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Goldman Sachs Bets Big on Solar Power Innovation

Cogentrix Energy, a wholly owned subsidiary of Goldman Sachs Group, will design and develop a 30-megawatt concentrating photovoltaic solar farm in Colorado -- a project risky in its complexity and potential cost, but also highly promising for this niche industry if the company and its partners can pull it off.

This project, considered the largest in the world of its kind, is somewhat lopsided in the payoff. If it's successful, CPV technology will get a nice little boost of credibility, enough perhaps to shed its niche status. It won't catapult the technology into the mainstream, however. If it fails, it's unlikely another major utility or power plant builder will want take on a CPV, technology that is considered too cutting edge to invest in.

The stakes are high for all the partners involved including utility Xcel Energy (XEL), which signed a 20-year contract to buy enough CPV power to supply electricity to 6,500 homes; and Amonix, the California-based company that will supply the CPV panels. Goldman Sachs is just as vested, not only through the Cogentrix project, but in CPV technology, in general. Amonix, which recently raised $129.4 million in a financing round led by Kleiner Perkins Caufield & Byers, also has received $25 million in Series A funding from Goldman Sachs and MissionPoint Capital.

What makes it special: Amonix's CPV system uses Fresnel lenses and motorized trackers to concentrate a large amount of sunlight onto a small area of solar cells. This highly concentrated light is directed onto the photovoltaic set of panels where it's converted into electricity. CPV is highly efficient, using less land, and according to Amonix, produces more energy per acre than other solar technology. Add an overall system efficiency of 25 percent and that Amonix's system doesn't require water in power production, and you've got a damned good investment. That is, if it weren't for two pesky issues.

The 2 big problems: CPV, while more efficient, is costly; and the tech -- as Earth2Tech notes -- can't make use of diffuse light, which shuts it out of regions with a lot of cloudy days.

Cost is the biggest problem. Chinese solar module manufacturers have drastically cut the cost of traditional solar, as Greentech Media also notes. Concentrators, meanwhile, are more expensive.

Amonix is trying to counter that by advancing the technology to increase efficiency. It's also trying to lower costs by scaling-up its operations. Last month, Amonix signed a lease for a new 214,000-square-foot manufacturing facility in Nevada, financed through $6 million tax credit from the federal stimulus bill and another $12 million in private capital.

Why this project is a worthy bet: Cogentrix and Amonix have found a location well-suited to mask the limitations of CPV. As noted before, CPV relies on motorized tracking and direct sunlight. Colorado is a sunny place and Alamosa, the south central town where the project will be located, is considered the sunniest area in the state.

For Xcel, it solves two problems. The utility recently agreed to raise its renewable energy portfolio to 30 percent by 2020 in Colorado. But Xcel's choices are limited to photovoltaic and solar generation because they're a better match to the utility's peak load than other intermittent renewables like wind, the company said in a recent statement.

Photo from Amonix