Green Tech

WASHINGTON--AT&T is making the largest ever commitment by an American company to purchase alternative-fuel vehicles, CEO Randall Stephenson told the Economic Club of Washington on Wednesday.

"My No. 1 job is long-term growth," he said. "I only know of one way to do that and that's by investing in areas that drive sustainable growth."

Companies like AT&T, Stephenson said, have an obligation to make investments that will drive the nation's economic growth and productivity, as well as to invest in America's workforce.

"The time to invest in America's future is not when (the economy) turns, the time is right now," he said. "By working together, I do believe we can accelerate the velocity of commerce in this country."

Stephenson commended President Obama's emphasis on expanding communications infrastructure, as well has his commitment to health care. He and other AT&T executives, however, cautioned against regulations on broadband funding that could stifle private investment, as well as further union reforms in the Employee Free Choice Act.

"Less regulation results in more investment," he said.

The company plans to make two investments amounting to $565 million to increase the number of alternative-fuel vehicles it uses from 100 to 15,000 by 2020.

Over the next five years, AT&T will spend $350 million to purchase 8,000 vehicles that run on compressed natural gas. The new vehicles AT&T will buy will be built by the U.S. auto industry and should produce 25 percent less greenhouse gas emissions than traditional vehicles, Stephenson said.

AT&T will also spend $215 million to replace nearly all of its 7,100 passenger vehicles over the next 10 years with alternative-fuel vehicles, starting with electric hybrids.

With these two investments, AT&T expects to reduce its gasoline consumption over the next 10 years by 49 million gallons.

The company continues to make large investments--which should amount to around $17 billion to $18 billion this year--expecting to weather the current economic downturn relatively well, Stephenson said.

AT&T's traffic has increased 50 percent year over year, largely in video and data. As an additional sign of its economic health, Stephenson pointed out the company has increased its dividends in all 25 years of its history, including during the 2001-2002 downturn.

"This environment is tough, but it really isn't much more difficult in our industry than what we experienced in the '01-'02 time frame," he said.

Stephenson said the company's growth lies in promoting mobility.

"Wireless is going to be a big opportunity inside and outside the United States," he said. "Everything you do on your desktop, over time your expectation is that it will be mobile."

Federal commitments to broadband infrastructure will help accelerate economic growth, Stephenson said, as long as conditions are not imposed that would deter private investment or influence companies to invest in the wrong technologies.

"The obsolescence curves we are riding are significant," he said. "We have got to make sure we get the policy right on this stuff."

AT&T is not actively seeking stimulus funds, said Tim Harden, AT&T's president of fleet operations, though it will take a look at what is available.

He said federal agencies will have to take inventory of available broadband before making any policy decisions and carefully consider definitions for undefined terms like "unserved" and "underserved." They will also have to be careful shaping the open-access conditions mandated for some stimulus funds.

"I would hope they would not seek to go farther than the FCC has already gone," Harden said.

Stephenson also said that, although more than half of AT&T's workforce is unionized already, the company opposes some aspects of the Employee Free Choice Act, a bill introduced Tuesday in Congress to make it easier for workers to join unions.

"Secret ballots we think are inherently important," he said. "How first contract arbitration manifests itself is very important."

While AT&T's overall workforce is declining because of the dismal economy, the company expects to add 3,000 new high-tech jobs this year that will be union-represented in its growth areas of wireless, broadband, and video. The added jobs will fulfill AT&T's commitment to bring 5,000 offshore jobs back to the United States.

House Democrats on Thursday revealed details of a massive legislative effort they said would inject new life into a flagging U.S. economy, thanks to a combination of $825 billion in tax cuts and new government spending.

The sprawling, 258-page draft bill includes $32 billion in electric power upgrades, sometimes known as "smart grid" technology, $6 billion for expanded broadband Internet access, and $20 billion for health care information technology.

"The economy is in a crisis not seen since the Great Depression," said letter published Thursday by Rep. David Obey, a Wisconsin Democrat who heads the House Appropriations Committee. "Credit is frozen, consumer purchasing power is in decline, in the last four months the country has lost 2 million jobs and we are expected to lose another 3 (million) to 5 million in the next year."

