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It may not be as much as the colossal $300 million financing that Nanosolar finally disclosed yesterday — the biggest ever for a solar company — but another thin-film manufacturer, AVA Solar, has broken into the nine-figure funding range today, with a challenge to industry giant First Solar’s dominance.

AVA stands out a bit from its peers, for several reasons. For one, it’s based in Fort Collins, Colorado, well away from the sunny or technology-laden areas its competitors operate in. The outfit has thus gotten relatively little attention. The second oddity is the technology that AVA uses, which builds thin-film cells using cadmium telluride (CdTe), a kind of semiconductor.

Most of the biggest bets in thin-film solar, a form of solar panel that is less efficient than traditional silicon-based cells but much cheaper to make, are based on copper-indium-gallium-selenide, or CIGS technology. Ascent Solar, Heliovolt, Miasole, Nanosolar, and a bunch of other companies all use CIGS. There’s an ongoing debate as to whether CIGS, CdTe or a third material, thin-film silicon, is best.

However, CdTe, despite a reputation for being difficult to work with, holds a singular distinction: It’s what First Solar, the industry’s first and only success, First Solar, uses. It has been reported that First Solar has no direct competitors in CdTe technology. AVA obviously proves that claim wrong. A handful of others working with CdTe include Sunovia (OTCBB: SUNV), Calyxo, which is owned by the German giant Q-Cells, and PrimeStar Solar, which recently sold a majority stake to General Electric Energy. Primestar, like AVA, is based in Colorado.

AVA is currently building a plant in Fort Collins, CO, where it promises to employ 500 at a production line that will make 250 megawatts worth of cells a year by 2010. The company appears to use deposition on glass to make its cells, which is also what First Solar uses, although a company spokesman tells me that AVA’s technique is “completely different”.

A number of well-known venture firms came on for the $104 million funding. DCM led, while new investors Technology Partners, GLG Partners and Bohemian Companies participated, and previous investor Invus came back in. AVA raised its seed less than two years ago and took a second funding in June of 2007, but didn’t disclose amounts for either of those fundings.

updated, with correction

These are heady times for the thin-film solar industry. The sector’s dominant player, First Solar, has been on a tear of late, recently announcing it would build a second 10 megawatt power plant in Nevada, while Miasole, once thought to be ailing, has staged an impressive comeback, raking in an eye-popping $220 million. Nanosolar has developed a new ultra-fast solar cell printer, and even giants like IBM and Applied Materials have gotten in on the game.

In the face of such intense competition, how will HelioVolt, a well-funded outpost of CIGS manufacturing in Texas, fare? The company hopes a new hybrid, super fast CIGS process it has developed in collaboration with the National Renewable Energy Laboratory (NREL), which combines its patented FASST process and NREL’s non-vacuum deposition technique, will help even the odds.

The Austin, Texas-based company licensed NREL’s non-vacuum deposition process, which allows for the quick application of liquid precursors onto a printing plate and substrate, to manufacture its solar cells with a 12.2 percent conversion efficiency at a fraction of the regular cost and in record time — under 6 minutes. Another advantage is that the substrate can be made from a variety of building materials, including glass, metals, plastics and roofing materials.

It remains to be seen how well this process will work, when it is applied to large-scale production. However, the technology recently won a vote approval when HelioVolt and NREL were given the R&D 100 Award, the technology and manufacturing industries’ equivalent of the Oscars, for developing this process.  The cost and time savings will help, but HelioVolt will need to move quickly if it hopes to catch up with the likes of Nanosolar and First Solar, who are both well on their way to making cells in high volumes.

John Langdon, HelioVolt’s VP of marketing, told us the new process would give his firm the flexibility to produce on a much faster time scale while still creating more expensive high-performance cells, although the technology would not affect HelioVolt’s short-term plans (over the next 6 months) as it is still focused on getting its 20 megawatt Austin plant up and running. He wasn’t sure whether the process would help bring the cost of cells below the oft-cited threshold of $1 per watt threshold, but it will speed up manufacturing and enable high-volume production.

“Sometimes vacuum processes are most cost effective and sometimes atmospheric processes are. All of our forecasts and models show we can get to extremely low costs in high volume processing with vacuum methods –- we are developing the non-vacuum methods for flexibility and to explore the fact that FASST can work with either kind of precursors,” Langdon said.

Those key advantages could help HelioVolt weather an inevitable round of consolidation in the thin-film industry. While Langdon wasn’t ready to predict how many of the 31 or so funded CIGS startups would remain standing, the company thinks there’s plenty of room for more than one winner — though the broader solar industry will likely experience more segmentation as multiple viable technologies crop up.

