Cleantech's Solar Conundrum

The solar market is still going strong, despite the financial crisis, and turmoil in some of its key markets. But that doesn't mean all is well on the venture financing end.

As a number of longtime Silicon Valley solar darlings start to demand even more serious money to build plants for commercialization, the financing picture gets clouded. Conventional wisdom has been suggesting it's market issues. Maybe so, and then again, maybe not.

Greentech Media has been reporting on the funding efforts of Solyndra, including a recent discussion of struggles by Goldman Sachs to raise structured finance for the startup, which claims it is shipping some of its very weird looking CIGS product, though little evidence let alone field data exists.

It's not the only one. Recently CPV darling SolFocus was reportedly struggling to raise capital arranged by Advanced Equities. The cash was to fund the buildout of a commercial manufacturing plant, and at least twice the company drastically cut its pre money valuation ask.

The conventional wisdom is that the finance crunch is hurting solar. I have another thought. Perhaps its just the riskiest solar technologies and businesses coming home to roost. Both of these companies have been pitched to investors as late stage, helping to justify massive capital needs and valuations. I'd argue they are actually very, very early stage, with all the risk still in front of them.

Maybe it's not the market? Maybe its the ludicrous suggestion that the first plant should be 420 MW in size. How about two new ideas: 1) Stage gate, or 2) Walk before you run.

Take Solyndra, which has raised hundreds of millions to coat CIGS on a glass cylinder. Perhaps the question shouldn't be is solar getting hurt by the credit crunch, but should be who exactly thinks its a good idea to invest hundreds of millions to build a plant to coat CIGS in a circle, at "pre IPO style prices"? The question everyone I know has been asking is, if they really can coat CIGS with good yields, why didn't they just do it? That's world beating on flat plate glass, if it works as advertised. Why wrap the same amount of solar material around a long glass paper towel roll?

With SolFocus, maybe its just that CPV isn't as good an idea as applying manufacturing process improvement to CdTe and tandem cell thin film?

Who knows, but let's look a bit closer at the particular technologies before we just blame it on the the financial crisis.

Comments

[billp37:]

"Maybe its the ludicrous suggestion that the first plant should be 420 MW in size"

Perhaps MWh [megatwatt hours] is a better measure of the electric output of solar electric generation?

CAPACITY FACTOR, we beleive, must be considered.

www.google.com/search?...

Once the MWh ouput for a solar electric plant is known, then the MINIMUM number of BTUs IN can be estimated from 3412.14163 BTU = 1 KWh.

home.comcast.net/~bpayne37/pnmelectric...

Actual BTUs IN for solar are likely more than double if fossil fuel HEAT RATEs are in the same ranges.

We continue to believe that the laws of thermodynamics apply to solar. And even wind too.

We currently don't believe "N/A" in FOILS 6 and 7 in Alternate Report.

Possible environmental effects of redirecting solar BTUs is interesting to speculate about.

Lots of money to be made in attacting venture capital or selling solar electric generation plants to those who don't understand laws of thermodynamics, HEAT RATE, and CAPACITY FACTOR, however!

Jan 04 10:13 AM

[GMI1982:]

Interesting questions but if you understand anything about new technology commercialization, you'll realize that both CIGS and CPV are progressing through final field validation. CPV is MUCH BETTER than any solar technology in areas of high DNI, and the reliability will not be matched in deserts or temperature-sensitive climates. CIGS is the next-generation CdTe, just like CdTe was the next-gen Silicon.

Every project that requires external financing, i.e. where the project depends on a separate investor, is experiencing setbacks. Just talk to SunPower, SunEdison, First Solar, et al. The only new projects going forward quickly are those where vendor or a partner provides the capital up-front from their own stash of cash/assets.

Jan 04 10:18 AM

[NOWHEREMAN:]

The final bottom in the Solar Sector looks like it has been made. Those making a profit will be able to weather the financial cutbacks.

Venture capital will not "Venture" with the same enthusiasm however. Look how long it took to resume after the Internet Bubble. Hedge Funds do not stay in for the long haul and the financials will not lend currently.

All that is left is R&D funding for Alt. Energy passed last year. This funding will not be lent to build commericial facilities. Pilot plants and research funding certainly but don't expect money to help raise capital for IPOs.

IMO

Jan 04 10:23 AM

[searcher:]

"Pilot plants and research funding certainly but don't expect money to help raise capital for IPOs." Perhaps not, but in the brave new world of the spreading of wealth and capital with governmental capitalization triage who knows what wonders will come to pass.

Jan 04 11:31 AM

[sylviechen:]

Another economic factor to consider is solar/wind power, smart metered into the existing grid from points of use. This demand depends on commercial financing or municipal bonds used to pay for renewable energy through special assessment on the property tax of a dwelling. California AB811 bill is one such case. If this program works it provides two benefits:
(1) it spreads the cost over a much longer period than the average household occupies the dwelling, making the annual cost much lower than leasing or financing.
(2) it levels the playing field for low income housing which currently cannot afford solar PV costs.

This all depends on the municipal bond market in the future, something not working in favor of California and its unfunded debt.

Jan 04 12:30 PM