By Ari Rabinovitch

KVUTZAT YAVNE, Israel, April 20 (Reuters) - An energy company in Israel plans to launch a solar farm this month using new technology it says can produce cheap and efficient electricity while supplying hot water to homes.

As with all solar energy systems, investors and consumers may be turned off by high initial costs and the need for strong sunlight. But if the commercial pilot works, Israeli start-up ZenithSolar plans to make small units for homes in two years.

ZenithSolar CEO Roy Segev says its energy dish can transform 75 percent of the sunlight it absorbs into electricity and hot water, with a cost of 8.6 cents per kilowatt hour.

Conventional solar panels generate electricity from sunlight with less than 15 percent efficiency and can cost more than double per kilowatt hour.

With billions of dollars being invested in global green stimulus plans, energy companies worldwide are racing to develop more efficient environmentally friendly technologies.

ZenithSolar says that in peak conditions, its system can produce electricity and hot water at a cost to consumers that can compete with fossil fuels without government subsidies.

Asked about the Israeli company's system, Ken Zweibel, director of the Institute for Analysis of Solar Energy at George Washington University, said he saw some shortcomings.

The reason the running costs are low, he said, is because the Zenith system produces mostly thermal energy in hot water, rather than more valuable electricity. He also said all solar cells lose efficiency when operating at such hot temperatures.

But he added that the combined output of high-efficient electricity and its hot water by-product is a new variation that should work well in areas with ample sunlight.

"It's a marriage of convenience as much as an improvement," said Zweibel, who has not examined the system first-hand but has seen technical data released by ZenithSolar.

1,000 TIMES SUNLIGHT

The company's solar field takes up a half-acre lot at the edge of a kibbutz in central Israel. Sixteen units, each with two 11-square-metre (110-square-foot) dishes, harvest sunlight in a pilot project that will be unveiled on April 26.

The dishes have about 1,200 small mirrors that concentrate sunlight -- hot enough to burn through metal -- on a four-inch (10 cm-) square panel of photovoltaic (PV), or solar, cells made from a special material.

"The idea is to replace large areas of PV panels with large areas of cheap glass and concentrate the light onto a very small amount of PV material," said ZenithSolar's chief scientist, David Faiman.

Each dish can generate the same amount of electricity as a 200-square-feet (19-square-metres) of conventional PV panel, Faiman said.

About a third of the peak energy produced at the pilot, some 70 kilowatts, is electricity. That is enough for about 30 houses. The rest, about 140 kilowatts, is heat transferred into water, which doubles as a coolant, to be used by the community.

The company says that each unit, generating 15 kilowatts of combined electric and thermal output, has a total cost of about $29,500 and can operate for 15 years. It plans to develop smaller units that can be installed in the backyard or on house rooftops by the end of 2010. (Editing by Alison Williams)

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