Summary:

GE was set to become a major solar manufacturer when it announced a 400 MW factory in Colorado last year. Over a year later, though, it’s putting that plan on hold for 18 months or more while it works on coming up with more competitive technology.

PrimeStar Solar Array

General Electric was set to become a major solar manufacturer when it announced a 400 MW factory in Colorado last year. Over a year later, though, it’s putting that plan on hold for 18 months or more while it works on coming up with a more competitive technology, Danielle Merfeld, general manger of solar technology at GE, told us on Tuesday.

It was only last month when a company spokeswoman told me by email that GE was still building its factory and hoping to start production in 2013. But the company reconsidered that plan in recent weeks after seeing solar prices tumbled significantly for over a year, and it stopped the factory building activities last week, Merfeld said.

The company also has down-sized the number of people working on its solar team, but Merfeld declined to disclose the number of layoffs. Since the goal now is to focus on technology improvement, those who were hired to work on, say, factory operations were let go.

“We are banking on the fact that with the technology improvement and our investment in technology today, we will put out more competitive products coming out of that factory,” Merfeld said.

The time line for re-starting the factory isn’t firm right now, but GE is looking at doing that in 2014. That doesn’t mean the factory will be mass producing solar panels then, though. The factory space, located in Aurora, still needs some infrastructure work before solar panel production equipment could be installed. After the equipment is in, it would usually take a year or longer to test the machines and bring them online for mass production.

GE was building the factory to make solar panels based on the technology from a startup called PrimeStar Solar, which GE bought last year. The technology would enable GE to produce solar panels with an ultra-thin layer of cadmium-telluride to convert sunlight into electricity. First Solar is the best known cadmium-telluride solar panel maker, and its growth to become one of the world’s largest solar panel makers has inspired many startups to develop the same type of technology and try to become an alternative source of supply.

But solar manufacturing has been a hellish business to be over the past year and a half, as a glut of solar panels caused the wholesale prices to drop near 50 percent alone during 2011. The oversupply problem isn’t going away any time soon, too, according to GTM Research, which is forecasting 59 GW of solar panel production for a global market that can only take 30 GW this year. That supply-and-demand imbalance is set to continue beyond 2012.

A long list of manufacturers have filed for bankruptcy in the U.S. and abroad. One of the most recent casualties is Colorado-based Abound Solar, which received a $400 million federal loan guarantee to expand manufacturing but by last fall it could no longer meet certain goals to continue to make use of the loan guarantee. It tried to line up more investors and customers but couldn’t do it, and last week it finally conceded that it couldn’t stay business any longer.

The new path GE has charted sounded similar to what Abound said it would do back in February this year, when it first revealed that it was laying off hundreds of people and refocusing its effort on improving its technology in order to come up with better performing and cost competitive products.

GE wants to improve how efficient its cadmium-telluride solar panels can convert sunlight into electricity because that is one way to reduce production costs. Last year, a GE executive said he expected the new factory would start shipping solar panels with 14 percent efficiency. Now the goal is to achieve more than 15 percent, Merfeld said.

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