The Arizona-based company said the hurricane is also disrupting the supply of components for its solar products, which include panels and trackers that prop up the panels and tilt them to follow the sun’s movement throughout the day. For 2012, First Solar now expects to generate $3.5 billion to $3.8 billion in sales — previously it was looking at $3.6 billion to $3.9 billion. Non-GAAP earnings should hit $4.40 to $4.70 per share, however, instead of $4.20 to $4.70.

The company issued the forecast along with its third-quarter financial results, which saw its sales decline year-over-year sales to $839.1 million from $957.3 million. First Solar posted a net income of $1 per share for the third quarter, down from $2.25 per share in the same period a year ago, thanks to charges related to its restructuring efforts to reduce costs. But still, a profit in a difficult year.

“The solar market remains challenging, but we are continuing to gain traction in the new sustainable markets we’re targeting and expanding our global presence,” said Jim Hughes, First Solar’s CEO, during a conference call with analysts.

First Solar executives highlighted the progress they have made in opening up new markets. The company has vowed to build its business in places with minimal government subsidies, which so far have been responsible for the rise of the global solar market. Europe has been the largest market, but the pace of its growth will likely slow over time as governments gradually reduce their incentives.

During the third quarter, the company announced it was chosen to build a 13 MW power plant for the Dubai Electricity & Water Authority. First Solar inked deals to sell its cadmium-telluride solar panels for a 25 MW project in the state of Rajasthan in India and for two other projects totaling 50 MW in the same state. The company also signed a memorandum of understanding with a power plant operation and maintenance company in Indonesia to work on 100 MW of projects.

First Solar also hired Bruce Yung as its China manager during the third quarter. The company tried to crack the Chinese market before but hasn’t seen much success. Although China presents lots of opportunities, its government also is keen on boosting the domestic market for Chinese solar manufacturers.

In recent years, First Solar has been building its power plant development expertise and amassed an impressive pipeline of projects under development. That business is more lucrative – the company can make money from developing, building and operating solar power plants (for owners it sells the power plants to) that use its own solar panels. The company is building the largest solar power plant project in the U.S. – the 550MW Topaz Solar Farms in central California. The vast majority of the 3 GW of projects under development that it’s inked power sales agreement contracts for are in North America.  Now the company’s hope is to develop solar power plants in other parts of the world.

First Solar has no intention of conquering the rooftop segment – its panels are less expensive but also less efficient at converting sunlight into electricity as other major brands. That means an array with First Solar’s panels will take up more space than the one with more efficient solar panels. Hughes also told analysts that the rooftop market has less brand loyalty and cares less about how well the solar panels will perform over decades.

Photos of Topaz Solar Farms by Ucilia Wang

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Hanergy is a large renewable energy producer in China and runs 6 GW of hydropower plants and employs 5,000 people worldwide. It also claims to have factories that can produce 2 GW of solar panels per year. It built two factories with 300 MW of capacity each in 2011.

Hanergy made its move into the U.S. market when it set up an office south of San Francisco in 2010.  The company also has built a wind energy generation business within China.

What is intriguing about the privately held Hanergy, aside from its buildup of a massive production capability at a time when the world market is plagued by a glut of solar panels, is its pursuit of thin film solar technology. The company makes amorphous-silicon based thin film panels, a type of technology that fell out of favor in the U.S. and Europe when several venture-backed startups working on it went out of business or still struggle to make it work.

Amorphous-silicon thin film technology promises to deliver low-cost solar panels with an ultra thin layer of cells. But the costs of buying equipment and starting production can be quite high, and reducing those costs during mass production often takes longer than expected (this issue isn’t unique to amorphous-silicon thin films but applies to new solar technologies in general). Amorphous-silicon solar thin films also tend to be less efficient at converting sunlight into electricity than technologies that use other semiconductors, such as silicon or copper-indium-gallium-selenide.

Manufacturers can sell lower-efficiency panels as long as they price them lower than the competing but higher-efficient panels. But accomplishing that has proven difficult when, in addition to dealing with high start-up production costs, you have to compete with technologies that are producing cheaper and cheaper solar panels as well.

