Green Tech

I've been saying for a while, that with enough money, someone is bound to crack the CIGS nut in thin film, and deliver the cleantech sector another First Solar (NASDAQ:FSLR) like renaissance for the always around the corner technology.

That's not because it's easy, or even because it's a good idea to try, but when well over a billion dollars in investment pours into a given technology, something is bound to come out the other side - eventually. A seductively high efficiency potential technology with very low potential materials costs, CIGS has been just over the horizon for a decade or more, but has enjoyed a huge influx of capital and increase in the number of programs chasing in over the last 5 years. Similar to other solar thin film technologies, device complexity, effective yield, throughput, and process control issues are always the bugaboo.

Given its seductivenes, its somewhat capricious nature, and the siren filled history of the technology, perhaps we should think of CIGS like a woman, and all men need a few rules of thumb to keep in mind before we jump in. Here are mine (for CIGS, not women):

Number one, like most thin film technologies, $100 mm in investment is the ante up to play the game. Just because you spend it doesn't mean you get real product out, and with CIGS, you tend not to know whether anything is workable until oh, say $50 to $100 mm is already spent.

Number two, what you think you know, you don't. Until the pilot plant has been operating for a few years, companies generally really underestimate what they don't know.

Number three, remember those experiments and great idea you sold your investors on, the hard part is not there, the hard (read risky) part is ALL in the "it's just engineering" end of the scale up process you told the investors was "fairly straightforward". This isn't IT, it's deposition with a very commoditized end product.

Number four, whatever the projection as far as timing, add 3 years, maybe 5. I'm not kidding here, I said years.

Number five, when the words "fast", "roll to roll", "reel to reel" or anything else equating to speed in the process are in the pitch deck, translate that to read excruciatingly slow in the development timeline, and lots of "issues" popping up in those nasty yield and process control areas.

Number six, when investing, be very careful about that "yield" number and the "capacity" numbers they made up based on it. All thin film development companies keep "little black books" with the data and charts on every process run they've ever made. Read every single one of those charts, and ask lots of stupid questions about why only 4% of the total square footage produced is above 6% efficiency in run XYZ. Think in terms of "effective total average yield". That's where the problems are hiding.

CIGS watchers have a number of darlings to follow. There's Miasole, which now under new management is rumored to have substantially tightened down its development discipline to take it's shot, Nanosolar, another Silicon Valley venture darling that has been described by many observers along the lines of, "never met hype they didn't like", but with a seductively low cost printable process if they can get it to work, Solyndra, the "stealth" company with the big sign on I-880, Heliovolt, the Texas-based hot CIGS deal of last year, which burst on to the fundraising scene on the back of it's still extremely early stage "FASST" technology. And those are just the largest of the US based venture backed deals, without including Honda, IBM, DayStar, Ascent Solar, Solopower, and literally dozens upon dozens of others around the world with significant backing (though all at a very, very early stage). Wikipedia has a decent cut at a list, though by no stretch of the imagination comprehensive.

My best estimate is that most of the venture investors in each of those deals personally looked in depth at the manufacturing process of single digit numbers of competing approaches before investing. And only read the little black book on two of them. That strategy was tried, with ahem, "mixed" results, in fuel cells a few years back. We'll see how well it works in thin film solar.

And of course, as with most things in solar, the major players should probably be watched more carefully than the startups. I've always liked larger companies to crack thin film issues, in no small part because the term "stage gate" tends to mean something to them.

But my personal favorite for front runner currently is Arizona based Global Solar, a solar company I have been following for years. Their announcement a few months ago of 10% efficiency in production runs, was pretty much lost in the crush of press around solar, for reasons unfathomable to me.

While admittedly not yet proven in a full production environment (they are working on the scale up to 30 MW plants) they do have the massive advantage of having run virtually the only operating CIGS pilot plant in the world - and I believe have shipped more volume of CIGS product than anyone if not everyone else. True to form, that technology, which originally came out of the Tuscon Electric backed ITN Energy Systems labs in Colorado which later did Ascent Solar, has had an estimated $150-$200 mm plus invested in it over the last decade, before Solon AG bought the company for a reported $16 mm. Though to be fair, current management under CEO Mike Gering was brought on well into that process. So while I'll keep my fingers crossed that some one will crack the CIGS nut, and continue to be flabbergasted at the $1 Bil plus valuations estimated to have been achieved by some of the startups named here for very large science projects, when it comes to the one to watch, Global Solar is my personal pick.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding CEO of Carbonflow, founding contributor of Cleantech Blog, a Contributing Editor to Alt Energy Stocks, Chairman of Cleantech.org, and a blogger for CNET's Greentech blog.

Upstart Nanosolar says that it has built the Ferrari of solar cell manufacturing: a one gigawatt machine that prints solar cells at 100 feet per minute.

In the company blog, CEO Martin Roscheisen on Wednesday said that the one gigawatt machine is a first for the solar industry, orders of magnitude more "capital efficient" than existing production techniques.

Nanosolar is one of several companies betting on CIGS (copper indium gallium selenide) to lower the price of solar electricity. Compared to traditional silicon, CIGS cells don't require nearly as much material.

