Rust Belt sunshine: Silicon Valley
solar firm gives autoworkers green jobs
Oct 9, 2009 - Alex Salkever - dailyfinance.com
To get to the future of Detroit, you
have to park at the guard shack outside a dusty bus
depot next to the freeway in San Jose Calif., the
heart of Silicon Valley. On the road in on a recent
weekday, I pass buildings bearing the logos of technology
titans such as Applied Materials (AMAT), Juniper Networks
(JNPR), Cisco Systems (CSCO) and others. When I arrive
at the shack, I meet Skyline Solar CEO Bob MacDonald,
another potential Silicon Valley savior of the beleaguered
U.S. auto industry.
We drive up to a chain link fence, unlock
a gate, and walk onto an empty parking at the Santa
Clara Valley Transit Authority. On the blacktop lot
reside 24 shiny, solar-energy collectors built by
Skyline. The collectors run 18-feet in length and
are six-feet tall, configured in a gently sloping
"W" and set on rotating arms that follow the sun.
The panels use curved aluminum mirrors that, when
Skyline ramps up for production in late 2009, will
be stamped out by workers at a retooled auto parts
factory in the Midwest (the company won't disclose
which one exactly).
What I do know is the factory is part
of a large company with 14 facilities -- a company
that is hurting due to the turmoil in the U.S. auto
industry and the bankruptcies of General Motors and
Chrysler. If Skyline Solar's order pipeline grows
as MacDonald hopes, then the small Silicon Valley
startup could become part of a wave of companies in
the technology heartland throwing a lifeline to staggering
giants in the U.S. industrial heartland.
"They are taking existing machinery
used to make auto chassis and body parts and retooling
them for our solar dishes," MacDonald tells me. "We
hope we can help keep autoworkers employed while at
the same time moving the country towards energy self-sufficiency."
The theme of retooling the Rust Belt
to become the industrial engine for the greening of
America has been much -- perhaps overly - repeated.
President Barack Obama has made retooling industrial
states to participate in the green economy a key priority
in his green economic platform.
To date, little progress has been made.
China and other parts of the U.S. remain the primary
locations for photovoltaic solar panel production.
Wind-energy equipment producers have excess capacity,
meaning Detroit's capabilities were not needed.
Rather, the hope for redeploying industrial
America likely lies in with technologies more similar
to that of Skyline Solar. The array in Santa Clara
puts out 27 kilowatts, enough to power a small- or
medium-sized office building. That is the market Skyline
is targeting, a space that includes office parks,
churches, schools and state and local governments.
These types of solar arrays do not require large permitting
processes, or even environmental impact statements.
"No one cares if you build in a parking lot," says
Skyline or, more likely, local installing
companies, will build out small- to medium-sized solar
arrays, ranging from several dozen kilowatts up into
multi-megawatt projects that could power hundreds
or thousands of homes. The installers will pay the
upfront costs of buying the solar equipment and then
sell power back to the end-customer, an arrangement
called a Power Purchase Agreement (PPA). These agreements
allow customers to lock in fixed costs for power and
allow investors to lock in fixed rates of return.
What Skyline has done differently is
design panels with minimal use of photovoltaic cells,
the most expensive part of solar arrays. Skyline also
uses lightweight aluminum panels that can be easily
packed in shipping crates and moved efficiently. Skyline
has also designed the whole array installation process
to be very simple and modular, allowing for install
times that are one-tenth that of standard photovoltaic
Another differentiator: Skyline uses
crenolated metal radiator panels behind the photovoltaic
surfaces to reduce the temperatures of the PV. This
adds an additional 10 percent to 15 percent to power
The vision is enticing. Skyline is one
of small handful of startups in the solar space to
get U.S. Department of Energy funding. Powerful venture
capital firm New Enterprise Associates is the lead
investor in Skyline, which has raised $24 million
in venture funding to date. Of course, nothing is
a slam dunk in the world of solar. In order to remain
competitive with traditional power sources, Skyline,
like other alternative energy equipment makers, is
heavily reliant on federal and state tax breaks for
buyers of alternative power systems.
With China heavily subsidizing production
of solar energy equipment, the costs are falling so
quickly that U.S. makers of solar gear are scrambling
to keep up. (Others, such as Bill Gross over eSolar,
are taking other evasive measures to drop costs).
The lack of a national feed-in tariff
(a mandated power price paid by utilities) for solar
power in the U.S. has made it harder for alternative-energy
power system installers to plot out viable business
plans due to the wide fluctuations of energy pricing
with the current system. In other words, retooling
Detroit with green power remains a tenuous proposition
dependent on all sorts of hard to predict external
Tim Keating, Skyline's vice president
of Marketing, says that the company already has a
real pipeline of projects ranging from a 500-kilowatt,
size up into multi-megawatt projects that are closer
to small utility scale. Early results from the Santa
Clara Authority project, which Skyline put up for
free in order to test its technology, have been positive,
"We received a development grant from
the Department of Energy's Solar America Initiative,
with goals of getting our power costs down to 9 to
15 cents per kilowatt hour(kWh) by 2010 and 7 to 10
cents per kWh by 2015. We expect to achieve these
goals," says Keating. Those costs are very low by
Should Skyline hit those numbers and
the pipeline of projects turn into reality, then the
heartland would get a small but meaningful boost from
Alex Salkever is Senior Writer at
AOL Daily Finance covering technology and greentech.
Follow him on twitter @alexsalkever, read his articles,
or email him at firstname.lastname@example.org.