Amorphous-silicon technology is still alive and may even be doing well in Asia, where there remains a number of manufacturers. DuPont, which has an amorphous silicon thin film factory in China, announced Wednesday that it will sell 22.75 MW of the thin films for two projects in Thailand.

In a write-up dated mid-2010, Hanergy said it was building a factory to make amorphous silicon solar panels (with an added microcrystalline layer) that could covert 9.5 percent of the sunlight that falls on them into electricity. Other thin film technologies had efficiencies a few percentage points higher than that back then, and panels made with much thicker silicon cells had efficiencies mostly in the mid-teens.

Hanergy remains a big believer in thin film technology and last week announced it was going to buy Solibro, a German company that makes solar panels using copper-indium-gallium-selenide cells. Solibro’s owner, Q-Cells, filed for bankruptcy a few months back.

Hanergy doesn’t just want to produce solar panels, it also wants to build solar power projects. That is one of its goals for the U.S. market, and it could benefit from the current trade case against imported Chinese silicon solar cells. However, the project development and construction business is a completely different playground that doesn’t easily accommodate new comers, even those armed with massive factories.

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At the Photon Thin Film conference in San Francisco last week, well-known researcher Rommel Noufi, who heads the thin film research at the National Renewable Energy Laboratory, challenged startup AQT Solar over promising and under delivering.

AQT Solar’s CEO, Michael Bartholomeusz, gave a pretty standard talk about the company’s shift from using the material combo CIGS (stands for copper-indium-gallium-selenide) to using CZTS (copper-zinc-tin-sulfide) for its solar cells. The Silicon Valley startup hasn’t met the goals it set a few years back with the manufacturing of CIGS solar cells, but it recently raised $18.7 million and is now charging ahead with its new CZTS technology instead. He promised to commercialize the CZTS technology in 2013.

And after Bartholomeusz spoke, Noufi stepped up to the microphone that was set up for a Q&A, and promptly put Bartholomeusz on the spot and cautioned about making empty promises: “The only advantage of CZTS is when indium and gallium disappear. We have to be careful about not giving another technology a bad name.”

In his own defense, Bartholomeusz, pointed out that the amount of money that has been pumped into developing CIGS technology has yet to make a significant dent in the market. He said: “I don’t think any commodity since the dawn of time hasn’t responded to supply and demand. So with indium and gallium there will have an issue.”

Failure of CIGS

The exchange ended there, but the feeling that the CIGS technology, which has attracted more than $1 billion in venture capital, hasn’t become a key player in the solar market lingered. Markus Beck, who until last December was heading the secretive CIGS development lab at First Solar, gave a talk at the conference that outlined why the CIGS community hasn’t achieved success. 

Some of the missteps involved experimenting with too many different ways to making CIGS panels and falling short on figuring out how to run production lines efficiently, Beck said. He noted the reliance on venture capital is partly to blame – VCs want to bet on cutting-edge technology because it could deliver a huge return if done right. But that in fact encouraged the development of fancy but expensive products that can’t compete, and Solyndra is a prime example, said Beck, who was the lead scientist at Solyndra before joining First Solar in 2008.

“If I say I have a new sexy process, then people give you money. We have diluted the money that is available to us,” he said.

Aside from AQT, other CIGS companies that still hope to become major players in the market include MiaSole, Nanosolar, HelioVolt, Stion, SoloPower, Soltecture, Global Solar, Solibro and Avancis. Several of them have brought in new CEOs in recent past. The biggest CIGS solar manufacturer is Solar Frontier, which brought online a 900 MW factory in its native Japan last year. The company last month announced a deal to supply up to 150MW of solar panels for a project in California. That project is now touted as a sign that demand for CIGS technology is there. Now if only other CIGS solar manufactures could work fast enough to meet demand.

Photo courtesy of Micky Aldridge via Flickr and Nanosolar

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San Jose-based Stion makes solar panels that use copper, indium, gallium and selenium (CIGS) instead of conventional silicon to convert sunlight into electricity. In January this year, the company announced the plan to build the Mississippi factory, which the company expects to eventually reach 500 MW of production capacity and require $500 million in investment. Stion completed a 10 MW pilot line at its headquarters last year.

