[pagebreak:Q&A: Global Solar VPs Dish Thin-Film Details] Earlier this month, thin-filmsolarcompany Global Solar Energy broke into mass production, opening a 40-megawatt plant in Tucson, Ariz.

The company, which makes thin films of copper-indium-gallium-diselenide (CIGS), expects to produce 20 megawatts of the films at the plant this year before ramping up to 40 megawatts of capacity in 2009 and 140 megawatts by 2010 (see Competition for First Solar?). Global Solar also is building a 35-megawatt plant in Berlin that it expects to open next year and that it hopes will reach more than 500 megawatts of production in less than five years.

The move to mass production had been a long time coming, as the company was founded in 1996, but that’s not an unusual story in thin-film solar.

Historically, thin films -- which consist of plastic or other substrates coated with silicon or other photovoltaic material -- have proved to be more difficult and expensive to manufacture at large volumes than expected.

One company, First Solar (NSDQ: FSLR), has been a notable exception. The producer of cadmium-telluride films already has 210 megawatts of annual capacity -- by far the world’s highest -- and has had much of the thin-film market to itself in the last couple of years.

Competitors are rushing out to try to change that.

Sharp Corp. said last month that it expects to begin production at a 1-gigawatt thin-film plant in Japan in 2010. 

Odersun earlier this week said it broke ground on its second factory, SunTwo, in Germany, with the capacity to produce 30 megawatts of thin films.

And earlier this month, Signet Solar said it would start production at its first plant, also in Germany, in the third quarter of this year and would build its second plant in India. March also saw Next Solar, a solar startup in Greece, announce that it would start production at its first thin-film solar factory -- a 30-megawatt plant using Oerlikon Solar equipment -- early next year.

Unlike those competitors, Global Solar is making thin-film cells and stringing them together but isn’t finishing them into glass panels. The company says selling the lightweight strings makes it cheaper to transport its product to customers, and says the flexible films can handle more jostling with less breakage.

The strings are matched to a standard panel size so that they can be laid right into current panel factory lines, directly replacing traditional silicon-based cells, said Tim Teich, vice president of sales and marketing.

The company has reached an average conversion efficiency -- meaning the amount of sunlight that its cells can convert into sunlight, on average -- of 10 percent from its 4.2-megawatt pilot plant, which it is phasing out as its new plant ramps up.

We chatted with Teich and Jeffrey Britt, vice president of technology, to find out more.

Q: Many thin-film companies with technologies that have worked at small scales have run into unexpected difficulties when they’ve tried to build larger facilities. Are you concerned you might also discover that parts of your process might not scale up easily?
We have an established technology, having operated this 4.2-megawatt plant here for the last three years, making product. We have a lot of experience that really differentiates us from anybody else in this particular area of the market right now. And the new tools that we have in our plant are based on really an evolutionary process -- it’s not a revolutionary redesign of what we have here -- so we are very confident.

Q: Because most of your competitors make thin-film panels, they give panel capacity numbers for their plants. Do 35 megawatts of strings actually make 35 megawatts of panels?
It’s very close. You end up with maybe 98 percent of that [capacity] in a glass module. You have a little bit of an optical absorption in a piece of glass, and that accounts for the difference.

Q: Do you already have sales contracts for your production this year?
Yes. We are being selective in the customer base because there seems to be quite a bit of demand. This is the advantage of having a transportable thin-film solar cell that, in effect, will plug into any and every area of the market.... So we do have customers for all of 2008 -- we’re sold out -- and if I let it, it would be the same in 2009, but we are holding back some capacity to develop either alternate markets or other customers. The majority of the strings shipping in ’08 and ’09 will go into power field modules.

Q: Can you talk about any of your customers?
We would prefer not to. We are pretty close to the vest.... I can only say that the few customers we are dealing with for the [strings coming out of the new plant] are very large companies. Dominant players.

Q: Is it because you really are still beta testing these products and are not in full production?
Part of the reason why Global Solar has stayed what I call under the radar was a purposeful and intentional [decision] so that when we came out with news, we were very sure that it was already achieved. I think it is important that every thin-film company, especially in the CIGS world, behave in a responsible fashion. I think the absolute, ultimate endgame for Global Solar is high quality, and we are going to take what time we [need] to achieve that. I have no doubt that it works today.

Q: When do you believe you’ll be ready to move beyond the testing to really commercialize this on a mass scale and be ready to announce partnerships and market your products as Global Solar?
I’m not sure that we’re not [commercializing] in a fashion now.... My guess is through this next six-month phase we will be [adjusting the equipment and testing]. We’ll be going along the path and when we introduce a product it will be IEC and UL approved. In the meantime, we have plenty of opportunity to develop products and know that they work and actually install them.

[Editor’s note: Products can’t get these key approvals, from the International Electrotechnical Commission and the Underwriters Laboratories, until they have been made on a production line using the same tools that the company will use to make products for customers.]

