Where’s the next boom? Maybe in `cleantech’

Energy breakthroughs could be the next big thing, but how many jobs can they generate?

By Jordan Robertson, AP Technology Writer
9:33 pm EDT, Tuesday October 6, 2009

SAN FRANCISCO (AP) — Our economy sure could use the Next Big Thing. Something on the scale of railroads, automobiles or the Internet — the kind of breakthrough that emerges every so often and builds industries, generates jobs and mints fortunes.

Silicon Valley investors are pointing to something called cleantech — alternative energy, more efficient power distribution and new ways to store electricity, all with minimal impact to the environment — as a candidate for the next boom.

And while no two booms are exactly alike, some hallmarks are already showing up.

Despite last fall’s financial meltdown, public and private investments are pouring in, fueling startups and reinvigorating established companies. The political and social climates are favorable. If it takes off, cleantech could seep into every part of the economy and our lives.

Some of the biggest booms first blossomed during recessions. The telephone and phonograph were developed during the depression of the 1870s. The integrated circuit, a milestone in electronics, was invented in the recessionary year of 1958. Personal computers went mainstream, spawning a huge industry, in the slumping early 1980s.

A year into the Great Recession, innovation isn’t slowing. This time, it’s better batteries, more efficient solar cells, smarter appliances and electric cars, not to mention all the infrastructure needed to support the new ways energy will be generated and the new ways we’ll be using it.

Yet for all the benefits that might be spawned by cleantech breakthroughs, no one knows how many jobs might be created — or how many old jobs might be cannibalized. It also remains to be seen whether Americans will clamor for any of its products.

Still, big bets are being placed. The Obama administration is pledging to invest $150 billion over the next decade on energy technology and says that could create 5 million jobs. This recession has wiped out 7.2 million.

And cleantech is on track to be the dominant force in venture capital investments over the next few years, supplanting biotechnology and software. Venture capitalists have poured $8.7 billion into energy-related startups in the U.S. since 2006.

That pales in comparison with the dot-com boom, when venture cash sometimes topped $10 billion in a single quarter. But the momentum surrounding clean energy is reminiscent of the Internet’s early days. Among the similarities: Although big projects are still dominated by large companies, the scale of the challenges requires innovation by smaller firms that hope to be tomorrow’s giants.

Can high-tech giants revolutionize solar market?

Commentary: Intel, H-P and IBM are making bets, but payoff likely years away

By Therese Poletti, MarketWatch
Last update: 12:01 a.m. EDT July 3, 2008

SAN FRANCISCO (MarketWatch) — As companies like Intel Corp., IBM Corp. and Hewlett-Packard Co. have made moves in the solar power space, many have wondered if these high-tech heavyweights could use either their manufacturing or intellectual muscle to push down costs and thereby lower the price of solar power.

Perhaps eventually, but not quite so fast.

Because of the vast use of silicon wafers in the solar industry, it is easy to leap to the conclusion that these tech giants, which all have great expertise working with silicon, will have a big effect on the nearly $20 billion estimated market this year for solar cells and modules. Solar cells, encased in panels on the rooftops of homes and businesses, convert solar energy into electricity.

While the three tech giants have made investments in solar, their recent actions are unlikely to add a big new supply of solar cells to the market anytime soon. Even though the once-tight market for polysilicon, a key ingredient for the cells, is loosening up a bit, subsidies by governments and utilities currently play more of a role in the cost of solar power.

Intel’s solar ambitions

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 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.)

IBM Links With Japan’s TOK to Develop Solar Technology

NEW YORK – IBM has joined forces with semiconductor process company Tokyo Ohka Kogyo (TOK) to develop more efficient solar power technologies to cut the cost of the clean energy source, the companies said on Monday.

The move is the latest by large technology companies to enter the burgeoning field of photovoltaic solar products, which turn sunlight into electricity without releasing the pollutants that are emitted from coal, oil and nuclear power generation.

International Business Machines Corp will contribute its expertise in manufacturing cells, while TOK will bring its technology used in the semiconductor industry and for coating LCD panels.

The partnership is seeking to create techniques that double the efficiency of thin film solar modules, making them capable of converting more of the sun’s rays into electricity.

IBM Research’s Supratik Guha, who leads its solar photovoltaic activities, said the companies do not plan to enter the solar module production business, but hope to license their technology to producers in the next two to three years.

“We’ve already been in discussions with photovoltaic manufacturers,” Guha told Reuters in an interview.

“There are problems to be resolved,” he said, “but this is the time we’re starting to talk to them.”

The partnership will focus on developing new methods for printing copper-indium-gallium-selenide (CIGS) cells that can turn more than 15 percent of sunlight into power — a significant improvement on the 6 percent to 12 percent efficiency that current solar CIGS makers have achieved in their fabrication plants.

Guha declined to specify the companies’ projected sales from the technology that will come from their link-up, but described the potential market as “huge.”

Intel, IBM Get Solar Exposure

Brian Caulfield, 06.16.08, 11:33 PM ET

Intel and International Business Machines have joined the parade of technology companies making alternative-energy plays, announcing Monday separate efforts to put their manufacturing smarts to work cranking out solar cells.

Intel and IBM already have plenty of relevant manufacturing and materials know-how, with IBM’s PowerPC processors competing with Intel’s ubiquitous x86 processors to power high-end servers.

IBM and Intel, however, are taking very different approaches, with Intel tapping into its long experience working with slabs of silicon and IBM pursuing a technology based on thin, flexible films developed at its research arm.

Intel said Monday it will spin off a new venture, dubbed SpectraWatt, that will build a factory in Oregon in the second half of this year and begin sending solar modules to customers by the middle of next year.

Intel will lead a $50 million investment in SpectraWatt, an effort that will be spun out of the company’s new business initiatives arm. Other investors include Goldman Sachs subsidiary Cogentrix Energy, PCG Clean Energy and Technology Fund, and Solon AG.

IBM’s approach is based on a process developed by IBM Research to crank out so-called thin-film solar cells based on copper, indium, gallium and selenide.

Solar cells, which convert light to electricity, have long relied on silicon, the same material upon which companies such as IBM and Intel build computer chips.

The idea behind thin-film solar cells, however, is to work with flexible films, slashing costs while creating solar cells that can be wrapped around walls or even incorporated into tinted windows. It’s an idea being pursued by a clutch of start-ups, in addition to IBM.

The goal, according to IBM, is to create solar cells that convert 15% of the energy that hits each cell from sunlight into useable electricity, up from a range of between 6% and 12% today. The technology giant will collaborate with Japanese manufacturer Tokyo Ohka Kogyo on the project.