By Michael Kanellos
12-07-04
One of today's more promising growth engines could come from an industry that harks back to the 1970s. Companies promoting solar power and other alternative-energy concepts are rapidly attracting venture funding, research grants and, just as important, the interest of many of the tech industry's deep thinkers and influential figures.
"We have a huge energy issue in this century, and it will not be solved by
policy. The only real solution is technology," said Jim Plummer, dean of
Stanford University's School of Engineering. "The alternative is to shut
down our economy."
US concerns about energy are probably greater today than at any time since
the Arab oil embargo of the 1970s. The future reliability of fuel and power
supplies has been increasingly clouded by such issues as rising oil prices,
conflicts in the Middle East, the threat of terrorism at domestic facilities and
the kind of Enron-related "rolling blackouts" that California
experienced a few years ago.
Still, history shows that crisis doesn't always lead to long-term change. In
1978, after the Arab oil embargo, the US Energy Department invested $ 250 mm in
photovoltaic, or solar-energy, technology. But the funding dropped to $ 35 mm by
1983, according to Terry Peterson, a consultant with the Electric Power Research
Institute.
The more immediate drivers for the interest in alternative energy today are technological improvements and declining costs -- in other words, qualities that appeal to the venture capitalists of Silicon Valley and others looking for new opportunities.
Lowell, Massachusetts-based Konarka Technologies, for instance, has raised $ 32
mm from, among others, ExxonMobil, utility company Electricite de France and
venture capital firm Draper Fisher Jurvetson. Konarka, which counts Nobel Prize
winner Alan Heeger as a founder, says it will deliver solar cells made of thin
layers of plastic to its customers -- large manufacturers -- by the end of the
year.
In Silicon Valley, Nanosys of Palo Alto is working with Matsushita on sprayable solar coatings for roofs. Meanwhile, Nanostellar, which was founded by William Miller, CEO emeritus of SRI International, hopes to produce cleaner, cheaper catalytic converters. Other companies with alternative-energy ideas include Ocean Power Deliver (wave power); Clarke Energy (natural gas from landfills); and Bowman Power (microturbines).
Additionally, fuel cell and battery companies such as MTI MicroFuel Cells,
PolyFuel and Solicore are finding markets for their products.
"It does appear that there has been an increased interest in the sector
over the past year," said Sean Brownlee, an executive at British venture
capital firm 3i. He estimated that, worldwide, 6 companies received $ 64 mm in
venture capital in 1999; 22 companies received $ 114 mm in 2001, and 26
companies received $ 277 mm in 2003.
At Stanford's engineering school, one of three primary research areas is
fossil fuel alternatives, or "clean" technology. ExxonMobil, Toyota,
Schlumberger and General Electric together are expected to invest $ 225 mm in
the university's Global Climate and Energy Project.
As Plummer points out, the world's energy structure is facing huge problems.
Production of easily extractable oil will likely peak -- and subsequently
decline -- between 2016 and 2040, according to statistics compiled by National
Geographic. That situation will force petroleum companies to raise prices and
look for oil from unconventional sources, such as tar sands. At the same time,
the environmental and health problems caused by fossil fuels are also rousing
critics and adding to cleanup and insurance costs.
"Going to the moon was the great Sputnik challenge. Today, I think the
challenges we face are a little bit different, and I would think it would have
something to do with the energy environment that we have," Craig Barrett,
CEO of chip making giant Intel, said.
One of the alternative-energy areas drawing the most interest is a technology known as thin-film solar cells. Traditional solar cells -- the hardware used for solar energy in decades past -- are rigid silicon chips that must be built in expensive fabrication facilities and eventually get installed in somewhat ungainly roof racks. With thin films, manufacturers use ink-jet nozzles to spray photovoltaic materials onto sheets of plastic or roof tiles in precise patterns. Not only does this cut costs, but the electricity-generating materials are unobtrusive as well.
"You could even have photovoltaic paint," said Martin Lagod, a
managing director at Firelake Capital, a venture firm formed in 2002 that
specializes in energy. "The biggest opportunity over the next five to seven
years and beyond is in energy and materials."
Government subsidies are also encouraging development of energy technologies.
Japan, Germany and California have been the three largest solar markets to date
because of subsidies that rebate about half of the cost of a solar installation.
Even individual households that use solar technology can sell excess electricity
back to their utilities for higher-than-market prices.
Similar programs have since been implemented in Illinois, New Jersey and New
York, as well as in Italy, Luxembourg and Spain, among other areas, said
Subhendu Guha, president of United Solar Ovonic, a Michigan-based specialist in
thin-film solar technology.
Without subsidies, electricity from a solar installation can cost 30 cents or more per kWh, far higher than the 6 cents to 15 cents per kWh for electricity generated by traditional means, such as hydroelectric dams. With a subsidy, the overall cost of solar-generated electricity can drop to 25 cents per kWh or less.