The factory represents a nice coup for Mississippi lawmakers, who offered Stion a $75 million loan plus tax and job training incentives to build and run the factory. Legislator and Gov. Haley Barbour recently lured another Silicon Valley startup, Calisolar, by offering the solar silicon producer a $75.25 million package to build a factory there.

Stion plans to expand its production in Mississippi in phases. The first phase is supposed to reach 100 MW of production capacity. The company held a grand opening ceremony for the factory on Friday, but it won’t start producing solar panels until later this year, Stion said. Manufacturers need time to test-run equipment and train employees before rolling out products.

Stion hopes to mass-produce solar panels at much lower costs than its rivals, a goal that is shared by many startups and is increasingly difficult to accomplish. Wholesale prices of solar panels have plummeted in the past three years as manufacturers in the U.S., Asia and Europe built many factories.

Chinese manufacturers, in particular, have expanded production rapidly thanks in part to the huge loans they received from government-run banks. The stiffened competition already has forced three American companies, including CIGS solar panel maker Solyndra, to file for bankruptcy in the last two months.

Stion raised a Series D round of $70 million as of June 2010, including $50 million from Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip manufacturer. Before that, it had raised $44.6 million in equity from investors including Khosla Ventures, VentureTech Alliance and Lightspeed Venture Partners.

To expand the Mississippi factory to 500 MW, Stion plans to raise at least another round of funding and will consider an initial public offering, the company’s CEO, Chet Farris, told us earlier this year.

Image courtesy of Stion

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The solar panel maker, known for its novel technology and for clinching a flagship $535 million federal loan guarantee in 2009 to build a factory, was supposed to become an American success story of greentech innovation and manufacturing. That loan guarantee, which came from the stimulus package, was meant to propel Solyndra from a startup to a full-fledged maker of solar panels and show how the U.S. will become a leader in clean power and green jobs.

Cue the sound of screeching wheels and a car crash here. Those hopes were largely dashed this morning as Solyndra said it plans to file for bankruptcy and will lay off its 1,100 full-time and temporary employees. That Solyndra had struggled before, but had more recently been drawing in customers and reducing its cost of production, makes the news even more shocking.

But as the news began to circulate Wednesday morning, the big question is: What went wrong?

The company’s own press release spelled out some of the reasons:

“Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.”

Founded in 2005, Solyndra isn’t alone in facing these challenges. In fact, many solar startups who are building their first big factories in the U.S. now will have to deal with the same pressures and figure out how they can survive. Some of these startups, like SoloPower, Abound Solar, Calisolar and 1366 Technologies, have also received federal loan guarantee offers to help them complete the factories.

The rough and tumble solar market

Solyndra's 300K Square Foot Factory

The global solar industry has gone through rapid changes since Lehman Brothers filed for bankruptcy in the fall of 2008 and heralded the arrival of the recession. Banks stopped making loans, and major solar manufactures began to see customers delaying or canceling orders. China-based Suntech Power, now the largest solar panel maker, laid off employees and saw its factories running at 50 percent capacity by early 2009. SunPower, located in Silicon Valley, had to delay production plans, and its CEO, Tom Werner, said the first quarter of 2009 was  the “most challenging quarter since we went public in 2005.”

The soft demand led to a price war, and some of the Chinese manufacturers, such as Suntech, Trina Solar and Yingli Green Energy, opted to build more factories and were able to borrow huge amounts of money from government-run banks to do so. Larger factories provide an economy of scale that makes it possible to drive down production costs. The government help and the resulting cheaper solar panels from China have caused rancor among European and American companies who contended that China was helping its manufacturers in violation of international trade rules.

By the end of 2010, manufacturers had cut the prices of their solar panels by around 50 percent. That year also proved to be a great year for the industry, thanks to strong incentives for installing solar power projects from countries such as Germany and Italy.

