Venture Capital Investment


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Venture Capital Investment

  1. 1. Venture Capital Investment The next generation of solar Venture Capital Investment Tim Chapman reviews venture capital investment in next generation solar technologies I t’s well over a century since Charles Fritts, an And then there’s a whole new generation of more exotic enterprising American inventor, found that a carefully materials, from organic compounds to nano-engineered prepared cell of selenium and gold could create quantum wells, emerging from laboratories around the electricity from sunlight. It’s 50 years since silicon-based world. solar cells were used to power early satellites. But there’s Not all of these technologies will reach their promised never been such a wave of technical innovation and potential, of course. Some will run into problems scaling investment as there has been in the past few years, as the up production from laboratory to factory, some may never climate change and energy security agendas have elevated become commercially viable because of high material and solar power into the mainstream. production costs, and others may just not find their place Venture capital (VC) activity can be a useful guide to the in a highly competitive market. commercial potential of a technology. Last year, according The critical factor for many of these solar plays is the to research by the Cleantech Group, VC investment in price of the high-quality silicon required for the most solar technology topped $1 billion in 71 deals across North established PV technologies. Recent years have seen America and Europe, as part of a record $5.18 billion huge price increases as the increasing demands of the invested across the cleantech arena. And the numbers solar industry competed with those of the electronics got even bigger in 2008: according to Greentech Media, industries. But with new production capacity coming solar companies raised a total of $1.5 billion in the third on-stream, material costs are set to fall sharply - analysts quarter of 2008 alone. at New Energy Finance have predicted a 43% drop in the Part of that wave of investment is helping increase cost of polysilicon in 2009. While that’s good news for the production of the mainstay of the solar industry, makers and users of silicon PV, it puts a big dent in the photovoltaic (PV) panels based on crystalline silicon. But business case for some of the new solar technologies. the bulk of the money is going to companies which are The following set of three articles introduces some commercialising a vast array of new solar technologies. of the most exciting companies developing the next Some companies are working to dramatically improve generation of solar PV, concentrating on those that have the efficiency of silicon PV, to get more power out of less secured VC funding. The articles originally appeared silicon, and to slash the cost of producing the cells. A key in Cleantech magazine between December 2007 and trend here is the move away from bulky crystalline silicon May 2008, but have been updated with details of later to thin films which use a fraction of the raw material. fundraising and other news. Thin-film cells can also be made with alternative semiconductors, such as cadmium telluride or the copper Tim Chapman is a business and technology journalist, who tracks cleantech VC at indium gallium selenide (CIGS) family of compounds, which have also seen intense VC interest. 7 exible super cell in module production. Image Dye Sensitised Thin Film solar cells. Heliovolt circular cell courtesy of Odersun Image courtesy of G24i Image courtesy of Heliovolt 4
  2. 2. Venture Capital Investment The next generation of solar 1 Improving silicon efficiency The centre of innovation is California’s Silicon Valley S olar cells are an increasingly familiar improving silicon efficiency is to concentrate sight, helping businesses and more light onto the PV cell. One of the households cut their emissions and leaders in this concentrated photovoltaic reduce their energy bills, and powering (CPV) field is SolFocus. The Silicon Valley a host of off-grid installations. But while firm uses reflective optics to focus sunlight the conventional photovoltaic (PV) cell on a small, high-quality silicon cell, technology is well established, it’s still achieving double the conversion efficiency relatively inefficient, awkward and expensive of silicon with a fraction of the material. The to install, often unsightly, and demands a technology is currently being deployed at a large amount of scarce crystalline silicon. 