Blogging from a sold-out, standing room only, Greentech Media solar event in Phoenix, Arizona--

A panel entitled Driving Costs out of Photovoltaic Manufacturing had three heavyweights in solar manufacturing giving us their views on scrubbing cost out of photovoltaics.

Dan Chen of 3M’s Renewable Energy Division used the history of the automotive industry’s (first) shakeout as a model. Between 1898 and 1930 there were 1,800 automotive startups -- and very few survived.  But these firms drove innovation in an industry that had decades of sustained growth -- an easy parallel to today’s solar industry:

• Tremendous scale opportunities

• Consolidation

• Commodification

• Lots of advanced materials

With an R&D budget of over one billion dollars, 3M is developing new materials for the solar industry in thin films, fasteners, flouropolymer backsheets, Fresnel lenses and solar mirror film.

Chen also cited the Dopeler effect -- the tendency of stupid ideas to seem smarter when they come at you rapidly.

Jonathan Pickering of Applied Materials gave his views on driving costs out of PV manufacturing.  Applied is a leading manufacturer of semiconductor and display manufacturing equipment. In 2006, it made a strategic decision to enter the solar business.

Pickering’s analogy for solar was not the automotive industry, but rather semiconductors and displays.  Since its invention, the cost per transistor has been reduced by 20,000,000 times.  Displays have undergone a cost reduction of 20 times in 15 years with a market expansion of 100 times.

With similar scaling and innovation applied to solar, Pickering remarked that a reduction in cost of just 2 times or 3 times would easily make affordable electricity from solar energy.

Pickering added that residential solar “will always be led by c-Si” and that utility solar will be led by thin film because it is “intrinsically the lowest cost solution”

Applied claims its tandem junction cost is $1.50/W and will drop to $1/W by next year.

Roger Little, the CEO of Spire Corp has a big idea -- distributed solar module assembly. He sees this as a means by which the US can become the world’s largest solar market.

Mr. Little sees U.S. solar incentives at the federal and state level creating an enormous shortfall in U.S. PV manufacturing, a shortfall that can be addressed with lots of 50-megawatt solar factories (which is what Spire happens to sell).

Spire can envision 3 gigawatts of c-Si production in the U.S. by 2012 with his distributed module manufacturing model.  This keeps manufacturing local and creates jobs, up to 10,000 jobs in the U.S., according to his claims.

He doesn’t want to create a situation he describes as “The Spanish put in a great program and they employed 8000 Chinese” but rather, “If you make it in the neighborhood you’re going to create a market in the neighborhood.”

More Bloggage from the BIPV Summit in San Diego -- Steven Strong  was the lead-off speaker at a recent BIPV event (see BIPV (vs. BAPV and BSPV) and The Yoda of PV) . He is a leading authority on integrating renewable energy systems, especially solar, in buildings in North America. Strong's firm consults to architects on the integration of solar power, and to the building industry on product development through his firm, Solar Design Associates.

Over the past 25 years, Steven has designed scores of solar buildings including the world's first PV-powered neighborhood in central Massachusetts in 1984, and in what was the world's largest PV installation at the time -- the Natatorium Complex at the 1996 Olympic Summer Games in Atlanta. Amongst his many PV installation accomplishments, Strong was involved in a semi-clandestine solar mission -- deploying solar in the less-than-friendly environment of the Bush/Cheney White House compound at 1600 Pennsylvania Avenue in Washington, D.C. "The dialogue actually began with the prior tenant," Strong explained.  "But Clinton was distracted by interns and impeachment," and Strong never heard from the Clinton people after that. Then, nine months after the start of the W. administration, Strong visited the site and spent the entire day with the White House architect.  They looked at all the potential siting opportunities, excepting the main mansion which is "covered with spook stuff."  (BTW: The White House grounds are managed by the Parks Service) Strong ended up helping design and install a 10kW+ photovoltaic system and two thermal solar systems within the compound.  All the inverters had to go to the secret service warehouse for clearance, presumably for inspection for listening devices and explosives.  The system was installed on one of those few occasions when the President was at his ranch clearing brush and the VP was at an undisclosed location.

If you wonder why you didn't hear more about this seemingly positive news from the W. press office -- well, in an administration that had a VP saying things like, "conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy," the presence of PV on the White House never made it to their talking points.

You don't hear that word, "optimism," much lately so I'd like to put it out there. Reputations to the contrary, VCs have to be resolute optimists -- making audacious bets on emerging technologies, in emerging markets, with no current customers. One needs high levels of knowledge, hope and testicular fortitude. We just released the most recent quarterly data showing that venture capital investment in green technologies totaled more than $836.1 million in 59 deals in the first quarter of 2009. The numbers are approximately back to 2007 levels.  I use the term "more than" because there are a number of undisclosed deals that take the number closer to a billion dollars for the quarter.

Here's what a few high-profile greentech VCs had to say about the quarterly totals: Ira Ehrenpreis, General Partner at greentech investment firm, Technology Partners, remarked: “It’s important to put these numbers in perspective. The $800 million of investment this quarter is more capital than has been invested annually for most of the years that we’ve been investing in the cleantech sector. We still see a lot of money flowing into the sector, but investors are getting more discerning and are concentrating investments into the best companies.

“Greentech VC investing declined year-over-year, not surprising given the economy," said John Doerr, partner at Kleiner Perkins. “Still, greentech could be the largest economic opportunity of the 21st century. This level of green VC investment is not enough. 

Erik Straser, a partner at Mohr Davidow Ventures adds: “Cleantech enjoys favorable tailwinds even in this challenging time. In the first quarter, quality companies continue to raise capital albeit with longer fundraising processes and through the Stimulus Plan we see a potent program of incentives and loan guarantees to accelerate adoption of these critical 21st century technologies."

Solar continues to be the leading sector in terms of dollars and deals at $356.6 million in 14 deals, followed by energy storage with $121.5 million, and biofuels with $94.15 million. Surprisingly – smart grid and energy-efficiency investments have not jumped we predicted, but as the billions of dollars of stimulus funding for the smart grid percolates into the market, we expect an uptick in this sector. At least 14 of the 59 deals in the first quarter of 2009 were early stage, either seed or Round A. Round A and seed investments dominated the automotive and transportation sectors, with seven of the nine rounds being early stage. 2009 will be a year of consolidation and development while 2010 and 2011 will be the year greentech breaks. Expect to see IPOs and acquisitions of VC-funded firms in solar, smart grid and biofuels. All in all, a good start to the year.

Details on these figures can be found in the Greentech Innovations Report.