Solar startup Innovalight on Monday said it raised $7.5 million in private equity funding to help develop a nanotechnology that could lead to a dramatic reduction in the cost of producing electricity with sunlight.

The company, based in Santa Clara, California, is developing solar cells based on nanotechnology “printing” processes. Innovalight has a solvent-based process for making what it calls “silicon ink,” which is made of silicon nanocrystals suspended in a liquid ink solution, said CEO Conrad Burke.

That lightweight soluble ink can then be printed on different substrates, potentially opening up new applications for solar power, such as solar strips for portable devices, he said.

Mr. Burke said Innovalight’s process uses “a couple of orders of magnitude… maybe 100X” less silicon than traditional crystalline technologies, and could ultimately reduce the cost of producing solar-generated electricity tenfold.

Solarbuzz, a research firm in San Francisco, said solar power systems average $5.15 per watt, implying that Innovalight’s price could be something like $0.52 per watt. Analysts have said the market for solar would be competitive with electricity from fossil fuels at under $1 per watt.

“Today, solar energy represents a paltry two-hundredths of 1 percent of the total global electrical energy generated because current production methods are still too expensive,” said Mr. Burke.

Actually, right now, cost is not the factor that is limiting growth (see Solar Energy’s Bright Future). A worldwide silicon shortage has meant that crystalline silicon companies have completely sold out for the year, and that has given so-called “thin film” technologies, which use little or no silicon, a way into the market.

Investors

Investors in the Series B financing include Harris & Harris Group, which led the round, Apax Partners, ARCH Venture Partners, Sevin Rosen Funds, and Triton Ventures.

Daniel Leff, executive vice president and a managing director at Harris & Harris Group, said his firm is “honored” to help a company that is “addressing an important problem with an innovative solution.”

Innovalight has also previously raised seed funding and a Series A round, but has not disclosed the amounts.

Formed in 2002, Innovalight was named a 2006 Technology Pioneer this year by the World Economic Forum (see Tech Pioneer: Conrad Burke), and has received U.S. Department of Energy and National Science Foundation grants.

Other thin-film startups, such as Konarka, Miasolé, Nanosolar, and HelioVolt, have also raised money (see Konarka Raises $20M in Funds, Energy Innovations Gets Cash).

However, while researchers have been exploring thin films for years, Michael Rogol, an analyst for CLSA Asia-Pacific Markets, has said they have historically proven expensive or difficult to manufacture on a large scale (see Solar’s Going Thin).

Mr. Burke said Innovalight doesn’t expect to launch a product until the end of 2008, but expects to be able to use existing, inexpensive “roll to roll” processes when it gets to production. “We’re connecting the best of all worlds—liquid processability in the silicon domain,” he said.

Less EfficientRon Pernick, a principal at research firm and consultancy Clean Edge, said many thin films also had low conversion efficiencies, meaning the amount of sunlight they convert into energy (see U.S. President Spotlights Solar).

Some new technologies have raised conversion efficiencies, but many thin films are still less efficient than crystalline technologies at peak times, although they can convert more sunlight into electricity in partial-light conditions.

Mr. Burke wouldn’t disclose Innovalight’s current efficiencies. “We’re still an early-stage company, so obviously we still have a lot of work to do,” he said. “We do believe we can compete on efficiencies long term, but now they are still pretty low.”

Konarka and HelioVolt are also using nanotech printing processes, but are using different materials. Instead of silicon ink, Konarka is using what it calls “organic PV,” and HelioVolt is using copper indium gallium selenide.

Mr. Burke said he isn’t familiar with those competitors’ processes, but added that even if they are similar, Innovalight’s material gives it an advantage. And instead of having to buy polysilicon ingots or wafers during a shortage, Innovalight has a chemistry-based process to build crystals starting at “the basic atomic level,” he said.

“What we’re using is probably the best material,” he said. “It’s the most well-understood and the best in terms of toxicity, robustness, and reliability. Silicon is a very politically correct material and we’re making it from pretty unique processes that will make it extremely cheap.”