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.

Because of big screen TVs and home computers, utilities are seeing another peak power problem evolve. Traditional peak power hours -- the time during the day when power demand shoots up -- run from 4:00 pm to 7:00 pm, according to Andrew Tang, senior director, smart energy web, at Pacific Gas & Electric. Air conditioning begins to ramp up and people start heading for malls and home. On some unfortunate days, brownouts occur. But utilities are now seeing a second surge after the 7:00 pm drop in demand; it runs from about 8:00 pm to 9:00 pm, he said. That's when people head toward the electronic entertainment devices. (See: Atomization of the American family.) "It is so much a peak as it is a plateau," he said, adding that "8:00 pm is kind of a recent phenomenon." The 8:00 pm to 9:00 pm plateau is also "reasonably close" to the 4:00 pm to 7:00 pm peak. This new geographical monument on the daily power consumption curve, of course, is becoming a problem that utilities will have to solve. Providing power during the peak hours is already a costly proposition. Approximately 10 percent of the existing generating capacity only gets used about 50 hours a year: Most of the time, that expensive capital equipment sits idle waiting for a crisis. (Tang will also speak at our Greentech Innovations End-to-End Electricity conference taking place November 17 and 18.) Some of the efforts to fix this are already underway. Panasonic and other TV manufacturers are all working to reduce the power consumption in LCD and plasma TVs while Intel and the PC crew are cranking down computer power consumption. Sharp, in fact, showed off a 26-inch prototype LCD TV that consumes 40 watts of power and runs on solar panels at Ceatec in Tokyo recently. Utilities are also figuring out ways to deliver their own resources more effectively. In California, for instance, plug-in hybrid cars would allow PG&E to better deploy energy from wind farms. Wind blows at night here often. If demand doesn't exist, it gets dumped. If thousands or even millions of drivers had their cars plugged in, they could refuel on cheap power in the wee hours. Plug-in cars, however, could also create problems with peak power, he added. Most people will try to plug-in as soon as they get home or at work. Thus, the utility is working with companies to regulate charging time. You might plug in at 6:30 pm, but actual charging might not begin until after midnight. Tang remains a bit of a skeptic of using plug-ins to provide power to the grid during peak times. The grid simply wasn't designed to accommodate power delivery from millions of comparatively small batteries. To work effectively, parking structures will have to aggregate power from a number of car batteries and even then it will remain a challenge. And here's another issue with plug-in cars. Consumers will have a natural tendency to plug-in wherever they go to top-off their batteries. Car makers, though, are worried that the large number of charges that will inflict on a battery -- close to 1,000 times a year if you plug in at home and work -- will prematurely age the battery. "Car makers hate the concept" of cars feeding the grid, he said.

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.

Utilities have already begun to adopt wireless technologies like WiFi, ZigBee, Z-Wave and some proprietary protocols as a way to curb power consumption. Next, you're going to see WiMax make a bigger splash in greentech, a well-connected source in the electronics world told me. Expect to see companies fleshing out WiMax energy efficiency strategies in the relatively near future and some start-up activity. Grid Net is already touting WiMax and is collaborating with Intel and General Electric. WiMax, for those of you that haven't been in an airport in two years and thus haven't had to relieve your boredom by buying a copy of BusinessWeek, is a long range, high-bandwidth wireless data protocol that can handle large numbers of users at once. It's like having fiber in the sky. Intel, Google, Clearwire, Sprint and others have collectively invested billions into getting WiMax off the ground. Pakistan and a few other countries are rolling out plans for nationwide WiMax coverage. Unfortunately, WiMax is in some ways entering a saturated market. WiFi and broadband links are a lot easier to find in Europe and America than they once were. Enter the energy crisis. Electricity rates are rising and utilities want to invest in technologies that will let them reduce the power going to air conditioners, lights and other devices to avoid brownouts. Consumers in turn get a discount. Utilities have only just begun to go down this road; thus, potentially a greater opportunity exists for smart grid than data services. It has become one of the hottest investment categories in greentech. WiMax is in many ways idea for smart grids. A WiMax station could receive information on electricity, water and gas consumption from several homes or neighborhood network nodes and then relay it to base stations or utitlities. Although utilities have experimented with ways to transmit data over power lines, there seems to be a lot more buzz and experimentation around wireless, particularly in the U.S. You can also start to better see how these technologies layer upon each other. In the home, we will likely see ZigBee or WiFi connecting appliances to a home base station. Technology for wiring the home will come from a lot of vendors: Cisco, Tendril, GainSpan, Threshold, etc. The base stations will then connect to the meters at home and send messages to neighborhood network nodes from companies like SilverSpring Networks. In turn, the SilverSpring nodes may then link up to a WiMax box powered by stuff from Intel.

