The Cadmium Telluride Solar Factory Race
Solar manufacturers are racing to build the next cadmium telluride (CdTe) photovoltaic (PV) factory in the United States. Three major CdTe on glass factories in the US have been recently announced each with a unique starting point. Abound Solar has won a US DOE loan to support a new 640 MW/yr facility in Tipton, Indiana. General Electric (GE) recently announced buying Primestar. They indicate that they will be building the largest PV manufacturing facility in the world. Finally First Solar has announced a 250 MW/yr facility to be built in Mesa City Arizona near Phoenix. Let’s take a closer look to see which one of these factories might have the best advantage to be in the lead to generate revenue.
As the largest manufacture of PV modules in the world, First Solar Inc (FSLR) is the defending champion.
First Solar has produced so many factories, it almost seems like their real product is factories, not solar panels. They indicate a total manufacturing capacity of 1.5 GW/yr (that is gigawatts per year) at the end of 2010. They have plants in Perrysburg, Ohio, Frankfurt/Oder, Germany, and Kulim, Malaysia. They plan to increase manufacturing to 2.9 GW/yr including additional facilities in Vietnam and the United States by the end of 2012. They are well capitalized, and will finally be manufacturing in Arizona with a 250 MW/yr factory, where the corporate headquarters is located. Don't blame First Solar on the long delay to manufacture in Arizona. Arizona has a backwards micro-economic energy policy. They import their fuel while exporting their dollars. With the 3,739 MW Palo Verde nuclear power plant dominating the electrical generating landscape of the state, solar energy has been a hard sell even with all that sun. The CdTe technology is very appropriate for the hot Arizona climate because of First Solar’s advantageous temperature coefficient in comparison to crystalline silicon PV technology. While Arizona has been debating solar for the last ten years, First Solar was building factories all over the world. This new facility is expected to take one year to build. Can Abound or GE build a factory and create markets faster?
Privately held Abound Solar is the young colt with a rich patron. In December 2010 Abound Solar closed on a long-anticipated $400 million loan guarantee from the U.S. Department of Energy (DOE) to fund the expansion of the company’s manufacturing capacity. They have an existing facility located in Loveland, Colorado with a nameplate capacity of 200 MW/yr.
Having a loan from the US DOE might seem like a great opportunity. However, getting the money and building the factory might take longer than anticipated. The first PV company announcing such an award was Solyndra, a copper, indium gallium and selenium (CIGS) thin film on tubes of glass PV technology. DOE had announced the Solyndra loan guarantee in March of 2009; however Solyndra failed to complete their initial public stock offering. With major delays, Solyndra indicates their annual production run rate will be approximately 200 MW/yr per year by the end of 2011, effectively eliminating them from this race.
Abound Solar, originally named AVA Solar, comes out of Dr. Sampath’s laboratory at Colorado State University. They have a few market channels for the PV product and have been exhibiting at trade shows for a couple of years.
General Electric's (GE) deep pockets might make the company seem like the odds-on favorite. But history has shown what GE can, or can't do, when they buy PV technology. In 2004, GE purchased Astropower at bargain basement prices. At the time, Astropower had a nice niche to purchase scrap silicon and produce well respected solar modules. Astropower filed for bankruptcy in February 2004, and then GE purchased all the assets for $15 million. GE never really capitalized on that PV investment. With that purchase came a residential PV shingle called the Astropower Gecko shingle. Before PowerLight had developed the SunTile (now the SunPower SunTile), Gecko was in the market and getting lots of California attention as a replacement to concrete tile roofing that made electricity. Have you heard of Gecko lately?
GE could have what Clayton Christensen describes as the Innovator’s Dilemma described in his book titled the same. The subtitle explains the book “When New Technologies Cause Great Firms to Fail”. GE was not able to capitalize on the Gecko PV roofing technology, nor the well-respected Astropower modules. One sunny note is the leader of the GE Solar organization, Danielle Merfeld, Director of the Solar Technology Platform at GE. She is an extremely technologically and business savvy person able to jockey any PV technology to a successful finish line. If she doesn’t succeed with GE due to the Innovator's Dilemma, she will eventually succeed at another PV company.
GE has been a majority equity owner of PrimeStar Solar since 2008. In March of 2010, GE announced an expanded relationship with Primestar, located in Arvada, Colorado with an existing 30 MW/yr nameplate capacity CdTe factory. Then in October 2010 GE and Solar Frontiers, a CIGS PV on glass technology, made a surprise announcement of a technical and commercial agreement indicating problems with the Primestar relationship. Apparently with the new April 2011 GE announcement that it was buying Primestar, this Solar Frontiers deal might not be going as well as expected. This most recent GE Primestar news announcement indicated they will build the largest CdTe factory in the world, but did not indicate the specific location.
Today’s handicappers will do well to remember how British Petroleum (BP) lost to First Solar in the last race. Before BP failed with the Deep Oil Horizon platform they had failed at CdTe. Opened in 1998, they closed their Fairfield, California CdTe plant in 2002, right about the time that First Solar was introducing its product to the market. First Solar’s IPO was in November of 2006 priced at $20 a share. Is there such a thing as corporate hindsight where directors can be held accountable for missing the potential $12B capitalization that First Solar now commands? BP was supposed to stand for Beyond Petroleum; now perhaps it stands for Beyond Prosecution. BP had decided that thin films were not going to be successful and eliminated all their investments. More recently they have closed their US PV crystalline silicon factory in Frederick, Maryland. BP Solar is an unfortunate scratch in today’s manufacturing race.
Important factors this time around will include the ability of the thin film tool makers to execute on the factory orders, and if any one of them are caught in a Japan material shortage due to the tsunami after effects.
So who is going to win this race? My trifecta bet says First Solar to win, Abound Solar to show, and GE to place: It will not be a photo finish.
Disclosures: Long FSLR
Joseph McCabe is a solar industry expert with over 20 years in the business. He is an American Solar Energy Society Fellow, a Professional Engineer, and is internationally recognized as an expert in thin film PV, BIPV and Photovoltaic/Thermal solar industry activities. McCabe has a Masters Degree in Nuclear and Energy Engineering.
Joe is a Contributing Editor to Alt Energy Stocks and can be reached at energy [no space] ideas at gmail dotcom.