A Silicon Valley company's plan to start a solar equipment prototyping service is running up against a June deadline to secure a critical funding from the Pacific Gas & Electric Co., which is seeking regulatory approval to use ratepayers' money for the plan.

SVTC Technologies has secured a $30 million grant from the U.S. Department of Energy to start the service, and it’s hoping to get $9.9 million from PG&E by June this year in order to claim the federal funding, said Gunter Ziegenbalg, SVTC’s president. The company first formed a solar business back in early 2008, but it’s taken this long to secure funding the service. 

PG&E needs the approval of the California Public Utilities Commission to spend the money, which will enable PG&E to get an equity stake in the service called SVTC Solar. To sweeten the deal, SVTC recently wrote a letter to the commission promising to increase the stake PG&E would have with the same $9.9 million investment. Although taxpayers’ money will be used, both PG&E and SVTC have refused to divulge the size of the equity stake that PG&E would receive.

The proposed terms of the equity investment would put PG&E ahead of other investors, including the energy department, for collecting its money from SVTC if the service goes bankrupt.

“If we aren’t getting that funding, then we would need to shut down the project, which we have barely started,” Ziegenbalg said. SVTC is getting some factory equipment and hoping to get the service ready for the Intersolar conference in San Francisco in July, he added.

The service caters to companies, particularly startups, who don’t have the money to buy equipment for prototyping their technologies. SVTC would provide the equipment and engineering service to help solar companies to complete that final developing step before commercial production. The service will focus on silicon-based technology development, Ziegenbalg said. Using SVTC could speed up the development process and reduce the need to use an existing production line to do test-runs of a new process, he added.

SVTC, which was a spin-off of Cypress Semiconductor in 2007, already provides a similar service for chip companies.

PG&E’s request is unusual. The San Francisco-based utility — and utilities in general — typically invest in solar energy generation to meet renewable energy mandates.

The overall cost of starting SVTC’s project is about $85 million, though a big part of that will come from in-kind contributions from factory equipment companies such as Roth & Rau. SVTC also counts its marketing, purchasing, human resources and other services in the $85 million budget. Cash contributions would come from the energy department and PG&E, Ziegenbalg said.

The commission, which put off making a decision in April, plans to consider PG&E’s request on May 10.

For the commissions, the key points of debate include how the public will benefit from this investment and whether the service even meets the criteria for a utility to put money into research and development projects. Critics said PG&E should use its own money instead of seeking public funds.

PG&E said the prototyping service will help bring cheaper technologies to market, and that will mean cheaper solar electricity for consumers. California already is the largest solar market in the country thanks to its mandate that all utilities must increase the amount of renewable energy in their power supply to 33 percent by 2020.

“This project could potentially allow companies to cut the time and risks to bring PV technology to market,” said Lynsey Paulo, a spokeswoman for PG&E. “That could reduce the cost of PV, and the savings could be passed onto customers.”

Will there be enough demand for SVTC’s service? When the company first sought to start the service, silicon prices were still high and the financial market meltdown wasn’t going to happen for several more months. After the meltdown, solar startups began to find it very difficult to raise money, and several of those working on silicon-related technologies changed their business plans.

Instead of making solar cells, Innovalight decided to sell silicon ink to solar cell makers to help improve cell efficiencies. 1366 Technologies wanted to make solar cells, too, but ditched that idea in favor of selling factory equipment to make cells and developing cheaper silicon wafers. Twin Creeks Technologies put a solar cell manufacturing plan in Malaysia on hold and turned what was to be a cell and panel factory in Mississippi into a lab for customers to try out its equipment for making thinner silicon wafers.  

Large silicon solar companies usually have already set up pilot production lines, so they might not be so inclined to outsource that pre-commercial production step to another company.

With a big fall in solar equipment prices over the past year, companies large and small have shuttered factories or tightened their spending.

Ziegenbalg contends that despite production and budget cuts, silicon companies are still under pressure to increase the efficiencies of their cells and panels in order to stay competitive. He said there is no service like SVTC’s for solar manufacturing in the United States (it’s available in Europe and Singapore). Solar companies such as SolarWorld, SunPower, Applied Materials and GA Solar, have expressed an interest in SVTC’s service or provided letters of support, Ziegenbalg said, though none has signed a service contract. Potential customers won’t sign contracts unless SVTC can actually provide the service, he added.