Signet Solar expects to begin commercial production of thin-film solar panels by the end of this month, a company executive told Greentch Media this week.

The company has the capacity to produce up to 20 megawatts of amorphous-silicon films annually using Applied Materials' (NSDQ: AMAT) thin-film panel manufacturing production line, Sanjay Arora, Signet vice president of finance, said Tuesday. Signet plans to begin shipping its films to commercial customers this month and to ramp up its production to full capacity in the next two months, he said.

Applied Materials believes the move will make Signet its first customer to reach commercial production, according to Applied Materials spokesman Steve Taylor.

The semiconductor- and solar-equipment manufacturer began selling its prefabricated SunFab line last year. The idea is that by purchasing the amorphous-silicon line, customers can quickly and easily get in on the burgeoning thin-film sector, which is currently dominated by Wall Street darling First Solar (NSDQ: FSLR).

According to an article published by Photovoltaics International, Applied Materials executives said in June that eight SunFab thin-film production lines were in various stages of being built and that four of them were already producing panels.

But as far as Applied Materials knows, none of these companies have reached commercial production yet, Taylor said. Menlo Park, Calif.-based Signet appears to be the closest to getting is thin-film panels off the line and in the hands of customers.

The production line makes panels using a single layer of amorphous silicon deposited on glass, Arora said. The line also produces panels that convert an average of 6 percent to 7 percent of the sunlight that hits them into electricity.

Signet, which has set up its thin-film plant in Germany, plans to expand its production to more than 100 megawatts by 2009.

Once the plant reaches a capacity of 65 megawatts, Arora said the company plans to switch to two-layer solar panels using both amorphous and microcrystalline silicon. Applied Materials expects the move to boost average panel efficiency to between 8.5 percent and 10 percent, he said.

First Solar, which makes cadmium-telluride films, reached an average cell efficiency of 10.6 percent at the end of the fourth quarter, according to investment bank Piper Jaffray.

Moreover, First Solar makes thin film at a lower cost than the reigning solar-power technology, crystalline-silicon panels.

Arora claims Signet matches First Solar's thin-film panel price at $2.50 per watt, but didn't disclose the company's expected cost per watt. First Solar reported a cost of $1.18 per watt in the second quarter of this year, with 6 cents of that going toward the cost of ramping up new plants.

Although Signet's panels aren't as efficient as First Solar's, Arora said they are cheaper to install than smaller thin-film panels like First Solar's. That's because Signet's panels don't require as much hardware, such as the brackets and junction boxes that help protect panel circuitry, he said. 

"So far, Signet has booked 140 megawatts of orders from five customers, Phoenix SolarSolegGoldbeck SolarAlfasolar and SolarMarkt, he said."    

Greentech Media and Prometheus Institute analysts expect thin-film solar production to double in each of the next three years to reach 4.18 gigawatts in 2010, according to a report released earlier this month (see Thin-Film Solar Set to Take Market Share From Crystalline Solar PV).

Most of the new companies are developing amorphous-silicon films on glass, and the news that Signet is beginning to ship products to customers could be a good sign for other Applied Materials customers.

Amorphous-silicon films have the lowest barriers to entry because companies can buy "turnkey" manufacturing equipment from suppliers such as Applied Materials and Oerlikon, according to Prometheus.

But beware: Running pre-fabricated thin-film lines aren't as easy as suggested by such wording, said Bijan Moslehi, vice president of manufacturing for Signet. 

"You hear this notion of turnkey, but trust me, there is no key," he said.

Things can go wrong, Moslehi said, such as glass breaking, machinery failing, or bubbles appearing in lamination meant to protect the panel - all of which cut away a manufacturer's bottom line.

The challenge is to understand the many variables in the manufacturing process and how each one impacts the final product, and then to figure out which ones are most critical to address, he said.

Signet has worked hard to understand the equipment and figure out the best way to operate it to get the highest yields of sellable product, Moslehi said.

And that could mean that other Applied Materials customers are in for a similar experience. 

Prometheus Institute President Travis Bradford has predicted that amorphous-silicon companies won't have an easy ride this year or the next year as the technologies get debugged and verified (see Thin-Film Solar Has Bright Future).

No doubt many of Applied Materials SunFab customers are watching to see how well Signet gains control of the machinery.

According to preliminary numbers presented by Bradford in May, SunFab customers had announced orders of an estimated 278 megawatts of capacity in 2008, 1.9 gigawatts of capacity in 2010 and 4.2 gigawatts of capacity in 2012.

In June, Abu Dhabi's Masdar Initiative said it would spend $2 billion to buy three thin-film solar lines from Applied Materials (see Green Light post and Funding Roundup: Solar, Biofuels Dominate Light Week).

Let's see how many of the customers get to the next step on schedule.

Stay up to date on the thin-film solar market with Greentech Media and the Prometheus Institute's new report Thin-Film PV 2.0 or at our upcoming event the Thin-Film Revolution in New York City on Sept. 15, 2008.