Last week Solexel, which uses silicon gas to make solar wafers, closed on $25 million in funding, according to a filing. Bloomberg reported on the deal and said that the funds would be used to build a pilot plant in California, which would be a testing ground for a larger commercial plant in Malaysia. Solar panel maker SunPower participated in the round, as did venture investors Kleiner Perkins, Technology Partners and DAG Ventures, reported Bloomberg.

Solexel has been rather quiet about its technology, but says that its manufacturing process is less expensive because less silicon is wasted in the process. At the same the price of silicon dropped dramatically over the past year, so the technology will become more valuable if the price of silicon jumps back up. Other next-gen solar makers that focus on making solar cells with less silicon include Twin Creek Technologies, 1366 Technologies and Astrowatt.

The other two solar makers that raised funds in recent days are focused on concentrating solar technologies, or using mirrors to concentrate and focus the sun’s light. SolFocus, which uses mirrors to amplify and direct sunlight onto photovoltaic solar cells, closed on a $10.75 million round of equity. So-called concentrating solar photovoltaic tech (CPV) has gotten more respect over the past year.

Finally, Honolulu-based startup Sopogy makes concentrating solar thermal systems, which are essentially a condensed version of the massive mirror-and-lense setups that companies like BrightSource develop in the deserts. The company raised a $1 million round, which included debt and options, according to a filing.

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Silicon wafers are the heart of traditional solar cells, which make up solar panels and convert sunlight into electricity. The traditional process to make silicon wafers is to melt the silicon into ingots, which are then cut to create blocks. A sawing machine slices the block into thin wafers. This sawing process can create silicon sawdust that becomes waste, and up to 50 percent of the silicon can go to waste in the process. The saw often requires frequent replacement, and the wafers need to be carefully removed from the slicer in order to avoid chipping and breakage.

1366 thinks there’s plenty of room for innovation in this process, particularly because silicon wafers can account for about 50 percent of the cost of making solar panels. The company’s technology can eliminate some of the many steps and wastes that take place in wafer-making process.

The most promising of its innovations is that 1366 has developed a process to make wafers directly from molten silicon, which is kind of like making sheets of glass. CEO Frank van Mierlo told us in an interview last year that the company’s process can cut manufacturing costs by as much as 80 percent and he thinks the manufacturing cost can still be lowered by 50 percent by the time the company starts shipping wafers. “We can get twice as [many] wafers per pound of silicon. Our process is faster: one step instead of four steps,” van Mierlo said.

1366 says it will use the DOE loan guarantee funds to scale-up this production process in its first two factories: a 20 MW plant in Massachusetts that’s supposed to be online by 2013 and a larger, 1 GW factory that will go under construction in 2013 in a location yet to be determined.

1366 has already raised $46 million from investors including GE Energy Financial Services and venture capital firm VantagePoint Capital, and also scored a $4 million grant from the DOE’s high-risk, early-stage ARPA-E program. 1366′s technology is based on research by Ely Sachs, the company’s CTO and an MIT professor. Sachs co-founded 1366 Technologies with van Mierlo.

The loan guarantee for 1366 is the fifth announced by the DOE this week. Three other awards went to solar power plant developers and one to a solar manufacturer this week. The loan guarantee program has supported 15 solar projects so far, including both solar power projects and solar manufacturing innovation. Through the loan guarantee program, the DOE promises to pay back loans if borrowers can’t and that usually means better rates for the winners and sometimes means loans from the Federal Financing Bank.

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1366 is an ARPA-E grant award winner (the Department of Energy’s high-risk, early-stage program), and the news was announced on the morning of the event. 1366 is using a $4 million grant from ARPA-E to develop a technology based on research by Ely Sachs, the company’s chief technology officer and an MIT professor. Sachs co-founded 1366 Technologies with CEO Frank van Mierlo.

The idea behind 1366 is that while silicon wafer production has been in existence for decades, there’s still significant room for improving the process and slashing costs. The company’s technology can eliminate the many steps and wastes that take place in the common way of making silicon wafers today. Silicon wafers account for about 50 percent of the cost of making solar panels, so reducing their costs can lead to much cheaper solar electricity.

The conventional method to make solar involves melting the silicon to make ingots, which are cut to create blocks. Then a sawing machine goes to work to slice the block into thin wafers, a process that creates silicon sawdust that becomes waste. Up to 50 percent of the silicon can go to waste in the process, and there is federally-funded research underway to figure out ways to re-use the waste. The saws require frequent replacement and the wafers need to be carefully removed from the slicer in order to avoid chipping and breakages.

1366 can make wafers directly from molten silicon, which van Mierlo said is akin to making sheets of glass. The company’s process can cut manufacturing costs by as much as 80 percent. Given the continuing decline in the price of silicon, van Mierlo told us in an interview last year he believes the manufacturing cost can still be lowered by 50 percent by the time the company starts shipping wafers. “We can get twice as [many] wafers per pound of silicon. Our process is faster: one step instead of four steps,” van Mierlo said.

