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BERKELEY, Calif. – The Berkeley City Council Tuesday night gave final approval for the nation’s first municipal program to finance solar arrays for homes and businesses.

The city’s Sustainable Energy Financing District could accelerate the adoption of rooftop solar by overcoming one of the biggest obstacles to homegrown green energy: the $20,000 to $30,000 upfront costs and long payback time for a typical solar system.

Here’s how the program will work: Berkeley will seek bond financing up to $80 million for the solar program – enough to install solar arrays on 4,000 homes and pay for some energy efficiency improvements. For those who sign up, Berkeley will pay for the solar arrays and add a surcharge to the homeowners’ tax bill for 20 years. When the house is sold, the surcharge rolls over to the new owner.

According to city staff, a typical solar array will cost $28,077 – you won’t find many McMansions in this city by the bay) – and after state rebates, $22,569 will need to be financed at an estimated interest rate of 6.75%. Berkeley is counting on obtaining a favorable interest rate given that the debt will be secured by property tax revenue. (And to answer the inevitable question, the foreclosure rate in Berkeley is low and property values have been relatively stable. How the meltdown on Wall Street will affect the program is another matter.)

For a typical solar system, the homeowner will be assessed an extra $182 a month on her property tax bill. To put that in perspective, the property tax bill on a $800,000 house – your basic middle-class home here if it was bought within the past three years – runs about $900 a month.

Electric bills are relatively low in Berkeley due to the temperate climate – Green Wombat’s was $15 in August. The real benefit of the program may come if it is used for solar hot water systems and expanded to pay for energy efficiency measures, such as installing new windows and insulation in Berkeley’s housing stock, most of which dates from the early 20th century.

The remaining hurdle is for the city to secure financing at a favorable rate. Once that is obatined, the program. which has won the support of local utility giant PG&E (PCG), should also be boon for solar panel makers and installers like SunPower (SPWR), SunTech (STP), Akeena (AKNS) and Sungevity.

The solar program is designed to help Berkeley meet a voter-approved mandate to cut its greenhouse gas emissions 80 percent by 2050.

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photo: David Lena

In a move that could alter the economics of the global solar industry, California utility PG&E on Thursday announced that it will buy 800 megawatts of electricity produced from two massive photovoltaic power plants to be built in San Luis Obsipo County on the state’s central coast. The 550-megawatt thin-film plant from Bay Area startup OptiSolar and a 250-megawatt PV plant from Silicon Valley’s SunPower dwarf by orders of magnitude the five-to-15 megawatt photovoltaic power stations currently in operation around the world.

Most of the industrial-scale solar plants designed to replace fossil-fuel power use solar thermal technology, meaning they deploy mirrors to heat liquids to produce steam that drives electricity-generating turbines. Photovoltaic power plants essentially take the solar panels found on suburban rooftops and put them on the ground in gigantic arrays. How gigantic? OptiSolar’s Topaz Solar Farm will cover 9 1/2 square miles of ranch land with thin-film panels like the ones in the photo above. Combined, the two solar plants would produce enough electricity to power 239,000 California households, according to PG&E (PCG).

“Obviously this is huge and a bold move,” says Reese Tisdale, a senior analyst who studies the economics of solar power for Emerging Energy Research in Cambridge, Mass. “It’s a pretty big jump in manufacturing capacity and a big opportunity for the PV industry, particularly for thin-film.”

If the power plants are ultimately built – and that’s a big if, given the challenges to get such facilities online – and other utilities follow PG&E’s lead, demand for solar modules could skyrocket. (Thin-film cells like those made by OptiSolar are deposited or printed in layers on glass or flexible metals. They are less efficient at converting sunlight into electricity than standard solar modules but they use far less expensive polysilicon and can be produced much more cheaply.)

First Solar (FSLR), a leading thin-film maker, has an annual manufacturing capacity of around 275 megawatts – which will rise to a gigawatt by the end of 2009. (First Solar is building two small-scale solar power plants for Southern California Edison (EIX) and Sempra (SRE).) SunPower (SPWR) is expected to produce 250 megawatts worth of solar modules this year; its California Valley Solar Ranch project for PG&E alone will be consume 250 megawatts.

“If we were trying to do it this year, it would be all of our production,” says Julie Blunden, SunPower’s vice president for public policy. “SunPower is ramping very quickly. By 2010 our production will be at least 650 megawatts.” SunPower’s solar power plant is set to begin producing electricity in 2010.

