VantagePoint Backs Solar Thermal Power Co. Luz II

By Jonathan Shieber 11/1/2006m Oakland, Calif.

Solar thermal energy generation company Luz II Inc. has raised an undisclosed first tranche in its first institutional round of funding from VantagePoint Venture Partners, VentureWire has learned. "We have done a first close with VantagePoint," confirmed John Woolard, the new chief executive of Luz II and a former entrepreneur in residence at VantagePoint.

Prior to his work with the venture firm, Woolard served as an executive officer at Itron, Inc., a provider of utility metering technologies. As a result of its investment, VantagePoint Managing Director David Fries, a co-head of the firm's semiconductor and components practice, will take a seat on Luz II's board. Though the still-stealthy Luz II would not disclose the amount of funding they received, Woolard said the capital needs of his company were less intensive than they would be for a typical photovoltaic start-up. "It's really working capital that we need for our company as opposed to capital to acquire plants and assets, which is more commonly understood by the market," he said.

Rather than requiring large amounts of capital to finance the construction and manufacturing of solar cells, Luz will rely on project financing vehicles from other capital providers to fund the construction of its solar power towers. Under new management Luz II is the resurrection of an old vision in solar power technologies, as the company's name implies.

The original Luz, based in Israel, was one of the leaders in solar power development. Between 1984 and 1990 it built nine solar electric generating systems in Northern California. At one point, according to a company press release, the company produced the most solar thermal electricity in the world. The bottom fell out for Luz when gas prices dropped in the early 1990s. With its pricing no longer competitive, the first incarnation of Luz retrenched and filed for bankruptcy. Its assets were acquired by a Belgian investor and were re-branded by the Israeli firm Solel Solar Systems Ltd., according to reports.

By 2004, the energy situation had reversed again and the company's original technologists felt that their solar thermal electricity generators could compete with gas prices. That was when the team went back to the drawing board and began re-designing its technology for the new market. Rather than use the solar trough plants to collect sunlight and generate steam heat to power turbines, Luz II is using what it calls DPT550 technology. The power tower technology costs about a third of the company's previous trough technology, according to Luz II President Charlie Ricker. "One way to look at it is that troughs produce power at 14 to 15 cents and we are in the 10 cent to 12 cent per kilowatt hour range," said Woolard. Oakland-based Luz II has already signed an agreement with Pacific Gas and Electric Co. to provide 500 megawatts solar energy beginning in the spring of 2010.