Wednesday, March 26, 2008

Silicon Valley is going solar

Tanja Aitamurto, Moi Mukkolat Photo Agency, for Innovation Beat

Anyone who thought solar energy was all about latte-drinking, Prius-driving green-bums, think again.

Nowadays, solar enthusiasts and clean-tech investors alike only reluctantly speak about the environment. They're in it for the money - and so are the consumers.

"It's kind of funny actually," says Kevin Ruszel, installer for Solar City, as he finishes his work on twelve solar panels atop a roof in San Rafael. "Sometimes we install for people who have two SUV:s standing in their garage, but I guess they just want to save some money."

As far as Solar City's founders Peter and Lyndon Rive -- two brothers from South Africa -- are concerned, there is only one thing you have to watch before going solar - and that is not a movie by Al Gore.

"Just look at your electricity bill," says Lyndon Rive. "In the last years, the prices have gone up with more than six percent each year. And nothing speaks for that to change. We expect solar to be profitable in a non-subsidized environment as early as 2010."

And perhaps the Californians have been scrutinizing their electricity bills lately. Solar City is so busy that their customers have to wait for two months before getting their panels installed. And installers like Kevin Ruszel can cash in.

"I used to work for another solar company," he says while taking a break in the shadow of the ever warmer sun. "But Solar City offered me a higher wage. There is a great demand for people who know how to do this."

Solar City wants to be the "Starbucks of the solar business," as Peter Rive puts it. That means that service and prices are more important than efficient solar panels

"We've actually just started using a new type of panels," Peter goes on. "We install cheaper ones now. They're not as efficient, but that is not the issue. If the customer wants more power, we just install another panel. We rarely have to cover the whole roof anyway."

Solar City is one of the fastest growing solar company in California, and Peter Rive thinks it's the right time to be sprinting.

"At this moment, there is a window of opportunity to establish powerful brands in the solar business," he says.

There is indeed something happening now. Last year saw the biggest amount of cash ever flowing into the clean-tech sector. With more than $ 2.6 billion of investments, the sector has increased eightfold in two years, and most of it is going one place: Silicon Valley.

Why? Well, first of all, the money's already there.

"California has always been in the lead when it comes to venture capital," says Emily Vendell at the National Venture Capital Association, "and the clean-tech sector has all the attributes a venture capitalist is looking for, like public demand and possibilites for innovation."

So the same brains and wallets that sparked the information revolution are now trying to save the world - or at least making money while trying.

Just a few miles from Solar City's offices, a company called Ausra is planning the world's biggest solar-thermo plant. The company's biggest investor is Vinod Khosla, one of the founders of Sun Microsystems. He lured the Australian founders of Ausra to Silicon Valley with a $50 million check.

"California is where the market is," says John O' Donnell, Ausra's executive vice-president. "This is where all the smart and fearless investors are."

Like most other cleantech people in the Bay Area, O'Donnell prefers talking about financial opportunities than about global warming. "When we open up our Las Vegas-factory in May, we will be producing 1000 MW of installations a year," he says. "That's twice the size of anyone else in the industry."

Ausra's business model relies on existing, but cheaper, technology. Importantly, the company's way of storing electricity is cheaper - just simply storing the heat

"It's like a coffee thermos," says O'Donnell. "A coffee thermos stores the same amount of energy as a laptop battery, but it's one hundred times cheaper."

Right now, Ausra is planning a solar farm in San Luis Obispo. The output - 177 MW - is enormous by previous solar standards. That translates to more than 100 new windmills -- and the power plant "only" occupies 484 football fields of farmland.

"With this technology," enthuses O"Donnell, "we can power the entire nation with eight percent of Nevada."

So what about the recession? And what if, for some unforeseen reason, global warming won't be as hip in a few years?

No problem, says the Rive brothers at Solar City. All it takes is for the electricity bills to keep climbing - and people will keep buying solar.

Says Pete Rive, "We've had some customers who've asked us: 'You don't believe in this global warming bull, do you?'"

John O'Donnell's Ausra uses stored thermal heat to
power the grid during peak-hours.

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