Abound Solar, a startup that received a Department of Energy loan, said this week that it will shut down one of its production lines and accelerate plans to make a more competitive solar panel.
As part of the change, the company will cut 180 jobs in Colorado, where it is based. Abound Solar makes solar panels with thin film cells made from cadmium telluride, the same material used by First Solar and General Electric.
In late 2010, Abound Solar secured a $400 million loan guarantee from the DOE to boost its production in Longmont, Colo., and build a new factory in Indiana. So far, it has received $70 million from the DOE, it said in an FAQ.
Now, the company said it will stop producing its first-generation product and upgrade its equipment to make a more efficient solar panel design in its Colorado facility. The new panels can achieve 12.5 percent efficiency, versus 10.5 percent efficiency.
By raising the efficiency of its panels, Abound Solar hopes to make its product more cost-competitive on a dollar-per-watt basis. It said it intends to producing panels again by the end of the year.
The rise of Asian solar panel producers, particularly Chinese manufacturers, in the last two years has slashed the prices of solar power by over 40 percent, according to analysts. That has led to bankruptcies at a number of U.S. manufacturers and red ink at existing suppliers.
Analysts say that the solar industry's course of cut-throat competition will likely continue this year, although some question whether it is sustainable.
Abound Solar chief financial officer Steve Abley told Dow Jones said that switching earlier than planned to the newer production is a better prospect than making products at a loss.
"The way the solar market is today, everything everyone is making they're selling below cost," Abley told Dow Jones. "Not just small guys like us; substantial Chinese manufacturers are selling below cost. They can't do it for a sustainable period and we can't either."
Abound Solar received money from the same loan guarantee program as infamous solar power company Solyndra, which went bankrupt after receiving a $535 million in loans and has become the focus of political attacks.
There are two other startup companies which received loan guarantees for solar manufacturing: SoloPower secured a $197 million loan and 1366 Technologies secured $150 million.
Abound Solar's decision to shut down its first production line reflects not only the difficulty of operating in the global solar market, but some the challenges of bringing new energy technologies into production. In addition to needing to secure inexpensive loans for factories, young companies often lack the manufacturing expertise which more established businesses have.