Manufacturer bounds into complicated solar market

“We believe we have a more efficient manufacturing process,” Chen said, calling it the company’s “secret sauce” but divulging no more. It’s at least as cost effective as the methods already being used and “certainly” more scalable, leading to lower capital expenditures.

Abound is seeking funds to demonstrate that scalability. The company applied in February for a loan guarantee from the U.S. Department of Energy, which recently financed its first loan under a three-year-old program to Fremont, Calif.-based Solyndra Inc. Solyndra’s award was part of a round two, $30.5 billion solicitation geared toward renewable energy and nuclear facility projects.

Abound is looking to land the financing for an expansion and second facility. The expansion at the Longmont facility would increase full capacity there by about 50 percent.  The company isn’t pinpointing where the second facility would be located, allowing only that it will be in the United States.

“The U.S. is still a maturing market for solar generation, particularly on the utility scale,” Chen said.

It’s a different story in Europe, where a vast network of integrators has already carved the market into niche spaces. One such company, Wirsol, based in Germany, the top solar market in the world, recently launched into the U.S. market with operations in Fort Collins.

Wirsol opened its office at the Rocky Mountain Innovation Initiative on April 2. G.J. Pierman, director of business development for Wirsol who is running the office, said he will begin adding staff as projects warrant. He also expects that the German headquarters will be sending out its experts to help with training. “By the end of the year, I imagine I’ll have between five and 10 employees,” he said.

The company has eight to 10 projects in various stages of development right now, including several in Fort Collins.

Global conditions cloudy

Wirsol’s move here, Chen added, is a testament to the local strength and support of the industry. But it’s the global conditions that have the clouds hovering over the solar market. First Solar Chief Financial Officer Jens Meyerhoff, in a fourth-quarter conference call, said the company has “identified approximately 10 percent to 15 percent of potential customer default risk” — meaning customers are canceling orders, leaving the company to shift the volume to other customers.

“We could see some inventory build in the first half of 2009,” he said in the call.

“The market is experiencing some positive and negative forces at the moment,´ said Rob Stone, an analyst with research firm Cowen and Co. LLC.

Stone said the initial fear with the economic downturn was that governments would pull away from funding solar projects, but the opposite is happening.

“What we’re seeing is that the solar market is experiencing a price drop,” he said.

Prices during the past few years have been inflated with material costs and large demand. Spain had pumped up demand in the past with a solar subsidy program capped at 1,200 megawatts; 2009’s subsidies are capped at 400 megawatts.

Stone said that while estimates call for the number of units sold to increase, revenue might be down because of prices. In all, he estimates solar unit growth between 10 percent and 20 percent this year, with much of the growth coming from Germany, Italy, France, Japan and the United States.

At the same time, prices are likely to drop 20 percent to 30 percent. The U.S. price per watt is expected to drop from $4 in 2008 to $2.50 in 2009. Stone thinks that by the second half of the year, the industry and economy will be bouncing back with growth returning for 2010.

on Facebook on LinkedIn