Obama’s Solar Bets May Avoid Solyndra’s Fate With Low Costs

Three solar-energy manufacturers that received backing from the Obama administration may survive an onslaught of cheap Chinese panels that helped force Solyndra LLC into bankruptcy.

Abound Solar Inc. and SoloPower Inc. won a total of $597 million in loan guarantees from the U.S. Energy Department to begin building their first commercial solar-panel plants this year, and 1366 Technologies Inc. received a $150 million guarantee for a polysilicon wafer factory.

Abound and SoloPower say their thin-film panels will compete on price against the most common type of solar panels, which are made from polysilicon, and 1366 is developing a low- cost system for producing polysilicon.

Solyndra touted the light weight and ease of installation of its cylindrical, thin-film solar products, advantages that were more important in 2009 when it received a $535 million U.S. loan guarantee to build a factory. The price of silicon-based panels, made mainly in China, has fallen 46 percent since then.

“Silicon panels have so relentlessly cut costs that other approaches haven’t been able to keep up,” Kevin Landis, portfolio manager at Sivest Group Inc., a San Jose, California- based investment manager with more than $300 million under management including SoloPower.

Abound, which received its $400 million U.S. loan guarantee in December, will compete against both polysilicon panels and First Solar Inc., the world’s biggest thin-film solar company that sells panels for 72 cents a watt. Photo: First Solar Close

Abound, which received its $400 million U.S. loan guarantee in December, will compete... Read More

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Abound, which received its $400 million U.S. loan guarantee in December, will compete against both polysilicon panels and First Solar Inc., the world’s biggest thin-film solar company that sells panels for 72 cents a watt. Photo: First Solar

$1 a Watt

The falling prices mean Abound and SoloPower will need to sell their thin-film solar panels at no more than $1.05 a watt to be competitive in 2013 when the plants are expected to go into full production, according to Bloomberg New Energy Finance. The four companies are the only solar manufacturers to receive Energy Department loan guarantees. Most recipients are developing power plants.

“In 2013 we should be able to sell at a dollar, 90 cents or even as low as 80 cents per watt and still make money,” Julian Hawkins, senior vice president of sales and marketing for Loveland, Colorado-based Abound, said in an interview. “When Solyndra started up it was a completely different time for the industry. Nobody expected the huge drop in polysilicon prices.”

Lawmakers are wondering whether other companies that received government backing will follow Solyndra into bankruptcy.

‘One Bad Bet’

“Was Solyndra just one bad bet by an administration rushing to claim credit for the first loan guarantee, or is it the tip of the iceberg?” Representative Fred Upton, a Michigan Republican who is chairman of the Energy and Commerce Committee said at a hearing yesterday. Solyndra filed for bankruptcy protection Sept. 6, and fired about 1,100 employees.

Competing on price will be difficult.

“The odds are stacked against these startups coming into a highly competitive market with new technologies,” said Paul Clegg, a solar analyst at Mizuho Securities USA in New York. “One of these guys might succeed but the amount of money needed to reach scale is huge and its often underestimated.”

Abound, which received its $400 million guarantee in December, is the furthest along of the three manufacturers. It’s expanding a plant in Colorado this year and will complete in 2013 a new one in Tipton, Indiana, that’s expected to be the largest U.S. thin-film solar production facility. The company expects to employ 1,200 people at the two factories.

It will compete against both polysilicon panels and First Solar Inc. (FSLR), the world’s biggest thin-film solar company that produces panels for 72 cents a watt. Multicrystalline silicon solar modules, a competing technology, sold for $1.43 a watt at on average at the end of August, New Energy Finance estimates.

Easier to Produce

Thin-film products require less labor, time and energy to produce than polysilicon-based products. General Electric Co. (GE) is also betting on the technology, with its PrimeStar Solar.

“Abound claims their process is more refined and less costly,” said Jesse Pichel, analyst at Jefferies & Co. “It’s awfully hard to compete with First Solar.”

SoloPower received its $197 million loan guarantee on Aug. 19. “I expect our total costs to be very competitive,” SoloPower Chief Executive Officer Tim Harris said in an interview. His lighter, flexible panels don’t require the fragile and costly glass sheets that First Solar and Abound use, making them useful for commercial and industrial rooftops that “can’t bear the weight of the older technology.”

Using technology developed at Massachusetts Institute of Technology, 1366 Technologies is building a factory that will continuously produce silicon wafers in just 25 seconds, compared with conventional batch processing takes up to three days, the Energy Department said in a statement last week when it guaranteed them $150 million in loans. The factory will be able to produce up to 1,000 megawatts of cells annually.

“The portfolio of investments of this administration has made, we stand by them and we believe that they will prove to be essential investments in the cutting edge technologies of the future,” White House spokesman Jay Carney told reporters yesterday as the president traveled to an appearance in Raleigh, North Carolina.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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