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From Silicon Valley to Solar Valley

Birthplace of computers poised to become the center of the alternative energy industry, experts say at conference. Video: Al Gore says Silicon Valley can save Earth

SAN JOSE, Calif.--Silicon Valley is poised to become the center of the growing alternative energy industry, just like it was the home of computing, experts said on Friday at an economic conference.

So-called green technology helped fuel last year's recovery in Silicon Valley, six years after the burst of the dot-com bubble, according to the Silicon Valley Index, released at the State of the Valley conference. The event was sponsored by the Joint Venture Silicon Valley Network and held in typically sunny San Jose.

Venture capital funding to clean technology firms increased 266 percent last year, investing about $300 million by the third quarter alone, according to the report.

"Is Silicon Valley going to become Solar Valley?" asked John Doerr, partner at Kleiner Perkins Caulfield & Byers, who moderated a panel on clean technology. The answer was a resounding "yes," particularly if the government offers incentives for companies to develop the technology and for consumers who use it, panelists said.

Former Vice President Al Gore says the investment and innovation that built the high-tech and biotech industries is now needed for green.

The United States has led in solar research but hasn't provided the necessary incentives to boost the market, said David Pearce, chief executive of solar company Miasole. "As a result, the demand has been outside the U.S., and the manufacturing plants, for the most part, have been outside the U.S.," Pearce said. "I see major policy changes coming."

For instance, there have been discussions in Washington, D.C., about potential manufacturing incentives, and this year the federal solar research budget was doubled to $70 million, he said.

Santa Clara, Calif.-based Miasole, which is developing an ultra-thin solar panel technology, is one of a number of companies in Silicon Valley trying to combine traditional Valley strengths in material science and low-cost manufacturing with alternative energy. "As we bring costs down, solar just has tremendous potential," Pearce said. "Silicon Valley is at the forefront of these emerging technologies."

Another Silicon Valley company involved with solar is San Jose, Calif.-based Cypress Semiconductor.

"We're looking at a $100 billion market just for solar cells," said T.J. Rodgers, Cypress chief executive. Currently, it costs about $8 to put a watt of solar power on a home roof, which typically needs about 2,000 watts, bringing the cost to about $16,000, he said. "I sell modules for $4 a watt...When it gets to $3.50 a watt, at that point in time we're going to be cheaper than PG&E."

In Germany, the biggest market for solar, users to the utility company, Rodgers said. In Japan, solar installations get a federal subsidy, like in the U.S., he said.

The United States should lead the world in reducing reliance on fossil fuels and push biofuel research, said Lynn Orr, director of the Global Climate and Energy Project at Stanford University. "We need to change the way we use energy," he said. "I think we have under way in this century now a set of transitions that will really change the world."