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First Solar delays factory; major staff cuts at Abound Solar

First Solar delays factory; major staff cuts at Abound Solar

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U.S. solar panel makers continue to amass battle scars as they struggle to survive in a difficult market. This week, First Solar and Solar Abound are forced to hunker down.

U.S. solar panel manufacturers continue to amass battle scars in a market grappling with lower demand in Europe, cutbacks in subsidies and a saturation of cheaper panels from Asia. The difficult market conditions have forced smaller, capital-poor companies to close factories and layoff workers. It's also impacted relatively healthy solar manufacturers, compelling some to delay expansion plans and hunker down until conditions improve.

This week, both First Solar and Abound Solar made announcements that reflect the challenging environment.

First Solar, which makes thin-film solar panels using cadmium telluride, reported a net loss of $413.1 million for the fourth quarter compared with net income of $155.9 million in same period in 2010. First Solar took a $393 million goodwill impairment charge related to its purchase of OptiSolar in 2009 and NextLight Renewable Power in 2010/ First Solar spent $164 million on warranty claims for faulty equipment made in 2008 and 200 and $60 million to restructure its business.

First Solar reported $2.76 billion in sales for 2011, up 8 percent from $2.56 billion the previous year. The company reported $39.5 million in net losses for the year, compared with $664.2 million in profits for the previous year.

As a result, First Solar has reduced its 2012 revenue forecast to between $3.5 billion and $3.8 billion. It had previously forecast up to $4 billion in sales.  First Solar, which had already delayed the opening of its Mesa, Arizona factory, now says the project will be on hold until the market rebounds, the Arizona Republic reported.  The factory was expected to add 600 jobs when it opened this year.

Abound Solar cuts jobs

Meanwhile, Colorado-based  thin-film solar panel maker Abound Solar has stopped production and has cut 180 jobs. Another 100 temporary workers were also laid off, the Longmont Times-Call reported. That means Abound Solar, which received a $400 million loan guarantee to build two factories in 2010, has cut 70 percent of its workforce. The company also said it will delay a new factory in Indiana.

Abound is trying to spin the shutdown as a necessary measure to refit its manufacturing lines with new equipment to produce its next-generation high-efficiency module. Abound expects to resume mass production with a module that will be able to convert 12.5 to 13 percent of sunlight into electricity. Its current module has a 10 percent conversion efficiency rate.

This is hardly standard in the manufacturing industry.  Abound has been forced to put all of its resources into developing (as quickly as possible) its next generation module -- a product the company is betting will reverse its fortunes and make it more competitive with its primary rival thin-film leader First Solar. The question is whether Abound will succumb before it can start production.

If Abound hopes to survive, its cost per watt will have to be competitive with First Solar. As Greentech Media also noted today, First Solar's 87-watt CdTe panels have a 12.2 percent conversion efficiency and a cost of $0.73 per watt. And it expects to reach the mid-$0.60 range this year or the next. GTM Research estimates if Abound was running a full tilt, which they're not, its current costs would be just above $1 per watt.

Photo: First Solar

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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure