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Summary:

Amid a solar market with an oversupply of solar panels, Silevo, a California company with a factory in China, is working on expanding its production and convincing customers that its novel hybrid silicon technology is worth their investments.

Silevo, which is entering mass production soon, says its solar panels can deliver a high efficiency of 18 percent.

Many investors aren’t feeling much love for solar manufacturing, a field where many startups have disappeared like the sun behind the San Francisco fog. But some of them apparently are willing to take a gamble on Silevo, a solar cell manufacturing startup which is looking to raise an equity round of $40 million to $50 million by October or November, the company’s vice president of business development and marketing, Chris Beitel, told us.

We first wrote about Silevo’s technology last October. The startup, based in Fremont, Calif., has since started producing solar panels with its new tyoe of solar cell design at a 32 MW line in Hangzhou, China. It’s shipping solar panels to customers, though Beitel declined to disclose their names. The factory isn’t producing at its full capacity yet – it’s rolling out solar panels at around 1 MW per month. By the end of the third quarter this year, the factory should be running at full speed.

Silevo is now hunting for a new factory location – the U.S. and Malaysia are contenders – for a 200 MW factory, Beitel said. The plan is to bring the new factory on line next year. Money from the yet-to-close equity round will be used for the new factory. Depending on where it will be located, Silevo expects to borrow roughly $60 million to $80 million to build and run the factory, Beitel said. With a total of 230 MW of production lines, the startup could become profitable and potentially a good candidate for an IPO, he added.

The company carries out research and development at its California office but opted for building its first commercial production line in China because labor and operating costs there are low. That low cost is an especially critical advantage for a startup because a startup doesn’t have the large scale to reduce its production costs, Beitel pointed out. At full production speed, the company’s production cost should hit $0.98 per watt.

That big difference in production costs between China and the U.S. narrows significantly when a factory is at a scale as large as 200 MW. Making solar cells may cost $0.05 or $0.06 per watt in the U.S., but the shipping cost of solar panels – which contain solar cells – from Asia to the U.S. also costs around $0.05.

“If Solyndra had built their first pilot line in Asia and then moved into the 300 MW line in the U.S., then they would’ve survived,” Beitel said. Solyndra, which filed for bankruptcy about a year ago, built its production lines in California with the help of a $535 million federal loan guarantee.

Founded in 2007, Silevo has a developed a novel design that uses silicon to convert sunlight into electricity. But unlike the conventional silicon solar cells, Silevo engineered its cells to use the more efficient single-crystal silicon (as the substrate) and amorphous-silicon to manipulate the voltage and current of the cells. It also uses copper instead of silver, which is more expensive, to create the ultra thin lines that ferry electricity out of solar cells. The result is a solar cell that is more efficient at converting sunlight into electricity than the dominant silicon-only cells on the market today.

Earlier this year, a federal lab validated the performance of Silevo’s cells to reach over 21 percent efficiency. That validation meant the company’s best cell could do that well, but it didn’t mean the company could produce efficient cells consistently. Beitel said the company now is able to produce the 21 percent cells at its 32 MW line consistently. The efficiency of its solar panels is at 18 percent or higher, Beitel said.

Silevo’s efficiency figures are impressive because not many silicon solar cell and panel makers are able to achieve such a high efficiency. The company could charge higher prices for its solar panels, though not so high that it would turn away buyers. The company seems to have assembled the right strategies to enter the market, but it still has to cross over to large volume manufacturing, which means rolling out hundreds of megawatts of solar panels per year, to become a serious competitor.

Previously, Silevo had disclosed $55 million in venture capital funding from investors including three China-based firms: DT Capital (affiliated with Madrone Capital), NewMargin Ventures, and GSR Ventures (connected to Mayfield Fund).

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  1. “At full production speed, the company’s production cost should hit $0.98 per watt.”

    Um, that’s higher than the current >retail< price of solar panels. How are they planning to profit with such a ridiculous business model?

    1. Prices are efficiency-adjusted. Most of the solar panels on the market can do 14-15%. Silevo can charge higher prices because its panels can convert 18%.

