E-Gang: The Sunshine Economy

Solar power is the ultimate alchemy, using something free to create something valuable.

Aficionados like to point out that an hour of sunlight packs enough energy to power the entire world for a day. Or this: If you could cover an area about the size of Massachusetts in the Southwest U.S. entirely with solar cells, you could generate enough electricity to quench America's need for electric power.

But building solar cells, the devices that convert photons from the sun into streams of electrons and electricity, is complex, expensive magic to pull off--and has burned many entrepreneurs and investors in the past.

Today, solar energy contributes about a tenth of a percent (0.1%) of the U.S.'s electricity needs. Both Germany and Japan, where government have provided more subsidies, use a larger percentage of solar power.

But oh, the promise.

Among alternative energies, solar energy is a child starlet: alluringly clean, endlessly promising--yet petulantly expensive and hard to manage. For investors, solar energy stocks have been an astonishing story this year: The aggregate market value of a group of 28 solar companies now tops $118 billion.

On average, the value of those companies has risen almost by half since January. Driving those market valuations is the expectation of more growth ahead: Analysts both in industry and in the government anticipate that solar will be the fastest-growing alternative source of electric power over the next 25 years.

How will it happen?

This year's E-gang, our ninth annual look at technology innovation, offers a snapshot of some of the inventions and entrepreneurs that are part of this solar boom. The work starts with tool makers--those companies that are building and refining the equipment needed to make solar cells.

Then there are inventors, who keep trying to squeeze more power from every ray of sunlight. Manufacturers of different versions of solar power vie to have their approach designated as the most promising. There are plenty of contestants: the traditional approach of building crystalline solar cells, pairs relatively higher efficiency with higher costs.

There are thin-films of solar materials, some made from exotic combinations of materials, others still relying on silicon. Then there is one of the oldest ways of getting power out from the sun: solar "thermal" installations, which absorb the sun's energy, transforming it into heat so it can boil water and run a turbine.

Finally there are those who innovate through their business models and strategic approach--the installers turned financiers, who help customers juggle the costs and risks of investing in solar. None have had more experience in this than Germany's solar installers, who are cashing in on their government's generous subsidies for solar power. The stock market has also been a boon to many Chinese companies, which have jumped into the business of building everything from solar wafers to finished panels.

Rising Sun
Investors have been snapping up stocks of solar companies from around the world. The aggregate market valuation of these 28 solar products manufacturers in early August was $118 billion.

Company/Country	Market Capitalization ($U.S. bil)
REC/Norway	$17.40
ORKLA/Norway	16.7
MEMC/US	12.4
WACKER/Germany	9.9
Q-CELLS/Germany	9.5
FIRST SOLAR/US	7.3
SUNPOWER/US	6
SUNTECH/China	5.8
SOLARWORLD/Germany	5.5
LDK/China	4.5
TOKUYAMA/Japan	4
DC CHEMICAL/South Korea	3
CONERGY/Germany	2.6
YINGLI/China	2
MOTECH/Taiwan	1.8
JA/China	1.5
TRINA/China	1.4
ECD/US	1.2
ERSOL/Germany	0.9
EVERGREEN/US	0.9
RENESOLA/China	0.7
E-TON/Taiwan	0.7
SOLON/Germany	0.7
SOLARFUN/China	0.5
SOLAR MILLENNIUM/Germany	0.5
ATS/Canada	0.4
CHINA SUNERGY/China	0.3
CSI/China	0.2
TOTAL	118.1

Market value as of Aug. 14.

Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy.

Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy. Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy.

Solar power is still more expensive than fossil fuel generated electricity. But the gap is closing. The rule of thumb in the solar business: Every time the volume of solar cells doubles, its cost drops by 20%. Governments in Germany and Japan have consequently offered generous subsidies to local consumers and companies who invest in building solar power. Those subsidies have sparked booms.

According to the International Energy Agency, by the end of 2005 Germany led the world with the most installed photovoltaic systems (1.43 million kilowatts) followed by Japan (1.42 million kilowatts). The U.S. was a distant third (480,000 kilowatts). (Click here for more information.)

The race is on to find a way to make solar grow up so that it can compete, dollar-per-watt, against any fuel on the planet.

