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At six feet and 230 pounds, Hertzberg would be hard to miss in any room. He still radiates the charisma of the California politician he used to be. Back in Sacramento he was nicknamed "Huggy Bear" for his tendency to embrace everyone he met. (Governor Arnold Schwarzenegger, whose transition team Hertzberg helped to manage, calls him "Hertzie.") Hertzberg served as Speaker of the California Assembly during the electricity crisis of 2002, when Enron squeezed favorable contracts out of the state by choking off its power supply. That debacle left him passionate about the importance of renewable energy. And a failed primary campaign for mayor of Los Angeles left Hertzberg in need of a new career.
So he founded a solar-power company, G24i, and quickly became the most contrarian guy in the renewable energy business. Most of his rivals produce silicon solar panels for the first world. Hertzberg is building silicon-free solar strips, and says his earliest customers are in the developing world, especially Africa and India. Most solar companies seek government handouts; Hertzberg avoids them like the plague. And while few solar firms would think of bringing their product to a cloudy climate, Hertzberg set up his headquarters in Wales--in part to prove that G24i's technology can work anywhere.
Hertzberg talks to his audience as if he's still running for office. "So far, solar power has benefited rich people, governments and corporations," he declaims. "We're going to provide it for ordinary folks." He explains that G24i's solar strips will fit on backpacks, computer cases and even purses. They will charge cell phones and other gadgets, even on a dreary day like this. Wales, a land once known for dirty coal mines, could host a clean-energy revolution. "We're telling the story of the transformation of Europe!" he bellows.
Based on this performance you would never know that shares in solar-power companies were being pummeled in the global markets. First Solar, a G24i rival, saw its share price drop from a high of $311 to a low of $85 in 2008 The bear market was caused, ironically, by a strong year for production. Investors think solar producers are less likely to receive the government subsidies on which they've relied to date.
But Hertzberg has made a long-term commitment to solar power. G24i, with 66 employees, is sitting on $100 million in venture funding. It helps that Hertzberg co-owns the investment firm Renewable Capital, which partly bankrolled G24i. The only handout he received from the Welsh government went to building a fence around G24i's factory. Hertzberg's golden rule: "Don't rely on subsidies. You spend all your time and money lobbying government and filling in forms."
Hertzberg learned that lesson the hard way. In 2005, after his failed mayoral bid, he set up a firm called Solar Integrated Technologies in Watts, a blighted area of Los Angeles. The business model relied on job-creation subsidies. The company planned to sell solar panels that could be built into walls and roofs. On the day that Solar Integrated Technologies received a large shipment of equipment, the city canceled its job-creation program--forcing Hertzberg to rip up stacks of contracts. The company was doomed.
Though a lawyer by training, Hertzberg has little patience for red tape. As a California state lawmaker, he drafted legislation designed to reduce the regulatory burden on green-energy startups. But it wasn't enough. "The government loves its cockamamie forms," Hertzberg says. "With all the money and time it took us to go through the regulatory maze, we were basically chased out of the country."
To his surprise, Hertzberg found less onerous regulations in Europe. Thanks to carbon-emission cuts mandated by the 1998 Kyoto accords, many European governments are keen to attract renewable energy companies. In 2006, Hertzberg heard about a disused factory in Wales. Acer Computers commissioned the facility but didn't take full occupancy because of corporate cutbacks. Hertzberg had never been to Wales, but he figured it was close enough to London--two hours by train--that he could tap the British capital's glut of green investment funding. Also, he wouldn't have to compete for cash and attention with scores of solar companies on the European mainland.
Hertzberg promptly flew to Cardiff and made the Welsh government an offer it couldn't refuse. If Wales could provide the necessary papers within three weeks, he would move into the abandoned Acer factory. A sympathetic official from International Business Wales, a government agency chartered to attract foreign investment, helped Hertzberg and his lawyers draw up the contracts in one long day. Hertzberg requested no other incentives. "We just wanted to be left alone," he recalls.
Instead of promising a job boom for the locals, Hertzberg merely stressed that G24i's presence would put Cardiff on Europe's green-energy map. G24i also committed to building a green education center for kids. "He's a very impressive chap," says Helen Williams, an officer with a government group called Invest Wales, who attended Hertzberg's lecture. "He wants results, and because he's so up front about it rather than being wishy-washy, people are willing to help."
Hertzberg refined his pitch to lure hires from as far afield as Spain and Taiwan. Where better than Wales, he asked them, to prove that solar cells can produce energy in low light? Last fall the company persuaded John Hartnett, formerly vice president of global markets at Palm, to move from Silicon Valley and serve as G24i's CEO. "It feels like joining Intel in 1973," Hartnett says. "The personalization of solar technology is where the industry is going."
Solar cells on sheets of extremely thin, flexible film are not new. U.S. firms such as Powerfilm and Nanosolar already make them. Thin film accounts for 10% of the global solar market now, and that share will rise to 20% by 2010, according to the European Photovoltaic Industry Association. For an undisclosed sum, Hertzberg licensed exclusive rights to a new technology developed by Swiss scientist Michael Graetzel. His thin film was impregnated with an especially light-sensitive dye. "G24i is the first company to try dye-sensitized cells on a large scale," says Andreas Bett of Germany's Fraunhofer Institute for Solar Energy Systems.
Of the light that hits a typical thin-film cell, about 8% is converted into electricity. Silicon cells capture approximately 15% of their light. Graetzel's dye-based technology captures just 3%--but does so at any light level, unlike its rivals. Better yet, G24i's cells require so little energy to make that the company plans to power its entire factory with a 2-megawatt wind turbine. "It's renewable energy making renewable energy," crows Hertzberg. The company won't estimate its first-year revenue, but Hertzberg eagerly touts its first products: thin-film batteries that can charge gadgets on the go, and a solar-powered LED light.
The products sound like no-brainers, but aiming them at the developing world is risky. G24i has contracts with local phone companies in India, Kenya and Nigeria to distribute cell-phone chargers, and last year the company won a $200,000 prize from the World Bank to distribute the LED light in sub-Saharan Africa. (Hertzberg claims that prizes are not the same as subsidies.) The light will launch in Rwanda late this year. G24i's charger will sell for $35, which analysts think may be too pricey for the developing world. Sure, cell phones are increasingly widespread in areas where the electric grid can be a day's walk away. But "people in these remote areas are unbelievably frugal in their use of appliances," says Nigel Scott, who writes about cell phones and development for the British think tank Gamos. For example, entrepreneurs in many African markets sell phone charges using their car batteries.
Hertzberg is unconcerned--indeed, he expects those entrepreneurs to be his best customers. They charge around 50¢ a pop, so his device could pay for itself in one day. And he argues that the rise of micro-finance in the developing world makes his product affordable to anyone. "Analysts aren't seeing the bigger picture," Hertzberg insists. In short, Hertzberg aims to make a profit by creating a global solar ecosystem. With that in mind, he ends his pitch to the Welsh civil servants by urging them to ditch subsidies and focus on nurturing green startups with a range of tax incentives. "The big companies aren't coming," he says. "But you can help the little folks come in and make heroes out of them."