The PG&E deal puts OptiSolar in the spotlight. Founded by veterans of the Canadian oil sands industry, the stealth Hayward, Calif., startup has kept its operations under cover, avoiding the media as it quietly set up a manufacturing plant in the East Bay and prepared to break ground on a million-square-foot factory in Sacramento.

OptiSolar CEO Randy Goldstein told Green Wombat that the company will have no problem producing enough solar cells to build Topaz, which is scheduled to go online in 2011, as well as fulfill contracts for some 20 small-scale power plants in Canada.

“Our plan has always been to produce solar energy on a very large scale to make it cost-competitive, even in a market like California,” Goldstein says.

The terms of utility power purchase agreements like the ones OptiSolar and SunPower have signed with PG&E are closely held secrets, but it has long been an open secret that building massive photovoltaic power plants was not economically viable. Last year when I attended the opening of an 11-megawatt PV power station in Portugal – which offers generous solar subsidies – that was built by SunPower’s PowerLight subsidiary, PowerLight’s CEO told me that pursuing such projects in the U.S. was not an attractive proposition due to market incentives and public policy.

So what has changed too make constructing gargantuan PV power plants profitable?

“Lots of things have changed,” says SunPower’s Blunden. “Power prices are going up and public policy is requiring utilities to have a portfolio of renewables.”  And after building some 40 megawatts of power plants in Spain, SunPower has been able to improve its manufacturing processes and cut costs, according to Blunden.  “We could see where the cost reductions were coming down and the benefits of scale,” she says. “We saw there was a way for us to be competitive with other renewables.”

Goldstein says OptiSolar’s business model of owning the supply chain – from building its own machines to make solar cells to constructing, owning and operating power plants – will allow it to reduce costs. “By taking control of the value chain from start to finish, by being vertically integrated and cutting out the middleman,” he says, “we can be competitive not only with other renewable energy but with conventional energy.”

Photovoltaic power plants do have certain advantages over their solar thermal cousins. They don’t need to be built in the desert, thus avoiding the land rush now underway in the Mojave. PV is a solid-state technology and with no moving parts – other than the sun tracking devices used in some plants – they make little noise and are relatively unobtrusive. Most importantly in drought-stricken California, they consume minimal water. And the modular nature of solar panels means that a power plant can start producing electricity in stages rather after the entire facility has been constructed.

“The economies of scale does make PV cost competitive with other renewable energy generating technologies, and wouldn’t be possible without advances that SunPower and OptiSolar have been working on,” says PG&E spokeswoman Jennifer Zerwer. “We take a stringent look at all technologies and we’re not wedded to a particular one.”

With the PV plants, PG&E now has contracts to obtain 24 percent of its electricity from renewable sources.

But contracts are no guarantee the even a watt will be generated. The Topaz and California Valley projects must overcome a number of obstacles, not the least of which is the U.S. Congress’ failure so far to extend a crucial 30 percent investment tax credit for solar projects that expires at the end of the year. SunPower’s Blunden acknowledges the PG&E project is contingent on the tax credit being renewed.

PG&E executive Fong Wan said as much at a press conference Thursday afternoon: “That is a major hurdle. If the investment tax credit is not extended, I expect many of our projects will be delayed.”

Then there’s the question of how welcoming rural San Luis Obispo County residents will be to two massive solar power plants in the neighborhood. Along with a 177-megawatt solar thermal power plant being built by Silicon Valley startup Ausra for PG&E adjacent to the Topaz project, the county has become a solar hot spot. Ausra has run into some community opposition and state officials are growing concerned about the impact of the power plants on protected wildlife.

“The challenge is going to be the magnitude of these projects,” says Tisdale, the energy analyst. “Other projects are already facing opposition from the environmentalists.”

But for solar power companies like OptiSolar the impetus is to get big and get big fast. “I think it’s going to demonstrate that photovoltaics have the ability to be part of the energy mix,” says Goldstein of Topaz. “We can scale up and have a big impact. There’s not going to be a lot of room for niche players in the long run.”

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photo: Southern California Edison

When Southern California Edison unveiled plans to install 250 megawatts’ worth of solar panels on warehouse roofs back in March, it was hailed as a ground-breaking move. In one fell swoop, the giant utility would cut the cost of photovoltaic power, expand the solar market and kick-start efforts to transform untold acres of sun-baked commercial roof space into mini-power plants.