      1. No, Ucilia, watts are watts. That accounts for efficiency.

        If their “volume production” price is $0.98 per watt wholesale, this product is >stillborn<. Literally stillborn.

        There's an article in the WSJ (sub required, shouldn't be a problem for you I'm imagining) that has the current price paid for panels at $0.84 per watt — today.

        http://online.wsj.com/article/SB10000872396390443589304577637333545350176.html?KEYWORDS=solar

        First Solar already relies on the fact that only watts matter, not efficiency. While it's marginally true that fewer panels = better (for rooftop installs in particular, but also utility scale), a wholesale panel price of $0.98 — at some unspecified date in the future — is absolutely not competitive. By that point, retail panel prices will likely be 50 cents. A more efficient panel might command 55-60 cents/watt for the smaller footprint in terms of panel use. That's literally as good a premium as will exist.

    2. You’re wrong. Watts are not watts.

      $/W is only applicable for comparable efficiencies. As efficiencies go up, the balance of system costs go down. A better measure is LCOE which takes this into account. Not coincidentally, Silevo claims to have the lowest LCOE on the market which is probably why there are 250 MW of back orders.

      Right now, panel costs are pretty much rock bottom but the solar industry is having a hard time reducing BOS and installation costs. You mentioned $.84/W panel prices. Know what system installation prices are today? $4.40 in the US. There are major inefficiencies there, however. In germany, it’s more like $2.20/W. I think the US will be there eventually but it’s hard to get it much lower than that with no-brainer things like reduction of permitting fees/economies of scale.

      That’s why efficiency matters. Sunpower and Sanyo HIT are very popular with installers despite their high $/W cost for this reason. Last I checked, they still go for like $1.50/W and despite almost double $/W they sell like hotcakes with guys like solar city

      Also too, the loadbearing weight of American roofs is the fundamental limit for how much pv can installed on a building–not area. This is another area in which efficiency is important.

      Efficiency really is king. Hope to see more startups like Silevo that keep bossting solar module efficiency

      1. Panels are virtually weightless, so obviously weight is not the limiting factor.. but anyway… The reason balance of system costs in Germany are lower isn’t that they are using more efficient panels there; you’re surely not suggesting that, are you?

        It’s absolutely true that more efficient panels lead to lower install costs on rooftops. That’s why Sunpower is still in business. That said, it’s mattering not at all in utility-scale projects, which explains how First Solar is also still in business.

        Unfortunately for Silveo, $0.98 per watt >production cost< is still not competitive, especially since that will exist at some future date.

  2. @Mark: If you think Silevo’s price target is off base, well, I can’t argue with that. I can’t predict what the prices of various silicon and thin film panels will be. But I do appreciate that you seem to have worked out some math that convinces you that Silevo’s pricing wont’ work. I can tell you that efficiency is related to the size/dimensions of each panel. When SunPower talks about its high-efficiency panels, it’s saying that it can pack more watts into a given area compared with other silicon or thin film panels. Same thing for Silevo. That’s why for residential rooftop, installers might prefer SunPower — you can set up a 5KW system using less space than you could, say, with First Solar’s thin films. If cost per watt is the only metrics, then you should only use Firs Solar panels (some lesser known Chinese solar panel makers also can give you a good deal). Some installers/developers don’t want to pay more per watt and aren’t as concerned about the availability of space. In that case, more expensive solar panels aren’t attractive. Or, you can pay for SunPower’s panels and its trackers and count on getting more kWh over 20 years that will make the trackers worth the investment. And then, there is the debate over whether certain solar cell materials will degrade faster over time or work better/worse in the hot climate. Hence the need for long-term field data. At the end of the day, it’s part numbers game and part salesmanship that determine winners.

    1. All of that is true, Ucilia. Degradation is pretty much a canard — at least with regard to anything made of silicon, which is absolutely a proven technology at this point and has shown no real-world degradation problems. It’s somewhat true that it’s hot-weather performance is less than optimal, but that’s already figured in for these desert-based systems.

      I like SunPower for residential/small rooftop business systems. I’m just telling you now Silveo’s >projected< production costs are already too high for that market. Look, I'm all for more players and technological development. There is room for Cd/Te, CIGS and silicon. These numbers are not impressive, however.

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