Should factories be big or small? It depends what you are making. Some execs like Charlie Gay at Applied Materials have advocated supersizing cell manufacturing facilities. To cut costs and gain economies of scale, they argue that the thing to do is build cell facilities that produce over a gigawatt of cells a year and consume nearly a ton of silicon an hour. OptiSolar, the fast-growing solar company that crashed spectacularly, talked about putting glass factories to make substrates for thin-film cells under the same roof as cell lines.
But when it comes to modules, Roger Little, CEO of equipment maker Spire, says it's better to go small. Put fifty factories capable of churning out 50 megawatts of modules a year, he told me in the hallway at Surviving the Shakeout, a conference we held this week. You could have one in each state.
Why? Policy is one reason. Both the federal government and the various states are linking green technology growth to job growth. In Oregon, for instance, a module maker can potentially qualify for a $3 million grant under the American Recovery and Reinvestment grant and a $5 million grant from state on a $10 million investment in production equipment. (A whole 50-megawatt factory, buildings and all, might run $20 million.). The factory would generate product worth $140 million a year and EBITA net income of around $15 million.
There are old factories out there for sale too. Drywall maker Serious Materials has generated heaps of goodwill in recent months by revitalizing factories in Illinois and Pennsylvania.
Module manufacturing also only adds a portion of the overall cost of making a panel and doesn't require the same ornate capital equipment or processes as producing cells. If you analogize it to electronics, making cells is like producing chips while modules are PCs. If the cell costs are $1.80 a watt, the module costs are only 54 cents per watt.
Distributed manufacturing would also cut down transportation costs. Factories could be set up next to utility scale solar farms. No crating or shipping needed -- just truck the modules over on a fork lift. A factory next to the utility farm could churn out modules capable of producing a kilowatt of power.
In all, the plan could produce 3,000 jobs said Little. Will it be adopted? Who knows, but there's a good chance that local politicians will love it.
