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Solar power startup to get subsidy: smart move or another Solyndra?

Solar power startup will offer lightweight panels for roofs that can't handle traditional load. But SoloPower is tapping the same federal subsidy program that failed solar power startup Solyndra did.

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SoloPower must have its first production line up and running and meet other undisclosed milestones before it can begin to draw down funds from its U.S. Department of Energy loan guarantee. Harris expects that to happen later this year or early next year. Funds from the loan guarantee will pay for construction of the rest of the Portland, Oregon factory, which is expected to be completed in 2014. DOE spokesman Damien LaVera would not provide details on the terms of SoloPower's loan guarantee and said the company's technology was not similar to Solyndra's, but would not elaborate.

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Once completed, the plant will produce 400 megawatts of solar panels annually and employ about 400 people. There are 60 people working there currently.

SoloPower will be profitable once the first line is up and running producing panels, Harris said. Many solar companies, meanwhile, have been losing money as they scramble to cut costs as quickly as the prices on their products are falling.

Solyndra, for its part, drew down 99 percent of its $535 million loan guarantee without turning a profit.

Some project developers, bankers and others are wary of newer "thin film" solar technologies like SoloPower's that are less efficient than traditional panels at transforming the sun's light into electricity.

Thin film, a broad term for solar panels that don't use silicon as their raw material, became a darling of investors five years ago when solar-grade silicon prices soared to $500 a kilogram. Thin film makers argued that despite their shortcomings in efficiency, they could deliver far cheaper solar power than their silicon-reliant rivals. Today, however, an influx of capacity from Asia has driven spot prices for polysilicon to about $20 per kg, raising questions about the need to fund alternatives to silicon-based panels.

"SoloPower is going to have to deal with the industry perception right now that thin film is a dying technology," said GTM Research solar analyst MJ Shiao. "A start-up thin film manufacturer makes a lot of developers uneasy."

But SoloPower's Harris disputed that view, saying his company already has more orders than it can fill. "There is a pipeline of projects that are about ready to go that are just waiting for this lightweight module. If you want to put solar on, we're the only choice," he said. "It would be impossible to start a factory today unless you had a unique product."

Like Solyndra, SoloPower's panels use copper indium gallium selenide, or CIGS, as their raw material. CIGS panels have long held the promise of being cheaper than polysilicon-based panels while delivering efficiencies that are higher than other thin film technologies such as cadmium telluride, the raw material used by U.S. solar heavyweight First Solar Inc. The drastic drop in the price of traditional panels over the last few years, however, has kept CIGS manufacturers from delivering on that promise on a commercial scale.

In the last year, CIGS solar companies HelioVolt and Ascent Solar Technologies Inc have sold stakes to South Korean conglomerate SK Group and TFG Radiant Group, respectively. Another, Miasole, has cut staff and said publicly that it is searching for a partner. Rival Nanosolar earlier this month said its chief executive left after just eight months.

Though Solyndra is the best known solar failure of the last year, it was far from the only one. GTM Research estimates that the United States produced 281 megawatts of PV modules in the first half of 2012, compared with 561 MW in the first half of 2011. That's a big reason why a string of manufacturers in both the United States and Europe have closed their doors in the face of competition from increasingly cheap Chinese panels.

First Solar, for example, postponed indefinitely its plans for a second U.S. factory in Arizona because of the weak market conditions. Start-ups are being hit too. Of the four companies that received loan guarantees for photovoltaic solar manufacturing, two - Solyndra and Abound Solar - have filed for bankruptcy. SoloPower and Lexington, Massachusetts-based 1366 Technologies Inc, which received a $150 million loan guarantee, remain. 1366 also has yet to draw down funds from its loan guarantee.

Even the Chinese manufacturers, whose products are the cheapest in the world, are losing money and struggling with ballooning inventories. One of the biggest Chinese solar companies, LDK Solar Co Ltd, said earlier this month that it was looking to raise cash and may sell a strategic stake.

For its part, SoloPower has hired Macquarie Capital to help it explore partnership opportunities. Such a deal could include giving distribution rights to a European or Asian partner in return for a stake in the company. SoloPower is not up for sale, however, Harris said.

In fact, the company could even pursue an initial public offering next year, Cavalier of Hudson Clean Energy Partners said.

"If the capital markets come back next year, I think we will be able to articulate the value that we offer to potential IPO investors," he said.

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