3MW installation in Spain. SolFocus, which Making solar power cheaper, more raised $64 million venture capital in late efficient and more flexible is the aim of a 2007, is also developing a new concentrating host of new companies that are receiving system which aims to reduce production intense interest from venture capital (VC) costs by integrating all the optical elements investors. That’s a huge driver for technical into a single piece of glass. and commercial innovation, and promises a Because they have to closely track the strong portfolio of listed solar businesses a sun as it passes through the sky, CPV few years down the line. installations are unsuitable for many These three features look at the next applications. Several firms are instead generation of VC-backed solar businesses, focusing on producing more efficient cells from companies now in commercial which can be used just like conventional production to the latest spin-outs to emerge cells. from the laboratories. This first feature Solaria, another Silicon Valley firm, focuses on companies working to improve promises to double or treble the efficiency of the efficiency of silicon in solar cells. silicon use by the simple method of taking Unsurprisingly, the centre of innovation one conventional cell and making two or is California’s Silicon Valley. The technical three new ones from it. In 2007, the firm skills learnt in the semiconductor industry raised a $50 million third round of funding are now being applied to the solar sector, led by German solar giant Q-Cells, which is with many companies managed and backed also supplying the firm with 1.35GW worth by veterans of the IT industry. of cell material over the next decade. Conventional PV cells depend on silicon Solaria takes standard crystalline Image, courtesy of Solaria of a very high quality, although not quite as silicon cells and high as that demanded by the semiconductor slices them into industry. While early solar developers thinner strips depended on scrap silicon from integrated using established circuit manufacturing plants, there now just techniques from isn’t enough scrap to go round. Growing the semiconductor demand from both industries has sent the industry. These strips price of polycrystalline silicon skyrocketing are then alternated with in recent years, although new supply troughs of low-cost plastic, and capacity should soon bring the price back packaged in a multi-layered down. Because silicon makes up the bulk cartridge which acts as a solar of the cost of cells, its cost has pushed up concentrating cell. The firm the price of new solar installations despite estimates that the production manufacturing economies of scale and technique can cut the cost of improvements in conversion efficiency (i.e. conventional PV modules by the efficiency with which the cell converts 15-30%. photons into useable power). Although the efficiency gains A relatively well established approach for are lower than those promised by
  3. 3. Venture Capital Investment other innovations, Solaria’s solution should be much easier to integrate into existing production lines, and the finished cells can be used in the same way as traditional PV cells. The firm is moving towards commercial production at both its California base and a 25MW line in the Philippines. A younger rival, Silicon Valley Solar, also aims to double silicon efficiency through its proprietary internal concentrator design. Its modules are outwardly similar to conventional modules, so can easily be installed or integrated into existing systems. The firm raised a $10 million first round in 2007, and is developing a 2MW production line at its California headquarters. Advent Solar, another innovative US cell manufacturer, raised over $70 million in a fourth round in 2007. Advent uses ultra-thin silicon wafers in a cell design, developed at Sandia National Laboratories in the mid- 90s, known as ‘emitter wrap-through’. These cells have all the infrastructure at the back, improving efficiency by area and simplifying assembly. Advent also says the cells are aesthetically superior. Advent is already shipping product from its 25MW production line in its native New Mexico, and signed a 250MW supply deal with European partners in September 2008. Image, courtesy of SV-Solar Opened in early 2007, the factory also aims to cut waste through lean manufacturing principles. facility, with commercial production Other firms are taking silicon beyond scheduled to begin in late 2009. the crystalline cell and into the emerging Another promising Silicon Valley firm thin-film arena. Thin-film PV promises is Solexant, which raised a $4.3 million substantially lower material costs and first round in September 2007. The firm is increased flexibility, replacing conventional developing nano-structured materials which solar panels and opening up new markets can harvest infra-red light that conventional and applications. Although many thin-film silicon doesn’t respond to. Combining that companies are working with other materials, with thin-film silicon can dramatically others are exploring new forms of silicon. increase efficiency by capturing more energy One of the most commercially advanced from the same light. is another Silicon Valley firm, Innovalight. Xunlight (formerly MWOE Solar) is a Based on research from the US Department spin-out from the University of Toledo. It of Energy, Innovalight has developed a is commercialising thin-film technology proprietary ink containing silicon nano- which adds a little germanium to the silicon crystals, or ‘quantum dots’, which have a to achieve record-breaking conversion substantially higher efficiency than silicon efficiency. The firm raised a $22 million wafers. The ink can be printed directly onto second round in May 2008 and is working a substrate, to produce ultra-thin solar on a 100KW pilot production line. modules for residential and commercial Thin-film silicon faces tough competition use, potentially at a tenth of the cost of from films based on other materials, conventional cells. including cadmium telluride and the Innovalight raised a £28m third round in compound semiconductor known as CIGS. late 2007, and secured further government In the next article, we’ll look at the most funding in September 2008. The firm is exciting businesses taking solar power developing a major new manufacturing beyond silicon. CT 6
