FOUR | Here comes the sun

Few stories illustrate the ups and downs of the solar industry like that of solar thermal plant giant Luz. In 1991, Luz International Ltd., at the time the sole U.S. commercial developer of solar thermal electric projects, filed for bankruptcy following its failure to obtain project financing for its 10th solar electric plant.

Fifteen years later, Luz II has returned, backed by an undisclosed sum of money from Silicon Valley venture fund VantagePoint Venture Partners. Luz II’s new patented technology uses flat mirrors to track the sun, and then reflects it to heat oil, which creates steam that generates electricity. The company aims to produce solar power at 10 to 12 cents per kilowatt hour, nearly half the price of rooftop photovoltaic (PV) panels and only .5 to 1 cent more per kilowatt hour than natural gas. Luz II also struck a deal with San Francisco’s Pacific Gas & Electric (NYSE: PCG) to develop 500 megawatts of solar power by 2010.

A worldwide silicon shortage drove the cost of solar panels up in early 2006. But state and municipal mandates, combined with efficient technologies that reduce production costs and the need for silicon is rekindling a solar flare that shows no sign of slowing in 2007.

Luz won’t be the only key player, even in the solar thermal energy plant game, says Paul O’Hop, partner and head of the Renewable Energy Group for Squire, Sanders & Dempsey. In 2005, Stirling Energy Systems Inc. signed a power purchase agreement with Southern California Edison to support development of a massive 500- to 800-megawatt solar power generation facility in California’s Mojave Desert [see “Stirling’s got the solar,” SIJ, Oct. 2005]. Shortly thereafter, Sterling signed an agreement with San Diego Gas & Electric to develop a similarly large facility in Imperial Valley, Calif. Stirling’s technology is comprised of a large parabolic concentrator with 89 mirror facets and a power conversion unit that heats hydrogen gas that in turn moves cylinders to generate electricity.

Thanks to millions of venture fund dollars, other companies are developing ways to either reduce or eliminate the need for silicon and increase the efficiency of PV. Several lower-cost solar products are expected to hit the commercial market in 2007, including Miasolé’s flexible, thin-film solar cells, Nanosolar’s mass-produced thin film technology from Palo Alto, Calif. [see “Big plans for nano-sized idea,” SIJ, Aug. 2006], and Solaicx’s continuous crystal-growing technology. Companies such as Pasadena, Calif.-based Practical Instruments are bringing the industrial strength of concentrated solar technology from the desert to the rooftop. Practical Instruments CEO Brad Hines says his company’s Heliotube reduces the amount of expensive PV material used while increasing power output.

The industry has also been bolstered by a recent flurry of mergers and acquisitions. In August 2006, venture-backed PV systems integrator SunEdison LLC acquired integrator Team Solar Inc. to become the country’s largest solar contractor, and in 2005 venture-backed Energy Innovations Inc. acquired Prevalent Power Inc. Both deals were rivaled by the $330 million acquisition in November 2006 of Berkeley, Calif.-based PowerLight, an installer of commercial rooftop and ground-mounted solar power plants, by San Jose-based SunPower Corp. (Nasdaq:SPWR), manufacturer of high-efficiency solar cells and panels.