OAKLAND, CALIF.—When Jack Jenkins-Stark was offered the job of chief financial officer two years ago at BrightSource Energy, a newly formed solar power start-up based here, he hesitated. "I came at it with a very cynical view," says Jenkins-Stark, 58, who had spent more than 20 years at Pacific Gas & Electric, the northern California utility company, before settling into a comfortable job as CFO of Silicon Valley Bank.

There was no doubt, he thought, that BrightSource's technology was promising. Founded by the same technical team that built some of the earliest solar power facilities in the California desert in the 1980s, the company had plans to build a series of sprawling new solar power plants across Southern California. Instead of relying on photovoltaic panels to generate energy or using the sun's rays to heat oil-filled pipes, as the early solar power projects had done, BrightSource was testing a next-generation solar array with thousands of small mirrors installed in a circle around a central tower holding a water-filled boiler. The reflected sunlight heated the water into steam, which turned a turbine. Voilà, sun-powered, utility-scale electricity, all at a price, according to the company, comparable to burning fossil fuels.

It wasn't the technology that made Jenkins-Stark nervous. And it wasn't the looming recession, either, though the slowing economy and the disappearance of credit would soon put the nascent solar industry's very survival at risk. No, for Jenkins-Stark, the problem was political. "I'd seen this movie before," he says. "I've seen everybody up in arms about oil prices; I've seen everybody up in arms over security of supply." And he'd seen the early attempts at building solar power in the California desert falter when the crisis passed and renewables couldn't compete with the falling price of natural gas.

But something about BrightSource's idea and the promise of a head-to-head race with fossil fuels won him over. That and the fast-changing political climate, in which presidential candidates from both parties were publicly throwing their support behind renewable energy. "This time, I really believed it was different," says Jenkins-Stark. "I jumped in with both feet."

As recently as last summer, when solar and wind projects were being feted by policymakers and investors alike, there was no question he had made a good decision. Jenkins-Stark joined a company and an industry that appeared to be on the march. Nearly $5 billion in venture funds poured into clean tech in 2008. And BrightSource, in particular, after raising $160 million from investors ranging from Google to Chevron, seemed to be in all the right places at all the right times. The company found its first customer in PG&E, which, like all California utilities, is required by law to purchase at least 20 percent of its power from renewable-energy producers by next year. The utility agreed to buy 900 megawatts from BrightSource, about one fourth of its total renewable-energy portfolio. Some outsiders questioned the move, claiming solar technology couldn't produce hot-enough steam at a low-enough cost to compete with fossil fuels. But last summer, BrightSource opened a demonstration facility in Israel that showcased its technology. Verified by an independent engineer, it was proof positive utility-scale solar worked.

On the verge. BrightSource seemed to be poised to take the next step. It was only a year away from construction on its first 400-megawatt solar plant, called Ivanpah, near the Nevada border. The new facility would provide enough electricity to power 140,000 homes, nearly doubling the capacity of utility-scale solar power production in the United States.

Then, suddenly, the economy ground to a halt. Lehman Brothers went under, the gears of the financial system locked up, and for much of the solar industry the music stopped. For months, Jenkins-Stark watched investors veer away from his industry, leery of the hefty price tag on new power plants. After years of trying to convince skeptics that their technology was legitimate, start-ups like BrightSource discovered that finding funding now trumped all other concerns. "In September, I would have said it looked like a good tropical storm, where we could ride it out and be fine," says Jenkins-Stark. "Now, it looks like it was a hurricane followed by another hurricane."

Sitting in his company's offices overlooking the Oakland shipyards, BrightSource's CEO, John Woolard, still uses the word fortunate to describe his start-up's predicament. "I can't say I predicted anything that's happened," he says. But the company's luck, as the market disintegrated around it, appeared to hold. BrightSource still had plenty of cash in the bank, and the Ivanpah project, scheduled to begin construction this fall, wouldn't need any major infusion of capital until this summer. "I have good friends in the wind business who were in the middle of financing plants [when the market collapsed]," says Woolard. "All project financing just stopped. Nothing happened in the industry. It was a complete freeze for months."

