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With Odds Stacked, Tiny Solar Manufacturer Looks to Create 'American Success Story'

Already branded the next Solyndra by some, government-backed SoloPower claims its flexible, lighter panels will beat the odds—even as major shakeout looms.

Oct 9, 2012
SoloPower

Solar panel maker SoloPower cut the ribbon on its Portland factory last month—a crucial step in getting its $197 million loan guarantee from the federal government. The money would flow from the same taxpayer-supported program that bet on bankrupt solar firm Solyndra.

That fact set off alarm bells.

SoloPower could be a "possible sequel to Solyndra," warned a Fox News broadcast, echoing a familiar refrain in conservative media and by Republican politicians, who have jumped on Solyndra as an example of failed clean energy policy and government overreach.

"Fox puts its Solyndra blinders on again," responded the liberal watchdog Media Matters for America, writing that the program has approved 26 loans, only three of which have filed for bankruptcy. 

So how risky is SoloPower, really?

The tiny solar startup could fall victim to the same market forces that helped sink Solyndra, according to Anthony Kim, a solar insight analyst at Bloomberg New Energy Finance (BNEF) in New York. "There are approximately 400 solar manufacturers in the world, when in fact the industry probably needs only about 20 of them."

But just as possibly, SoloPower could survive the turbulence and succeed as a global player, if its flexible and lightweight solar panels can penetrate the untapped industrial market, analysts told InsideClimate News.

"For better or worse, SoloPower has a lot to prove," said MJ Shiao, senior analyst of solar markets at GTM Research, a Boston-based consulting company.

Tim Harris, SoloPower's CEO, brushed off any speculation of being the next Solyndra. SoloPower has "more customer demand than we have the capacity to meet," he said in an interview. "We're creating an American manufacturing success story."

Flexible, Lighter, Cheaper: How SoloPower Could Beat the Odds

SoloPower and Solyndra came on the scene at the same time in 2005, with a similar goal: to change the economics of commercial solar, by slashing the time and costs it takes to install rooftop panels on industrial buildings.

Solyndra's solution was to coat tubes of glass with thin-film technology called CIGS and mount them to metal racks. The tubes would capture sunlight from all angles, unlike flat-plated panels, which only take in overhead rays.

But Solyndra's modules, while quick to install, proved expensive to produce—and consumer demand stayed low.

During that time, SoloPower honed a flat CIGS panel design that was lighter and more flexible than Solyndra's—and as a result could go on more types of rooftops. SoloPower's panels are rolled on rooftops like carpets and secured with special adhesives. The company is targeting factories and other industrial facilities whose roofs can't support the weight of traditional flat panels, which require aluminum frames and heavy metal racks.

SoloPower CEO Harris estimates that lighter panels like SoloPower's are the only option for half the world's commercial rooftops. Silicon modules (panels plus installation gear) weigh between 40 and 60 pounds each; SoloPower's modules weigh about 13 pounds, he said. Per square foot, SolarPower's panels are five times lighter than those made by Solyndra, according to the companies' estimates.

Shiao, the GTM analyst, said SoloPower also has a cost advantage.

Solyndra's modules were expensive to produce, mainly because they required a new process to manufacture them, he said. "It was always difficult to imagine them being able to aggressively reduce costs on that technology itself."

SoloPower is adapting an existing manufacturing process, which cuts costs. The Portland facility will use a 6,000-foot-long roll of stainless steel—which looks like a giant rolling pin—to produce sheets of laminate that it sprays with chemicals needed to convert sunlight into electricity.

Harris declined to disclose the per-watt price of SoloPower's panels, calling it "competitive information."

So far, SoloPower has installed just 1 megawatt of panels on rooftops in 20 countries. Harris said his company expects to make a profit starting next year, when its first production line reaches a capacity of 75 megawatts of panels a year.

Within the next three years, SoloPower hopes to expand its $60 million factory into a $340 million facility that can produce 400 megawatts' worth of panels annually.