Q: Has the first generation of films, made on the 4.5-megawatt pilot plant, been approved?
It is in the final stages. And as you are probably aware, because of an onslaught of testing, [the process of getting] IEC and UL approval has drawn a lot of these tests out far longer than any of us had imagined. It’s probably been 10 months. As I go around and talk to other solar companies, [they tell me it takes] 12 to 16.



[pagebreak:Global Solar Q&A: Continued]

Q: So once you apply for final approval for Generation 2, it won’t be ready for sale until another year after that?
The customers that partner with us to make modules with the strings are the ones that will face that challenge.... But I would be off base if I said it would be six months, because you know how long it’s taking a new module to get approved. And when you are talking about BIPV (building-integrated PV) markets, I’m even going to throw the ball out there a lot farther, it could be even three to five years by the time you get into all the roofing, electric codes and new electric standards for that type of material. That’s very developmental there, and there will be prototyping over the next couple years all around the map of solar. But I’m not going to hang my hat, or our whole business strategy, on that tomorrow.

Q: Some analysts have forecast that the solar industry might have more supply than demand during the few next years, pressing prices downward. Are you concerned about that?
The markets are moving so quickly it’s really hard to tell when that will start, or [if] so much new product and demand will come on that it will extend it out. I guess I’m not going to draw a conclusion on that yet. Every business has to be prepared for that type of event, and we do talk about it, but the way you survive is to make sure that your fundamental basis of business is strong enough to take that kind of market. And I believe Global Solar is going to be prepared for that.

Q: Prometheus Institute President Travis Bradford has said that thin-film makers would need to be able to profitably sell panels for $1.50 per watt to survive a coming shakeout (see Solar Sector Heading for a Shakeout). I know you don’t make panels, but do you think you will be able to make strings at a low-enough cost for your customers to meet that goal?
Because we [don’t make panels], we are left to estimate the cost of converting strings into modules. But we believe, based on our cost models, we will be able to beat that cost model.... With the new equipment that we have designed for these two new plants, we [expect reduced materials and labor costs]. We’re using virtually the same amount of operators to scale up [to 10 times the capacity] -- we currently have about 150 employees and expect to have 150 to 200 in the Tucson plant.

Q: Before you’re ready to enter new markets, such as the building-integrated solar market, isn’t it going to be a challenge to compete with traditional silicon-based companies, which have higher efficiencies, and low-priced First Solar?
This is really teaching us discipline. We have to compete now; we have to grow now. So the only way we can achieve the goals of growth at this point, with the technology we have, is to beat the cost out of it and compete at that level. This is really going to benefit us when we reach the time where we have a mature BIPV-type product and we have already learned to make it low-cost.
: The game is not to really go out and take a shot at a First Solar or anybody else. I think that this market is growing so fast that the demand for solar will need all of us to be available.

Q: You’ve talked about the advantage of experience making your Gen 1 strings. But for Gen 2, you’re saying you’ve got some new technology involved to make it more cost-effective, so isn’t there still a risk? 
Absolutely. There has to be risk. If you don’t take risks, you’ll never make any gains. What we do is we try to minimize that risk so that, for instance, we use a co-evaporation technology to make our copper-indium-gallium-diselenide coating. We’re still going to be using a multisource co-evaporation technology. What we’ve done to the new tools is to add in more control and more flexibility into the process so that we could achieve higher efficiencies and so that we can tighten down the quality of the product. So there are elements of risk in what we’re doing, but we’ve tried to keep it to a fairly manageable level. It’s not as though we’re trying to go to something silly like a nanoparticle-type product.

Q: What about other CIGS competitors like Nanosolar and HelioVolt? What do you think your advantages are over them?
The difference is really our maturity. That’s what differentiates us from everybody out in the marketplace right now. You can’t underestimate the value of experience in this field. Things are not as simple as they might look to someone who’s never done it before. There is something new under every stone you turn over. And we’ve had the benefit of over 10 years now of development at Global Solar. We’ve uncovered a lot of stones.... And not only are we far down the path, but we started on the right path.

Q: Other key differentiators?
Efficiency, stability and usability. The efficiency of the technology and that capability to grow in efficiency; stability of the production process already demonstrated; and usability [because the transportability] is a key differentiation, in that it can be used by, in a broad sense, everybody. It fits into the current process today, into current markets today, and it is really a paradigm shift for future markets.

Q: How much funding have you raised so far?
That’s something we have not discussed. I can say that we’ve never accepted VC funding. Global Solar has been lucky in that we were owned [in our entire 12-year history] by only two groups: Tucson Electric Power for the first 10 years, and then we were sold in April of ’06 to two companies. One of them was Solon AG -- they own 19 percent of our company -- and the remainder is owned by I-Sol Ventures.... We can’t rule out [debt or equity financing] in the future, but up to this point, our current owners have taken care of everything.

Q: Can you talk about your expected revenue?
Not at this time. [Part of the reason is the pricing for thin films isn’t set yet.] We have to get our costs down to the targets you hear from other thin-film companies.

Q: When do you expect to turn a profit?
We expect to be profitable before early 2009.