The pressure to cut costs has continued, though. Cuts to solar incentives in Europe – and the amount of time it took for Italy and other countries to decide on the extent of the cuts – earlier this year began to cause solar panels to pile up in warehouses. That in turn prompted manufacturers to slash prices even further.

Solyndra’s struggles

The changing dynamics of the solar market are one reason that it was tough for Solyndra to survive. The company’s technology not only uses materials that aren’t commonly used in solar panels today — including copper, indium, gallium and selenium — it also produces solar panels with a design that is very different from conventional ones. Each Solyndra solar panel consists of rows of solar cell-lined tubes (the tubular design was meant to enable the solar cells to capture light reflected from the roof). Conventional solar panels are made with silicon and have a flat surface.

Being unique is important for a startup; you have to offer something better and different from anyone else. But it typically also means the research and production costs will be higher because you have to design your own factory equipment instead of buying ready-made ones. Novel manufacturing processes also generally involve more trouble shooting to make them work for mass production.

Solyndra was hoping the large factory project would help it lower production costs and the prices of its solar panels. The company also designed and sold racks for mounting its solar panels and promised the entire design will cut installation costs. It needed to raise more money in addition to securing the federal loan guarantee (which translated into a loan from the Treasury-run Federal Financing Bank) to scale up production and operate the new factory. It completed building the factory and began adding equipment last year, but it wasn’t going to scale up production until this year.

The company sought to raise more money through an IPO but canceled it in June last year, citing poor market conditions. It managed to line up private funding since and told us earlier this year that it was aiming to close another round. The company also closed an older factory, laid off workers late last year and scaled back its manufacturing plan late last year because the competition to produce solar equipment cheaply was intensifying.

But at the end, it couldn’t lower its production costs fast enough. It also couldn’t raise the money needed when it couldn’t show it could compete with larger rivals. “Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion.  Raising incremental capital in this environment was not possible.  This was an unexpected outcome and is most unfortunate,” said Solyndra’s CEO, Brian Harrison, in a statement.

The company plans to file for Chapter 11, a type of bankruptcy that allows it to reorganize. Its options include licensing its technology and selling the business,the company said. The company has already suspended production. Solyndra’s unusual designs may or may not live on, but the lessons of its rise and fall sure will.

Lessons for VCs, DOE

One of the big lessons out of this is for venture capitalists. Solyndra raised about $1 billion in equity from investors including Redpoint Ventures, RockPort Capital, Argonaut, CMEA Capital, U.S. Venture Partners, the Walton family fund Madrone Capital, Abu Dubai’s MASDAR and Richard Branson’s Virgin Green Fund. That financing makes Solyndra one of the most well-funded tech companies out of Silicon Valley. VCs we’ve talked with that passed on investing in the deal back in the early days of the company said the manufacturing costs were just too high compared to competitors. But Solyndra was able to convince some very big names (Richard Branson’s fund, the Walton family fund) and well-established firms (CMEA, RockPort) to bet that it could get those costs down.

Another lesson is for the DOE. By its nature, the loan guarantee program picks winners and losers, offering some companies an edge in the market with its guarantees, while companies that don’t receive the loans are at a disadvantage. That could work OK if the DOE was really good at picking winners. But when the first company out of the lot crashes and burns so roughly, clearly the selection process hasn’t been all that great.

At the National Clean Energy Summit in Las Vegas this week, DOE Secretary Steven Chu noted in his keynote that he was interested in policies like a clean energy standard that specifically doesn’t pick winners and losers. House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Oversight and Investigations Subcommittee Chairman Cliff Stearns (R-FL), which have been spearheading an investigation into Solyndra put out a statement today that said:

As the highly celebrated first stimulus loan guarantee awarded by the DOE, the $535 million loan for Solyndra was suspect from day one. Our investigation to protect American taxpayers has revealed that in the rush to get stimulus cash out the door, despite repeated claims by the Administration to the contrary, some bets were bad from the beginning. And yet, despite the red flags and vocal concerns this Administration continued to tout Solyndra as a stimulus success story, going so far as to have the President visit the plant last summer.

