First Solar Snaps Up Silicon Startup TetraSun

For thin-film mega-company First Solar, the two-year crisis caused by the solar module supply glut may be almost over. The largest manufacturer of solar panels in the United States surprised silicon valley by announcing that it will buy startup TetraSun, which makes high-capacity silicon solar cells. That's right, silicon. But more about that in a moment.

First Solar can buy TetraSun because it's in much better shape than other solar manufacturers, many either declaring bankruptcy, like China's Suntech, or panicking; First Solar will be able to use cash from its strong balance sheet to finance the acquisition, CEO Jim Hughes told the Wall Street Journal. (Read the press release.)

TetraSun deal fills a product gap

First Solar survived the glut by moving beyond making solar panels and becoming a project developer, designing and installing complete utility-scale solar power plants. These large projects created a reliable market for First Solar's panels and drove down costs. The successful company now gets better financing then many rivals - one of the biggest costs of solar power.

As a sign of the times, First solar bought TetraSun after picking over dozens other startups, most having run out of venture capital. "This really arose out of the fact that industry conditions generated a significant number of opportunities to acquire new technology," Mr. Hughes added. (Listen to archived analyst webcast.)

For First Solar, the TetraSun deal fills a gap: its efficient silicon solar panels are better suited for small rooftop systems, particularly those to be built in Japan, which is expected to become the second-largest solar market this year, according to Bloomberg. Now First Solar, which had previously abandoned rooftop solar, has a complementary technology that opens up the entire global market.

Now competing on SunPower's rooftop

What about TetraSun's technology? TetraSun's cell delivers conversion efficiencies exceeding 21 percent, with manufacturing costs comparable to conventional multicrystalline silicon solar cells. The design also enables high-

volume production with higher yields using readily available equipment.

The technology also benefits from a low temperature coefficient of power, which produces better yields in hot climates compared to typical silicon PV modules, further expanding the company's reach.

TetraSun's cost-effectiveness is further enhanced by eliminating the need for expensive silver and transparent conductive oxide. Silver is both expensive and volatile with regard to its pricing, according to analyst Shyam Mehta at Greentech Media:

The use of copper metallization really does give TetraSun a shot at being a truly low-cost, high-efficiency technology concept.

Other than a PV demonstration installation in Japan, First Solar has had little success in the Japanese market. Though no legislation is believed to exist in Japan that directly bans the use of cadmium telluride-based products, rules do exist for labelling of products using the substance (cadmium) for recycling purposes.

US-based rival SunPower recently renewed a distribution deal with Toshiba for over 100MW of its modules for installations in Japan this year.

Buying TetraSun sends a signal to SunPower that it plans to compete directly with similar technology in rooftop markets. First Solar plans to begin commercial-scale manufacturing of the new technology in the second half of 2014.

First Solar CEO Jim Hughes summed up the deal to industry analysts, saying, "This new capability to meet the needs of customers with distributed generation applications, coupled with our leading CadTel offering, which remains the benchmark for utility-scale systems, gives us a unique end-to-end suite of solutions to serve the full spectrum of commercial applications."

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Photos: various, First Solar