There’s just one problem: the solar industry is fighting the billion-dollar plan. In briefs filed with the California Public Utilities Commission, solar companies, industry trade groups and consumer advocates argue that allowing a utility to own and operate such massive green megawattage will crowd out competitors who can’t hope to compete with a project financed by Edison’s ratepayers.  (In California, shareholders of investor-owned utilities are guaranteed a rate of return for approved projects, while utility customers bear a portion of the costs in the form of higher rates.)

The five-year plan “would establish SCE as the monopoly developer of commercial-scale distributed solar in its service territory,” wrote Arno Harris, CEO of Recurrent Energy, a San Francisco company that sells solar electricity to commercial customers. “This would irreparably impair the development of a competitive solar industry.”

Southern California Edison (EIX) is the first utility in the United States to propose such a “distributed generation” scheme and the dispute is being watched closely as a test case for the viability of producing renewable electicity from hundreds of millions of square feet of commercial rooftops. Such systems can be plugged directly into existing transmission lines and tend to generate the most solar power when electricity demand spikes – typically on summer afternoons when people crank their air conditioners. Having such green energy on tap would save utilities from having to build expensive and planet-warming fossil fuel-powered “peaker plants” that sit idle except when demand suddenly rises.

Even critics hail Edison’s move as “bold” and “visionary” and no one disputes that in California the development of big rooftop solar has lagged. For instance, the state’s $3.3 billion “million solar roofs” initiative is designed to put smaller-scale solar panels on homes and businesses and provides generous rebates for systems under 1 megawatt. At the other end of the scale, the state’s big utilities have been signing contracts to buy electricity from solar thermal power plants to be built in the desert. Left out of the subsidy game are incentives for the 1-to-2 megawatt arrays well-suited for commercial buildings.

Southern California Edison says it’s filling that gap and will energize the solar industry, not crush it. The utility plans to lease 65 million square feet of commercial rooftop space in the “Inland Empire” region of Southern California for solar arrays that would generate enough electricity to power 162,000 homes.

“SCE’s financial stability and business reputation will increase the probability that 250 MW of solar PV systems will be available to meet the state’s solar rooftop goals over the next five years,” the utility’s attorneys wrote in a brief filed with the utilities commission, which must approve the program. “In so doing, a solar PV program can improve efficiencies … to reduce costs and jump start the competitiveness of solar PV for widespread application on California roofs.”

There’s no doubt the program will be a boon for solar module makers. For instance, thin-film solar cell company First Solar (FSLR) is supplying 33,000 panels for the program’s first project, a 600,000-square-foot roof array in the inland city of Fontana. However, Southern California Edison intends to contract for union labor to install the solar systems and tap its own capital and a rate hike to finance the project. That won’t leave many opportunities for solar installers and financiers like SunPower (SPWR), SunEdison and MMA Renewable Ventures (MMA).

“Even though this program is kind of taking bread out of our own mouth, the demand for solar will keep going up,” says Mark McLanahan, senior vice president of corporate development at MMA Renewable Ventures, a San Francisco firm that finances commercial solar arrays.

“What they have announced is extremely visionary,” McLanahan tells Green Wombat. “It’s game changing and opens up whole new realms of what solar can do. That’s exciting.”  On the other hand, he says, “It’s certainly possible that a young, growing industry that is pretty fragmented could be hurt by this rather than helped.”

A solution advanced by some solar industry critics is for Southern California Edison to open up the entire program to competitive bidding, not just the procurement of solar panels. The utility vehemently opposes the idea, arguing it would work against the economies of scale it says it can bring to the program.

Whether regulators will approve Southern California Edison’s request for a rate hike to pay for the initiative – and at electricity rates that are significantly higher than those set for other solar programs – remains to be seen. The commission’s own ratepayer advocate has questioned whether utility customers will get their money’s worth.

The utilities commission is unlikely to issue a final decision until next year. In the meantime, you can bet the state’s other big utilities – PG&E (PCG) and San Diego Gas & Electric (SRE) – and solar companies will be watching to see whether the sky’s the limit for big rooftop solar or whether a ceiling is about to be placed on the industry’s ambitions.

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In late 2006, there was something of an exodus from Australia as solar startups decamped for California, frustrated by the long-entrenched conservative government’s tepid support for renewable energy. On one Sydney-to-San Francisco flight alone could be found David Mills, co-founder of solar power plant company Ausra, and Danny Kennedy, chief of solar installer startup Sungevity.

Flash forward 18 months and solar energy companies are beating a path back to Australia. Ausra recently opened up operations Down Under, and last week Silicon Valley solar company SunPower (SPWR) acquired an Australian solar installer called Solar Sales. So is Oz the next hot solar market? By all accounts, the sun-baked environmentally conscious country should be. But the move into the South Pacific is another example of how governments’ ever-morphing renewable energy policies are spurring solar companies to move operations around the globe.

