TerraWatt Power LLC, a solar-inverter startup, is in the middle of raising a $1.5 million round of funding, President Gary McDaniel told Greentech Media.

The Malta, N.Y.-based company, which is showcasing its ecoJoule inverter at the Solar Power International conference in San Diego this week, already has raised about $1.5 million in angel funding, as well as about $1 million in grants, he said.

Inverters convert the direct current (DC) power generated by solar-power systems and convert it into the alternating current (AC) power used by most appliances and the grid.

What's different about TerraWatt's inverter is that it disconnects from the grid during outages and feeds electricity directly into the home, McDaniel said.

Many solar-power owners complain that they suffer from outages even when the sun is shining and their system is producing electricity, he said. 

Two feeds allow customers to do without the batteries for backup power when the grid goes down, he said.

Of course, that only works during the day, when the sun is shining.

The inverter can also work with batteries, and for systems that are both on and off the grid, McDaniels said.

While TerraWatt plans to charge "a couple hundred" bucks more for the inverter, manufacturing costs are competitive with regular inverters today, he said.

The company is gearing up to begin manufacturing next month, McDaniels said. TerraWatt plans to outsource its manufacturing in New York.

Advanced Energy Conversion has spent several years developing the technology behind TerraWatt, which was officially founded earlier this year, he said.

The company said part of the motivation behind the spinoff was to change its name to avoid confusion with Advanced Energy Industries Inc., which also makes inverters. 

Advanced Energy Conversion also has received grants from the U.S. Department of Energy and from the New York State Energy Research and Development Authority to help develop the TerraWatt technology.