We describe a large lateral photovoltage that develops in AlGaAs/GaAs modulation‐doped structures in response to excitation by spot illumination. The effect is observed in wafers where the equilibrium inversion channel electron density is negligibly small. This effect is sensitive to the position of the illuminated spot. The dependence of the induced photovoltage on the power and the spectral composition of the excitation as well as its temperature dependence has been carefully studied. A resistive two‐channel transmission line model has been developed to explain the experimental results.