There are about 25 VC-funded firms in the Concentrated Photovoltaic market.  We listed all of them in CPV Part One, Part Two and Part Three. Only a few of them, maybe 10 percent, will survive to win market share and perhaps be acquired or go public. That means at least 20 of those companies are doomed. Most will create pretty Websites, make outrageous claims, oxidize their investor’s money and waste journalists’ time. Which brings us to my interview with Sunrgi. Sunrgi is building a CPV system with a claimed 2000X concentration. The system has “built-in� 2-axis tracking and is produced in 1kW blocks that integrate like Lego-blocks™.� Greentech Media’s Rachel Barron reported on the firm earlier this year. We’ll talk more about technology in a bit. First, let’s talk about their team: Dr. KRS Murthy is one of the founding partners of Sunrgi and is something like their CTO. Here’s his resume. He’s evidently a child prodigy, a poet, accomplished actor, graduated high school at the age of 12, and is also a musician and composer. Here’s a page where he does unspeakable things to Beethoven and many other musical genres. He is able to take any piece of music and transform it into the same unlistenable song. Perfect qualifications for the CTO of a CPV company. Here’s an excerpt from one his poems:

She asked him How long? How big? How strong? How firm?

More:

What does future hold 
for the baby we just made? Turbo love? Drive-in romance? Takeout love lunch? Nanosecond orgasms? Strobe light love affairs, can hypnotize gene welding, we just enjoyed.

And here’s another excerpt:

I remember the times my mind vomited eruptions of stinking gooey green liquid
 every time I remembered how you made me feel by rejecting me on my rainy days.

Paul Sidlo is another founding partner of the laugh riot that is Sunrgi. According to his resume, he is one of the pioneers in the field of computer graphics, has earned numerous awards including nine Emmys and is the principal of a firm that is the broker for sponsorship and advertising of the Las Vegas Monorail. Another perfect employee to develop a CPV system. You can read about the other team members here. What they seem to have in common is little or no experience in solar power, energy technology or the utility business. Which frees them from the mental constraints of having actual real world experience in this market. The following includes some quotes from the founders that speak for themselves Greentech Media and the Prometheus Institute projected that the CPV market will be about 6 GW by 2020 (It’s only a few Megawatts today). The Emmy Award-winning Paul Sidlo said: “That’s absolutely wrong, I get a call for 6GW of power orders in a week!� He claims the market will be at least four times that figure and that Sunrgi has, “1kw to 1GW capability.� Dr. Murthy said that, “There are three things that distinguish Sunrgi – cost, space, and time.� He claims Sunrgi can achieve “5 cents per kWh� in the Southwestern U.S., that the company only needs “1.5 acres of land to generate 1.5MW� and that Sunrgi “can deploy 100MW in 100 days.� Bob Block, another founder claims that they can become “a global company almost overnight,� because of their use of subscontractors and a “technology that can be manufactured on a standard PCB line.� Don’t these guys realize that I’m writing down the things that they say? Anyway, rather than solely trust my own instincts and the deafening roar of my bullshit detector, I asked some experts in the field – people at the DOE, CEOs at other CPV firms, researchers and academics. Here are some comments that seem to confirm my skepticism: “Yes, 2000X is probably possible, but why would you want to do it?  It’s pretty likely to be more costly than a lower-X solution,� said a technologist and CPV company founder. He added that Spectrolab and Emcore both do not advise operating the cells above 1000X. It has something to do with tunnel junctions. Basically, if the cell is not built and/or illuminated uniformly, two things can happen: Hot spots can develop, leading to thermal runaway; and parasitic tunnel junctions can eat current, leading to reduced efficiency. Above about 750X, the cost of a receiver assembly is dominated by things that aren’t the cell – thermal substrate, die attach, optical secondary, bond wires, heat sink, grounding wire (required by UL), leads and cell-to-cell interconnect, labor, etc. Further reduction in overall cost by reducing the cell size further becomes pretty minimal, whereas you’re making other things a good bit harder, and cost will very likely go up. As the cost of the cells drops in the future (e.g., as the vendors move from 4-inch to 6-inch fabs), the money saved by going to very high concentration will become even less. And to summarize the whole thing: Yes, I think Sunrgi can pull off 2000X, but it will be more costly than a lower-X design, and it’s unlikely that the cells will perform well at that concentration ratio, so it’s a double-whammy against them. Who cares if they’re 2000X? I would say if they, in their heart of hearts, really think that 2000X is their crown jewel, then they are lost in the wilderness. If 2000X is just a banner to attract funding and talented staff, then it may serve them well. This gentleman had more to add about pointing and cooling that seemed to cast doubt on Sunrgi’s claims. According to a colleague affiliated with the DOE, There is no evidence that [2000X] can be done thermally, [with accurate] tracking or at low cost. These are amongst the kinder comments I received. The odds are against any early-stage startup. That’s borne out by history. Not having a real technology or appropriate domain experience further stacks the deck against bubble-market startups like Sunrgi. Click here to continue to Part Four: More VC Funding in CPV.

