Which Concentrating Solar Companies Are Doomed?

Only three out of the 25 venture-capital funded companies developing concentrating photovoltaic technology will likely succeed, wrote Eric Wesoff, a senior analyst at Greentech Media in his blog Thursday.

The three startups will stand apart from the pack by developing technologies that are more efficient at using sunlight to produce electricity, Wesoff said. As a result, these companies will not just win market share but also provide good returns for their backers by going public or getting acquired, Wesoff said.

Concentrating photovoltaics, or CPV, use lenses or mirrors to concentrate sunlight and direct it onto solar cells. Wesoff recently compiled a list of the CPV companies and described their work, which can be found here, here, here and here.

A silicon shortage that began in 2005 has made the CPV technology attractive to some investors and entrepreneurs. Concentrating photovoltaic systems use less silicon than conventional solar panels, which dominate the market today.

But analysts don't believe the CPV technology will have a popular appeal. Currently, CPV is a zero billion-dollar market with only a few megawatts deployed, according to Wesoff.

The CPV market is expected to reach about 6 gigawatts by 2020, accounting for about 2 percent of the solar market, according to a Greentech Media and the Prometheus Institute report release in April (see Concentrating Solar to Reach 18 Gigawatts by 2020).

Although many companies are vying for that sliver of the market, those that are developing low-concentrating PV are less likely to stick around, Wesoff said. 

The low-concentrating PV technology only gathers two to three times the natural sunlight while high-concentrating PV technology can concentrate 400 times or more of the natural sunlight.  

Wesoff said many of the low-concentrating PV companies received their funding a year ago when the spot price of silicon shot up to more than $200 per kilogram.

At the time, the companies claimed they could make low-concentrating solar systems for the same price as traditional rooftop solar-electric systems, Wesoff said.

But analysts are predicting an end to the silicon sho rtage by next year or so, so the price of traditional silicon-based solar panels is expected to drop (see Solar Sector Heading for a Shakeout and Oversupply of Silicon to Be Worse Than Expected).

And once that happens, "the value proposition brought forth by all these low-concentrating solar companies evaporates," Wesoff said.

At least one low-concentrating PV company already has made a switch. Soliant Energy said in September of last year that it had decided to license its low-concentration technology and focus the company efforts on a high-concentration product instead (see Soliant Switches Focus).

Some high-concentrating PV companies also aren't likely to fare well.

Sunrgi, a Hollywood, Calif.-based company told Greentech Media in April that its solar technology can intensify sunlight by more than 1,600 times and convert it into electricity at the same cost as electricity from fossil fuels (see Sunrgi Keeps Solar Cool).

In his blog, Wesoff said he doubts Sunrgi's technology claims and questions the management's ability to lead the company. 

Catch up on the thin-film solar market with Greentech Media and the Prometheus Institute's new report Thin-Film PV 2.0 or at our upcoming event the Thin-Film Revolutionin New York City on Sept. 15, 2008.