Roscheisen said that the secret to Nanosolar technology is that cells are literally printed from a liquid. From his blog:

"Most production tools in the solar industry tend to have 10-30MW in annual production capacity. How is it possible to have a single tool with Gigawatt throughput?

"This feat is fundamentally enabled through the proprietary nanoparticle ink we have invested so many years developing. It allows us to deliver efficient solar cells (presently up to more than 14 percent) that are simply printed," he wrote.

Nanosolar started manufacturing late last year and said that its first cells were destined for a solar park in eastern Germany.

Speed, as well as cell efficiency, are the name of the game when it comes to being competitive.Traditional CIGS manufacturing processes are done in vacuum chambers and are slower.

Companies like Nanosolar, Miasole, HelioVolt--and now IBM--are developing processes more cost-effective manufacturing techniques to undercut existing technologies.

There's been an explosion in the number of solar companies over the past few years. But for the most part, product development is destined for power plants operated by utilities.

That won't always be the case, however, says Nanosolar CEO Martin Roscheisen, who wrote in a blog that the company will eventually serve the home rooftop market.

Nanosolar is a well-funded Silicon Valley solar manufacturer that started making thin-film solar cells and modules late last year. The first customer is a utility in east Germany.

In a recent blog, Roscheisen described why the company is targeting utilities first and argued that small municipal solar power plants offer good growth prospects.

VentureBeat wrote a roundup of the several solar companies developing technology for relatively small power plants, on the scale of 2 to 10 megawatts.

But in an update, Roscheisen added that the utility route can ultimately benefit consumers looking for lower-priced solar installations.

"To all those of you who are disappointed that our first product is not for residential homeowners, we can reassure you that we do have a fabulous residential solution on our near-term road map--one that will bring the utility scale economics of Nanosolar Utility Panel...technology to homes everywhere and completely redefine how residential solar is done," he wrote.

Renewable energy provider EDF Energies Nouvelles has plunked $50 million into Nanosolar and will get access to output from Nanosolar's factories in 2009.

Nanosolar specializes in copper-indium-gallium-selenide (CIGS) solar cells. CIGS cells aren't as efficient as silicon solar cells, but they cost less and can be integrated into building materials. Nanosolar's cells can be printed on thin, flexible sheets of metal.

The company became one of the first to start producing CIGS commercially when it started cranking out production in December. Some other competitors have had to delay production. Right now, only Global Solar in Arizona also produces CIGS commercially.

A few weeks ago, we heard consistent rumors that Nanosolar had been seeking additional investment and has been telling investors that the company is worth around $2 billion. The company hasn't confirmed the $2 billion part (though we've heard it from a lot of people), but this confirms the "seeking investment" part, I guess. In 2006, Nanosolar raised $100 million. Investors include Mohr Davidow Ventures, Larry Page, and Sergey Brin.

EDF serves nine European countries and has 1.4 gigawatts of installed capacity and is building 1.1 more gigawatts.

The race is on to make most the cost-effective solar panel, and little-known Global Solar Energy says its flexible, thin-film cells have got the lead.

Company president and CEO Mike Gering told investors at the recent Piper Jaffray's Clean Technology and Renewables Conference that the company is trying to raise $100 million in private equity to finance construction of two new plants--one in Tucson, Ariz., and one in Berlin.

The company is one of several developing thin-film solar cells made from the combination of materials copper indium gallium and diselenide (CIGS).

CIGS, one alternative to the dominant silicon solar cell, is fast becoming a substantial piece of the fast-growing solar business. Solar industry research firm Prometheus Institute for Sustainable Development estimates that thin film technology could represent 20-30 percent of solar cell production by 2010.

Nanosolar, a well financed start-up from Silicon Valley, started shipping its CIGS solar cells late last year and they will be used in a solar power park in Germany.

Nanosolar and Solyndra, another CIGS challenger, are said to be looking to raise significant amounts of money as well at very high valuations, according to rumors. One of the largest venture investments last year was another CIGS producer, Heliovolt.

"It used to be that CIGS technology was the next hope for thin-film PV (photovoltaics), but that point has been reached by Global Solar," Gering said, adding that others will reach that point.

Gering discounted the progress of his competitors. That's not surprising, given that he is trying to raise money, but the company has been manufacturing for a few years already and all of its production for 2008 is already sold.

Until now, the company has sold its cells for use in portable, flexible solar chargers for military use or to charge consumer electronics.

But he said a bigger growth opportunity is in solar panels and building-integrated PV, where cells are baked into roofs or siding. To expand, it needs more capital to build a 40-megawatt plant in Tucson and a 35-megawatt plant in Berlin, Gering said.

In addition, Global Solar claims to hold the CIGS efficiency crown for converting light to electricity.

The company's products can now convert 10 percent of sunlight to electricity and the company claims it will get to 13 or 14 percent.

For comparison, the most efficient silicon solar cells are in the 20 percent range.

Meanwhile, Nanosolar CEO Martin Roscheisen disclosed that his company's cells operate in the "9 to 10 percent range."

