More U.S. solar start-ups are finding that the route to the global solar panel market passes through government offices.
The meltdown of the financial markets over the past two years means that state, local, and federal incentives are increasingly part of the financial package solar start-ups need to assemble when looking to start manufacturing at large scale.
Silicon Valley-based SoloPower expects to hear next month whether its application to the Department of Energy's loan guarantee program will come through. Without the loan, private money, and incentives from its home town of San Jose, Calif., SoloPower would be looking to ramp up overseas, said CEO Tim Harris.
"Globally we're competing with the Chinese, and the government there has put billions of dollars into four solar companies in the past few months," said Harris. "It's a brutally tough environment to raise money...so you have to work all the avenues."
The story at SoloPower, which makes a flexible solar collector designed for rapid installation, is also playing out at many other green-tech companies, which need to get creative about how they bankroll their transition from product development to commercialization.
Before the financial crisis, solar challengers were able to build manufacturing facilities using private money--venture capital, private equity, and hedge funds. These sources still exist, but private investors are being pickier about how they place their bets, said Ted Sullivan, solar analyst at Lux Research.
Raising money on the public markets with an initial public offering was possible a few years ago, too, but is very difficult now, said Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance. Banks, meanwhile, are unlikely to finance the first factory for a solar company if the technology is relatively new and untested.
That leaves government programs, such as low-cost loans, and state incentives for economic development to help fill the financing gap in many cases.
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