The House leadership has said it would like to hold a floor vote on the package by January 28 and send it to President-elect Barack Obama by mid-February. One potential obstacle is negotiations with the Senate, which is likely to have its own priorities.

The energy-related sections of what is tentatively called the American Recovery and Reinvestment Act of 2009 include $11 billion for research and development related to the "Smart Grid Investment Program;" $8 billion in loans guarantees for renewable energy generation; $2 billion for loan guarantees to high-capacity battery makers; and $200 million for a grant program for electric vehicles.

Some other portions, excerpted from the summary prepared by Rep. Obey's office:

* Energy Efficiency and Renewable Energy Research: $2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills. Funds are awarded on a competitive basis to universities, companies, and national laboratories.
* Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.
* Cleaning Fossil Energy: $2.4 billion for carbon capture and sequestration technology demonstration projects. This funding will provide valuable information necessary to reduce the amount of carbon dioxide emitted into the atmosphere from industrial facilities and fossil fuel power plants.
* Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.

In terms of wireless and broadband, the legislation would require the National Telecommunications and Information Administration (part of the Commerce Department) to create a grant program for "nonrecurring" costs of broadband deployment in rural, suburban, and urban areas--meaning, basically, anywhere in the country. NTIA is supposed to prioritize "unserved" and "underserved" areas, two terms that have no actual meaning until the Federal Communications Commission eventually comes up with one.

State governments may apply for grants by submitting reports listing which of their areas have unserved wireless voice, underserved "advanced wireless broadband," unserved basic broadband, and underserved "advanced broadband service." NTIA will dole out separate funds for wireless deployment and broadband deployment.

"Advanced broadband service" is defined as at least 45 megabits per second downstream and 15 megabits per second upstream; "advanced wireless broadband" is 3 mb/sec downstream and 1 mb/sec upstream.

Whether this so-called stimulus will have any positive effect on the economy is uncertain, though, because the U.S. Treasury will pay for it by running up the national debt significantly and future generations of taxpayers will be expected to pay it back.

The bailout's cost so far has ballooned to $8.5 trillion, not counting the $5.2 trillion in Fannie and Freddie guarantees, although the Treasury should eventually recover some or even much of this amount. If deficit spending were a sure way to stimulate the economy, the Treasury could simply borrow, say, $100 trillion -- and the economic malaise of the last few months would evaporate.

A recent article by Greg Mankiw, a professor of economics at Harvard and former adviser to President Bush, surveys recent research and concludes that each dollar of government spending increases economic activity by only 1.4 dollars, while (according to Obama's top economics adviser) a dollar of tax cuts raises the GDP by about $3. And Tyler Cowen of George Mason University suggests that "we are being asked to spend (untold) hundreds of billion dollars" even though the evidence it will have a positive impact "is inconclusive."

Green-tech venture capital funding soared last year, aided by megadeals in thin-film solar companies, according to preliminary figures released Tuesday by the Cleantech Group.

During 2008, green-tech venture investments jumped to $8.4 billion, a 38 percent increase, according to the report.

Solar investments helped drive the growth, capturing 40 percent of green-tech investments. Thin-film solar deals did particularly well, capturing the three largest investments in green technology last year.

NanoSolar raised $300 million last year, followed by Solyndra with venture investments of $219 million and SoloPower with $200 million.

Cleantech Group's senior research director, Brian Fan, said in a statement:

2008 saw solar take a 40 percent share of clean-technology venture investment dollars, led by mega investment rounds in thin-film solar, concentrated solar thermal, and solar-service provider companies.

Investors also continued to migrate from first-generation ethanol and biodiesel technologies to next-generation biofuels technologies, led by algae and synthetic biology companies. Other sectors with healthy investor interest included smart-grid companies, small-scale wind turbines, plastics recycling, green buildings, and agriculture technologies.