He, too, spoke at the Piper Jaffray conference, where he said that the company expects it can reach 15 percent efficiency ultimately.

"Our entire strategy is not based on delivering the most efficient panels. It's to deliver the most cost-efficient panels," he said.

Roscheisen said the installed cost of the panels at the planned East German plant will be about $3 per watt.

He added that the company expects it can make the entire system cost lower than stock market high-flier First Solar, which is considered the most cost-effective on the market today.

CIGS looks like it could pay off.

Nanosolar and Solyndra, which both develop copper-indium-gallium-selenide (CIGS) solar cells, are looking at raising additional funds, according to sources, and both companies have put large valuations on themselves.

According to sources, Nanosolar is telling investors it will have a valuation, after another round of funds, of around $2 billion. Solyndra says it is worth $1 billion. Not bad for companies with combined current revenues at the moment that probably would have difficulty rivaling the take of a reasonably located convenience store. Nanosolar just started shipping a few solar cells to customers at the end of 2007, and Solyndra is ramping up toward production.

I haven't confirmed these rumors, and they might be wrong, but they have been consistent.

Nanosolar CEO Martin Roscheisen has said that Nanosolar does not have a term sheet, a document that provides details about business prospects and a funding proposal, at the moment. Roscheisen, however, has not discussed valuation.

Both Nanosolar and Solyndra were contacted for official comment, but no response has yet been received. Companies generally don't comment this early on financial issues such as valuation.

The high valuations seem to be driven by the current dynamics of the solar business. Demand continues to outstrip supply. The shortage of silicon continues to hamper manufacturers of silicon solar panels. CIGS solar panels aren't as efficient for converting sunlight into electricity as silicon panels, but advocates say they will cost less. The active materials in CIGS panels also aren't in dire supply at the moment either.

The love affair that investors have had with First Solar, which makes thin film solar panels with cadmium telluride, also persists, which lends some glow to CIGS companies. First Solar went public at $20 per share in late 2006 and now trades at $207. (Before the recent swoon on Wall Street, it hit $283.) First Solar has also seen tremendous growth in revenue and earnings with each passing quarter.

When it went public, First Solar was valued at close to $2 billion. It currently is valued at $16.3 billion. Some believe the company is overvalued, but those are the numbers.

First Solar, however, was not your ordinary start-up. The company's founders started tinkering with cadmium telluride technology in the 1980s. By the time the company went public, First Solar had already begun mass production.

HelioVolt, which plans on producing thin film solar panels made from copper indium gallium and selenide (CIGS), will build a 20-megawatt factory in Austin, Texas, that will start popping out panels in 2008.

The factory will employ about 150 people. The company then hopes to move into mass manufacturing by the first quarter of 2009 as well as expand production capacity.

CIGS solar panels aren't as efficient at converting sunlight into electricity as silicon solar panels, but advocates say that they cost far less to produce. CIGS solar panels can also be placed on glass or polymer sheets. Ideally, a plastic sheet coated with CIGS solar cells could cover the roof of a giant retail outlet and provide the building with a huge percentage of its electricity.

Getting CIGS into mass production, however, has taken some work. HelioVolt, Miasole, and DayStar Technologies have all experienced delays. NanoSolar, in Silicon Valley, just began producing solar cells out of its new factory.

Although each of the CIGS companies will make the same basic product, they each employ a different manufacturing process. He who comes up with a cheap, reliable way to produce finicky CIGS solar cells will be the winner, say analysts. First Solar, which makes cadmium telluride thin film solar cells, can attribute a lot of its success to its manufacturing process, which it has honed for the last few decades.

Earlier this year, HelioVolt raised $101 million. Investors include New Enterprise Associates and the Masdar Clean Tech Fund, an investment group formed by the government of Abu Dhabi.

Venture capitalists have poured more than $344 million into five CIGS companies in the last few years--Nanosolar, Miasole, Solopower, Solyndra, and HelioVolt.

Well-financed solar start-up Nanosolar on Tuesday said it has started shipping its flexible thin-film solar cells, meeting its own deadline and marking a milestone for alternative solar-cell materials.

On the company's blog, CEO Martin Roscheisen announced that the first megawatt of its solar panels will be used as part of a power plant in eastern Germany.

The release of Nanosolar's first products is significant because the company develops a process to print solar cells made out of CIGS, or copper indium gallium selenide, a combination of elements that many companies are pursuing as an alternative to silicon.

The 5-year-old company, based in San Jose, Calif., has raised more than $100 million in financing and has drawn in Google founders Sergey Brin and Larry Page as investors.

Because of the high price of silicon, several companies are making thin-film cells from CIGS, but a number have run into technical problems.

Roscheisen said the manufacturing process the company has developed will enable it to eventually deliver solar electricity for less than a dollar per watt, which would be significantly cheaper than fossil fuel sources of power generation.

To mark the occasion, Roscheisen said the first commercial panels will get special treatment: the first that came off the rolls will become part of a Nanosolar exhibit; the second will be auctioned off on eBay; and the third will be donated to the Tech Museum of Innovation in San Jose.

In a previous interview, Roscheisen said all of Nanosolar's anticipated production in 2008 has already been ordered.