Suntech Power Holdings said Thursday it has run into difficulties making its high-efficiency Plutosolarcells, raising the possibility of a delay in this next-generation technology.

The Chinese solar giant said the problems arose in ramping manufacturing beyond its present monthly pace of 4 MW. As a result, the company said it decided to maintain this relatively modest production level -- probably two factory lines -- until it works out the technical kinks.

The move is a blow for Suntech as it begins to transition to this key technology in hopes of catching up with more efficient solar developers, particularly mass-market efficiency leader SunPower. It also could be a setback to Suntech's hope of pushing Pluto beyond its present 19 percent average efficiency to a 20-percent target.

Rumors have percolated over the last two weeks about Pluto problems. One installer told Greentech Media recently that Suntech told them not to expect delivery of Pluto panels until the third quarter or so. Another said Pluto panels have been discussed since late 2007, but have not yet been seen.

Suntech pulled back on production goals in 2008 due to the economic collapse, but in 2009 and early 2010, the company remained somewhat optimistic. In March, execs said capacity in Suntech's plant for Pluto modules would rise to 450 megawatts by the end of the year. Suntech at the time said it would produce around 30 megawatts by the end of the first half, with 120 to 150 megawatts slated to be produced in the second half.

On a first-quarter conference call with analysts today, Suntech Chief Technology Officer Stuart Wenham described the hang-ups as "small glitches" of the sort that are common when transferring a new technology to large-scale module production.

"In the course of ramping Pluto production to levels well above the current 4 MW a month, we have identified process control challenges to module production," Wenham said. He added: "We have gained a great deal of experience since we began producing commercial quantities of Pluto cells."

Suntech says it remains pleased with the cell's performance and claims nothing is wrong with the Pluto design. Yet Pluto's average cell efficiency remains at 19 percent, with the best yielding cells reaching 19.5 percent. Both are well above the market average of 17.5 percent, but the company first achieved 19 percent efficiency as far back as early 2009.

Suntech is "fully confident Pluto will become our core product and the industry benchmark for high-performance and cost-effective solar panels," Wenham says.

The Pluto design is based on the PERL (passivated emitter with rear locally diffused) technology developed at Australia's University of New South Wales, where efficiencies of 25 percent have been achieved in the laboratory. It has low reflectivity to capture more sunlight and thinner metal lines to reduce shading.

While the technology remains promising, Suntech said in a difficult-to-interpret announcement that it recently began a new solar research initiative with the University of New South Wales and Silex Solar to improve the efficiency and cost of cells. The research received a $5 million grant from the Australian government. The company also kicked off a collaborative effort with Swinburne University of Technology on nanoplasmonic cells. Suntech describes both efforts as complementary to its work with Pluto.

Because of its high efficiency, the Pluto panel commands a premium price in the market and customer demand appears to be high.  Yet production is far from the 450 MW Suntech plans for the middle of its fiscal year. When the problems are resolved, the company promises production will increase rapidly and engineers are reportedly convinced they can meet the target.

On the conference call, Suntech said a weak Euro contributed to a 14-percent fall in average product prices in its first quarter. The prospect of continued weakness led its shares down 3 percent.

Suntech does 68 percent of its business in Europe.

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Michael Kanellos contributed to this report.