Following solar-energy firms in attracting VC dollars were companies specializing in biofuels such as ethanol, biodiesel, synthetic biology, and algae. The sector captured 11 percent of green-tech venture investments last year, while transportation companies, such as makers of electric vehicles, advanced batteries, and fuel cells, accounted for 9.5 percent.

United States-based companies raised the most green-tech venture funding, landing $5.8 billion among 241 disclosed investments. This group also posted the largest gain last year, marking a 58 percent funding increase over the previous period.

European and Israeli companies followed, raising $1.8 billion amid 146 disclosed rounds, marking a 47 percent increase.

Chinese companies raised a total of $430 million in green-tech investments in 18 rounds, marking a 22 percent increase over the previous year. And Indian companies landed $277 million in 14 disclosed deals, a 20 percent increase.

And while green-tech venture investments were up for the year, preliminary fourth-quarter results marked a downturn from last year and the previous quarter, according to the report.

The fourth quarter accounted for $1.7 billion worldwide, down 4 percent from last year during the same period and a 35 percent decline sequentially.

A sampling of green-tech news with quick commentary:
• Small actions add up to big impact on climate change - Wall Street Journal
  American consumers contribute 65 percent of U.S. greenhouse gas emissions, according to McKinsey & Co. The report suggests that individuals making small changes in driving habits and energy use could slow climate change.

Increasing acidity, shown in pink and caused by atmospheric carbon, would enable high-pitched sounds to travel deeper in the ocean, researchers say.
(Credit: Monterey Bay Aquarium Research Institute, David Fierstein)
• Imitating electric eels to power medical implants - ZDNet
  Researchers say artificial energy-producing cells could mimic those of electric eels, and would be ideal for firing up tiny medical devices. It's an example of biomimicry, which patterns technologies after structures found in nature.
• Suntech plans aggressive expansion - The Associated Press
  The Chinese solar company, snapping up EI Solutions, aims to dominate one third of the U.S. solar market.
• Noise will pollute warmer, acidic oceans - Live Science
  As oceans become more acidic due to higher levels of carbon dioxide, noise can travel to greater depths. Sounds in the soprano range will reach deeper and could interfere with communication among whales and ships, according to a study from the Monterey Bay Aquarium Research Institute.
• Will America run out of gas soon? - Treehugger
  Energy investment banker Matt Simmons say a scarcity of oil soon could eclipse the financial crisis. Whether you agree with the alarm, the worst-case scenario may be worth imagining.

Google recently opened its Wikipedia competitor, styled "Knol" for unit of knowledge. I wrote a definition of cleantech to put up on Knol, and upon reflection, it's probably an overview worth passing around. Especially given that at my own sites - CleantechBlog.com and Cleantech.org - and at CNET's Green Tech Blog, we have been significant contributors to defining the sector. Without further ado, here is the definition:

Cleantech, also referred to as clean technology, and often used interchangeably with the term greentech, has emerged as an umbrella term encompassing the investment asset class, technology, and business sectors which include clean energy, environmental, and sustainable or green, products and services. (See various definitions below.)

The term has historically been differentiated from various definitions of green business, sustainability, or triple bottom line industries by its origins in the venture capital investment community, and has grown to define a business sector that includes significant and high growth industries such as solar, wind, water purification, and biofuels.

... Read more

In his speech in Constitution Hall this week, former Vice President and renewable energy investor Al Gore extolled a stretch goal challenging America to achieve 100% renewable power within 10 years.

The quote: "Today I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years." And my favorite part: "When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. But 8 years and 2 months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon."

That statement is about like challenging your 2 year old to finish college by the time she is 12. Not exactly practical, more than a little crazy, and likely to be either ignored, or if you push it, to cause lots of therapy sessions by the time she is 8. I will, however, credit him with getting almost every renewable energy platitude I've ever heard into one succinct speech.