  4. 4. Venture Capital Investment The next generation of solar 2 Thin-film PV - CIGS and CdTe Thin-film cells can be more flexible in their applications and, depending on the substrate, physically more flexible. W hile many solar cell manufacturers to fall to $1 per Watt peak (Wp, a measure are struggling with the rising of optimum output) by 2010, half that of cost of silicon, others are reaping monocrystalline silicon and less than all the benefits. For the new generation of other silicon-based tech. More power per companies developing photovoltaic (PV) dollar means than thin-film is forecast cells based on alternative materials, high to make up 20% of the total PV market silicon costs can only increase demand for by 2010, up from around 8% today, and their own products. potentially dominate the industry by 2020. The most advanced alternatives are in That’s made thin-film very attractive for thin-film technology. Thin-film PV has venture capital investors. Investment rounds a lower material cost than traditional have tended to be large, as they have to fund crystalline silicon cells as it typically uses purpose-built manufacturing facilities. Firms just one per cent as much semiconductor which have secured funding are nearly all material for the same output. in the US, with many around Silicon Valley There’s other benefits too. Thin-film cells - even though they’re not using silicon, their can be more flexible in their applications manufacturing methods are often based on and, depending on the substrate, physically techniques from the ICT industry. more flexible. Solar panels can be wrapped Texas-based HelioVolt closed a massive around different structures and, because $101m second round in October 2007. The the PV film can be applied to range of base money goes towards opening Heliovolt’s materials, can be integrated into buildings, first plant, with the initial capacity to vehicles or even clothing. produce 20MW worth of cells a year. The Several different semiconductors can firm’s production technology prints the be used in thin-film PV. In the last issue, CIGS-based thin film directly onto a range we introduced some silicon-based thin of materials, although initial production film developers. But two other materials is concentrated on glass. HelioVolt’s core are drawing most attention - the copper market is the construction industry, where indium gallium selenide (CIGS) family; and its flexible production process allows cells to cadmium telluride. be integrated into the building itself. Thin-film developer HelioVolt calls CIGS Thin-film production lends itself to a “nature’s best solar-absorbing material”. range of manufacturing methods, including Actually, it’s not as effective as crystalline direct printing, sputtering, vapour and solar in capturing energy from sunlight. plasma deposition on a PV modules based on silicon have a net variety of rigid or flexible efficiency of around 18 per cent, while substrates. Many companies current CIGS modules have a net efficiency are experiencing problems of only up to around 12 per cent. That’s and delays in moving to full- forecast to approach 14 per cent as full-scale scale commercial production, production allows improved deposition and however. encapsulation technology, but it still lags One of the first CIGS silicon. developers to begin large-scale CIGS does perform better in low-light or production is California- low-angle conditions, however. It also has an based Nanosolar, which advantage over other semiconductors in that started production in late its performance isn’t as sensitive to the exact 2007. The firm’s San Jose concentration of its constituent elements, facility, previously owned by giving more tolerance and flexibility in IT giant Cisco, is thought to Nano solar energy panel. manufacturing. be the world’s largest solar cell factory. It’s Photographer:MARK THIESSEN/National But its big advantage is in cost. The also developing the world’s largest panel- Geographic Image Collection production cost of CIGS modules is forecast assembly facility near Berlin, Germany. 7
