Let there be light. The Obama administration unlocked $346 million in stimulus funds for energy efficiency earlier this week, including $50 million for advancing solid state lighting, or SSL, technology. The Department of Energy designed the program as “a coordinated development of advanced manufacturing techniques” and an effort to “reduce the first cost of high-performance lighting products.” So it doesn’t exactly have semiconductors written all over it.

But according to a recent report on GigaOM Pro (subscription only) from analyst Katherine Austin, President of KDA Consulting, SSL represents a big opportunity for chip makers as the technology gains a foothold in everyday applications beyond consumer electronics and displays.

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You know the solar industry is hurting when a startup with a promising cell manufacturing technology turns to systems integration to stay afloat. That’s the recent story of Blue Square Energy, which was launched to develop and manufacture low-cost solar cells using upgraded metallurgical-grade (UMG) silicon but has now shifted into a “survival plan” focused on being a systems integrator. Chief Executive Joseph Babin tells us that the North East, Md.-based startup now is generating business by designing and selling small-scale solar arrays and energy-efficient lighting programs for residential and commercial customers.

The company has customers in Delaware and New Jersey, and Babin said he expects to generate revenue of between $3 million and $8 million this year. But why the systems integration business, even if it is temporary? Babin responded: “We have an established business network in this region that is driving inbound opportunity.”

In many ways, Blue Square is a victim of the times. The startup, which had raised about $5 million in funding from individual investors and had intellectual property to boot, was hunting for about $25 million in venture capital in late 2008 when markets for financing largely shut down and the weakening economy and other factors reduced demand for solar products. There were no takers, Babin said. Nor could he find strategic partners to merge with or buy his company. By January 2009, the company had shrunk from a high of 75 employees to just five including Babin, its current size today.

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As far as speed bumps for cellulosic ethanol ventures go, this one’s a doozy: Jurors in a federal court have ordered Cello Energy, a biofuel startup run by Alabama’s former ethics chairman, Jack Boykin, and backed by both Silicon Valley cleantech investors Khosla Ventures and pulp maker Parsons & Whittemore Enterprises, to pay more than $10.4 million in a fraud case. According to the Alabama Press-Register, back in 2007, Cello promised P&W that it would make $16-a-barrel fuel from cellulose derived from things like hay, switchgrass and wood chips — and it has gone downhill from there. The case suggests at least two lessons for investors getting giddy about a buzzy technology: do your homework, and get ready to wait.

Cello reportedly accepted a $2.5 million investment from P&W in 2007 to help finance its first plant. Several months later it received a $12.5 million investment and a pledge for up to $25 million for construction and operation of additional plants from Khosla. Cello agreed to use discounted wood waste from the company as feedstock, but “a string of witnesses testified that samples of the fuel allegedly produced at Cello’s facility…were derived entirely from fossil and not renewable sources,” the Alabama Press-Register reports. This week a jury in Mobile, Ala., decided that Boykin’s original claims (made with his partner and son Allen Boykin) were fraudulent.

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Updated: We’ve heard from a couple of our sources that President Obama is forming an advisory council on energy and economic policy that would be staffed by cleantech leaders, including the CEOs of some buzz-worthy startups along with some high-profile investors. Someone high up on Obama’s “green team” was making phone calls this week to bring well-known cleantech execs out to D.C. for meetings this week and next — after which an announcement will likely be made, we’re being told. We’re not sure how formal the council will be but we’ll bring you more details as we get them. Update: After talking to more of the members of the meetings today, this sounds less of an official group, but more a group of cleantech leaders from which Obama wants to learn.

Update: The CEO of Kleiner Perkins-backed carbon software startup Hara, Amit Chatterjee, has confirmed with us that he was one of three CEOs that met with Obama this morning at the White House to discuss energy and environmental policy. We’ve also heard that execs from these firms also met with Obama this week: Standard Renewable Energy, Dow Corning, Positive Energy, FPL, Hycrete, Applied Materials and Cree Lighting. Cree just released a press release on the meeting and sent over this photo.

Given that Obama has had the support of cleantech leaders since his campaigning days, we’re thinking that anyone from that sector would jump at the chance to help inform a council. Obama also needs some sound advice now that the climate bill is rounding the Senate and the first U.S. cap and trade system is in sight.

A series of setbacks for flywheel energy storage last year made us wonder if the technology was just spinning its wheels. But this morning things are looking up for the tech’s long road to commercialization, with word from the Department of Energy that it has awarded a conditional $43 million loan guarantee to Beacon Power to help with construction of a 20 MW flywheel energy storage plant in Stephentown, NY — the first full-scale commercial deployment of the company’s technology.