He does raise lots of good points about the need for a new energy policy not built around shipping dollars to the MidEast for oil (a definite must), for long term support for renewables (it is critical for us to get off our fits and starts mish mash idea of renewable energy policy), and for moving faster and larger to fight climate change (a topic near and dear to my heart, and one that is only partially helped by making broad statements about how fast the sky is falling, I mean, the glaciers are melting). In fact, there is no better way to give anti renewable energy and climate change naysayers fuel and ammunition than to make statements like these. Any path we go down, I'd still rather challenge that two year old to do something they can achieve, not try and make it through college by age 12 - especially if I'm asking her to pay for it. Slow and steady wins the race.

The core of Al Gore's argument in his speech on the practicality of a 10 year all renewable energy goal boils down to this quote from his speech on fuels:

"What if we could use fuels that are not expensive, don't cause pollution and are abundantly available right here at home?

We have such fuels. Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world's energy needs for a full year. Tapping just a small portion of this solar energy could provide all of the electricity America uses.

And enough wind power blows through the Midwest corridor every day to also meet 100 percent of US electricity demand. Geothermal energy, similarly, is capable of providing enormous supplies of electricity for America."

And this one on costs and technology:

"To those who argue that we do not yet have the technology to accomplish these results with renewable energy: I ask them to come with me to meet the entrepreneurs who will drive this revolution. I've seen what they are doing and I have no doubt that we can meet this challenge.

To those who say the costs are still too high: I ask them to consider whether the costs of oil and coal will ever stop increasing if we keep relying on quickly depleting energy sources to feed a rapidly growing demand all around the world. When demand for oil and coal increases, their price goes up. When demand for solar cells increases, the price often comes down."

These quotations, while partially true and very seductive, are highly misleading in this context. The effective conversion rates of that energy to usable electric power or liquid fuel is still horrendously low, and requires lots and lots of capital expenditures, and thousands of miles of new transmission lines to implement. And that's not taking into account the state of technology - as an industry we really are the two year old in my analogy.

So given those conversion rates and the current high capital expenditures per unit of energy, the cost is still 5-20x (depending on what you count) the cost of conventional electric power generation (yes I know, unless you add in the carbon price and environmental externalities, but that's still extra cost any way you slice it . . . unless you'd like to subsidize mine). Frankly no serious analyst is suggesting that within 10 years, given the state of technology and the best case forecast capacity, that solar can make up more than a small single digit fraction of even electricity needs or that wind can make up more than a meaningful minority share (let alone after doubling the global power demand by replacing liquid fuels in cars with electricity, which Al Gore also suggests), especially given lead times on power plants and transmission lines.

Most likely even if the technologies were already cost comparative, which they are not - if you need evidence, just look at our wind and solar industries in their current tizzy because their biggest subsidy programs are up for renewal this year - most analysts wouldn't project a fabled grid parity on cost for renewables for at least the next decade, and certainly not at scale. So Mr. Gore's statements on cost and technology are in part true, but imply a maturity level in these industries that just doesn't exist yet. Given manufacturing scale up issues on the technology, transmission infrastructure requirements at least as large as the new generation requirements, and long lead times on building projects of this size (industry executives point to seven year time frames just to build a single transmission line), probably reaching even significant low double digit percentages of carbon free power within ten years is a stretch (excluding large hydro and nuclear which we already have but are hesitating to expand) across the whole nation. Notwithstanding that California has managed to come close to its target 20% number over the last decade, that's one state leaning on the resources of many states, using the best available sites, federal subsidies paid for from all of our pockets, and that took a decade. When it comes to carbon capture and storage for coal fired generation, a concept with lots of legs - if it works - 10 years just isn't enough time to achieve scale. The first big pilots are scheduled over the next several years, and there are too many unknowns to bet the farm on, without the lead time and capital cost issue. Though still definitely worth trying.

And as far as paying for it, there was an article in the San Francisco Chronicle today calculating our Federal government long term liabilities at $450,000 per American already mainly for Medicare and Social Security. Actually trying to replace our entire fossil fuel infrastructure within 10 years would push that to how much? Somebody please do the math before we launch a government funded mission to the moon, or legislate that our citizens pay for it instead. On costs, Mr. Gore made the statement in his speech "Our families cannot stand 10 more years of gas price increases." I agree, but Mr. Gore, your 10 year, hell for leather, man to moon race for 100% renewable energy would guarantee just that.