SoloPower's promises might sound familiar to some.

In 2010, Solyndra declared at a now-infamous press conference with President Obama that it would produce 500 megawatts' worth of panels per year at its facility in Fremont, Calif. In the end, it installed 100 megawatts of solar capacity before it went bankrupt on Aug. 31, 2011. It never became profitable.

For taxpayers, the risk is lower with SoloPower, however.

Harris said that SoloPower can draw funds from its $197 million federal loan guarantee only after its first production line in Portland is producing panels and after the company meets other undisclosed milestones.

How SoloPower, Too, Could Fail: The State of the Market

Despite SoloPower's advantages, "nothing in module manufacturing is really a clear-cut winner right now," Shiao said.

The company enters the global solar market at a time when even the most successful panel manufacturers are struggling to turn a profit. A widespread consolidation is taking place that's expected to drive most small players out of business—or at least see them gobbled up by bigger players.

That's largely because the price of traditional crystalline silicon solar panels has plummeted by 75 percent since 2008, as Chinese manufacturers flooded the market with cheap panels and as key European markets like Germany and Spain scaled back incentives, creating a glut.

The oversupply dealt a blow to makers of crystalline silicon panels, but SoloPower's thin-film peers were hit even harder.

Thin-film technologies were touted in recent years as a cheap alternative to polysilicon, the key ingredient in crystalline silicon panels. And by the mid-2000s, the price of polysilicon was rising fast.

At that time, SoloPower, Solyndra and others set out to commercialize a nascent technology called CIGS for the copper, indium, gallium and selenium elements it contains. Although less efficient at converting sunlight into electricity than conventional panels, the idea was that CIGS could make up for its inferior efficiency by offering a huge cost advantage in terms of raw materials, equipment and labor.

But the promise of lower-cost thin-film panels was short-lived. The technology proved to be more complicated to manufacture and mass-produce than expected, and it required more time to scale up.

And then polysilicon prices dropped, plummeting 96 percent in four years to $20 per kilogram today.

At those polysilicon prices, "it's tough to really cut out ... a concrete competitive advantage" for thin-film technologies, said Matt Feinstein, a solar industry analyst with Lux Research. "We think the odds are against them," he said, referring to SoloPower and its thin-film competitors.

Feinsten in particular questioned SoloPower's estimates that half the world's rooftops are too fragile for heavier conventional panels, which is a key part of its business plan. That estimate is "way too high," he said, adding that the actual number of weaker rooftops is likely a tiny fraction of that amount.

Further, he said, the downfall of several of SoloPower's thin-film peers is far from encouraging for the startup's prospects.

Here's a snapshot of some companies' recent struggles:

  • Miasolé. The CIGS panel maker from Santa Clara, Calif., was acquired last week for $30 million by major Chinese energy developer Hanergy Holdings. The deal was a big loss for investors and backers, who had poured about $500 million into the firm since 2004.
  • Ascent Solar Technologies. The Thorton, Colo.-based firm, which also makes CIGS panels, hasn't reported a profitable quarter since it went public in 2006, according to Bloomberg News. Now the firm is shifting its focus from large-scale solar power plants to consumer electronics, including sun-powered charging cases for Apple's iPhone 5, which will ship in December.
  • Abound Solar. The solar panel maker in Loveland, Colo., made thin-film panels with a cadmium telluride compound before it filed for bankruptcy and suspended production in July. The firm had used about $70 million of its $400 million federal loan guarantee. It said it planned to dismiss 125 workers.

All that bad news doesn't bode well for SoloPower's ability to attract the private financing it needs to reach mass-production. So far, the company has raised $232 million in private money, plus tens of millions of dollars in state and city incentives. 

The key for SoloPower, Feinstein said, is to find a few major customers, such as big-box retailers, to buy and install its solar power system, so that potential financial backers can feel confident the panels work and can produce clean electricity at a competitive cost.

That will help "prove that they are a viable option in the market segment that they want to be in," he said.

 

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