Holding fast. The lack of credit began to inflict casualties across renewable energy. One of BrightSource's major competitors, Ausra, a well-funded Silicon Valley start-up that had been touted as a leader in the race to build the next generation of solar power plants,decided the market simply wouldn't allow it, opting to become an equipment supplier instead. Start-ups began letting employees go, hoping to stay solvent until more funding appeared. BrightSource, with 30 employees in Oakland and nearly 100 in Israel, held fast.

Outside analysts were busy trying to gauge who would survive and who would not. "These companies are all in a tricky spot," says Reese Tisdale, research director for solar power at Emerging Energy Research in Cambridge, Mass. "They've raised the capital to start their projects, but the next step is to cross the valley of death to get to commercial delivery. Some of them should be able to get through this, but there's a lot of shuffling going on."

The biggest hurdle for companies like BrightSource is the amount of money a start-up in the energy industry eventually requires. "Power plants are costly things," says Alan Salzman, CEO of VantagePoint Venture Partners, one of BrightSource's original investors. "This isn't three guys with a couple of servers who can scale by buying a few used Dells." Outside analysts believe the Ivanpah facility alone will cost over $1 billion, more than 20 percent of the total investment venture capitalists made across all of clean tech last year. And it could be just the first of dozens of solar power plants that might pop up in the Southwest over the next decade. "Venture capital is small dollars," says Woolard. "Power plants are big dollars." With the banks in deep freeze, though, exactly where the big dollars would come from was a mystery.

Through the first few months of this year, BrightSource turned its attention, instead, to what it could control. One team worked on permits for the Ivanpah site; another made preparations to link the plant to nearby power lines. Others were scouting new locations for future plants. BrightSource announced a few more deals, including a contract with Siemens to build its first solar-powered steam generator, which will be the largest machine of its kind ever built. The company also found another customer: Southern California Edison, the utility that supplies electricity to Los Angeles, agreed to purchase 1,300 megawatts from BrightSource—enough energy to power 850,000 homes.

The mood in the solar industry may have been somber, but Woolard and Jenkins-Stark were keeping their chins up. "This is one of those things where I went from thinking it was a 10,000-foot mountain to climb and realizing it was 29,000 feet," says Woolard. Still, he felt his company was in good shape, so long as the credit markets opened up again. "You can get up Everest," he insists, "if you prepare, you plan, you think, and you do it right."

Especially, it turns out, if the federal government offers a helping hand. When the $787 billion stimulus bill was signed in February, there were more than a few sighs of relief at BrightSource. The bill showered renewable energy with new funds, including $60 billion in loan guarantees for companies building wind and solar plants. BrightSource was among a small group of start-ups that had already been selected for Department of Energy loans, but the stimulus vastly increased the funds available. It also loosened rules governing tax credits, greatly expanding the pool of potential investors. After months of wondering where to turn for funding, BrightSource had been given a reprieve. "Now, all of a sudden," says Jenkins-Stark, "I have a very different worry proposition for half the capital of our project."

While BrightSource may have found a way to build its first plant without government backing, analysts say, the stimulus will certainly help. "The financing just wasn't there in this climate," says Brian Fan, director of research at the Cleantech Group, a San Francisco research firm. "But now, existing projects in the pipeline, especially renewable-generation projects that have good strong companies behind them like BrightSource, will be considered very favorably."

BrightSource execs recognize that they can't get ahead of themselves. They have yet to break ground at Ivanpah, and the plant, even if it goes up on schedule, won't begin operations until at least 2011. Still, as he leaves what he hopes will be the worst of the company's financial problems behind, Jenkins-Stark is willing to talk about solar energy's big dreams once again. "I think we have the ingredients to be the largest solar technology developer and owner of solar assets in the world," he says. "I've seen this movie before, but this time, it's real."