“Obviously there’s a lot of sun in Australia but with the recent change in government there’s a policy environment that could be much more favorable for us,” Peter Aschenbrenner, SunPower’s vice president of corporate strategy, told Green Wombat. “We decided to get in now. It was a little opportunistic as the owners of  Solar Sales were looking to monetize their investment. It follows a model of a previous acquisition in Italy where we got in before the market headed north.”

Last November, a left-leaning Labor government took power in Australia, immediately signed the Kyoto Accord and expanded a national subsidy for rooftop solar panels. Meanwhile, individual Australian states, much like their American counterparts, have enacted their own incentives. Three states – Queensland, South Australia and Victoria – have adopted “feed-in-tariffs” that pay homeowners a premium for electricty produced from solar panels – up to four times the prevailing power rates. Solar homeowners that return  more electricity to the grid than they consume can zero out their power bill or even earn cash from their utility.

But the government of Prime Minister Kevin Rudd has shown the same propensity to alter the rules of the game mid-stream as its predecessor, which wreaked havoc on the wind industry several years ago when it abruptly curtailed a renewable energy target. The Rudd government already has changed course on a national solar subsidy – which provides rebates up to $A8,000 for photovoltaic systems – to make it available only to households earning less than $A100,000 – which qualifies as middle middle-class in Australia’s big cities. Some of the states in turn have limited their subsidies. Victoria – Australia’s second-most populous state – will pay premium solar rates to only 100,000 households.

Given that solar is a game that moves as you play and the relatively small size of the Australian market (population: 20 million) Kennedy for one is cautious about doing business in his homeland.

“I think that it’s potentially a good market in the future,” says Kennedy, a former longtime Greenpeace activist who’s close to Australia’s environment minister and other government officials. “But it’s not living up to its potential because there’s a set of mixed signals from the federal and state governments and no certainty from one year to the next.”

Just how quickly the market can change has been illustrated by Spain, a solar hotspot that has attracted SunPower and other solar power plant builders as well as financiers like GE Energy Financial Services (GE)  with its lucrative premium rates for green electricity. But now the Spanish government is considering cutting its feed-in-tariff and limiting it to an annual 300 megawatts of installed solar, 100 megawatts of which must be rooftop photovoltaic systems. By contrast, some 1,100 megawatts of solar were expected to be installed this year. That would dramatically change the economics for solar energy companies that have moved into the Spanish market.

“This is something we’ve been preparing for,” says Aschenbrenner of SunPower, which has focused on building photovoltaic power plants in Spain. “With our global footprint, we are well placed to move allocation around as these markets wax and wane. In Spain, we’ve been working on building a dealer network to focus on the residential and small commercial markets.”

In Australia, SunPower will need to ramp up its new acquisition since Solar Sales operates on the country’s isolated West Coast while most of the country’s population is concentrated on the eastern seaboard. About half of Solar Sales business has been building off-the-grid power systems for Outback communities that rely on diesel generators for power. Aschenbrenner says he expects that business to continue but the focus will switch to residential solar.

photos: Todd Woody

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The idea that green is the new tech was brought home this week in San Francisco when one of the chip industry’s biggest trade shows, SEMICON West, was held in conjunction with a huge solar trade show, Intersolar North America. The geeks and the eco-freaks together under one roof.

Not surprising, really. It has been oft-observed that much of the solar cell industry today is essentially an offshoot of the chip biz; both use  the same basic building blocks – silicon – and common manufacturing processes. Cypress Semiconductor saw that early on and has profited greatly from an acquisition that has eclipsed its chip business, solar module maker SunPower (SPWR).

Almost two years ago, Applied Materials (AMAT), the world’s biggest manufacturer of the machines that make computer chips, jumped into the solar business. It reconfigured  equipment used to produce flat-screen televisions and displays to print thin-film solar cells on the same plates. (Thin-film technologies vary, but essentially solar cells are printed or layered on sheets of glass or flexible materials.)

Applied has sold $3 billion worth of contracts for a dozen solar-cell factories that will be able to crank out 1.5 gigawatts’ worth of modules a year by the end of 2010, said Applied chief technology officer Mark Pinto at a lunch Green Wombat attended on Wednesday at Intersolar. To get an idea of just how hot solar is, consider this: Pinto estimates that in just two years solar will bring in 20 to 30 percent of Applied’s revenues.