  5. 5. Venture Capital Investment Image: Mehran Sadeghi, a senior scientist at Prime Star Solar, measures a solar cell’s e ciency Nanosolar is one of the best-financed industries - leading developer First Solar, companies in the solar arena, most recently for instance, sources its cadmium from zinc raising a $300 million strategic equity round smelting waste. in August 2008. The firm uses a continuous Arizona-based First Solar is one of the roll-to-roll process, printing a CIGS elders of the thin-film world, forming in 1999. nanoparticle ink onto low-cost aluminium The firm floated on Nasdaq in early 2007, foil. The metal substrate removes the need and is now on track to hit its target of 1GW to deposit a separate electrode layer, as annual production from its plants in the is needed on glass, while the roll-to-roll US, Germany and Malaysia. Its production printing allows high throughput. process uses high-speed vapour transport Another San Jose firm, SoloPower, is also deposition onto glass. developing a roll-to-roll manufacturing German solar giant Q-Cells is also process. The firm says its electroplating investing in CdTe technology, acquiring production technique, borrowed from the Ohio-based Solar Fields in November semiconductor industry, is significantly 2007 and merging it with its own Calyxo more cost-effective than other methods. subsidiary. Solar Fields also uses vapour SoloPower raised a $30m second round in deposition technology, which it had July 2007, and is also supported by the US previously licensed to Q-Cells. Calyxo is now Department of Energy. working on a 60MW production line. Still in California, Miasolé is also gearing Colorado-based AVA Solar meanwhile up for commercial production. Miasolé raised a $104m second round of venture raised $50m in a fourth round in September investment in September 2008, to fund its 2007 and is currently raising a further new 200MW factory. The firm has developed round of some $200 million. Headed by a a continuous high-throughput process for seasoned management team from the hard manufacturing CdTe-based cells with a disc industry, Miasolé uses a proven high- conversion efficiency of around 12 per cent. throughput sputtering technique to deposit Early-stage CdTe developers are also CIGS onto a stainless steel foil. The finished winning investor interest. Georgia-based modules can weigh less than a fifth as much PrimeStar Solar raised an undisclosed round as glass plate modules, and can be integrated from GE Energy in June 2008, with the into building materials. engineering giant taking a majority stake in The other thin-film material winning the company. The firm is commercialising serious attention is crystalline cadmium CdTe technology developed at the US telluride (CdTe). CdTe offers a similar National Renewable Energy Laboratory module efficiency to CIGS but potentially which has achieved a record 16.5 per cent an even lower cost, forecast to reach around cell efficiency, and is currently developing a $0.80/Wp by 2010. Like CIGS, it’s effective pilot manufacturing plant for its deposition in low light situations, and also copes well in technology. high-temperature environments. Meanwhile, other firms are developing Cadmium is an extremely toxic heavy thin-film PV based on other semiconductors, metal in its raw state, but solar developers including novel copper-based compounds, take pains to ensure production and titanium dioxide, and organic polymers. In use of their products remain thoroughly the next article, we’ll look at these and other environmentally friendly. Using cadmium businesses leading the third generation of as an input can reduce waste from other solar power. CT 8
  6. 6. Venture Capital Investment The next generation of solar 3 Third generation materials Companies are developing new kinds of solar cell based on a variety of more exotic materials. I t’s a happy fact of chemistry that solar scale installations and building-integrated cells can be built from a wider variety systems, to personal items such as the solar of materials than many people might bags it is developing with Berlin-based realise. The vast majority of photovoltaic Bagjack. (PV) panels now on the market are based The firm is currently building its first on silicon - and, as we’ve seen, there’s commercial-scale (30MW) factory in a plethora of companies working to get eastern Germany, with the aid of a Euro21 more power out of that semiconductor million public grant. Odersun has also been by developing new cell configurations or successful in attracting venture capital, with by using silicon in thin films. Other firms a Euro40 million second round in February are developing thin film cells based on 2008 from investors including Doughty copper indium gallium selenide (CIGS) Hanson and Virgin Green Fund. semiconductors or cadmium telluride. Other solar firms are working with very There’s also a third set of companies different materials. Technologies which have which are developing new kinds of solar cell secured investor interest fall into two broad based on a variety of more exotic materials. categories - organic materials, and III-V Each of these technologies presents its own compounds. benefits and challenges in terms of cost and The most advanced company in the conversion efficiency, but all promise to take organic space is Konarka, originally a spin- solar power into new arenas. out from the University of Massachusetts. Not all of these materials are radically Konarka is developing what it calls ‘Power different. Odersun, a German solar Plastic’ - a lightweight, cheap and versatile developer which was recently picked as solar cell manufactured by direct printing. Europe’s hottest private cleantech company, The photovoltaic capability depends on is developing thin films based on copper nanoparticles of titanium dioxide coated indium disulphide, a compound that is with an organic dye similar to those used chemically similar to the CIGS family. in some LED displays. These particles are Odersun prints its semiconductor onto printed in a continuous reel-to-reel process, Image: Four cell production at centimetre-wide copper tape, a technology onto a thin plastic film along with electrode Odersun AG it calls CISCut, in what it claims is the layers made of semi-conductive polymers. industry’s fastest reel-to-reel production Light is absorbed by the dye, which excites process. Applications range from utility- electrons out of the titanium dioxide and 9
