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Solar Panel Maker is Out of This World by Alexander Haislip Private Equity Week, July 21, 2009

SAN FRANCISCO - Solar panels in space. It sounds more like science fiction than a business, but one early stage company has raised money from investors to launch solar panels into space and use high-powered radio waves to beam back energy to earth.

Manhattan Beach, Calif.-based Solaren raised $600,000 from investors for its business of delivering power from space, according to a recent regulatory filing. No information about the investors was immediately available.

The company had previously raised $1.3 million from friends and family in December 2006, according to regulatory documents.

CEO Gary Spirnak did not respond to calls for comment.

The company says it will deliver power to California's Pacific Gas & Electric Co. by 2016, according to a statement on the utility's website.

In fact, PG&E has already signed an agreement to purchase 200 megawatts of electric energy from the startup, Spirnak said in an interview with the Cleantech Group in April.

Because space solar arrays are not affected by cloud cover and other atmosphere impurities and can be positioned in a high orbit to receive the sun's light 24 hours a day, the technology is considered eight to 10 times more efficient than terrestrial solar arrays, according to PG&E.

Having a large public utility such as PG&E interested in buying energy from Solaren's technology helps interest investors, Spirnak told the Cleantech Group. He also said that he hopes to raise "billions" of dollars for his business plan.

Solaren isn't the only company that is working on collecting solar power from space. Japan's space agency, JAXA, is also looking at how to deploy a similar system, but it is not planning to have anything available for launch before 2030, according to the space agency.

Angel investors, presumably the investors that Spirnak is reaching out to, may be more skeptical than he realizes.

"As of now, there remain major unsolved technical issues with this type of project," says Burton Lee, principal and co-founder of the Space Angels Network. Lee says that he has seen two similar startups aim to collect solar power from space. He says that he's wary of entrepreneurs pushing for this type of commercial space endeavor.

"Space advocacy groups need to take care not to let their justifiable enthusiasm for human exploitation of space resources color their professional judgment as to near- and medium-term feasible space businesses and technologies," he says.

If solar power from space sounds like it has a science fiction bent to it, that's because it does. The concept was proposed in 1941 by science fiction author Isaac Asimov in his short story "Reason," which tells the tale of two astronauts who are assigned to a space station that supplies energy via microwave beams to the planets.

The robots that control the energy beams have highly developed reasoning ability. Using these abilities, the robots decide that space, stars and the planets beyond the station don't really exist, and that the humans that visit the station are unimportant, short-lived and expendable.

Outside of science fiction, however, the Pentagon's National Security Space Office gave space-based solar power high marks in a 2007 report:

"There is enormous potential for energy security, economic development, improved environmental stewardship ... and overall national security for those nations who construct and possess..."

The Cleantech Group reported that Spirnak and other Solaren employees have backgrounds from the aerospace business and have been in talks with such companies as Lockheed-Martin and Boeing to build the solar plant and the rockets needed to launch its operations into orbit.

Little is known about Spirnak, other than he was a spacecraft project engineer in the U.S. Air Force and previously worked at Boeing. Whether or not Spirnak has experience running a solar power startup may not matter.

Venture capitalists have decreased their investment pace in solar startups since the financial crisis late last year. VCs put $150 million into 17 solar-related companies during the second quarter, according to preliminary data from Thomson Private Equity Week. That's down from the $660 million they invested into 28 companies during the same period a year ago.