So while extolling stretch goals for a two year old is probably a good idea, let's keep it within the realm of possibility, and not just make grandiose statements for media effect. Now if Al Gore's silly challenge on renewable energy was simply a trojan horse to get people talking about how to move forward on fighting climate change and addressing our long standing energy policy issues, I'm all for that and am happy to help. After all, the words Al Gore and climate change make for very searchble blog articles! But personally when I make outlandish statements, I do like to bring an modicum of practicality to the discussion.

I will leave you with one final note, and please remember, I am actually a proponent of the ideals in Al Gore's speech, I just prefer to get there in one piece. One theory on the effect of the history of the man on the moon driven space race that Mr. Gore challenges us to copy basically says that we pushed for a single high profile goal so fast and furious that we effectively skipped ahead and outran our infrastructure and capabilities to get a nonscalable shot at the moon in the target time frame. The theory goes on to suggest that's why after reaching the moon so fast we haven't progressed at the same rate in space since, and had we taken it slower, we would have gotten there a few years behind, but might be on Mars by know. Akin in a military campaign to outrunning your supply chain, and then getting your army surrounded and destroyed - or perhaps invading a country half way around the world, winning the war in weeks and forgetting to prepare for the peace. And just to show that I can deliver as many platitudes in one article as Mr. Gore, that's why you never get involved in a land war in Asia.

Energy and environment are the two pillars of everything in our lives. Mr. Gore and I want the same thing, but he thinks we can't afford not to swing for the fences - I think we can't afford to mess it up.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, Chairman of Cleantech.org, and a blogger for CNET's Green Tech blog.

I've been saying for a while, that with enough money, someone is bound to crack the CIGS nut in thin film, and deliver the cleantech sector another First Solar (NASDAQ:FSLR) like renaissance for the always around the corner technology.

That's not because it's easy, or even because it's a good idea to try, but when well over a billion dollars in investment pours into a given technology, something is bound to come out the other side - eventually. A seductively high efficiency potential technology with very low potential materials costs, CIGS has been just over the horizon for a decade or more, but has enjoyed a huge influx of capital and increase in the number of programs chasing in over the last 5 years. Similar to other solar thin film technologies, device complexity, effective yield, throughput, and process control issues are always the bugaboo.

Given its seductivenes, its somewhat capricious nature, and the siren filled history of the technology, perhaps we should think of CIGS like a woman, and all men need a few rules of thumb to keep in mind before we jump in. Here are mine (for CIGS, not women):

Number one, like most thin film technologies, $100 mm in investment is the ante up to play the game. Just because you spend it doesn't mean you get real product out, and with CIGS, you tend not to know whether anything is workable until oh, say $50 to $100 mm is already spent.

Number two, what you think you know, you don't. Until the pilot plant has been operating for a few years, companies generally really underestimate what they don't know.

Number three, remember those experiments and great idea you sold your investors on, the hard part is not there, the hard (read risky) part is ALL in the "it's just engineering" end of the scale up process you told the investors was "fairly straightforward". This isn't IT, it's deposition with a very commoditized end product.

Number four, whatever the projection as far as timing, add 3 years, maybe 5. I'm not kidding here, I said years.

Number five, when the words "fast", "roll to roll", "reel to reel" or anything else equating to speed in the process are in the pitch deck, translate that to read excruciatingly slow in the development timeline, and lots of "issues" popping up in those nasty yield and process control areas.

Number six, when investing, be very careful about that "yield" number and the "capacity" numbers they made up based on it. All thin film development companies keep "little black books" with the data and charts on every process run they've ever made. Read every single one of those charts, and ask lots of stupid questions about why only 4% of the total square footage produced is above 6% efficiency in run XYZ. Think in terms of "effective total average yield". That's where the problems are hiding.