Images courtesy of Ucilia Wang, GigaOm

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The Tempe, Ariz. company generated $609.8 million in fourth-quarter sales, a 24-percent drop from the previous quarter and a 5-percent drop from the same quarter a year ago. Net income reached $155.9 million, a 12-percent decline from the previous quarter and a 10-percent rise from a year ago. Falling prices for its solar panels and revenues from its power plant development business contributed to the lower sales, the company said.

The company brought in $2.56 billion in sales for 2010, up 24 percent from 2009. Net income was $664.2 million for 2010, up 3.8 percent from 2009.

For 2011, the company expects to generate $3.7-$3.8 billion in sales and earnings of $9.25-$9.75 per share. The company is building new factories in the U.S. and Asia, so it expects to spend $60-$70 million for production startup costs and another $15-$20 million for bringing new factories into the full-production runs.

First Solar executives blended optimism with a note of caution for the 2011 market, which they believe will see a big growth in the first half and a less certain one in the second half. The boom will primarily be driven by deadlines for when several key European countries will lower their feed-in tariffs. Feed-in tariffs are government-set, above-market prices that utilities must pay

“We expect solid growth in the European markets for the first half of 2011 and tightened economics in the second half,” said CEO Robert Gillette during a call with analysts. “We are diversifying geographically and by segments.”

“Diversify” was a word repeated several times by Gillette and other executives on the call, and it underscored First Solar’s eagerness to establish itself in emerging markets before growth slows in Europe. India, China, Australia and the Middle East are the company’s targets. The company has trumpeted this strategy more loudly over the past year, and it isn’t alone in looking beyond Europe.

Germany has been First Solar’s biggest territory, but it will likely make up 30-35 percent of the company’s business, in terms of megawatts, in 2011 vs nearly 50 percent in 2010. Germany has long been the world’s largest market thanks to its feed-in tariff policy. Feed-in tariffs are designed to fall as the solar market grows and the costs of equipment and project development decline.

India, interestingly, has begun to present opportunities for First Solar. The country represented 1 percent of the company’s business in 2010, and that will likely climb to 8 percent in 2011, Gillette said. First Solar announced two solar panel supply agreements with Indian companies in recent months: 15MW to ACME Tele Power and 25MW to Moser Baer Clean Energy. The Indian government last year launched the National Solar Mission that aims to install 20GW by 2022. Several states within the country, such as Gujarat, also have their own incentive programs.

China once appeared to be opening up its market, but it hasn’t grown as fast as some companies and analysts have hoped. The Chinese government announced big plans to launch incentive plans in 2009, when the market looked like it was in the dump and many Chinese solar cell and panel makers were suffering. First Solar and the Chinese government in 2009 announced a plan to install 2GW of solar power in Inner Mongolia. The project has been delayed because of the time it’s taking to get government permits, and the company reported progress with building the first 30MW of that proposal last month.

In China, only state-owned companies can apply for and secure permits to build power plants, so First Solar has teamed up with China Guangdong Nuclear Solar Energy Development Co. for the Inner Mongolia project. “We are significantly increasing our market development to solve unique challenges for new markets,” Gillette said.

First Solar has been a long-time solar panel maker, but it entered the project development business in recent years and has built up an impressive 2.4 GW of project pipeline in North America. Those projects have contracts to sell electricity to utilities. The company is using these projects to boost sales of its solar panels and to hedge against fluctuating demand in Europe where, in addition to Germany, countries such as Italy and France also are considering cuts to their feed-in tariffs.

The company has bought project pipelines from several developers over the past two and a half years. It recently bought RayTracker, which designs mounting hardware to support and rotate the solar panels to follow the sun’s movement. Last month, the U.S. Department of Energy announced a loan guarantee of $967 million to help complete a 290MW project in Arizona. First Solar expects to finalize the loan guarantee as well as the sale of the project to NRG Energy by the end of the second quarter this year, Gillette said.

First Solar is looking for project development opportunities in Europe as well, said Jens Meyerhoff, who was the company’s chief financial officer and became the president of the project development group last year.

