When Nanosolar first burst onto the scene in 2002, it received criticism for maintaining a veil of secrecy around it development and testing operations. It refused to reveal any useful information about its solar technology, business strategy, or manufacturing intentions. The San Jose, California thin film solar panel manufacturer provides the innovative panels utility-scale power generators, including Engineering, Procurement and Construction (EPC) companies and Independent Power Producers (IPP), use to develop, construct and operate cost efficient solar power stations.
It seems the firm's early commitment to focus its resources solely on the product area of reengineering the Copper, Indium, Gallium, and Selenium (CIGS) manufacturing process for thin film solar panels. Armed with a $150 million in startup funding, Nanosolar early investors include Google founders Sergei Brin and Larry Page. In 2007, the startup moved from the development and testing phase to the manufacturing phase in 2007.
By mid-December 2007, Nanosolar shipped its first panels for a one-megawatt municipal power station project located in Germany. An infusion of cash by multiple investors boost Nanosolar's funding to $500 million by April 2008. Equity investors include Power Company AES Corporation, the world's largest utility firm EDF, Carlyle Group and Energy Capital Partners.
In 2008, Nanosolar, the company with the “plays it close to the belt” reputation, made the public's eye when Time Magazine named it as one of the 50 Best Inventions of the year. Nanasolar operates as a private company; it has over 300 patents issued, licensed, or pending related to all facets of their solar printing technology.
Along with its U.S. headquarters and Nanosolar cell manufacturing facility in San Jose, the company also has a European panel factory near Berlin, Germany. Nanosolar also opened an international headquarters in Zug, Switzerland.
The industrial printing process applies CIGS nanoparticle ink on an inexpensive aluminum foil substrate. The aluminum foil substrate lowers the manufacturing costs, which still fall short of First Solar's industry leading $0.75 per watt recorded in November 2010. However, Nanosolar thin panel solution delivers 200 to 240 watts compared to 80 watts for traditional thin film panels.
In addition, its thin film product requires 40 percent less mounting materials, 65 percent less strings and conductors and allows for 85 percent faster connection versus conventional thin film modules.
Branded the “world's thinnest solar cells and lowest-cost solar panels;” the panel needs 40 percent less mounting materials. The aluminum foil substrate also functions as a conductor, which eliminates the need to use expensive deposited thin film metal material, called molybdenum, in the CIGS process, which makes it cost-efficient.
Transformation into Manufacturing
By late 2006, the company closed deals to secure about 700,000 square feet of factory space in San Jose, California and near Berlin, Germany. The company has two highly robotic manufacturing facilities. The San Jose, California solar cell factory has 430 MW annual output capacities; management expects 115 MW (megawatts) nameplate capacity by fall of this year. The Berlin panel factory can function at a production rate of one solar panel every ten seconds. The factory has an annual capacity of 640 MW.
The basic manufacturing process starts with the makeup of nanoparticle ink. According to Nanosolar's website, the confidential formula and methods prevents the ink's ingredients from gathering and assures high-quality coatings. Precision equipment sprays nanoparticle ink on to specially treated foil. Because this activity takes place under a standard atmospheric setting, it eliminates the cost of a clean room.
Cell formation comprises the third step. It consists of two-kilometer long rolls of solar cell and other components, including a metal contact. Machinery cuts the foil into pieces to form individual solar cells. The final step entails assembling the solar panel by connecting the solar cells. Each panel's has solar cells matched by performance bins. Matching the cells ensure better performance and reliability.
The roll-to-roll process turns a roll of aluminum into 50,000 solar cells in one continuous loop. This state-of-the-art manufacturing process operates at printing press like speeds.
Poising the Company for Market Penetration
Making moves to position organization for rapid expansion, Nanosolar hire Geoff Tate as CEO in March 2010. Tate has a record of accomplishment as CEO of Rambus, a company that specializes in semiconductor interfaces. He also worked as senior vice president of Advanced Micro Devices. In addition, the company brought in established executives, such as Eugenia Corrales as executive vice president of operations and Ali Zamanpour as VP of quality and reliability.
A seasoned veteran, Corrales has gathered years of experience at companies like Cisco Systems and Hewlett Packard, Corrales in manufacturing, product development, and operations management. She states in an interview, “I've spent most of my career taking things from prototype to high-volume production, and it is definitely in that window. We need to continue to evolve it, to mature the technology.”
Nanasolar also filled and shored up other positions from directorships to mid-level management in all functions, including operations, marketing, sales, product design, production control and field engineering. Nanosolar self-fund its factory expansion with cash reserves. Nanosolar has no plans to raise additional equity capital; it expects to achieve a positive cash flow in 2012.
When the company announced supply agreements with three European developers, it signal to the market Nanosolar’s latest in a series of moves that inch it closer to one of its driving objectives -- becoming cost-competitive with standard solar panels. These contracts build on Nanosolar’ ongoing partnerships originally established with these companies in 2008.
The years Nanosolar spent developing and testing its product and processes positioned the company to become a strong player in the PV thin film market. Its main competitor, First Solar (NASDAQ: FSLR) continues to lead the thin film field. However, FSLR depends on dated, slow and expensive high-vacuum based thin-film deposition processes technology. The technology produces one panel every 2.5 hours.
Nonetheless, First Solar has over 2GW of thin film installation in place. In November 2010, it had an industry-leading $0.75 per watt installation. By the end of 2012, FSLR expects to produce 2.7GW of panels. Nanosolar also faces competition from companies like MiaSole, and Japan's Frontier Solar. The CIGS market in general experiences price pressure from silicone solar modules from China.
The future seems bright for Nanosolar; it has a backlog of orders totaling more than $4 billion for utility-scale projects. The company has yet to tap the potential of its thin film product in the residential and, building integrated PV markets. The focus, for now, remains the deployment of its rectangular rail mounted panels.
It is important to understand the meaning of the “phrase” long-term supply agreement;” the contracts are non-binding. The take-or-pay agreements depend on Nanosolar's ability to reach its cost targets and efficiency objectives. In reality, the company does not have a backlog or orders, but a line of customers who have teamed with the Nanosolar brand.
The company continued to make progress with its efficiency, reporting a 11.6 percent for the Nanosolar Utility Panel; the printed CIGS has a 13.9 percent efficiency rating. Management believes once it ramps up to full production; the panels per watt cost will decrease to $1.00. Within the next three years, Nanosolar expects to achieve a $0.60 per watt cost. These sorts of numbers have equity investors eagerly awaiting a Nanosolar IPO.