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Following a spate of hefty financings this year, culminating last week with Trilliant’s $40 million funding, it looks a bit like smart grid startups — companies that give the meters on homes and businesses the ability to communicate with utilities and other devices — are poised to take off. But for many of these firms, growth may be less of a rocket ride than a long, slow trudge uphill.

The smart grid, also called advanced metering infrastructure (AMI), is usually seen favorably by the utilities that do the actual work of installing new meters. But AMI startups, which sell to the utilities, might be better off marketing their ideas to the people who actually buy the electricity, as evidenced by a new recommendation from San Francisco’s Department of the Environment that the California Public Utilities Commission deny Pacific Gas & Electric’s request for $572 million to install advanced meters.

PG&E was already approved for $1.7 billion in funds, so the recommendation doesn’t exactly spell doom. But where PG&E wants to rush ahead and expand a program that it has been planning for several years, adding in the most current technology, San Francisco — arguably the most aggressive city in the nation, in terms of rebuilding the energy infrastructure — is pulling back on the reins.

The reason for the hesitation is that there is no proof yet that PG&E’s planned network will function as planned. The utility clearly stands to benefit, because any unexpected costs will be passed on to its customers. That state of affairs is true across the whole industry, says Henry Jones, CTO of the AMI startup SmartSynch. According to Jones, until large AMI networks are deployed, a risk of disappointment with their performance will remain.

If PG&E does get to build its network (a final decision on the funding comes in December), any failures in the technology, which is made by Silver Spring Networks, will impact the whole industry, says Jones. “With any new technology, there’s a hype cycle. It’s not clear that AMI has been through the part of the cycle where expectations are not met,” he told me.

It’s worth pointing out that SmartSynch has an interest in casting doubt on whether the sprawling mesh networks made by companies like Silver Spring will turn out to be a good investment; SmartSynch’s own technology instead beams information directly to the same carriers that power your cell phone, which cuts out the step for utilities of maintaining their own networks. And Jones also noted that his worst-case expectation of the AMI industry’s growth is still a fairly healthy 10 percent a year, plenty to keep SmartSynch humming along.

A PG&E spokesman, Paul Moreno, told me that any worries about either the performance of the network or getting funding are unfounded. “All [of the department's] concerns have already been vetted and expressed,” he told me.

According to Moreno, the program stands on its own merits: Of PG&E’s total 22,000 megawatts of capacity, the original version of the metering program was expected to help reduce demand by 400MW, about half a coal plant. The new version might reduce demand even more. And he dismissed concerns that the network wouldn’t work well, noting that test units of Silver Spring’s technology functioned well even in the rugged terrain around SF’s Mt. Davidson.

However, the possibility remains that part of the program will be nixed. That could be bad news for AMI startups, because utilities that are smaller or more conservative than PG&E are watching it and other progressive utilities, like Ontario’s Hydro One, to see what happens. “They’re having trouble making a clear case for the investment,” says SmartSynch’s Jones. Other municipalities, also, may follow SF’s lead in recommending against AMI deployments, at least until there’s hard data on how well they work.

Pacific Gas & Electric, the utility that services much of northern and central California, has announced plans to buy electricity from an 800 megawatt solar panel installation, a vast project many times the size of anything currently existing.

The move is somewhat surprising, because the expectation was that utilities would first work on building more solar thermal plants, which focus sunlight with mirrors to drive steam turbines, before building large plants with costly solar panels. At around the output of a nuclear plant, the PG&E project should provide power to several hundred thousand homes.

Economics usually drive such purchasing decisions, and they don’t always make sense for solar. Solar panels are generally expected to produce power for costs of over 15 cents per kilowatt hour when set up en masse (in smaller installations, like rooftops, the figure is higher). Roughly speaking, that’s at least three times what coal plants cost. Wind power goes for well under 10 cents per kWh, and solar thermal producers usually claim to be at 8-12 cents per kWh. Some estimates are listed here.

Thus the unusual aspect of PG&E’s deal. It would seemingly make more sense to work with other types of renewables to reach the 20 percent requirement for renewable energy the utility needs to reach by 2010. While costs for solar panels have been dropping, most companies would prefer to test smaller projects first. No numbers have been released for the installations, which will be in San Luis Obispo County.

One possible reason for PG&E pulling the trigger on the deal is that there is very little time left until the 2010 requirement. Solar thermal and wind require not only building the plants, but also erecting costly transmission lines from the site, sometimes several hundred miles worth. San Luis is close to the center of PG&E’s territory.

However, there’s also an existing deal with solar thermal provider Ausra to build a 177MW plant in the county, which suggests that PG&E could have contracted for more solar thermal in the same location. Instead, it went with Optisolar, a secretive thin-film solar firm that will build out a previously rumored 550MW of panels, and SunPower, a public corporation that makes standard panels, and will have 250MW of generating capacity.

Optisolar, which still says little about its technology, is also building about 100MW of capacity in Ontario, which offers hefty incentives for solar power. The thin-film silicon panels the company makes are likely very inefficient at converting sunlight to electricity, but very cheap to make.