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“Other thin film companies are struggling whether they are willing to say so,” or not, Mints said during the webinar hosted by the advocacy group, The Vote Solar Initiative. “Are they making money? Yes. Are they making money on a lower margin? Yes.”

Thin film solar refers to solar panels made with little or no crystalline silicon, and they only make up a fraction of the solar market today. Most of the solar panels made today use crystalline silicon to convert sunlight into electricity. First Solar uses cadmium and tellurium and many companies are developing similar recipes. A gaggle of thin film startups are concocting formulas using either amorphous silicon or a combination of copper, indium, gallium and selenium (CIGS).

Thin films in general are able to convert 10 to 11 percent of the sunlight from the panel into electricity while the crystalline silicon variety can do mid-teens or higher. So if you want to install, say, a 1 MW solar project, you will need more thin film panels than traditional PV panels and therefore more land. That’s a disadvantage that is forcing thin film makers to lower their prices, Mints said.

The average selling price for thin films was around $1.35 per watt in 2010, Mints said, down from $1.65 per watt in 2009 and $2.75 per watt in 2005.

On average, thin films are 12 percent cheaper than crystalline silicon solar panels, and that gap won’t go away soon. “I expect that (price difference) to continue until you have thin films with the same efficiencies” as the crystalline silicon variety, Mints added.

Thin film solar technologies attracted intense attention from investors several years ago when silicon prices were high. The startups promised to deliver goods at much lower prices than what their rivals were charging for crystalline silicon solar panels. But many startups have taken longer than they had expected in getting their technologies ready for mass production.

Meanwhile, silicon producers expanded production to ease the shortage problem and intense competition during the economic downturn in 2009 prompted solar panel makers to slash their prices by 50 percent. A number of crystalline silicon solar panel companies also have greatly expanded their factories to reach close to, or more, than 1 GW in annual production capacity.

Many thin film solar startups, on the other hand, are producing solar panels in just a single factory, often times smaller than 100 megawatts. Billions of dollars in venture capital have gone into nurturing these startups, and some of them are now lining up money to expand production. Last week, Stion said it was heading to Mississippi to build what will initially be a 100 MW factory. AQT Solar is going to South Carolina to build a factory with 30-40MW to start. SoloPower recently raised $51.58 million, and it wants to build a 75 MW factory in Oregon. In a meeting today,  Oregon officials are scheduled to consider a $20 million loan request from SoloPower to help pay for the factory. All three companies use CIGS in their products.

A few Japanese companies also are betting on thin films and plan to open huge factories. Solar Frontier, for one, is set to open a 900 MW factory for making CIGS panels this year. Getting new factory equipment up and running at full speed takes months, so how much Solar Frontier will produce this year remains to be seen. It currently has two factories totaling 80 MW.

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Photo courtesy of First Solar

First Solar already is already testing RayTracker’s technology in the field, said Alan Bernheimer, a First Solar spokesman. The acquisition doesn’t mean First Solar will use trackers for all or most of its projects. But it does expand First Solar’s menu of project engineering services, Bernheimer said.

“Tracker technology is one of a number of initiatives under development in our Systems group as part of our broader effort to enable lower LCOE (levelized cost of electricity) pricing capability and further differentiate our solution in the market,” Bernheimer wrote in an email.

“We are not announcing any new products at this time. First Solar is still evaluating the effectiveness of tracking and other advanced systems technologies and will announce product offerings through a customer release process when appropriate to do so,” he added.

Tempe, Ariz.-based First Solar is a long-time manufacturer of thin-film solar panels, and it jumped into the energy project development business in recent years. The move creates outlets for its solar panels, and the strategy has made it one of the largest project developers in North America.

First Solar has bought several project developers, including paying $297 million for NextLight Renewable Power last year and $400 million for OptiSolar in 2009. These purchases gave First Solar more than 2 GW of projects under development in North America. The company also is heading to China, and said earlier this week that it has teamed up with a Chinese energy company to develop the first 30 MW of what promises to be a 2 GW project in Inner Mongolia.

