In a sign of optimism about the stock market's reception to clean energy start-ups, California solar company Solyndra on Friday filed documents to go public.
The Fremont, Calif.-based company said it plans to raise $300 million in a public stock offering to expand into a market it projects to grow at 34 percent annually.
Four-year-old Solyndra makes a very specialized solar module designed for flat commercial rooftops. The system, which looks like long rows of black tubes, uses flexible thin-film solar cells shaped as a half cylinder to generate electricity from sunlight. The shape increases the amount of captured light while providing cooling from the air.
Solyndra's rooftop solar arrays are made up of hundreds of tube-shaped solar cells.
(Credit: Solyndra)The company received a $535 million loan from the Department of Energy's loan guarantee program earlier this year, which it used to open a manufacturing facility in California. That loan, authorized in the 2007 Energy Act, was the first that the incoming DOE had given after a four-year backlog of applications.
Solyndra said it intends to use the proceeds from a public stock offering to finance the expansion of its second fabrication unit. It has also applied for a second loan guarantee for $469 million from the DOE in September, it said.
Billions of venture capital money has been put into green technology companies, but there have been few successful stock market offerings that have rewarded early investors and fueled further growth.
Earlier this year, Watertown, Mass.-based battery company A123 Systems went public and its stock has largely maintained its initial rise. That successful offering was seen as a sign that investors are interested in the potential for energy technology companies despite the economic downturn.
In its S-1 documents, Solyndra indicated that it had revenue of over $174 million and a net loss of nearly $120 million for the nine months of 2009. In the past several weeks, Solyndra announced distribution agreements with companies outside the U.S.
Correction, 12:55 p.m. PDT March 19: Global Solar is not technically a subsidiary of Solon as was suggested by the analyst. According to Global Solar, Solon acquired a 19 percent stake in 2006. The remaining 81 percent is owned by a European venture capital investor.
One year ago, silicon, the most common material used in making solar panels, could not be supplied fast enough. It gave an opening to many new solar tech start-ups looking to pick up venture capitalist interest and cash.
While some technologies may not have been as efficient as traditional silicon solar panels, they had other qualities. Thin-film photovoltaic systems were very popular.
But now with a silicon supply glut that's going to get worse before it gets better, the game has changed. Solar venture capitalists will lean away from innovative technologies toward sure bets closer to commercialization, according to a report released Wednesday by Lux Research.
The report deciphers in company-by-company detail where the solar market stood before the 2008 fourth-quarter crash, and how it's affecting the development of new solar technologies. It predicts where the bottom of the solar market is, who will climb out of it, and when that will start to happen.
Overall, the solar market will go from $36 billion over 5.5 GW (gigawatts) worth of solar panels sold in 2008 to $29 billion over 5.3 GW in 2009, an illustration of the average decrease in price per watt. The silver lining, solar to grid parity and growth to $70 billion across 18.5 GW, will not be seen until 2013.
Investors may still bet on technologies like CIGS (copper indium gallium selenide), but only those under the auspices of a larger established parent company, according to Ted Sullivan, a senior analyst at Lux Research who oversaw the report.
"Nobody really comes out of this unscathed, but those who will be least harmed by this will be companies like First Solar. Even with crystalline silicon prices dropping as far as they are, First Solar is still cost competitive. They may have to reduce (their prices) a little but they still are the formidable," said Sullivan in a phone interview with CNET.
Minor players will collapse, leaving market share for others to pick up and grow.
"Players might get hurt on pricing, but emerge almost stronger from this because a lot of the second- and third-tier competitions will play out," said Sullivan.
Because of the interest from developers and solar installers, CIGS is still a viable solar technology to watch.
CIGS technology will grow from $321 million in revenue this year to $950 million in 2013 despite the fact that many of today's CIGS companies won't be there to see the turn around, according to the report.
Sullivan points to Q-Cells' subsidiary Solibro and Global Solar, which Solon has a stake in, as two CIGS companies that will likely survive because they are warrantable in the sense that they have the backing of strong companies.
Although six months ago suppliers could not keep up with the demand for silicon, makers of both traditional crystalline silicon and thin-film silicon solar panels have huge surpluses of inventory, according to the Lux Research report.
As in many industries, the economic crash of fourth quarter 2008 has left the solar industry with fewer consumers and inventory build-up resulting in a forced drop in prices.
Prices for commercial utilities purchasing solar panel systems, for example, have fallen from roughly $3.80 per watt to as low as $2.50 to $3.10 per watt, according to Lux Research report figures.
