A severe shortage of polysilicon used for solar cell production has led to a stampede of startups trying to enter the market using thin film technology, but private equity for thin film solar cell startups is drying up, says The Information Network, a New Tripoli, Pa.-based market research company.

Dr. Castellano, president of the firm says he has seen a large number of individuals purchasing the firm's research to use as part of a business plan to enter the solar market, with nearly everyone asking about starting a 20-megawatt (MW) production plant for $40 million in equipment, and the vast majority wanting to start a copper indium gallium diselenide (CIGS) line.

However, private equity money is drying up for a number of reasons, he says.

First, the much ballyhooed startup Nanosolar is notable for grabbing $120 million to use CIGS technology but the company was started in 2002 and with production scheduled for late this year, that translates to a development time of more than 5 years.

Also, two other CIGS companies, Miasole and DayStar, have recently experienced delays: Miasole is seeing efficiencies of 4 to 6 percent, compared to commercial crystalline silicon solar panels with efficiencies between 15 and 22 percent, the firm observed.

As a result, The Information Network believes the venture capital firms and other equity investors who had hoped for faster return on investments are becoming sour on solar.

To combat some of the technology issues, and given that traditional thin film amorphous silicon cells also have efficiencies of 6 percent, there are plans underway to introduce a bi-layer micromorph structure next year that would improve efficiencies to the 8 to 9 percent range. This comes at a cost: additional deposition equipment, some of which is priced at $17 million to handle meter-squared glass.

Further, the very slow migration to higher efficiencies, albeit only 8 to 9 percent, is also turning away investors, the firm believes.

Another factor is the entry of China-based companies into the market with low cost product. The Information Network points out that a 20MW amorphous silicon plant in the U.S. can cost $60 million in equipment and another $40 million in yearly expenses – for a cost of ownership as high as $2.50 to $3.00 per watt. China-based solar suppliers are advertising sales of completed solar panels for $2.20 per watt, less than the production cost in the U.S.

Finally, the firm points out that large, publicly-traded manufactures are announcing solar cell expansions on almost a daily basis with production facilities being constructed with internally generated funds. These companies already have sales and distribution networks in place, something that would be difficult for a startup.

“In our research, the peak of equity investment occurred in December 2006 and has been dropping quickly since then. The promise of high demand for solar energy, which in fact is a reality, enticed too many people with a me-too strategy of low-efficiency solar cell production with the promise of quick rewards,” Castellano concluded.

By: DocMemory
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