The long-term forecast? Bright, with big patches of innovation ahead.

http://www.forbes.com/technology/2007/08/16/egang-intro-solar-tech-07egang-cx_ec_0816egangintro.html

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Column: Smile--You're always on Camera

Letter From Silicon Valley

Burlingame, Calif. -Last week, I got a glimpse of the future--and even captured a couple of minutes of it on video.

It happened during the opening dinner of a three-day powwow on media and entertainment, convened by the Paley Center for Media (formerly the Museum of Television and Radio) and the technology governors of the World Economic Forum. The event glittered with executives and political wonks: California Gov. Arnold Schwarzenegger spoke; so did Google's Eric Schmidt and Yahoo Chief Terry Semel.

Even more memorable than the speakers, however, were the scores of guests holding up little white boxes, about the size of a BlackBerry, videotaping the event. Each dinner guest had been given a "Flip" video camcorder--and instantly put it to use.

Sitting next to me, Jonathan Kaplan, the spirit and chief executive behind the company that developed the Flip, beamed--and pointed his Flip toward center stage as well.

Welcome to a world where everything you do may well be recorded. Flip clips bring special significance to the phrase "global village." Just like several generations ago, when the old ladies of the village kept a sharp eye on everyone, today an electronic eye will do that for us.

Every event. Any time. Anywhere. This thing fits into a purse or pocket. The quality of the video? Not as great as your high-end camcorder, for sure, but sweet enough--and certainly handy. It took my 10-year old about two seconds to find the "on" button and start filming breakfast the next morning.

It won't all be great video. (OK, my Arnold footage isn't brilliant. I did get a shot of the green snakeskin boots, though.) There will be plenty of chances to accidentally delete footage. (Yeah, I did that too.)

Kaplan's company, Pure Digital Technologies, based in San Francisco, is at the front of this wave. In May, it rolled out two models: one captures 30 minutes of video, the other 60 minutes. Prices range from roughly $120 to $150--maybe less, depending on where you shop.

Such technology is essentially software, wrapped up in a package of plastic and metal. Kaplan says Pure Digital spent about six years building the software inside the Flip. At first, the start-up licensed its technology to a number of companies: RCA, for instance, makes "Small Wonder," a similar camcorder. These plug into your computer or your television directly. Drugstore chain CVS/pharmacy sells a one-time use camcorder, based on Pure Digital's technology, that sells for $30. (Those video clips have to transferred to a DVD at CVS, a $13 operation.)

But the opportunity seemed too juicy to leave to everyone else. About six months ago, Pure Digital, which has a raft of high-stakes financial backers including Mike Moritz of Sequoia Capital and Benchmark Capital, decided to go for broke by selling Flip video devices itself. "Designed in America, made in China," Kaplan says.

Expect to see these kinds of recorders--whether using Pure Digital's technology or someone elses'--everywhere. In your cellphone too.

There's enormous power to the technology. I saw video footage from China last year, taken by a journalism student who did an internship with Forbes, documenting appalling working conditions in factories that are making high-tech products. Imagine if the Chinese workers who build the Flip hand out a few boxfuls of devices to their friends--and share with the rest of the world some of the heartbreaking images of the human and environment cost of economic progress.

Imagine how a Flip would have changed the history of Watergate--if either Woodward and Bernstein had used them, or if Nixon's gang did.

Imagine how schooling changes: Will my boys videotape future classes instead of taking notes?

Jonathan Schwartz, the pony-tailed chief executive of Sun Microsystems, got his five minutes of stage time too. He described how he had recently asked a fresh-faced new hire at Sun what he thought of the company.

"Well, it's kind of an old-fashioned company," the 20-something conceded.

"Old-fashioned?" fumed Schwartz. "In what way?"

"You use e-mail," replied the younger man.

"What's wrong with that?" demanded Schwartz.

"My parents send me e-mail," he answered.

So uncool, so 1990s.

Just keep your nose powdered.

Your comments are most welcome. Write to me at ecorcoran@forbes.com. Please also note whether I can share your comments with readers.

http://www.forbes.com/technology/2007/06/15/flip-camera-video-tech-cx_ec_0618valleyletter.html

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