Alt Energy Watch: Solar Venture Funding Steady in Second Quarter

The projected oversupply of solar PV modules for 2011 and into 2012 has chilled some investors enthusiasm for the solar sector. But one area of the solar world that still appears to be doing well is the ability of solar-related startups to attract venture capital funding.

As a whole, clean energy companies attracted $2.6 billion in venture capital funding in the first quarter of 2011. Some of the biggest deals of that quarter were a $201 million round for BrightSource Energy, a concentrating solar power company, and a $106 million round for MiaSole, a maker of thin-film solar panels using copper indium gallium selenide (CIGS) technology.

During the second quarter of 2011, Greentech Media noted more than $325 million in solar venture capital funding.  Suniva, a maker of high-efficiency monocrystalline solar cells, closed the largest deal for $115 million.

More interesting, though, is the number of deals involving makers of micro-inverters. These are the devices that convert the DC power generated by solar panels to AC power that can be transmitted over power lines or directly from rooftop systems into a house’s electrical system.

Typically a single inverter would be attached to a panel and convert all the electricity from that panel. Micro-inverters are attached to every cell in a panel and convert the DC power to AC before the electricity is gathered up and sent off the panel. This increases the efficiency of each cell and the overall efficiency of the panel.

High-efficiency micro-inverters reduce the overall cost of a solar PV system by simplifying the design and installation of the whole system. EnPhase Energy is the leading micro-inverter maker and filed last month for an IPO to raise $100 million. The company also got another round of venture funding, to the tune of $14 million, at about the same time.

Other micro-inverter makers who received venture funding in the second quarter are the UK’s Enecsys ($41 million) and SolarBridge ($19 million). Over 40 companies are working on inverters and micro-inverter, including Satcon Technology Corp. (NASDAQ: SATC), which warned on revenues yesterday and saw its stock price fall below $2/share.

Micro-inverter makers are playing in a crowded field and the competition will get tougher as what could be a shakeout begins among the solar PV makers.

Paul Ausick