The obvious conclusion to draw is that the economics of solar panels have changed drastically in a short time, such that giant solar farms make sense. And that seems to be the impression that all three companies are attempting to give off; for instance, a PG&E spokesperson told the NYT that the plant would be “competitive with wind power”.

However, there’s likely more to the story than is being admitted. PG&E obviously has some strong motivations to buy solar power. The question is what its contract with the two companies looks like. A standard contract involves a set purchase rate for electricity, say 12 cents per kWh for ten years, rising with inflation. That limits risk for the utility; and the risk, in turn, generally falls on the owner of the generating capacity.

What’s nearly certain is that the plants will not be competitive with wind power, which is not only very cheap, but also proven at very large scales. Solar is not yet proven at the scale PG&E is working on — and that may remain the case until the plants are built. And in the meantime, to be built at all, the plants will require a renewal of the investment tax credit, which still doesn’t look likely.

FCC chair rejects opening existing wireless networks — A petition from Skype failed to convince FCC chairman Kevin Martin to force wireless carriers to open up their existing networks to outside devices and software, leaving the newly-auctioned 700Mhz airwaves as the only network opened by regulation. More at the WSJ.

PG&E wants 800 - 1,200MW more renewable energy by 2015 — Energy utility PG&E, which supplies the Bay Area, just struck a deal for 900 megawatts of energy from solar thermal company BrightSource. Instead of taking a day of rest, though, the company has gone on to ask for up to 1,200MW more in a public “Request for Offers”, or RFO. It will announce bid winners in July. Via the East Bay Business Times.

Jana refuses board seat, continues attack on CNET — Jana Partners, the fund that is using its 10 percent share in CNET in an attempt to force the company to oust its top executives, has turned down another offer of a board seat. According to a new statement from Jana, CNET’s execs “lack the industry-specific experience and expertise to stop this shareholder value destruction.” It’s sticking to its demands for seven board seats, and has sent a proposal to CNET for an some changes it wants made, including more extensive social networking on the news site. More at Reuters.

Algae could become major source of hydrogen — Auto companies and government are both calling for a hydrogen-fueled transportation infrastructure, but nobody’s quite sure yet where all the cheap hydrogen will come from. The latest possibility is algae, which could be tweaked to release hydrogen, according to researchers at Argonne National Laboratory.

Microsoft’s open-source OOXML standard gets approval — Despite stiff opposition from open source devotees and some advocacy groups, Microsoft’s open document standard, called OOXML, passed an ISO vote to become a recognized standard. As a result, Microsoft will have an easier time keeping governments and some large businesses using its document software. More at Ars Technica.

Cleantech investing doesn’t mean being a nice guy — People, planet and profit: Bill Green, managing director of VantagePoint Venture Capital’s cleantech investments, only cares about one of those factors, and you can probably guess which. “You really don’t want the chief sustainability officer, you want the chief financial officer,” he says. “We need to change this conversation around. The chief sustainability officer, man he’s your friend. He drinks the cool-aid, he wakes up in the morning, he reads your blog, he so gets this, he hates George Bush, it’s all good. That’s not going to get us to done.” More Green tips for green investing over at Greenbang (no relation).

Mashery launches WhitePages API — A new API from Mashery will allow developers to easily add people search to their applications. The company is growing quickly, according to a post on ReadWriteWeb.

Samsung’s iPhone killer and Microsoft smartphones — Samsung has released its ‘Instinct’ phone, an iPhone competitor that “does a decent job aping Apple’s phone”, according to the Silicon Alley Insider. The phone got better reviews from other sources, but as SAI points out, a new, even better iPhone is due out next quarter. Meanwhile, Microsoft announced that it is releasing Windows Mobile 6.1 and an upgrade to Internet Explorer Mobile, which the company says will have more security and easier navigation.

updated
California energy utility PG&E has agreed to buy power from a 177-megawatt solar thermal plant to be built by Silicon Valley company Ausra.

Ausra, of Palo Alto, Calif., is applying for a regulatory permit to build on 640 acres of ranch land in California’s San Luis Obispo county.

The idea behind solar thermal power is focusing mirrors on contained water, which then turns to steam that can drive turbines. We last reported on Ausra two months ago, when it raised $40 million from Khosla Ventures and Kleiner Perkins Caufield & Byers.

Ausra’s execution of the deal, if it goes through will help the company catch up with competitor BrightSource, which just cleared the regulatory hurdle for a 400-megawatt plant in the Mojave Desert last week, according to Green Wombat.

Although PG&E has now committed to buying over a gigawatt of solar thermal energy in coming years, it remains to be seen which startup’s designs are most effective.

Technology used by companies like BrightSource and Solel uses special curved mirrors to focus more light, and thus create more steam than Ausra’s plants. However, the latter’s approach, which uses mass-produced flat mirrors, is cheaper, the company says, potentially bringing the cost for solar thermal energy as low as coal-fired plants.

The technology for solar thermal itself has existed for decades. Photovoltaic cells, which directly capture sunlight, may possibly become cheap enough to be a viable replacement.