SAN FRANCISCO ---Correction: see below.

Encore Solar says it can lower the cost of cadmium telluridesolarmodules by 20 percent or more as well as help the technology break through a looming efficiency wall.

But getting funding in Silicon Valley could be a bit challenging because of the past history of the people behind the company.

Encore wants to produce CdTe modules with electroplating. Currently, CdTe companies like First Solar handle the process through vapor deposition: CdTe vapor is introduced into a vacuum chamber and forms films that become a solar cell.

While proven and reliable, deposition requires expensive equipment and the materials have to be heated to 500 degrees to 600 degrees Celsius.

In electroplating, substrates are dipped into a water-based solution containing cadmium and telluride ions. A voltage is applied and, voila, photovoltaic films are formed. The active solar layers don’t form as fast, but the process takes place at lower temperatures so less energy gets consumed in the process.

 “You are going to have big tanks where you put hundreds of pieces in,” said Bulent Basol, chief technology officer and one of the firm's founders.

Electroplating also allows you to form smooth, consistent layers of active materials. The active layers are thinner (0.7 to 1.5 microns) are actually thinner than normal in an electroplated module, leading to lower costs. When you add in the energy and material savings, the cost of producing a module is about 20 percent less, Basol claimed.

First Solar currently produces modules for less than 75 cents, the cheapest in the industry, and the DOE wants to drive the price to 50 cents under the SunShot initiative. Electroplating would, if it works, clearly help in this effort.

Just as important, electroplating could help boost efficiency to 17 percent or even more in commercial products someday, he claimed. First Solar currently produces CdTe modules with an efficiency close to 12 percent, but progress has been difficult. The highest efficiency ever achieved in CdTe was a cell produced at NREL in 2001 with a 16.7 percent efficiency, or lower than the top efficiencies achieved with copper indium gallium selenide (CIGS) cells.

Some have feared that commercial CdTe modules could stall at around 14 percent. (General Electric announced a 12.8 percent module earlier this year.) The lower temperature process would allow manufacturers to tinker with the material, absorber layers and other factors.

“It opens the doors to device structures that can go to higher efficiencies,” Basol said.

BP Solarex earlier produced modules measuring 2 feet by 5 feet with efficiencies close to 11 percent.

In two years, Encore hopes to have multi-megawatt factories.

Now the challenging part. Encore is founded by Basol and Homayoun Talieh. The two founded SoloPower, which produces CIGS modules via electroplating. Talieh was ousted as the SoloPower CEO in 2009 after delays and disagreements with investors.

Talieh subsequently filed suit against Crosslink Capital and other investors. The suit was settled in February 2010 with a payment of approximately $19.9 million.

Generally, founders don’t sue their VCs, so the case raised eyebrows.

“I haven’t seen too many ousted CEOs fighting back in this way, suing the board in this way. In the Valley, you usually say, ‘Well, I’ll go on to the next one, and I’ll still make money,’” Steve Diamond, associate professor of law at Santa Clara University told the San Jose Business Journal in 2009. “You don’t want to anger the VC community because you rely on them for the next startup.”

In the past, Talieh also filed a demand for arbitration against an employer in 1996 alleging wrongful termination, according to this SEC filing.

Talieh and Busol were also joint parties in a patent issue.

CORRECTION: We thought Mr. Basol was referring to Encore's solar cells when he said some have produced electroplated CdTe modules with an 11 percent efficiency. Instead, he referred to ones produced by BP.