The company plans to make the standard-sized multicrystalline silicon wafers that are 200 microns thick and six inches square in size. Most of the solar cells made today use multicrystalline silicon wafers. The goal is to break ground a year from now and start shipping wafers in 2013, van Mierlo said.

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The new initiative, called SunShot, is the latest effort by the U.S. Department of Energy to make solar electricity cheaper to produce (using solar panels). The goal is to cut the installation cost of a large-scale solar power project, from equipment to labor and a built-in profit margin for developers, to $1 per watt without government subsidies by 2020.

Reducing the cost of solar isn’t necessarily a new goal for the DOE. Already the White House has suggested that the stimulus money has helped to drive down the price of solar electricity by half over the next five years. The administration has invested billions of dollars into the solar industry over the past two years alone, from the $935 million in loan guarantees to Solyndra and Abound Solar for building factories to the roughly $472 million in grants to developers for installing solar power generation projects.

The goal is not just to boost the country’s renewable energy generation but also to create jobs. The investments are also meant to help counter complaints that the U.S. is falling behind countries such as China in providing government support for green technologies.

“We want (solar) to be competitive without subsidies. If it’s achievable, then, boy, the companies and the installers will have a huge world market,” Chu said during a press conference. SunPower’s co-founder and president emeritus Dick Swanson joined Chu during the conference call to present the company as an example of a successful beneficiary of DOE funding.

At installation cost of $1 per watt, the cost to produce solar power will fall to roughly $0.06 per watt, making it comparable to the wholesale rates of power produced by coal or natural gas, Chu said. Currently, solar power plants built for utilities have cost from $3.50 per watt to more than $7 per watt, depending on the size and whether the solar panels are installed on the ground or the roofs of commercial buildings, according to GTM Research.

That term “large scale” doesn’t have a defined size. Back in 2009, the largest solar power plant was a 25MW project by Florida Power & Light. The DeSoto power plant includes 180 acres of SunPower solar panels. In 2010, Sempra Generation completed a 48MW project on 380 acres in Nevada.

Projects under development now by other companies are in the hundreds of megawatts range each, and they are set to rise from remote tracks of land. At the same time, some states and utilities are promoting installations of smaller projects, from 1-2MW to about 20MW, that can be built closer to communities they serve.

Chu is launching SunShot as part of a larger plan by the administration to boost the production of cleaner sources of energy. In his State of the Union address last week, President Obama said he would like the country to get 80 percent of its electricity from clean sources by 2035. He said “clean sources” would include not just renewable sources such as solar and wind but also nuclear, natural gas and “clean coal.” Clean coal is a euphemism for a type of technology that scrubs carbon dioxide emissions in coal-fired power plants in order to reduce the amount of emissions that they emit into the atmosphere.

As part of SunShot, the DOE plans to invest up to $20.3 million in five manufacturers of different components of a solar electric system. The recipients include 3M (a polymer sheet to replace glass as the protective to layer of a panel); 1366 Technologies (a new process to produce silicon wafers for making solar cells); and Veeco (a factory equipment to make copper-indium-gallium-selenide cells).  SunShot also will fund efforts to reduce installation and permitting costs in the future, the DOE said.

1366, incidentally, also has received funding from DOE’s Advanced Research Projects Agency—Energy (ARPA-E) program, which aims to fund innovative technology that might be considered too risky to attract private investments.

The remaining $7 million will go to companies that are in the earlier stage of their product development. The recipients are Caelux, Solexant, Stion and Crystal Solar. The $7 million funding is coming from the Photovoltaic Solar Incubator Program, which isn’t new and whose mission is also to fund early-stage companies and help them reach pilot or even commercial production.

We have written about Stion and Solexant before, both of which have lined up funding and space for commercial production. The new DOE funding is meant to develop their next-generation products, it appears. Stion’s CEO, Chet Farris, told us about the company’s effort to add an additional layer of semiconductor material to boost the efficiency of its copper-indium-gallium-selenide (CIGS) thin films.

While it’s difficult to say whether these investments will deliver the promised results, the administration can count on increasing scrutiny from skeptics questioning the funding decisions and the benefits for taxpayers. To show success, the DOE will have to point to more than SunPower as a role model.

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Photo of DeSoto plant, courtesy of SunPower

At the same time, a lot of these winners were companies that had a small amount of private funding from investors before the ARPA-E award, so naturally these firms had an easier time raising funding after the ARPA-E grant compared to some other early-stage ventures. At the ARPA-E summit I attended last year, there were hundreds of really early-stage, unfunded companies that didn’t make the cut. We’ve covered all of these six companies at length, so I’ll break them down for you below:

1. Envia. Envia develops low-cost cathode materials for vehicle lithium-ion batteries and other energy storage applications, and the company is also expanding its focus to include anode technology. A battery is made up of an anode on one side and a cathode on the other, with electrolyte in between. Lithium ions travel from the anode to the cathode through the electrolyte, creating a chemical reaction that allows electrons to be harvested along the way.

