Against the headwind of a chaotic solar market, 1366 Technologies of Lexington, Mass., a startup with VC funding and a DOE loan guarantee, just opened a $6 million, 25-megawatt wafer fabrication facility that could eventually employ 100 people.

The company's technology falls in the "kerfless wafer" category, a technology of special interest for outgoing DOE head Steven Chu. The aim is to disrupt the traditional way that silicon-based photovoltaic wafers are fabricated.

We spoke with CEO Frank van Mierlo. "For the last 50 years we've been melting silicon, creating ingots and blocks, and cutting the blocks with wire saws to create wafers," said the CEO, noting that the incumbent process uses eighteen different machines and goes through "a lot of consumables," adding that "half of the silicon is wasted."

"Our process has none of these consumables," said the CEO, noting that 1366 uses one-quarter of the factory real estate and doesn't waste silicon in its "semi-continuous process."

1366's "Direct Wafer" method creates wafers directly from molten silicon -- although the firm has not divulged details about its process.

The end product is a textured wafer in a standard 156-by-156-by-0.2 millimeter size. According to the CEO, "It goes into any standard cell line and has yielded efficiencies of 17 percent in customer trials."

According to GTM Research, 1366 purchases polysilicon feedstock, melts it, and produces square wafers that are sold either as-is, or after texturing.  The report also finds that silicon utilization is at approximately three grams per watt at the firm.

Other companies in the kerfless silicon sector include Solexel, Crystal Solar, and AstroWatt.

As Andrew Gabor, author of the GTM report, writes, "Saving silicon is great, but if this comes at the expense of cell efficiency, the technology doesn’t stand a chance. 1366 is closer to standard wafers than are any other kerfless technology, and the ability to sell directly into the existing market without any significant processing or handling changes is an enormous benefit for market introduction."

Van Mierlo said, "We will work with China to help them get profitable again." He noted the 70 gigawatts of global cell capacity and said, "We will give [China] a new lease on life by giving them a wafer cost that fits into a 50-cents-per-watt module."

Van Mierlo claimed, "Our production costs are significantly lower than the variable cost of the legacy solution. [...] We will have fully loaded production costs of less than ten cents per watt."

GTM Research sees module costs falling below 50 cents per watt this year.

The CEO said, "We've had significant commercial traction," adding, "A significant part of our funding is coming from customers. Cash flow from operations over the last two years has been positive." 

1366 has raised $49 million in venture funding from Hanwha Chemical (Hanwha is also a likely customer), Ventizz Capital, North Bridge Venture Partners, and Polaris Venture Partners, as well as several million dollars in DOE grants. The firm also has a $150 million loan guarantee offer from the DOE's 1705 program, but will not draw down those funds until the process is proven out at the pilot factory.

The pilot factory was funded by the firm's VC investors. That $150 million loan is slated for use in an eventual 1,000-megawatt factory.

Since mid-2010, the DOE has made conditional commitments for eighteen loan guarantees in solar to fourteen different companies for a total of $15.585 billion.

The bottom line is that the program will end up making money, not losing it. But at this point in the loan program's life, it's fair to say that loans for solar manufacturing have been less successful than loans for solar generation. The manufacturing firms include the defunct Solyndra and Abound Solar.

SoloPower and 1366 are still standing. 

Here's a list of solar loan guarantee offers under the 1705 program from 2011.

1366 Technologies         Solar Mfg         $150M   MA
        Solar Gen
Abengoa Solar
        Solar Gen
        $1.2B   CA
        Solar Mfg
        Solar Gen
        Solar Gen
        Solar Gen
First Solar (Antelope)         Solar Gen          $680M   CA
First Solar (Sunlight)         Solar Gen          $1.8B   CA
First Solar (Topaz)         Solar Gen          $1.9B   CA
Fotowatio         Solar Gen         $45.6M   NV
Sempra Mesquite         Solar Gen         $398M   AZ
NextEra (Genesis)         Solar Gen         $852M   CA
        Solar Gen
         $1.4B   US
        Solar Gen
        Solar Mfg
        Solar Mfg
        Solar Gen


Van Mierlo likened the 1366 innovation in silicon to the Bessemer process innovation at U.S. Steel or the use of float glass at Pilkington.

He said, "New manufacturing processes change the way things get done," adding, "Our prospects are as good as U.S. Steel's were two centuries ago."