"Today, crystalline silicon producers like Suntech Power, Gintech Energy, Motech Industrial, and others are reportedly holding roughly up to 100 MW each in excess inventory, while thin-film silicon producers such as EPV Solar are reportedly stacking modules to the ceiling as storage space runs short," says the report.
Lux Research says that there is light at the end of the tunnel and that it can determine where the bottom is, based on its review and interviews of over 200 solar companies, as well as producers, installers, and project developers.
In crystalline silicon, Lux Research sees Sharp Electronics, Suntech, and Q-Cells in stronger financial positions and, therefore, able to instill faith in its warranties, making them more attractive to buyers. But companies like Yingli and ET Solar will be forced to discount to distract buyers from the perceived risk of an unproven company.
"Most surprising thing for me, within the crystalline, I tried to find the cut-off for those easily viable. People named companies like Yingli....Yingli? The bar was surprisingly high. They named only the best of the best not-bankable companies, which surprised me," said Sullivan.
A 97.2 kilowatt solar photovoltaic system Borrego Solar installed for a mixed live/work property in Richmond, Calif.
(Credit: Borrego Solar)Borrego Solar Systems, a manufacturer of a solar power systems that can connect to electrical grids, received $14 million in venture funding on Wednesday.
The money will go toward the company's expansion already under way to bring more solar installations to the mid-Atlantic region of the U.S., according to the company. Borrego Solar recently opened offices in Boston.
The deal itself could be a sign that green capitalists are taking a more conservative approach to investment, not only in terms of business management but also in terms of the type of technology they're willing to take a risk on.
For one, Borrego Solar brought in $60 million in revenue in 2008 and scored over $90 million in contracts, according to company statistics. And in addition to last August's distribution deal for its residential solar panels with Wal-Mart's Sam's Club stores, the San Diego-based company has also scored some high-profile clients in California.
But perhaps of more interest to those watching the industry is the fact that Borrego Solar's solar panels are made of silicon semiconductors and not thin-film solar cells from CIGS, a combination of copper, indium, gallium, and selenide.
Silicon is a tried-and-true material in the solar industry. CIGS is a newer and, therefore, less proven solar technology material, even though many big names, such as IBM, are trying their hand at CIGS solar panels.
Solyndra, a start-up making thin-film photovoltaic systems, has secured $600 million in funding.
It's additionally secured $1.2 billion in contracts from clients in the U.S. and Europe, the Fremont, Calif.-based company revealed Tuesday.
What start-up gets that kind of funding and client promise? Basically, one that's invented thin-film solar panels shaped like old-school fluorescent lightbulbs.
Solyndra's series of tubes offer a unique angle on solar power.
(Credit: Solyndra)Since 2005, Solyndra has quietly been developing a proprietary CIGS-based thin film photovoltaic (PV) system and a staff of more than 500 employees.
CIGS is a material that includes a combination of copper, indium, gallium, and selenide. It's now being used by quite a number of companies to make thin-film solar cells among other things.
Solyndra's cylindrical PV panels don't have to be spaced to leave room for rotation toward the sun as with flat solar panels. The panels are actually rows of cylindrical tubes which are installed horizontally and close to one another.
The tubes can "capture sunlight across a 360-degree photovoltaic surface capable of converting direct, diffuse, and reflected sunlight into electricity," according to Solyndra.
Solyndra panels consist of tubes that can absorb sunlight from all angles.
(Credit: Solyndar)The company also says that because of this unique shape and mounting system, more productive solar surface area can be packed onto one roof than with conventionally shaped panels. Subsequently, its system is able to generate "significantly more solar electricity on an annual basis" compared with flat panels, according to the company.
Because Solyndra's tube panels are lighter and allow wind to pass through them easily, there is less construction needed in terms of rooftop anchoring or shoring up a roof for significant weight-bearing. Because of this, according to Solyndra, its system is significantly cheaper to install than flat-panel systems
While solar power may not be considered the complete solution to U.S. energy woes, many commercial, industrial, and public facilities are looking at using solar photovoltaic systems as a supplement to their facilities' energy diets. In April, for example, the landmark Staples Center in Los Angeles announced it will be covering its 24,196-foot roof with photovoltaic modules.
Thin-film solar cells, particularly CIGS panels, have been attracting a lot of attention and funding. SoloPower, NanoSolar, and Ava Solar are thin-film solar companies that have announced funding in the hundreds of millions over the last few months. Even IBM is getting into CIGS solar cells through a partnership with a Japanese semiconductor equipment manufacturer.
Solyndra's funding comes from a mix of venture capital and private equity investments totaling $600 million to date. Solyndra investors include Virgin Green Fund, the Abu Dhabi-based Masdar, Rockport Capital Partners, and Argonaut Capital, according to a company spokeswoman.
