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New kid on the thin-film block: Solar Array Ventures chooses New Mexico as site for PV panel factory

10 April 2009 | By Tom Cheyney | Chip Shots

A name like Solar Array Ventures may sound generic, but there's nothing plain vanilla about a $210 million fund-raising effort during these days of tight financing, cash burn, and struggling or failing photovoltaic enterprises. The upstart company just announced its plans to move from its Austin, TX, incubator digs to a greenfield site in Bernalillo County near Albuquerque, NM. SAVe (the PV company's acronym of choice) plans to break ground on a thin-film solar panel manufacturing facility this summer and have production rolling by late next year.

solar_array_ventures I talked to company CFO Everett "Buddy" Rogers on the phone as he was driving around house-hunting in the area. He told me that one of main reasons that the start-up chose to base its operations in the Albuquerque area is because the local "economic development group took us seriously very early on. When you have five guys with no money, many of the states just say come back and see us when you're real--and that's too late. The economic development guys have to at least give you an idea of what the incentives could be, so you can deal with your investors."

"The county and all the state officials here," he said later in our chat, "really treated us so well, to make this thing work. Start-up ventures, particularly in this environment when investors are just nervous, every little bit counts, and they helped us get over the hump on alot of these issues."

The incentives offered to SAVe total nearly $200 million. The Albuquerque Journal reports that "Bernalillo County Manager Thaddeus Lucero said the commission is set to take its first action Monday on a $175 million industrial revenue bond (IRB) package for the company--the largest IRB in the county's history."

Although the company won't be the first solar manufacturer setting up shop in New Mexico (Advent, Schott, and Signet are all either building or planning to build there), SAVe will be the first of its kind in the Cordero Mesa business park and will hire 225 full-time employees to start. The new plant might also be the first PV factory in the U.S. to employ an Applied Materials or Oerlikon (or Jusung?) amorphous-silicon PV turnkey module line.

"The first process we use is probably going to be one of those," Rogers confirmed. "We're in negotiations with those equipment suppliers right now. We see the turnkey lines as our opportunity to get into the game quickly. We will be doing some R&D too. We are agnostic with technology, so we'll be looking for the best technologies as we move forward and the opportunities present themselves."

It might only be a matter of weeks until SAVe signs a contract with one of the turnkey PV purveyors. "The equipment manufacturers have some questions they need to answer for us (but) we're pretty much ready, it's just a matter of dollars and cents and working through contracts with both of them."

"Since we want to break ground this summer, to be able to do that, we have to finalize the equipment manufacturer so we can design the building itself around that equipment," he continued. "The architects that we're working with have worked with both Oerlikon and Applied Materials, so we think we'll be able to move pretty quickly. We have what I would call an 80% basis of design using both lines; that way, once we get closer to a finalized contract with either supplier, we can move in that direction very quickly."

Whatever the brand of turnkey line, SAVe is looking at a "60 or 70 MW" dual-/tandem-junction aSi module line initially, to be outfitted in the 225,000-square-foot building. Most of its $210 million war chest will be invested in the plant and equipment, with a smaller portion allocated for "working capital and soft costs," according to Rogers. The PV firm will start with 25 acres, with an option for 25 more, which would provide enough "room to do multiple plants out there."

SAVe is already looking ahead and thinking about locating another production site elsewhere in the U.S. "If our business plan comes off the way we envision," Rogers explained, noting the "market dependency" of any earnings projections, "we will build multiple plants."

"We are anticipating that we will very quickly look for a site east of the Mississippi, and New York is one of the states we're looking at, as is Indiana, as is New Jersey, and as is Florida today--and there may be more." Local New York state media reports named the company a few months ago as one looking seriously at locations there.

None of SAVe's grand plans would be possible without an experienced executive management team and the investors' deep pockets and expertise. The PV company's chairman/CEO Joe Hudgins has decades of experience, both running worldwide operations for BP Solar and working at such semiconductor concerns as Cypress and Mostek. His colleague, VP of manufacturing and operations Haden Bourg, also cut his teeth at BP Solar and in various companies in the chipmaking sector.

wirt_save The investor of record so far is Oxantium Ventures, whose principal Richard Wirt (pictured at right) sits on the PV company's board. A former Intel senior VP and fellow, he has a keen interest in maintaining SAVe's technological edge. "One of his hot button issues is certainly staying on top of the research and development," explains Rogers, "and his fund will be out looking for technologies to invest in as well that will be complimentary to the factories that we have."

SAVe's CFO didn't hide the fact that his company hit its share of fund-raising potholes. "Money was a problem for us. This is just such a difficult environment. We've had three different term sheets, and each time the investors either backed out or couldn't get their capital raised."

Although Rogers didn't have permission to talk about the other investors yet, he did tell me that "they are not classic venture capital guys, but are more from the development side. We've got guys that we think are pretty solid, and they're gonna be great investors."

"Investors bring a couple of different things: one investor brings money, others can bring alot of strategic value," he added. "We think that we're fortunate that our investors bring both. And that's rare."