  7. 7. Venture Capital Investment into the electrodes, producing an electric Euro1 per peak Watt, on par with the aims current. of CIGS developers. The firm has secured The conversion efficiency is low, at around funding and research support from BASF five per cent compared with around 10 per and Bosch, as well as VC investment. cent for CIGS and up to 18 per cent for University spin-out companies are also silicon. The production costs are low enough pioneering a relatively untested area for to compensate, however - the cost per watt solar tech - the III-V semiconductors, output is around a fifth that of traditional named for the positions in the periodic table silicon PV. of the compounds’ constituent elements. Konarka is supported by some major VCs, Common III-V compounds include gallium including 3i and cleantech stalwarts Good arsenide (GaAs) and indium phosphide Energies and Draper Fisher Jurvetson. The (InP), substances which are also used in the firm has also secured government support, optoelectronics industry. including funding from the US Department These materials can potentially make of Defense. The US military is a major highly efficient solar cells. The problem is customer for Konarka, which is already that the semiconductor crystals need to be supplying portable battery chargers to the extremely pure, so cells have very high costs Army to keep the modern soldier’s multiple of production. The materials are also heavier devices fully charged, and materials for and mechanically weaker than silicon. portable military buildings to the Air Force. The key to tapping their potential may Cleantech and the military might be an lie in quantum wells. Despite sounding like uneasy mix for some, but the technology something from science fiction, quantum has far wider applications. Power Plastic wells are a well-established technology used could bring great benefits to developing in lasers and low-noise electronics such as countries and areas with limited power infra-red imagers. When constructed with infrastructure, while domestic applications III-V crystals, quantum wells can effectively range from construction materials to be tuned to reap the maximum energy from consumer items. incident light, while using a tiny amount of Konarka is itself a shareholder in Cardiff- the semiconductor. based G24 Innovations, which holds the QuantaSol, a spin-off from Imperial European manufacturing rights for the College London, is developing what it same TiO2 nanoparticle technology. G24i is calls a stress-balanced quantum well. developing a range of products for consumer This uses a mix of GaAs and other III-V and business applications, and secured compounds to absorb the maximum light £50 million in summer 2008 to expand its energy while being more stable than manufacturing facilities. single-compound crystals. Other companies are working on Following a £1.35 million seed round improving the conversion efficiency in 2007, QuantaSol secured £500,000 of organic materials. Heliatek, a new follow-on funding in April 2008 after company spun out from the Technical demonstrating conversion efficiencies of 27 University of Dresden and University of per cent with a single-junction cell. This was Ulm in 2006, is developing new organic achieved with light equivalent to 500 suns, materials and production techniques which means the cells should be ideal for use which it says can significantly improve in solar concentrating installations which efficiency and cut costs. use optics to focus a large amount of sunlight In its first, pre-production, phase of onto a relatively small PV cell. The firm aims development, Heliatek is aiming to achieve for 35 per cent efficiency in a multi-junction conversion efficiencies of 8-10 per cent and cell before the end of the year. to prove its reel-to-reel production process. SunFlake, spun out from Copenhagen The firm’s organic semiconductor is very University last year, is also aiming for thinly deposited in this vacuum process, conversion efficiencies of 30 per cent with one gram covering a square metre of and above. The firm is developing solar solar cell. cells based on a III-V semiconductor NanoFlakes - a perfect crystalline structure Heliatek is aiming to reduce costs to below nanostructure called ‘NanoFlakes’ which Picture courtesy of SunFlake lead researcher Martin Aagesen has called ‘a perfect crystalline structure’. These crystals act as a quantum well when printed onto a low-cost silicon substrate. Initial work has involved indium arsenide, but the same technique can potentially be used with range of III-V compounds. These quantum well technologies are still years away from commercialisation, and the complex nanostructures mean that they’re unlikely to ever match the production speed of the thin-film technologies, but they might still play an important role in the future of solar power. CT 10