The company has already been expanding its current plant, Venture Beat reported early Tuesday morning.
Solyndra counts Solar Power, the company contracted to do the Staples Center, and Phoenix Solar, a large solar power integration company in Europe, among its satisfied customers.
"By eliminating the need for roof-penetrating mounts and wind ballasts, PV arrays with Solyndra panels can be installed with one-third the labor, in one-third of the time, at one-half the cost. For commercial rooftops, PV module installation time can now be measured in days, not weeks. For flat commercial rooftops this is game-changing technology," Manfred Bachler, chief technical officer at Phoenix Solar, said in a statement.
If you need more proof that thin-film solar cells is where the action is going, take a look at the money flow.
SoloPower is raising almost $200 million to ramp up manufacturing of its thin-film solar cells, according to a report in VentureWire picked up by other media outlets.
A diagram showing SoloPower's roll-to-roll solar cell manufacturing process.
(Credit: SoloPower)The San Jose, Calif.-based company makes cells from CIGS, a combination of copper, indium, gallium, and selenide which a number of solar companies are betting can undercut traditional crystalline silicon.
Thin-film solar cells, from CIGS or other materials, are less efficient at converting sunlight to electricity but use far less material than silicon, making it potentially cheaper.
CIGS cells are also flexible, enabling things like solar rooftop shingles. At the same time, fabricating cells with that combination of materials has been fraught with technical challenges.
SoloPower's hefty funding is the latest to pour into thin-film CIGS solar start-ups.
NanoSolar last month disclosed that it has raised $300 million, bringing its total funding to about half a billion dollars.
Another thin-film start-up, Ava Solar, raised $104 million in equity last week to make cells from cadmium telluride like high-flier First Solar. CIGS maker Miasole is said to be seeking to raise an additional $200 million as well.
These relatively young companies are taking in a lot of money, when compared to companies specializing in things like smart grids. But to be competitive on cost, solar companies need to manufacture high volumes of cells, and building these facilities requires large capital investment.
SoloPower's technology is a roll-to-roll manufacturing process in which CIGS cells are layered on a flexible substrate. It layers the cells through electroplating, rather than sputtering, which is the technique used by hard-drive manufacturers to layer on magnetic material.
SoloPower's series B venture round in July of this year raised $30 million.
A recent report by Greentech Media and the Prometheus Institute forecast thin-film production to double in each of the next three years, with CIGS being the most "exciting yet elusive."
The study forecast that the thin-film cells will cost $1.40 per watt or less, with a 50 percent gross margin, while silicon cells manufacturers' margins could be as small as 15 percent.
Intel's venture capital arm, Intel Capital, on Wednesday said it has invested in German thin-film solar cell manufacturer Sulfurcell.
Intel Capital led the $133.7 million (85 million euro) round with a $37.7 million contribution. The money will be used to expand the company's existing production, which started in 2005.
A module using Sulfurcell's CIGS thin-film solar cells.
(Credit: Sulfurcell)The announcement follows the spin-off last month of SpectraWatt, a manufacturer of silicon solar cells, from Intel.
Sulfurcell, by contrast, is an expert in thin-film solar cells made from a combination of materials in the CIS/CIGSe (Copper-Indium-Sulfide/Selenide) family of chemicals. The company was spun out of Hahn-Meitner-Institut, a Berlin-based research institute specializing in thin-film photovoltaics.
Intel Capital's clean-tech strategy is to invest in a number of different areas including solar, energy efficiency, power generation and storage, and transportation.
Chip rival IBM is also moving into the thin-film solar cell arena through a manufacturing partnership with Tokyo Ohka Kogyo (TOK).
Thin-film cells, particularly those made from CIGS (copper, indium, gallium, and selenide), are one of the hottest areas of clean-tech investment.
Because they use much less material than silicon, they can be more cost-effective on a price-per-watt basis.
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.
Corrected July 9 at 6 p.m. PDT: This blog initially stated that CIS reached an efficiency of 20 percent. The studies showing that efficiency used a higher light concentration than the studies of CIGS efficiency. When comparing the two, CIS has a lower efficiency of around 15 percent.
Royal Dutch Shell subsidiary Showa Shell Sekiyu, Japan's fifth-largest oil refiner, plans to invest 100 billion yen, or about $938 million, in a solar-panel megaplant, according to AFP.
The planned factory will produce panels with the cumulative annual capacity to produce 1 gigawatt of power, equivalent to that of a small nuclear-power reactor.
