Two young solar companies--DayStar Technologies and OptiSolar--have indicated that they're on shaky financial footing, signs that a shake-out among solar power companies has begun.
On Friday, DayStar Technologies said that it has issued a "going concern" statement as part of its annual filing with the Securities and Exchange Commission. The Halfmoon, N.Y.-based company had a net loss of $26 million in 2008.
"Our commercialization plans require additional capital to be raised," William Steckel, DayStar's chief financial officer, said in a statement. He added that the company engaged J.P. Morgan Securities to explore "select strategic transactions."
DayStar was one of the first companies to be formed to make solar cells from CIGS (copper, indium, gallium, and selenide), an alternative material to silicon.
Meanwhile, Hayward, Calif.-based OptiSolar said last week that it has closed its solar cell manufacturing plant and is laying off 200 employees, according to reports. Late last year, it cut its staff in half and warned that it would need more capital to continue operating.
That leaves fewer than 100 employees on OptiSolar's payroll, the San Francisco Chronicle reported.
OptiSolar, too, has developed an alternative solar technology, making thin-film cells from amorphous silicon. Last month, it sold its pipeline of projects to First Solar.
Both events point to the financing challenges that green-tech companies face, particularly in the solar sector.
Faced with both the economic slowdown and conservative lending, development-stage green-tech companies have had trouble getting the large amount of capital needed to expand.
Venture capitalists had poured millions of dollars into dozens of new solar companies, a situation that many people expected would lead to failed companies.
Meanwhile, an anticipated drop in silicon prices is expected to push the cost-per-watt of solar power lower, creating brutal price competition among cell and panel providers.
The situation could lead to consolidation among solar companies, say analysts. OptiSolar has been looking for a buyer but hasn't been able to find one, a company representative told the San Francisco Chronicle.
That's not to say that all solar start-ups are in a perilous position financially. Solar start-up Solyndra on Friday said that it expects to receive a $535 million loan from the Department of Energy to build a cell manufacturing plant.
Solar panel maker First Solar said on Monday that it has acquired the rights to develop utility-scale solar projects that rival OptiSolar has been unable to complete.
The deal, valued at $400 million, is a sign of how the seized-up financial markets are derailing large renewable energy projects and forcing solar companies to change their business strategies. Because of the tough economic conditions, analysts expect there to be consolidation among solar providers this year and next.
(Credit:
First Solar)
OptiSolar laid off half of its staff late last year and idled its Sacramento, Calif., factory because it was unable to raise additional capital. Developing utility-scale projects requires raising tens or hundreds of millions of dollars in financing, but the credit crisis has made borrowing far more difficult than a year ago.
Through the transaction, First Solar gains the rights to develop a 550-megawatt project to deliver solar-derived electricity for Pacific Gas & Electric, scheduled to begin construction in 2010.
It also acquired a pipeline of 1,300 megawatts' worth of projects with other utilities in the western U.S. and enough land rights to generate 19 gigawatts of utilty-scale solar projects. Significantly, these projects are already partially developed, allowing First Solar to short-cut a multi-year project-approval process.
The transaction is a big boost for First Solar's utility business. It comes on the heels of the company announcing that it has broken the long-pursued industry mark of producing solar panels at under $1 per watt. The company manufactures thin-film solar cells from cadmium telluride.
The OptiSolar projects will likely yield $70 million in revenue for First Solar in 2009, company CEO Michael Ahern said during a conference call on Monday.
Lazard Capital Markets analyst Sanjay Shrestha called the deal "a watershed event for the industry as it effectively takes solar industry into the mainstream" and noted that it more than doubles First Solar's project pipeline.
Like OptiSolar, other solar technology companies are making changes to their business models in reaction to the economy.
eSolar and Ausra are two concentrating solar companies which had originally planned to build and operate their own utility-scale solar power plants. Both, though, have adjusted their business models to focus instead on selling equipment--the gear that generates electricity--to utilities or power generation project developers.
OptiSolar aims to build the largest solar farm in the world some 100 miles north of Los Angeles. It would amount to 550 megawatts and power the equivalent of 190,000 homes.
The Hayward, Calif., company aims to begin construction in 2010, assuming that San Luis Obispo County will approve permits being submitted in May.
OptiSolar's thin-film silicon photovoltaics can be placed close to the ground without needing a dramatic tilt, according to the company. OptiSolar says it uses about 1 percent of the silicon of competing crystalline systems, with nontoxic and recyclable equipment made largely of glass, metal, and concrete.
Nellis Air Force base in Nevada holds the record for the largest solar plant in North America, with 14 megawatts of arrays. If OptiSolar succeeds, its farm could provide nearly 40 times that amount within six years.
California is requiring that utilities by 2010 use renewables for 20 percent or more of electricity.
Overcast Germany is recognized as the world's leader in working solar installations.
OptiSolar's farm would provide close to 40 times the energy of the 14-megawatt arrays at Nellis Air Force Base.
(Credit: U.S. Air Force photo/Senior Airman Larry E. Reid Jr.)OptiSolar says it is working with the California Department of Fish and Game and the U.S. Fish and Wildlife Service to ensure that the project, set to cover nearly 10 square miles near the Carrizo Plain National Monument, won't harm wildlife including the endangered San Joaquin kit fox. Less than 5 feet off the ground, the panels are also meant to be out of sight from nearby Highway 58.
The company has 270 employees and says hundreds of workers would be needed during installation, with minimal maintenance once the panels are up. Manufacturing is in Hayward and Sacramento.
In April, OptiSolar attracted $3 million from Kensington Global Private Equity Fund in Canada, where the company plans to build a 60-megawatt solar installation.
Last year Google distinguished itself as having the largest corporate solar installation, which amounts to 1.6 megawatts and powers up to 40 percent of the company's headquarters in Mountain View, Calif. Semiconductor equipment maker Applied Materials is outdoing Google with a 1.9-megwatt solar installation in nearby Sunnyvale.
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