(Reuters) - Google is disappointed with the lack of breakthrough investment ideas in the green technology sector but the company is working to develop its own new mirror technology that could reduce the cost of building solar thermal plants by a quarter or more.

"We've been looking at very unusual materials for the mirrors both for the reflective surface as well as the substrate that the mirror is mounted on," the company's green energy czar Bill Weihl told Reuters Global Climate and Alternative Energy Summit in San Francisco on Wednesday.

Google, known for its Internet search engine, in late 2007 said it would invest in companies and do research of its own to produce affordable renewable energy within a few years.

The company's engineers have been focused on solar thermal technology, in which the sun's energy is used to heat up a substance that produces steam to turn a turbine. Mirrors focus the sun's rays on the heated substance.

Weihl said Google is looking to cut the cost of making heliostats, the fields of mirrors that have to track the sun, by at least a factor of two, "ideally a factor of three or four."

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"Typically what we're seeing is $2.50 to $4 a watt (for) capital cost," Weihl said. "So a 250 megawatt installation would be $600 million to a $1 billion. It's a lot of money."

That works out to 12 to 18 cents a kilowatt hour.

Google hopes to have a viable technology to show internally in a couple of months, Weihl said. It will need to do accelerated testing to show the impact of decades of wear on the new mirrors in desert conditions.

"We're not there yet," he said. "I'm very hopeful we will have mirrors that are cheaper than what companies in the space are using..."

Another technology that Google is working on is gas turbines that would run on solar power rather than natural gas, an idea that has the potential of further cutting the cost of electricity, Weihl said.

"In two to three years we could be demonstrating a significant scale pilot system that would generate a lot of power and would be clearly mass manufacturable at a cost that would give us a levelized cost of electricity that would be in the 5 cents or sub 5 cents a kilowatt hour range," Weihl said.

Google is invested in two solar thermal companies, eSolar and BrightSolar but is not working with these companies in developing the cheaper mirrors or turbines.

In wide-ranging remarks, Weihl also said the United States needs to raise government-backed research significantly, particularly in the very initial stages to encourage breakthrough ideas in the sector.

The company has pushed ahead in addressing climate change issues as a philanthropic effort through its Google.org arm.

Weihl said there is a lack of companies that have ideas that would be considered breakthroughs in the green technology sector. After announcing its plans to create renewable energy at a price lower than power from coal, it has invested less than $50 million in other companies.

Weihl said Google had not intended to invest much more in early years, but that there was little to buy.

"I would say it's reasonable to be a little bit discouraged there and from my point of view, it's not right to be seriously discouraged," he said. "There isn't enough investment going into the early stages of investment pipeline before the venture funds come into the play."

The U.S. government needs to provide more funds to develop ideas at the laboratory stage, he said.

"I'd like to see $20 billion or $30 billion for 10 yrs (for the sector)," Weihl said. "That would be fabulous. It's pretty clear what we have seen isn't enough."

(Additional reporting by Laura Isensee; editing by Carol Bishopric)