The Obama administration also announced a $16 million guarantee today for Nordic Windpower to build an assembly plant for its two-blade 1 MW wind turbine, bringing the number of awards under a much-delayed DOE program to three in the last four months (Energy Secretary Steven Chu made it a priority to accelerate the program when he entered office). In late March, cylindrical solar panel maker Solyndra snagged the first guarantee — for a whopping $535 million — to finance a new factory, three years after it applied for the funds and four years after Congress created the program. While Beacon’s guarantee is small relative to the one offered to Solyndra, it could help boost momentum for flywheel tech as well as the company, which has scored a few key deals in recent months after a rocky end to 2008.

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We give a lot of props to the entrepreneurs, innovators, engineers and investors that are building the greentech tools of tomorrow. But we don’t often offer a lot of praise for the legislative process or the policy makers that have been driving clean energy and climate policy (OK, except for occasionally Obama and Reid). And while the climate bill, which has passed the House and is still being negotiated in the Senate, delivered enough concessions that even eager beavers like Tom Friedman say they hate it (but pass it!) the political jujitsu required to get the bill through the House was laudable.

Politico (h/t Business Insider and Climate Progress) posted a colorful and insightful article recently explaining the “arm-twisting” involved in getting the climate bill passed in the House, even with Speaker Nancy Pelosi (described as floating “in and out of the House cloakroom all day, impossible to miss in an arctic-white linen pantsuit”) as the chief ax-grinder. From Politico:

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The Department of Energy just opened up $346 million in stimulus funds for boosting the energy efficiency of new and existing buildings — but ultimately the agency’s chief, Steven Chu, wants energy efficiency, and other elements of green building, to be incorporated into structure designs from the get-go by way of an open-source software platform.

In other words, in addition to funding tech investments and retrofits with tax dollars in the near term, he wants the DOE to provide advanced design tools at affordable prices or for free so companies can implement them at a relatively low cost.

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Updated: More than any utility on the planet, Germany’s Yello Strom has embraced the intertwining of energy and home broadband connections. The company manages its smart meter service directly via its customers’ broadband connection; it’s the first European utility to offer its customers access to Google’s energy management tool PowerMeter; and it tells us this week that it has developed a prototype application that will enable its smart meters to tweet its customers’ energy consumption.

Compare that type of innovation to what your average utility is doing — just keeping the lights on — and it’s like night and day. “There’s close to a revolution happening,” when it comes to bringing the Internet and energy consumption together, says Martin Vesper, Yello Strom’s executive director. Think about it: The emergence of broadband connections in our homes has changed the way people consume media, communicate with each other, buy goods and work. And the hope, which Yello Strom is betting on and which could do wonders for fighting climate change, is that broadband will also fundamentally change both our energy consumption habits and what it means to be a utility.

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Obama on Climate Bill Opposition: “Are there going to be nay-sayers? Absolutely. Are there going to be short-term instances where you can get political gain by scaring the bejesus out of people and telling them that their electricity rates are going to go up a thousand percent and this is going to be a tax of $3,000 — even though the studies that they cite the authors of say that these guys are just lying about these costs? Yes.” — Climate Progress

Woe is Musk: As part of Daimler’s investment deal with Tesla Motors, Elon Musk says he had to commit to staying on as Tesla’s CEO at least until the Model S launches in 2011 — a requirement he calls “flattering, but at the same time it’s golden handcuffs.” — Reuters via AutoblogGreen

June Auto Sales Silver Lining: June sales figures released today show Ford had the smallest decline of any of the six largest automakers since last summer. Volkswagen clean diesel cars had their best month ever. — New York Times, Associated Press

Detroit Electric’s Route to China: Recently-revived electric car company Detroit Electric’s CEO, Albert Lam, says in a Q&A that a new partnership with Dongfeng Motor “a direct line of communication to Chinese policy makers who will define the strategic direction for the new electric car industry.” — NYT’s Green Inc.

Still Worth It?: A watered-down climate bill is better than nothing. After all, “the first item on the wish list of every venture capitalist working in clean tech is a simple price on carbon. Lay that down…and money will start spilling into energy innovation.” — TNR’s The Vine

Until the launch of Honda’s low-cost hybrid Insight earlier this year, Toyota was pretty much the unchallenged king of the hybrid market. It took an early lead with the launch of its Prius, and has hung onto it, acquiring patents along the way — or, as The Wall Street Journal put it today, building a “thicket” of patents around hybrid technology in order to block competition.

Over the last decade, Toyota has been racking up patents for hybrid systems and components — starting with more than 300 patents for the first-generation Prius, about 370 for gen-2, and upwards of 2,000 for the latest model, Toyota North America VP Bob Carter told reporters in January at the Detroit Auto Show. Rival automakers including Ford, Honda and General Motors, however, think they can find workarounds with their own innovation. They might be foolish not to — Global Insight forecasts that hybrids could snag some 5 to 11 percent of the U.S. market by 2015, up from 2.2 percent in 2007.

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