral response, no LID

All factors resulting in a lower LCOE.

A Very Few Words on LCOE

A simplified formula for Levelized Cost of Energy (LCOE) is:

LCOE = Panel cost + BoP cost + O&M costs / Sunlight collection * Conversion efficiency

But, unfortunately it's not really that simple.  SunPower has detailed calculations and displayed the many factors influencing LCOE in its presentation. NREL has its own byzantine formula for LCOE.

An accurate measure of LCOE will have to include:

• Initial investment
• Depreciation tax
• Annual costs
• System residual value
• System energy production

And LCOE calculations have a very high sensitivity to certain input variables such as:

• Annual panel degradation
• Differences in annual discount rate / cost of capital
• System life (inverter replacement, etc.)
• Annual O&M

The major contributors to LCOE are:

• Capital costs
• Modiule $/W
• Area related BoS
• Electrical BoS
• Project related costs

"If someone says the LCOE of my technology is x cents per kilowatt-hour, it still doesn't tell you a lot," said Rose.

Differentiation and Branding in a Commodifying Market

A healthy cost structure, a good balance sheet, and the right level of vertical integration are what will distinguish winners from losers in the coming solar shakeout. Differentiation is going to help as well. And SunPower has that technical differentiation by virtue of the highest efficiency commercial solar product – a 22 percent median efficiency in 2006 looking for over 23 percent in its Gen3 cells. Combined with itss one-axis trackers which increase capacity factor by about 30 percent to match energy production with summer load, an important point for utilities – SunPower has some of the crucial ingredients for survival in the demand-constrained solar landscape.

Single axis tracking is a tremendous lever to reduce the LCOE of power plant, and to deliver significantly more power when the utility companies most want it (late afternoon in summer).

Of further interest in the differentiation department is SunPower's recent plunge into consumer branding of its panels. Ride a bus in San Francsisco and you'll see a SunPower-branding consumer ad campaign. 

Three questions for our readers:

• Do consumers care which brand of solar panel they're buying?
• What is the real value, the real premium for high efficiency?
• And contrarily – what is the penalty for low efficiency?  Where does 6 percent to 8 percent efficient a-Si or OSC fit into the solar landscape?  Or does it?

We welcome your thoughts.