The benefits of using trackers to point solar panels to the sun have been a source of debate. Proponents say trackers squeeze more power and therefore more money from each installation. Critics say trackers add costs without providing enough returns on investments.

First Solar rival SunPower has been a big proponent of using trackers and has been developing its own offerings in that area for years.

Here’s what RayTracker says are the advantages of using its trackers: The single-axis trackers can boost energy production of solar panels by up to 38 percent. The trackers, primarily for ground-mounted installations, tilt the solar panels in the opposite direction of the sun in early morning and late in the day in order to avoid shading.

Each tracking unit, at about 80 feet long, comes with a low-voltage actuator that controls its movement. That’s a setup different from competing trackers, which are linked together row after row in each installation. The company says this distributed system simplifies installation and allows more accurate tracking. Each controller, which contains a custom processor and software, oversees the workings of 12 tracker units.

RayTracker has seen its trackers used in megawatts of projects, including a 5 MW installation in Italy and a 1.1 MW system at The North Face’s distribution center in California.

RayTracker has hired outside manufacturers to produce the equipment, Bernheimer said. Before the acquisition, RayTracker was operating out of Idealab, a technology incubator in the southern California city of Pasadena that was founded by Bill Gross. Idealab, Quercus Trust and Phoenix Fire backed the tracking company.

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Photo courtesy of RayTracker

The Sunnyvale, Calif., startup, founded in 2007, plans to set up the factory in Richland County this year and start production in 2012, said AQT CEO, Michael Bartholomeusz. AQT will set up equipment for two production lines totaling 30-40 MW this year.

AQT makes solar cells using copper, indium, gallium, sulfur and selenium as the main ingredients to convert sunlight into electricity. Unlike many other solar companies using similar materials, AQT isn’t depositing them on a large piece of glass or flexible metal sheet to make a solar panel. Instead, the startup is layering the CIGSS on 6-inch glass pieces that can be drop-in replacement for crystalline silicon solar cells inside a panel. AQT contracts with other manufacturers to assemble those cells into panels.

AQT has lined up about 65 MW of customer orders and is negotiating for additional sales agreements for 160 MW, Bartholomeusz said.

South Carolina has offered an incentive package that includes what the state calls “job development credits.” The job development credits allow companies to use a portion of new employees’ withheld taxes for its operational needs. The state also has approved two grants totaling $2 million for building and infrastructure improvements and job creation. The first $1 million will be released as a reimbursement of improvement work done to create 500 jobs, but the money won’t be available until the company lines up a new round of private funding, the state said. The second $1 million is tied to the creation of another 519 jobs.

Bartholomeusz declined to disclose how much AQT will have to raise to receive the first grant or how much the company will have to secure overall to complete the factory project by 2014.

AQT announced the opening of its factory in Sunnyvale, Calif., on Aug. 12 last year. In its press release, the company said it had started production at the new facility to fill customer orders. At the factory tour held two weeks later, Bartholomeusz said the company actually wouldn’t start producing cells until September. The factory now has 15 MW of annual production capacity, and the company plans to boost that to 30-40 MW by the end of 2011.

The company shipped its cells to “several customers” in the last quarter, Bartholomeusz said. In December, solar panels with AQT cells headed to Mexico for a 2 MW installation at a gated community in southern Baja, he added.

The company has a deal with Solar Enertech to have Solar Enertech assemble panels with AQT cells. But the panels shipped last quarter weren’t done by Solar Enertech, said Bartholomeusz, who declined to say who produced the panels. The agreement with Solar Enertech remains in place, and the company will assemble “a large portion” of AQT cells in the future, he said.

Last August, the company said its cells could reach 14 percent efficiency. Asked whether AQT was able to hit the number after it began production, Bartholomeusz said the company is asking National Renewable Energy Laboratory to verify its cell efficiency before releasing the number. NREL is one of several organizations in the world that provide efficiency verification services that are deemed credible by the solar industry.

Solar panels with AQT cells will need to get UL and IEC certification, something that solar panel makers are working on, Bartholomeusz said.

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Photo of AQT Solar’s future factory in South Carolina, courtesy of AQT.