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Abound Solar Snags Ample Funding for 775 MW of Factories

Abound Solar is ending the year with glad tidings and good cheer. The thin-film startup on Tuesday said it has raised $110 million in equity and closed a $400 million federal loan guarantee, almost all of which will fund an ambitious plan to build 775 MW of new solar manufacturing capacity.

The U.S. Department of Energy chose Abound out of many applicants for the loan guarantee program, which helps its recipients secure loans by promising the government will repay the loans if the borrowers can’t. Abound is only the second solar panel maker to snatch the loan guarantee. The company, founded in 2007, will borrow from the U.S. Treasury’s Federal Financing Bank, said Russ Kanjorski, Abound’s VP of marketing.

The Loveland, Colo.-based business plans to spend $500 million overall on the factory expansion plan, Kanjorski said. Abound currently has a 65 MW production line it started in April 2009, and it plans to add another 65 MW by the end of 2011 in the same factory. A third line will be added in 2012 to bring the total annual production capacity at the Longmont factory to 200 megawatts, Kanjorski said.

The expansion plan also includes a new factory in Tipton, Ind. Abound plans to start setting up the factory in 2012 and have a total of 640 MW of annual capacity there by the end of 2014, Kanjorski said. The factory will be located in a leased space that was designed to build auto transmission parts for Chrysler, but it was never used, a casualty of Chrysler’s bankruptcy filing in 2008.

The loan guarantee program, called Section 1705 by industry insiders, initially received big applause from renewable energy advocates when Congress set aside $6 billion to fund it as part of the American Recovery and Reinvestment Act last year. Some say the program hasn’t been as effective in spurring renewable energy development, from building factories to power plants. Biofuel and electric transmission projects also qualify.

Congress took $3.5 billion away from the budget to fund the Cash for Clunkers program and to save jobs for teachers and other public employees. Some critics say the process of getting loan guarantees is too long and costly, and the loans that come with the guarantees aren’t as cheap as they had expected. Then, there were the announcements by the first loan guarantee recipient Solyndra to cancel an initial public offering and shutter its first factory – after it had secured a $535 million loan guarantee to build a second factory – that stirred debates on the success of the government program.

For those companies that have secured the loan guarantees or who are close to doing it, the program makes it possible to borrow huge sums at a time when banks aren’t willing to make the loans (so far, loan guarantee recipients have borrowed from the Treasury’s Federal Financing Bank).

“It’s absolutely critical for us to ramp up this capacity, especially in this market today. It wouldn’t have been possible without the DOE support,” Kanjorski said. “It could’ve gone faster, sure, and everybody knows that. DOE has been more rigorous than one could imagine (in evaluating applications). I think it’s a good thing from the taxpayers’ point of view.”

Abound needs to expand its manufacturing capacity in order to compete effectively. Like many startups, it believes it’s got a unique production process that could yield quality solar panels at affordable prices. But the emergence of manufacturing giants that have factories that can produce hundreds of megawatts and do it at lower and lower costs has presented a formidable challenge for smaller players. Many of these large manufacturers are in China and Japan, such as Suntech Power and Sharp. In the U.S., First Solar (s FSLR) and SunPower (s SPWRA) are the largest.

Abound makes cadmium-telluride solar panels, and it expects to ship over 30 MW of them this year, said Kanjorski, who declined to give a 2011 forecast. When the private company opened the factory in April 2009, its then-CEO had expected the company would be able to produce solar panels at under $1 per watt that year provided, of course, that the process of bringing the factory equipment into full production went well.

Abound didn’t hit that goal. The company had to gradually bring its equipment into commercial production, and it produced 100 panels in October 2009, Kanjorski said. By September 2010, it was rolling out 67,000 solar panels a month. The startup’s early, 45-watt solar panels could convert 6 percent of the sunlight that hit them into electricity. The 70-watt panels it was producing by fall 2010 were “under 10 percent,” he said.

Abound’s production cost is about $1.25 per watt, Kanjorski said. When the second production line comes online, the company could get to $0.90 per watt, he added.

It took First Solar four years and several factories to get production cost to under $1 per watt ($0.77 per watt during the third quarter this year). The Tempe, Ariz.-based company also makes cadmium-telluride solar panels, and it has about 1.4 gigawatts of factory capacity.

Abound has some supply deals with companies including Juwi Solar, Solen Energy and GP Joule. Abound saw the first installation of its solar panels in November 2009; a recent project in Germany used 5.6 megawatts of Abound’s products.

The $110 million in equity came from investors including Invus Group, Bohemian Companies, DCM, BP Alternative Energy and West Hill Investors.

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Photo courtesy of Abound Solar