“Energy generation has been void of technological development for 50 years and that makes it ripe for change,” said Applied CEO Mike Splinter. “It’s all about engineering and the environment.”

For photovolatics, it’s all about getting the costs per watt down to compete against fossil fuels. Part of that involves improving the efficiency of solar cells, but it’s just as much about reducing manufacturing and installation costs.

To that end, Applied was showing off its latest product (or to be exact, the product made by its machines): Out on a deck at the Metreon center across from the San Francisco convention hall sat a supersized thin-film solar panel measuring 5.7 square meters (7.2 feet by 7.5 feet) that is but an inch or so thick. The panels, which produce about 500 watts each, are designed for solar farms. The large size means that a 10-megawatt solar power plant would require 20,000 Applied panels versus 150,000 conventional-sized panels, cutting overall costs by 17 percent, the company claims. Installation costs fall dramatically as the panels attach to mounting racks with just two screws and plug into the circuit with two wires.

“We think the cost to produce and install is less than the average cost of electricity in California,” said Pinto.

Thin-film panels like the one in the photo above cost less to make than conventional bulky solar modules, but they are much less efficient at converting sunlight into electricity  – around 6 percent versus 20 percent. However, they tend to work well in diffuse sunlight – i.e. foggy San Francisco – and can be integrated into building facades. The panels could also be made semi-transparent and transformed into electricity-generating windows for skycrapers.

Don’t expect Applied’s booming solar business to translate into a lot of green collar jobs in the United States. So far, it has not sold one solar cell factory here. Europe’s solar tax incentives have made it the market for Applied, with Asia set to become another big play in the coming the years. At home, meanwhile, the looming expiration of a crucial investment tax credit for renewable energy is discouraging expansion of the solar economy.

That doesn’t mean that demand has slowed. Southern California Edison (EIX), for instance, this year announced plans to install 250-megawatts of solar arrays on warehouse rooftops in the Southland. (This week it awarded the project’s first contract to thin-film company First Solar (FSLR) to build a 2-megawatt array in the sun-baked city of Fontana.)

But given that there’s only one thin-film factory currently in commercial operation in the United States – First Solar’s – the panels for Edison’s project and others will be coming from overseas. It makes no economic or environmental sense, of course, to ship huge pieces of glass across the ocean to California. (CORRECTION: As a couple of readers have pointed out, Energy Conversion Devices of Michigan operates a thin-film factory in the U.S.) But as Splinter put it about the lack of a coherent U.S. renewable energy policy and the investment tax credit mess, “This is the biggest miss in a long, long time.”

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When it comes to solar companies, First Solar is the Google of renewable energy. The Tempe, Ariz.-based solar cell maker backed by the Wal-Mart (WMT)’s Walton family has seen its stock skyrocket over the past year, hitting a high of $317 on May 14. (It was trading at $275 Friday.) Now First Solar, which makes “thin film” solar modules, is getting into the utility business, winning approval Thursday from California regulators to build the state’s first thin-film photovoltaic solar power plant. The 7.5 megawatt project – expandable to 21 megawatts – will sell electricity to Southern California Edison (EIX) under a 20-year contract.

While First Solar (FSLR) supplies solar modules to power plant builders in Europe, this is apparently the first time it has acted as a utility-scale solar developer itself. First Solar tends to keep quiet about its projects and did not return a request for comment. But a troll through the public records reveals some details of what is called the FSE Blythe project. The solar farm will be built in the Mojave Desert town of Blythe by a First Solar subsidiary, First Solar Electric. The company paid $350,000 in January for 120 acres of agricultural land in Blythe, providing a tidy profit for the seller, which had purchased the property for $60,000 in June 1999.

Approval of the contract by the California Public Utilities Commission Thursday came on the same day that SunPower (SPWR) announced a deal to build two photovoltaic power plants – a 25-megawatt one and a 10-megawatt version – in Florida for utility Florida Power & Light (FPL). PV plants are essentially supersized versions of rooftop solar panel systems found on homes and businesses. Thin-film solar prints solar cells on flexible material or glass and typically uses little or no expensive (and in short supply) polysilicon, the key material of conventional solar cells.

Most large-scale solar power plants being developed in the United States use solar thermal technology that relies on huge arrays of mirrors to heat liquids to create steam that drives electricity-generating turbines. In fact, there is a solar land rush underway in the desert Southwest as solar developers, investment banks like Goldman Sachs (GS), utilities and speculators of every stripe scramble to lock up hundreds of thousands of acres of federal land for solar power plants. (See Green Wombat’s feature story on the solar land rush in the July 21 issue of Fortune.)