CIGS watchers have a number of darlings to follow. There's Miasole, which now under new management is rumored to have substantially tightened down its development discipline to take it's shot, Nanosolar, another Silicon Valley venture darling that has been described by many observers along the lines of, "never met hype they didn't like", but with a seductively low cost printable process if they can get it to work, Solyndra, the "stealth" company with the big sign on I-880, Heliovolt, the Texas-based hot CIGS deal of last year, which burst on to the fundraising scene on the back of it's still extremely early stage "FASST" technology. And those are just the largest of the US based venture backed deals, without including Honda, IBM, DayStar, Ascent Solar, Solopower, and literally dozens upon dozens of others around the world with significant backing (though all at a very, very early stage). Wikipedia has a decent cut at a list, though by no stretch of the imagination comprehensive.

My best estimate is that most of the venture investors in each of those deals personally looked in depth at the manufacturing process of single digit numbers of competing approaches before investing. And only read the little black book on two of them. That strategy was tried, with ahem, "mixed" results, in fuel cells a few years back. We'll see how well it works in thin film solar.

And of course, as with most things in solar, the major players should probably be watched more carefully than the startups. I've always liked larger companies to crack thin film issues, in no small part because the term "stage gate" tends to mean something to them.

But my personal favorite for front runner currently is Arizona based Global Solar, a solar company I have been following for years. Their announcement a few months ago of 10% efficiency in production runs, was pretty much lost in the crush of press around solar, for reasons unfathomable to me.

While admittedly not yet proven in a full production environment (they are working on the scale up to 30 MW plants) they do have the massive advantage of having run virtually the only operating CIGS pilot plant in the world - and I believe have shipped more volume of CIGS product than anyone if not everyone else. True to form, that technology, which originally came out of the Tuscon Electric backed ITN Energy Systems labs in Colorado which later did Ascent Solar, has had an estimated $150-$200 mm plus invested in it over the last decade, before Solon AG bought the company for a reported $16 mm. Though to be fair, current management under CEO Mike Gering was brought on well into that process. So while I'll keep my fingers crossed that some one will crack the CIGS nut, and continue to be flabbergasted at the $1 Bil plus valuations estimated to have been achieved by some of the startups named here for very large science projects, when it comes to the one to watch, Global Solar is my personal pick.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Greentech blog.

As always, the venture community is looking for its next big thing. The cleantech world is no exception. Despite the dearth of exits, so much capital has flowed into the cleantech sector that investors need new places to put it. So despite my promise to certain friends not to blog certain funding rumors in each category, the top 4 contenders are:

Green building materials - I'm not sure it would be my thing, but investors across the board seem to think this area is ripe for a hit.

Carbon IT - With some sort of cap and trade a near certainty, the interest is picking up in one of the few areas in carbon that looks like a "venture bet". I should know, I have one of these companies myself.

Food related technologies - High food prices and rising fertilizer costs, what can I say?

N-generation solar technologies - Everyone not in the first wave is looking to get in to the 4th wave. Not sure venture investors will fare better in the 3rd or 4th wave than they did in the second, but they are going to try.

I had a chance to visit one of the Gaia Hotels, which bills itself as a new eco-hotel chain, this weekend. The experience put those four contending areas in a bit of a new light, as the creator of the Gaia ecotel concept toured me around and shed some light on the decisions that went into them from the demand side. (Note: "ecotel", "bit of a new light", "shed some light", "demand side", all good cleantechisms).

After launching a LEED Gold Certified facility in Napa Valley a little under two years ago, Gaia opened a new one in Northern California, focused on outdoor recreational travelers, which they expect to achieve at least LEED Silver. I had lunch with Wen Chang, the creator behind Gaia, this Saturday. When it came to green building materials, I was frankly amazed how much impact the LEED program had on the design and materials selection, and how big a selling point LEED was to this concept. Everything from using photovoltaic panels and Solatube daylighting, to low flow shower heads, low water usage and local landscape selection, and chemical free gardening and stormwater management, all the way to the carpet made from recycled materials, CFLs in the night stand, and sustainable forest products. Talk about demand stimulus, after an extensive tour, I was ready to buy a green building materials company myself. Especially since the ecotel was booked solid!

