(FORTUNE Small Business) – Even Dirty Harry likes clean energy. Three years ago, with the California energy crisis in full swing, Clint Eastwood was looking for a "clean" energy source for his Tehama Golf Club in Carmel, Calif. He turned to PowerLight, which installed 242 photovoltaic panels on the clubhouse rooftop. That solar energy now powers everything from the lights to the electric golf carts.

For PowerLight CEO Tom Dinwoodie, who built this Berkeley-based business from a one-man shop in 1995 into what he says is a profitable, 100-employee, $50 million company, it's the kind of endorsement that, well, makes his day.

But celebrity clients were the furthest thing from Dinwoodie's mind in the late 1970s when as an analyst at MIT's Energy Lab he was working on early photovoltaic panels, comprising smaller solar cells that convert the sun's energy into electricity. Indeed, at the time PVs were so expensive that Dinwoodie couldn't envision them making economic sense anytime soon. Discouraged, he jumped ship to become an independent consultant in the wind industry, which was further along in its economic potential. But he couldn't take his eyes off the sun for very long.

"Photovoltaics were my first love," he says. "It's a very elegant technology. It just sits out there, soaks up sun, and generates electricity." So in 1991 he picked up an architecture degree, hoping to learn how to incorporate PV systems into buildings.

His solution was unorthodox. Instead of traditional slanted solar panels, he figured out that a flat-panel design made more sense. It drew more energy and cost less to install. It even provided an extra layer of insulation (with its dense foam base) and extended the roof's life--a major bonus for building owners. Dinwoodie bought PV modules from manufacturers and focused on sales, installation, and service. That allowed him to pick the most appropriate module for specific projects and gave him a bit more flexibility on cost. He also devised a "plop and drop" system, a unique way of installing a PV system without penetrating the rooftop surface.

"They're head and shoulders above everybody in that niche," says Scott Sklar of the Stella Group, a strategic marketing firm that advises companies on alternative energy.

Nevertheless, all the engineering breakthroughs in the world couldn't make PV electricity (21 to 40 cents per kilowatt hour) as cheap as standard energy (3 to 24 cents). So Dinwoodie turned to public utilities first, which often nourish green energy companies with research contracts. He also received some help in the late 1990s in the form of new, generous government subsidies. California started offering rebates of up to 50% of a project's cost to companies that purchased alternative energy systems. (Other states have since followed suit.)

Incentives like those powered Dinwoodie's sales. In 2001 revenues were $28 million, and in 2002 more than $50 million. In addition to Clint Eastwood, PowerLight boasts clients like Toyota, Johnson & Johnson, and the Moscone Center in San Francisco. And PowerLight recently installed America's largest commercial rooftop photovoltaic field--14,000 panels--for the Long Island, N.Y., direct-marketing firm Fala.

Meanwhile, Dinwoodie has been focusing on his next challenge: how to make photovoltaics profitable without depending upon government subsidies. That's not just a nice idea--it's becoming necessary. California's subsidies are already being phased out because many industry experts say they keep PV prices artificially high. Fortunately, Terry Peterson of the Electric Power Research Institute expects the cost of manufacturing PV systems to fall in the near future, thanks to continuing technological development and increasing consumer demand.

"It's the kind of challenge we like," says Dinwoodie. "That's the founding principle of PowerLight--to get the technology out of the emerging category, take it mainstream, and have it stand on its own. And we're not that far away from that."