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Blue Square Energy Raising $25M for Dirty, Efficient Solar

logoGiven how expensive high-grade silicon is, solar startups looking to cut costs are using the cheaper, jankier stuff instead. Among them is Blue Square Energy, which VentureWire reports, and we’ve confirmed, is looking to raise $25 million for its solar cells, which use low-quality, or “upgraded metallurgical-grade” (UMG), silicon. This news comes months after Gunther Portfolio reported that Blue Square was unable to secure a planned $30 million round of funding, which caused the company to miss commercialization milestones, start laying off employees and executives asking then CEO Jeff Barnett to resign.

Blue Square’s new CEO and board member Joseph Babin, tells us that unlike many thin-film players that are avoiding silicon altogether because of its cost, “We believe silicon is the best play for solar in the long term.” By using UMG silicon the company says its solar modules cost 30 percent less than traditional silicon alternatives.

The company is seeking funds to get the first of its Bright Point products to market by the end of 2009. Bright Point cells have a fine layer of high-grade silicon on top of a thicker layer of UMG silicon. The combination allows the cells to have a high efficiency and just this week Blue Square announced that its Bright Point product had achieved an efficiency level of 14.6 percent, verified by the National Renewable Energy Laboratory. Eventually the company will debut its second-generation Bright Point products, which Babin says will have efficiencies of up to 23 percent.

Blue Square, based in North East, Md., started off focusing on its revenue stream while getting its R&D going. Founded in 2004, Blue Square has $6 million in backing from angel investors and began by buying used solar cell fabrication equipment to make standard silicon solar cells from high-quality scrap wafers purchased from Intel. The company had a positive cash flow for the first three years, Babin says, by making cheap cells and selling them to China.

Staying in the black, Babin says, allowed Blue Square to develop its proprietary Bright Point process without needing more funding. Bright Point is now the focus of the company’s business and now more money is needed to scale up its 1 megawatt production line.

The company is already at work with the Defense Department’s DARPA program for high-efficiency solar cells, the Department of Energy’s Solar America Initiative and research partners at the University of Delaware.

Last week it came out that CaliSolar, a Sunnyvale, Calif-based startup working with UMG silicon, reportedly raised $102 million. Babin says that his company can use even dirtier, and therefore cheaper, silicon to make its cells. Babin wouldn’t speculate as to exactly when Blue Square would close its funding round but said it would be soon announcing some partnerships with silicon providers, ensuring that it would have access to more “dirty” materials.