Valley clean energy innovation can prosper, it just takes awhile

Two Silicon Valley-backed Bay Area companies appear to be the tech vendors behind Apple’s (s AAPL) new sizable and pioneering clean power push at its massive data center in North Carolina. Last week it was revealed that solar panel maker SunPower(s SPWRA) will provide Apple with panels for a 20MW solar farm, while I reported earlier this month that fuel cell maker Bloom Energy looks to be the vendor behind Apple’s 5MW fuel cell farm. The significance of Apple opting to partner with two Valley-born clean power firms illustrates that the greentech venture ecosystem can work — it just takes quite a long time.
San Jose, Calif.-based solar panel maker SunPower was founded way back in the mid-80s by Stanford electrical engineering professor Richard Swanson and received early funding from the Department of Energy, the Electric Power Research Institute, two venture capital firms and chip firm Cypress Semiconductor. The company went public in the spring of 2005, bought venture-backed Berkeley, Calif.-based solar installer Powerlight in late 2006, and more recently was bought by French oil giant Total.
Sunnyvale, Calif-based fuel cell maker Bloom Energy was founded a decade ago, though only came out of stealth two years ago, and was venture capital firm Kleiner Perkin’s first foray into greentech. Bloom also counts venture firm NEA as an investor, and Bloom raised its latest $150 million round of funding in late 2011.
Both companies have taken years to develop into firms that can mass produce their respective clean power technologies at scale and at a low enough cost to meet the needs of a large customer like Apple. And both companies have likely taken longer to mature than their investors had originally hoped. Kleiner Partner John Doerr said a couple years ago that he thought Bloom Energy would take nine years to go public (which, if true, would mean that Bloom would have gone public last year). SunPower’s execs reportedly said, back in the early-ish days of the company, that developing SunPower into a solar manufacturer took a lot longer than they anticipated.
But Apple apparently chose these two Bay Area clean power leaders for its first-of-its-kind, huge solar and clean power farms, suggesting that these firms are delivering industry-leading products at the right economics for Apple. Apple is spending $1 billion on the data center, and likely between $70 million and $100 million on the solar farm. Each 100 kW Bloom fuel cell costs between $700,000 and $800,000 (before subsidies), so Apple’s fuel cell farm could cost around $35 million.
Yes, both SunPower and Bloom Energy have had their fair share of struggles in recent years. 2011 was a particularly difficult year for SunPower, with a glut of solar panels causing prices to fall around 50 percent globally, and Total’s CEO said recently that SunPower would have gone bankrupt last year without Total’s backing. Bloom Energy is a private company and doesn’t disclose its financials, but likely if Bloom had been in shape to go public in 2011, it would have done so.
However, it’s no secret that greentech has been a particularly hard area for venture capitalists to invest in. The long time frames, the large capital investments needed, the hardcore science for the innovations and the low-cost-focused energy markets have created a difficult ecosystem for the traditional VC to make money off of. But after a long slog — which is still ongoing for SunPower and Bloom Energy in 2012 — these clean power technologies have actually broken into the mainstream. Valley-backed cleantech firms can make it — you’ve just got to sit back and wait.