Lyngby, Denmark--Stirling engines, which convert heat into other forms of energy, are incredibly efficient, in theory. Harnessing them for real-world work has proved somewhat difficult. Stirling Denmark, however, says it has come up with a version of the engine, as well as a target market, where the devices make sense. It has created a biomass furnace powered by a Stirling. It works as follows. Biomass is burned in a kettle. The heat from the biomass is then condensed and passed through a heat exchanger. The difference in temperature between the heat exchanger and the ambient temperature of the engine--which climbs to around 1100 Celsius--drives the Stirling engine. The output from the process is electricity, hot water and heat. The device is 90 percent efficient if the customer takes advantage of the hot water as well as heat and power of the system, said Peter Tottrup, a partner at Seed Capital, a venture fund sponsored by the Danish government, in an interview. (Seed is an investor.) The efficiency goes way down if the hot water isn't used. The heat from the biomass can be sent directly to the heat exchanger. Alternatively, the biomass can be converted into a gas and burned. The flame from the gas is directly applied to the heat exchanger. "It's like applying a Bunsen burner," he said. The secret sauce to Stirling's technology is figuring out a way to prevent the ash from the biomass from gumming up the works, he said. Unlike an internal combustion engine, where the combustion of fossil fuels takes place in the cylinder, the biomass is combusted outside of the Stirling's cylinders. Stirling is primarily targeting rural communities and isolated industrial sites with the product. Right now, remote towns and buildings often get power by running diesel generators. In Alaska, some communities have been known to bring in diesel by helicopter, he said. Oil derricks at sea need diesel shipped in. (Savor the irony.) Stirling's engine can cost 1/3 the price of running a diesel generator in these situations, he said. Customers in some EU countries can also get credits for replacing fossil generators with a biomass engine. If the customer wants both power and hot water, the price of using Stirling's product comes to around 14 cents a kilowatt hour. Without water, it comes to around 33 to 35 cents per kw/h. Although that's a high price to pay for power in a lot of U.S. cities, it's not that unusual in stranded communities, he said. The taxes, though, can be 10 to 15 cents a kw/h if using regular power. Maintenance is also easy. "There are fewer moving parts than a diesel engine," he said. The company started selling some of its systems, which cost around $400,000, last year. (Peter was going to show me one at the Stirling warehouse but the most recent ones from the production line had just shipped off to Italy the day before.) The company will also make an appearance in the U.S. later this year at the Dow Jones Alternative Energy conference taking place in October. Like many companies, Denmark has been investing heavily to build up a local clean tech industry. Although small, it does have some pretty good expertise in the area. Wind giant Vestas comes out of here.

