Unlike conventional solar cells, made from silicon wafers, CIGS cells can be deposited on glass or flexible materials, much as ink is printed on rolls of newspaper. Though the technology is less efficient at converting sunlight into electricity, the promise of “thin film” solar cells was that they could be made cheaply. However, producing CIGS cells on a mass scale has turned out to be a formidable technological challenge, requiring the invention of specialized manufacturing equipment.
While Silicon Valley companies were working on the problem, silicon prices fell and Chinese companies like JA Solar, Suntech and Yingli Green Energy rapidly expanded production of conventional solar panels, supported by tens of billions of dollars in inexpensive credit from the Chinese government as well as other subsidies like cheap land.
Arno Harris, chief executive of Recurrent Energy, a San Francisco solar developer acquired by Sharp last month, said he chose to sign a supply deal with Yingli because the Chinese company offered low prices, quality products and financing.
“We realized that would enable us to bid competitive power prices from projects that could also be efficiently financed,” Harris said by e-mail.
Chinese solar panel makers now supply about 40 percent of the California market, the largest in the US, and the bulk of the European market, according to Bloomberg New Energy Finance, a research and consulting firm.
“We grow every year with double revenue and almost double capacity,” said Fang Peng, the chief executive of JA Solar, in a telephone interview from the company’s Shanghai headquarters. “At end of the year, we will have 1.8 gigawatts of capacity and will have grown from 4,000 employees at the beginning of this year to more than 11,000.”
By comparison, Solyndra expects to have a total production capacity of 300 megawatts by the end of next year.
The competition from the Chinese prompted some Silicon Valley companies, like AQT Solar, to pursue new strategies to survive.
AQT has modified off-the-shelf machines used to make computer hard drives to create CIGS cells using a proprietary process. The Sunnyvale company, which has raised US$15 million from investors, further cut its capital costs by manufacturing only solar cells, which it sells to other companies to package into solar panels.
Rather than build a factory from the ground up, the company recycled a 1970s-era rental building.
“We moved in here in eight weeks, put our first 20-megawatt line up and did it for under US$1 million. That’s on Chinese time,” said Michael Bartholomeusz, AQT’s chief executive.
A kilometer away, another startup, Innovalight, has abandoned solar module manufacturing altogether. The company had developed what it calls a silicon ink, which increases a solar cell’s efficiency when it is printed on a standard silicon wafer.
After installing a 10-megawatt production line in late 2008, Innovalight executives decided that, rather than compete with the Chinese, they would license the patented ink technology to them and avoid having to raise hundreds of millions of dollars to build factories of their own.
“How do you fight against enormous subsidies, low-interest loans, cheap labor and scale and a government strategy to make you No. 1 in solar?” Innovalight’s chief Conrad Burke said.