Thursday, February 24, 2011

Pivotal Year for Thin Film Solar Companies

In 2007, start-ups developing “thin-film” solar material were all the rage. Venture investors poured hundreds of millions of dollars into these companies, encouraged by the technology’s low-cost potential as an alternative to high-priced polysilicon-based solar panels, as well as by several initial public offerings in the solar market.

But after the recession hit, polysilicon dropped in price, capital dried up and the general demand for solar panels waned.

The fortunes of thin-film solar developers–which use copper indium gallium selenide, or CIGS–are now up in the air, and this year may prove pivotal as capital remains in short supply.

Some of these start-ups may seek to transfer into the hands of larger partners. HelioVolt Corp., for instance, is searching for a buyer after raising more than $140 million in venture capital, as VentureWire reported today. “The next step of evolution requires a lot more capital than we have,” said Scott Sandell, general partner at New Enterprise Associates, which was an early backer of the Austin, Texas, company.

SoloPower Inc., another CIGS play, went through a rough period, including CEO changes, but is staging a comeback. It’s relying on government funding to forge ahead in its manufacturing plans. On Thursday the Department of Energy provided a conditional commitment to issue the company a $197 million loan guarantee. This is a strong endorsement, as the program is highly competitive, especially given that it already provided a large loan to another CIGS company, Solyndra Inc. DOE officials previously said they would seek to diversify among technologies.

SoloPower is also applying for $40 million in loans from the State of Oregon. Its investors, which include Crosslink Capital and Hudson Clean Energy Partners, hope that the loans will be enough to go to commercial production, without relying on much additional equity investments. The company abandoned the plan to raise $100 million in new venture last year. Instead, it got its existing investors to offer about half of that first in a bridge, which then converted into equity.

Government funding is also helping Stion Inc.–a Khosla Ventures bet. The company said in January that it received $75 million in loans and other incentives to build a factory in the State of Mississippi.

Miasole Inc., meanwhile, has been making great progress in increasing the efficiency of its CIGS panels. But the company still needs considerable funding. It has been raising about $125 million in venture funding, with most of that already committed, as VentureWire reported. Besides Miasole, other companies that are shipping thin film CIGS panels are Nanosolar Inc., which has raised more than $300 million in venture capital and last year replaced its top management, and Solyndra Inc., which also changed its chief executive and laid off staff after withdrawing an IPO filing and raising more than $1 billion in private equity.


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