Abound Solar claims closure of Gen 1 thin film plant supports acceleration to Gen 2 plant migration

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Having started production of CdTe thin-film modules at its first facility located in Longmont, Colorado, in 2009, Abound Solar said it would close the facility to accelerate the migration to its Gen 2 higher efficiency modules with the loss of 180 jobs. Abound Solar received a US$400M loan guarantee from US Department of Energy to build and expand capacity in 2011. The new plant is being built in Tipton, Indiana.

“While this is a difficult move with regards to temporarily reducing our workforce, we know that accelerating the introduction of our next generation module will bring significant benefits to our customers and allow us to create even more jobs in the future,” said Craig Witsoe, president and CEO of Abound Solar. “Current market conditions are challenging for all U.S. solar manufacturers, but the long-term winners will be manufacturers of the lowest cost per watt, most reliable systems. By focusing our resources to accelerate scale-up of our next generation high efficiency technology, we will sustainably lower total system costs for our customers, increase our own profitability and grow U.S. jobs and energy security.”

However, the plant closure and the reduction in head count means that the company does not expect to resume mass production with its AB2 85W modules that will have a claimed 12.5-13% efficiency until near the end of 2012.

Abound's new plant is said to have a nameplate capacity of 840MW when fully completed and operational in 2014, which would be the largest thin-film plant in the US and would in theory, provide one of the lowest cost-per-watt capabilities.

But the move, despite the positive tones from its CEO, is somewhat perplexing. The company has been producing and selling modules from its Gen 1 line, especially in the emerging Indian market to large-scale installations. Abound claims performance advantage in this market over thin-film technologies is due to high humidity conditions.

In a recent investor note by Vishal Shah at Deutsche Bank, the analyst noted that rival First Solar had been successful in gaining access to utility projects in India, due in part to the fact it had been able to secure low cost financing from the US ExIm Bank.

The cost of obtaining project financing in India has been known to be difficult and at a higher cost to overseas alternatives, not least due to lack of experience in the Indian financial sector in this type of financing.

According to Shah, checks have highlighted the possibility that ExIm Bank could be reducing its investment exposure to India, impacting support for projects from First Solar. Should this be correct, Abound Solar would also be seriously impacted in its ability to sell-through while maintaining production volumes, said to have been in the region of over 40MW in 2011.
 

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