Solar cell maker Silevo plans to ramp up, with new funds

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).