Solar squeeze

Abound Solar opened its first full-scale production facility.

The life of a technology startup is rarely easy. But the last nine months have been especially hard for young companies looking to develop and manufacture new solar cell technologies. The weakening economy and tight credit market over the past year has led to shrinking demand for their products and limited access to finance to further develop their technologies and build manufacturing plants. At the same time, sharp declines in the cost of the incumbent technology—conventional silicon-based solar cells—has created pressure on the price of new products young solar companies want to bring to market.

Advent Solar is one startup feeling the pinch. Executives at the Albuquerque, N.M.-based company were hunting for financing last year to build the first manufacturing plant for its silicon-based solar cell technology. The company approached financiers with its so-called emitter wrap-through technology, which eliminates the grid lines found on the top of conventional cells and maximizes the amount of sunlight turned into electricity. Advent executives say they also hoped the company’s new process for manufacturing cells, which has the potential to increase yield, would woo investors.

But the company couldn’t find financing, and executives decided in late 2008 it was time to create a new business plan. So it gave their solar startup an extreme makeover: Advent abandoned its goal of building solar panels and now is looking to license its technology to existing solar manufacturers. Products based on Advent’s technology to be on the market by next year, says Naresh Baliga, the company’s vice president of marketing.

As pressure on the solar industry mounts, Advent Solar and other startups across the country are being forced to shift their plans. Meanwhile, those that don’t change their course risk failure. Some industry observers have called the current environment Darwinian: Only the strongest will survive. But at the same time, the struggle has an upside. It’s forcing startups to be more realistic about the industry and their survival in it, and declining solar prices and government incentives [see “Cities go big with solar financing,” Sustainable Industries, May 2009] should spur demand for more installations. 

Reality check
If you were an executive at a solar startup in early 2008, you’d be forgiven for thinking then that the only way the market could go was up. Global photovoltaic installations, spurred by generous government subsidies, had grown at an impressive clip for years, rising by 40 percent from 2006 to 2007 and by 50 percent from 2007 to 2008.

But toward the end of 2008, the recession took hold and Spain, which had accounted for half of global installations in 2008, dramatically pulled back its subsidies for solar. The market rapidly changed, and research firm iSuppli now predicts global revenue generated by photovoltaic system installations will plunge to $18.2 billion in 2009, a 40 percent drop from last year.