PV power plants, on the other hand, have not been cost-competitive with solar thermal and have been most popular in countries like Germany, Spain and Portugal, where generous subsidies guarantee solar developers a high rate for the electricity they produce. The situation in the U.S. seems to be changing, though, judging by the deals utilties are striking with companies like First Solar and SunPower. Meanwhile, thin-film startup OptiSolar is moving to build a gigantic 550-megawatt thin-film solar power plant on California’s central coast but has yet to sign a power purchase agreement with a utility.

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When Intel announced this week that it was spinning off a stealth in-house startup called SpectraWatt to develop solar cells, it appeared the chip giant was just the latest old-line Silicon Valley tech firm bitten by the green bug.

After all, crosstown chipmaker Cypress Semiconductor jumped into the solar game back in 2004 when it acquired SunPower (SPWR), now a leading manufacturer of solar cells and panels and an installer of large-scale solar arrays. Then the world’s biggest chip-equipment maker, Applied Materials (AMAT), retooled machines that make flat-screen video displays to produce thin-film solar panels. And just this month, Hewlett-Packard (HPQ) unveiled a deal to license solar technology to a solar cell startup while IBM (IBM) announced it would develop thin-film solar.

But it’s not just now jumping on the enviro-biz bandwagon – Intel’s solar efforts have been quietly under development since 2004. That’s when Andrew Wilson, an 11-year Intel (INTC) veteran, was chatting with a colleague while waiting for a conference call to begin. “We were shooting the breeze and I mentioned that I had replaced all the light bulbs in my house with compact fluorescent lights and my utility bill had come down by a third,” says Wilson, SpectraWatt’s CEO. “And he said, `Hey, did you know that solar cells are made of silicon?’ ”

“We started talking about what a business plan would look like, because if something is made out of silicon then Intel should be taking advantage of that market,” Wilson told Fortune. A year later, Wilson and his colleagues had developed a marketing plan and secured funding from Intel’s new-business incubator to develop a business strategy and hone its technology. (It’s no coincidence that the nascent solar industry is populated by computer industry veterans from companies that put the silicon in Silicon Valley.)

When it comes to cutting-edge solar technology, silicon-based cells are considered a bit old-school. Silicon is currently in short supply and the resulting high prices have led venture capitalists to invest hundreds of millions of dollars in thin-film solar startups that promise to dramatically lower the cost of solar by printing or otherwise applying non-silicon solar cells to glass or flexible materials that can be integrated into walls, windows and other building materials. While thin-film solar is less efficient at converting sunlight into electricity, the expectation is that it can be produced much more cheaply than conventional cells.

But thin-film solar is still largely an early-stage technology and silicon-based cells will continue to be the big market for the near-future. So the question is, how does Intel compete with established players like SunPower, China’s Suntech (STP) and Germany’s Q-Cells as solar cells become a commodity? Intel controls some 80 to 90 percent of the worldwide chip market but it’s unlikely that it – or any other player – will replicate that experience in solar cells.

Wilson’s view is that it’s early days for the solar market and that SpectraWatt’s ace in the hole is Intel’s global manufacturing experience and history of technological innovation. “The solar industry today looks like the microelectronics industry in the late ‘70s – there’s very few standards and no one is manufacturing at scale,” says Wilson. “It’s all about manufacturing processes and material sciences that will lead to fundamental breakthroughs. The product is vastly simpler than a microprocessor but the fundamental nature of a solar cell isn’t all that different. When you think of what it takes to manufacture globally and manage supply chains, that’s Intel’s core competence.”

There certainly is room for more players, given that solar was a $30 billion market in 2007 and is expected to continue to grow at a clip of 30 to 40 percent in the coming years.

Wilson says SpectraWatt has secured silicon supplies and is developing technology that will give it a competitive edge. He’s keeping mum about the details of that technology for now. “We do believe we will have a technological advantage when we get what we’re doing in the lab to manufacturing,” Wilson says.

The company is set to begin building its manufacturing facility in Oregon later this year, with production to begin in mid-2009.

SpectraWatt launches with a $50 million investment lead by Intel Capital, the company’s investing arm. Other investors include Goldman Sachs (GS), PCG Clean Energy and Technology Fund, and German solar giant Solon. (As Green Wombat has written, Solon has invested in an array of solar startups in the United States, including Sungevity and thin-film solar company Global Solar.)

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