And of course front and center in the lobby, there were Renewable Energy Credits (though not carbon credits) purchased from our friends at Renewable Choice Energy, to offset the power usage, and a monitoring system to show power and water usage, and solar production.

Moving on to the food technology, the Gaia Anderson restaurant is not yet open, but is intended to be an organic and locally grown food (I assume that Napa will count as "local" for the wine, but I did not ask!).

No eco friendly building in this day and age would be complete without a solar panel on the roof. Gaia Napa's solar system is apparently providing 10% of the electricity needs on site, while at the Gaia Anderson, the panels have not yet arrived. But perhaps the most telling for would-be solar barons, Wen Chang did not know or care whose technology powered the solar panels. Only that they arrived and worked.

All in all, quite an eye opening one day "deep dive" into the demand side of the four top contenders for cleantech's next big thing. (Pardon the expression deep dive, I've always found that term amusing, especially since cleantech VCs use it all the time now to describe the 6 conferences they went to and 12 business plans they read to become an expert in, say, solar, so I couldn't resist.)

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Greentech blog.

Following on the 2006 and 2007 announcements of technology giants Applied Materials and IBM moving into the solar sector, Intel has joined the fray in 2008 with the spinout of SpectraWatt, its newly created solar division.

I had a chance to chat with Andrew Wilson, a longtime Intel guy who is the CEO of Spectrawatt, about what he is doing. The venture is the result of the last 3 years of extensive business planning, that Andrew said grew out of an off the cuff conversation he had internally four years ago.

While they have very early stage development in the works for some new and novel technology to reduce the manufacturing costs of solar cells, they are not sharing details. The Spectrawatt core business today will be about building a company to manufacture crystalline silicon based solar cells. In the near term the business will be buying wafers and manufacturing cells. According to Andrew, they have a significant supply of silicon secured, and while he cannot say who the vendors are, at least one of those vendors will likely be announcing soon, as the Spectrawatt contract is a material event for them.

So the first question is why x-Si and not thin film? Besides the obvious that it is far and away the biggest market today and a natural fit for Intel, Andrew added two more. Customers care about per kwh cost, and all things equal, how much energy they can get out of the real estate they have (read, efficiency matters). So they think x-Si makes a lot more sense than thin film, especially given the additional issues around stability, manufacturing complexity and materials resource constraints.

Andrew did say that they may vertically integrate later. So I asked why did they start at cells? Andrew explained that since the business comes out of Intel, and Intel is accomplished at processing wafers into products, cells made sense to start with. And at the end of the day they hold the view that the biggest point of value in solar value chain is in creating the cell, moving from low value silicon to high value device. They consider it the largest single value add step.

Andrew and I are in agreement that 2004 was a kind of a magic year changing what the photovoltaic industry is. Andrew stated it was the first year where the average company in every segment of the value chain in solar became profitable. So given today's environment Intel and Spectrawatt could have conceivably started at numerous places in the value chain. This is where the vertical integration may come in. His view on the silicon supply is that no glut is coming, or at least not a long lived one. The end demand market is growing at 30 to 40% per year, and the silicon supply that is coming on line is in large part subject to long term contracts with fixed prices. The silicon supply additions then are pretty much already spoken for. In Andrew's mind while growth at the margin will definitely cause some level of boom bust cycles, those long term supply contracts may moderate it more than other people believe. If he is right, and he has secure supplies, a horizontal business like cell manufacturing is a great place to be. If he is wrong, he sees continued vertical integration to manage the growth issue as one of the major avenues industry participants will go done. In this he and I also agree, rapid movements in supply cycles tend to reward vertical integration. And if he gets big enough with Spectrawatt, vertical integration could be a move Spectrawatt makes, too.

It is great for the solar industry to see more technology giants like Intel joining the fray, and perhaps helping drive down crystalline product costs the same way Applied Materials and IBM are looking to drive down then film costs.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, Chairman of Cleantech.org, and a blogger for CNET's Green Tech blog.