Part One and Part Two of this CPV series covered high- and low-concentration PV systems, respectively. Part Three follows here and is devoted to firms developing and building the high-efficiency semiconductor cells that perform the actual solar power conversion. With a genesis in the space satellite industry, multi-junction compound semiconductor cells from the III-V groups are starting to see VC investment and offer a bit of a challenge to the existing Emcore-Spectrolab-Azur triple-junction oligopoly. Startups building triple-junction cells like Cyrium, Solar Junction and QuantaSol are a natural for venture capital investors, even those new to cleantech and solar. They are compound semiconductor plays, some are fabless, and VCs have domain experience in these sectors. We expect to see Spectrolab and Emcore challenged not only by these VC-funded startups but also by LED and laser companies with experience in MOVPE and these material sets. Here’s the list (which includes a Ge substrate manufacturer and a thin-film Ge company as well): Aonex: Aonex, owned by AmberWave, with technology from the Atwater group at Caltech, builds a triple junction cell with a silicon solar subcell. Here’s the patent. And here’s a paper on their GaInP/GaAs dual junction solar cells on Ge/Si epitaxial templates. Azur Space: German-based III-V and Si solar cell vendor with a long history of supplying space applications and, more recently, terrestrial CPV applications. Azur’s GaAs cells are manufactured by MOVPE on germanium substrates. Cesi Ricerca: Developing III-V solar cells for CPV. Cyrium: Quantum dot-based triple-junction solar cell startup with VC funding from the Quercus Trust, et al. Here’s a link to a relevant patent awarded to the company and its CTO, Simon Fafard. Emcore: Emcore is a publicly traded, vertically integrated supplier of III-V solar cells as well as CPV systems and is contemplating an IPO for its solar unit in 2009. (See Part One of this series for details on its systems.) Emcore's cells are said to sell for less than Spectrolab’s cells. It claims to be shipping more than $1 million in solar cells in the third quarter. IQE: AIM-listed firm providing wafer outsourcing including InGaAsP and InGaN epi wafers. Microlink Devices: Received $3.2 million from the DOE SAI PV Module Incubator program for multijunction solar cells. Microlink claim that its MOCVD technology and unique processing steps minimizes the amount of GaAs used in the solar cells. QuantaSol: “Strain-Balanced Quantum Well� triple-junction PV cells from this U.K.-based, VC-funded startup with technology developed at Imperial College London. QuantaSol claims that the spectral response of an SB-QWPV cell can be tuned to maximize conversion efficiency under a “wide range of radiation spectra by varying composition and thickness of the III-V semiconductor nano-layers in the active region of the solar cell.� Solapoint: High-efficiency GaAs solar cell wafer manufacturing foundry service. Solar Junction: III-V materials startup Solar Junction CEO Jim Weldon and VP Craig Stauffer confirmed that their funding was “north of $3 million,� the company’s goal is to create very high-efficiency, triple-junction cells for CPV systems, and that the “secret is in the EPI.� NEA is an investor. Spectrolab: Spectrolab has shipped about 4 MW of CPV cells to date and is moving from 100-mm to 150-mm substrates. Spectrolab has won one of the largest terrestrial III-V solar cell orders from Solar Systems with a claimed 350 MW purchase worth over $93 million. Spectrolab also signed a supply contract with OPEL for 10 MW of cells to be delivered in 2008. It is estimated that Spectrolab's cells currently cost its customers around $0.90 per watt of power generated. Spire: Spire has MOCVD capabilities to provide GaAs epi materials. Sylarus: Sylarus is a startup that claims to be a source for the Ge substrates used by Emcore and Spectrolab in its cells. The company is producing 6-inch germanium wafers. VPEC Asia: GaAs epi-wafers. Wakonda: “Virtual Single Crystal� high-efficiency, thin-film solar cells using III-V semiconductors on flexible metal foils. Wakonda claims to be able to produce a Ge film on a flexible metal substrate to replace expensive Ge crystal wafer substrate. The company raised a $9.5 million round A from ATV, General Catalyst, Polaris, Applied Ventures and MGEF. Here’s a link to one of Wakonda’s patents. Click here to continue to Part Four: Concentrated Photovoltaic Poetry Corner With Sunrgi.