The news breaks a month after Japanese Prime Minister Yasuo Fukuda called for a tenfold increase in the country's use of solar power by 2020. The government is considering subsidies to boost the industry.
Showa came into the solar-power business last year, with its first 20-megawatt-capacity photovoltaic plant in the southern city of Miyazaki. In August, it announced plans to build a second factory, with a capacity to produce 60 megawatts.
The company produces its thin-film photovoltaics with copper, indium, and selenium (CIS). This differs from the combination of copper, indium, gallium, and selenium (CIGS) that companies such as Miasole, HelioVolt, Nanosolar, and Global Solar are using.
In 2005, CIS had reached a maximum efficiency in converting solar light to electricity of 15 percent, according to the U.S. Department of Energy's National Renewable Energy Laboratory, NREL (PDF). That is less than the 19.9 percentage mark that CIGS cells achieved in March by researchers at the U.S. Department of Energy's National Renewable Energy Laboratory. The reason Gallium is added into the CIS cell (to make it a CIGS cell) is to raise the band gap of the material. This enables the material to more efficiently absorb the solar spectrum and in turn increase the efficiency of the cell. But it also makes CIGS more complicated--and potentially more expensive--to manufacture than CIS thin film.
The location of the new plant remains undisclosed, but rumors say the company is considering areas of Japan, Europe, and the Middle East. Equally unknown is the financial source for the project.
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:
Nanosolar started manufacturing late last year and said that its first cells were destined for a solar park in eastern Germany."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.
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.
Add IBM to the hordes of companies trying to build a better solar cell.
The computing giant on Monday is expected to announce a deal with a Japanese semiconductor equipment manufacturer to make thin-film solar cells from CIGS, a combination of copper, indium, gallium, and selenide.
Neither IBM nor its partner, Tokyo Ohka Kogyo (TOK), plan to manufacture cells themselves. Rather, they will develop technology that can be licensed to solar companies in two or three years, said Supratik Guha, lead scientist for photovoltaics at IBM Research.
IBM has already built a prototype device. Once made at large volumes on a glass substrate, the cells are expected to deliver electricity at less than one dollar per watt at peak times--a long-held target of many solar outfits.
"We have the skills that we have developed in other areas--standard silicon semiconductors, materials chemistry--and we're looking to utilize those skills in the photovoltaic space and develop IP (intellectual property) and know-how that other people don't have," Guha said.
Traditional solar cells are made from silicon, but alternative thin-film materials are becoming a larger share of the market. Thin-film cells are less efficient at converting sunlight to electricity than silicon, but they require much less material to produce a cell, making them cost-competitive. Solar high-flier First Solar sells thin-film cells from cadmium telluride.
CIGS is a material that a number of companies are betting on, including Nanosolar, Global Solar Energy, Miasole, and Heliovolt.
These companies are not producing cells at large volumes yet, but use of CIGS is expected to catch on quickly next year as their factories come online.
"CIGS will be the big story of 2009 because we know how many companies are putting in multimegawatts of CIGS (production capacity) in 2009," predicted solar expert Travis Bradford, president of the Prometheus Institute, who spoke at a recent Greentech Media solar briefing.
15 percent efficiency goal
IBM's CIGS manufacturing technique came out of research IBM had done about 10 years ago in flexible electronics.
It's a break with the most common CIGS manufacturing process, called co-evaporation, in which active chemicals are immersed in a solution that gets removed in a vacuum.
IBM's "solution-based processing" calls for the chemicals to be dissolved in a liquid and then dried. It does not require a vacuum, doesn't require as much energy to run, and can be done faster than co-evaporation, Guha said.
IBM is also looking to leap-frog existing CIGS manufacturers on efficiency with a target of about 15 percent.
The efficiency of the CIGS cells on the market now is at about 9 percent or 10 percent. HelioVolt recently announced that it hit 12.2 percent efficiency with a process that is faster than co-evaporation. Global Solar said it expects to get to 14 percent, eventually.
The record for efficiency was done by the U.S. National Renewable Energy Research Laboratory (NREL) earlier this year, which reached 19.9 percent efficiency through a co-evaporation process.
In about a month, IBM intends to provide more technical detail of its solutions-based process in an advanced-material paper, Guha said.
CIGS is not the only area of the solar industry where IBM is investing.
Again by modifying chip-manufacturing technology, IBM created a cooling method for a solar concentrator that it hopes to license to others.
It is also doing work on techniques to manufacture silicon solar cells on glass using very little silicon, Guha said.
Rival Hewlett Packard, meanwhile, earlier this month licensed transparent electronics technology to Xtreme Energetics to make a solar concentrator.