As the cost of solar declines with improving technology and as the cost of
traditional electricity rises, solar becomes attractive. On an installed system,
Mr Guha said, "you can get payback in five to eight years."
And business is growing. United Solar Ovonic's revenue for its most recent
fiscal year, which ended June 30, came to $ 35 mm -- a 90 %increase from the
previous year. Revenue is expected to climb 110 % this year. Notable
installations include the Coca-Cola building in Los Angeles and a system for the
Beijing New Capital Museum that will crank out 360,000 kWh of electricity a
year. Like most solar installations, these buildings remain connected to the
electricity grid, but they only tap it when solar power is weak or unavailable.
At present, the art of turning light into electricity remains an imperfect science. Light, in the form of photons, strikes the solar cell, which can be made of rigid, crystalline semiconductors or a pattern of sprayed-on flexible semiconductors. The light excites an electron and prompts it to split with its corresponding "hole," or positive charge.
The electron and hole get drawn toward different electrodes, with the negatively
charged electron providing power to a building, battery charger or some other
device. If the electron and hole reunite, or if the electron goes into the
ground, the electricity is lost.
Each company promotes a different technological solution to this problem. Konarka has developed a dye injected into titanium oxide that can absorb light and organize itself into patterns. Nanosys takes a similar approach, but with a different designer molecule. Both companies are working with manufacturers that in turn will incorporate solar power into their products.
Konarka's first solar cells will likely appear in a foldable pads that can
recharge cell phones, said Daniel McGahn, the company's executive
vice-president. The military is considering applications such as tents that can
generate solar energy, and home-roofing tiles may start to appear in 2006 or
2007.
Miasole and United apply amorphous silicon onto spools of plastic. The technology is less exotic, but both companies say that's an advantage because the manufacturing process and the photovoltaic properties of silicon are better understood. Before going solar in October 2002, Miasole sold coating equipment to optical-networking companies.
"We're basically coating new materials," Miasole CEO David Pearce
said, adding that samples of its photovoltaic materials will come out in 90
days, and volume production will begin next year.
United already sells product. Other companies are developing chlorophyll-like
molecules that can convert sunlight into energy, said Josh Wolfe, a principal at
Lux Capital, a nano technology venture firm.
Right now, the efficiency rate -- the amount of sunlight that gets turned into electricity -- ranges from 3 % to nearly 12 % for various nano particles in different lab experiments. That could grow to 20 %, said Michael McGehee, an assistant professor at Stanford in materials science and engineering. McGehee currently is conducting research on organic photovoltaic nano particles.
Although this means that 80 % of the sunlight will never get converted to
electricity, the low cost of thin-film solar cells would make such a system far
more economically viable than current solar cells -- and more competitive with
traditional electricity.
"It costs $ 300 per square meter now for crystalline solar cells. We think
we can get this down to $ 30 a square meter," he said.
Alternative-energy specialists acknowledge that scepticism runs rampant.
"The general perception even in the high-tech community is that solar was a
good idea, but it was born in the 1970s and died in the 1970s," Konarka's
Mr McGahn said.
Still, as Firelake's Mr Lagod said, a lot has changed in the decades since.
Desktop computers and modelling software, which didn't exist back then, are
being used to improve emissions performance in cars and create the materials,
semiconductors, molecules and other elements that energy start-ups are promoting
today.
Contrary to conventional wisdom, proponents say, energy prices and concerns will
prompt consumers to flock to new brands and technologies.
"The 1970s oil shock introduced Americans to fuel efficient cars from
Japan," Mr Lagod said. "Nobody knew what Toyota was. Now they have the
dominant market share."
Circumstances may be ripe for alternatives. In 1990, the United States imported 46 % of its oil. In 2000, the figure jumped to 57 %. Cash-strapped governments also continue to subsidize traditional electricity and water purification.
Pinpointing when a crossover to new technologies could occur is tough to gauge.
Because thin film barely exists as an industry, it is much more expensive than
regular electricity. Improved technology and a larger manufacturing base could
mean acceptable parity as soon as 2006 or 2008, but the calculation isn't easy
to establish.
Other alternative forms of energy face tricky evaluations as well. Wind power works, but it will likely remain a European phenomenon, Mr Brownlee said. Generating electricity from the ocean holds promise because, unlike wind or sunlight, waves never cease. The problem? It involves sinking equipment into rough seas. Similarly, hydrogen looks great on paper, but the experimental results have been inconsistent, and the infrastructure -- storage systems, gaskets and the like -- doesn't exist.
Despite the challenges, it appears that the inspirational light bulb is going
off a lot more often now -- solar-powered or otherwise.
"Nano is hot right now, and people are looking for a good application for
nanotech," Mr McGehee said. "I never thought I'd see this in Silicon
Valley, but they are realizing that the energy market dwarfs the computer
market."
Source: Bell Globemedia Publishing