Envia recently raised $17 million from investors including GM Ventures, Asahi Kasei, Asahi Glass, Bay Partners, Redpoint and Panagea Ventures. GM says it has also secured the rights to use Envia’s cathode materials for future GM vehicles. Envia, which was founded in 2007, snagged  a first-round $4 million grant from ARPA-E, raised a $3.2 million first round of financing in 2008, and by September of 2009, a regulatory filing indicates Envia raised the bulk of another $7.7 million Series B round.

2. 1366 Technologies. The aim behind 1366 Technologies, a company founded on research from MIT Professor Ely Sachs, is to develop manufacturing innovations to improve the process and slash the costs of producing silicon wafers for solar panels. The company has built a technology that producers wafers directly from molten silicon, which is akin to making sheets of glass, and the company says its process can cut manufacturing costs by as much as 80 percent.

The Lexington, Mass.-based startup, which was founded in 2007, used a $4 million grant from the federal ARPA-E program in 2009, and raised $20 million in late 2010 to take its new technology out of the lab and into the factory. Investors include Polaris, North Bridge Venture Partners, Hanwha Chemical, and Ventizz Capital Fund. The company has raised $37.55 million since its inception.

3. FloDesign Wind Turbine. FloDesign is developing a “high-efficiency shrouded” wind turbine that draws inspiration from the aerospace industry. The “shrouded” design is a cage-like enclosure commonly used with jet engines (the image is a rendition supplied by FloDesign), as opposed to conventional turbines that use long blades. The shrouds work off the concept that air moving through a hole will gain speed because of differences in air pressure.

FloDesign Wind believes its design will be able to extract 3-4 times more energy from the wind than current technologies, according to this YouTube video. The spokesperson told us this would lead to turbines that are more efficient and less costly than competing products on the market today. The company has raised money from Kleiner Perkins (its first $6 million round) as well as Goldman Sachs, Technology Partners, and VantagePoint Venture Partners. Founded in 2007, FloDesign secured a $8.3 million grant from ARPA-E.

4. Sun Catalytix. Sun Catalytix was created to commercialize research from MIT Professor Dan Nocera, and the idea is to use an intermittent source of energy, such as solar power, to split water into hydrogen and oxygen via electrolysis. When the energy is needed, the hydrogen and oxygen can either be recombined to produce electricity, such as with a fuel cell, or the hydrogen can potentially be converted into a liquid fuel, like ammonia, and used to power vehicles. Sun Catalytix investor Bob Metcalfe told us last year that Sun Catalytix hadn’t yet decided whether its ultimate product will be electricity or fuel.

If Sun Catalytix’s energy storage technology is successful, it could help spur the deployment of renewable energy. Solar and wind power are intermittent, meaning the sun doesn’t always shine and the wind doesn’t always blow, and these events can’t be controlled according to electricity demand. Energy storage has long been considered the Holy Grail for enabling large amounts of distributed renewable-power projects. Sun Catalytix, won $4 million from ARPA-E, raised $3 million in seed funding from Polaris, and raised a $9.58 million round in late 2010.

5. 24M. 24M, which stands for the material concentration 24 molar, was spun out of lithium-ion battery company A123 Systems in mid-2010, and has plans to work on advanced non-traditional lithium-ion based storage technology. 24M raised $10 million in Series A funding from Charles River Ventures and North Bridge Venture Partners, and won a $6 million grant from ARPA-E.

The company has plans to work on a system for vehicles and grid storage that combine aspects of lithium-ion batteries and flow battery technology. 24M’s work is being led by Yet-Ming Chiang, a professor at MIT and founder of A123 Systems, and Chiang tells MIT Tech Review that he’s using a “semisolid” energy storage material, compared to the traditional use of solid materials. A123 said it expects to see 24M’s low-cost energy storage technology deployed toward the “latter part of decade.”

6. General Compression. General Compression has come up with an effective way to use compressed air for energy storage without burning natural gas: Its “GCAES” units use isothermal compression and expansion to generate power without burning any fuel. The company claims its 2-megawatt modular units can store power at 70-75 percent round-trip efficiency, and because the units can respond in less than 30 seconds and cycle between compression and expansion quickly, they can be used to back up wind farm power output, which is the company’s main focus. The company plans to start building its first commercial project in early 2011.

General Compression raised a $17 million Series A round of funding and $9.9 million back in 2007. Investors include US Renewables Group and Duke Energy, a utility with a lot of wind power to back up.

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