The use of aesthetically-pleasing solar cells in architecture, for example, will become an increasingly important segment as prices decrease. Five years from now, he predicts, thin-film solar will account for roughly 50 percent of the industry, with polycrystalline silicon cells accounting for the other half.

While Langdon hopes to see the renewable energy tax investments extended, he said he would prefer to have one set of rules put in place to eliminate the uncertainty that has plagued the industry and made investment, particularly in the wind sector, less consistent. Even if the financial incentives decrease over time, the clarity and continuity one common set of rules would provide would encourage the sector’s long-term growth.

Calling it a “sleeping giant,” he said the US offered the most potential room for growth. While European countries may currently have the largest markets, Langdon suggested that rising energy prices, combined with some well-timed incentives, could help solar flourish. If Texas were to implement the set of incentives that have helped California become the country’s largest solar hub, it could even surpass the Golden State.

HelioVolt CEO BJ Stanbery is set to announce that his company has set a new speed record for CIGS conversion efficiency, ratcheting up the pressure in the competitive, high-stakes thin-film solar cell sector. The Austin, Texas, start-up, which raked in a cool $101 million in second round funding last October, claims its proprietary FASST reactive transfer printing process can produce cells with a 12.2% conversion efficiency in a mere 6 minutes.

This latest technological breakthrough comes as HelioVolt and competitors such as Nanosolar, Miasole, Solyndra and OptiSolar race to bring the cheapest, most efficient solar cells to market. All are competing to lower the cost of solar cells by using copper indium gallium selenide (CIGS) instead of the costlier, but more efficient, crystalline silicon material. Silicon solar cells have a conversion efficiency of around 14-20%.

Nanosolar, the most heavily-funded thin film firm outside of the public market and one of the first to commercially sell its cells, broke the crucial $1 a watt price point in December — an important metric because it means cells can become competitive with conventional sources of electricity — and First Solar (NASDAQ: FSLR), the largest publicly traded thin-film firm, is close to doing so.

HelioVolt’s FASST process helps reduce costs by building CIGS cells 10-100 times faster than its competitors’ processes, Stanbery says. The 12.2% efficiency figure was independently confirmed by scientists at Colorado State University. Stanbery added that there was still much room for improvement, and that his company was focusing on squeezing a higher efficiency out of its cells.

The FASST printing process can directly apply (or “print”) thin film layers to a variety of substrates, including glass substrates for solar modules, roofing tiles and other construction materials. HelioVolt said last Tuesday that it would partner with Architectural Glass & Aluminum to develop building-integrated photovoltaic (BIPV) products.

Stanbery hopes to make a dent in silicon’s once indomitable lead in the industry by accelerating the commercialization of the high-throughput printing process to scale production at its soon-to-be completed 20 MW plant in Austin, after which it plans to aggressively expand its operations overseas.

Though it remains to be seen whether HelioVolt remains on schedule to get its cells out by the end of 2008, the company says its record breaking technology will put it out in front of its much bigger rival, First Solar, which uses cadmium telluride to build its cells, from the get-go. Even assuming its technology is superior, HelioVolt will have a lot of ground to make up if it ever hopes to catch First Solar, which already has over a gigawatt of production capacity, and some of its other rivals, which have announced more ambitious construction plans.

Nanosolar CEO Martin Rosecheisen, whose first plant’s capacity exceeds 400 MW, scoffs that HelioVolt’s plant looks more like a pilot project than a commercial-scale one. OptiSolar recently announced plans to build a 550 MW plant in San Luis Obispo County, California. It has already started construction on a 50 MW plant in Sarnia, Ontario, with two additional 20 MW plants to come in nearby Petrolia and Tilbury.

Another day, another dollar, or $50 million of them. Nanosolar is now the most heavily-funded thin-film solar cell manufacturer outside the public market, with a new investment from a French company that wants it to churn out cells more quickly.

Nanosolar’s cells, which the company only started producing in December, are among the cheapest on the market, which is reason enough for it to continue attracting attention from investors like EDF Energies Nouvelles. The company’s CIGS technology, while less efficient than silicon, is also far less expensive, and most other CIGS makers don’t have a product yet. Its pricing is reportedly competitive with First Solar (NASDAQ: FSLR), a thin-film manufacturer with a $20 billion market cap.

That doesn’t mean a great deal at the moment, because the market is begging for cheap solar cells; true competition will take a couple years more. That will give Nanosolar time to lower costs more by scaling up production further. CEO Martin Rosencheisen told me that the company’s two existing facilities are capable of producing more than 100MW of cells each year at top capacity, and it will probably be building more factories soon.

Exactly how much has Nanosolar raised? By my count, it’s at about $170 million, including a large Department of Energy award. According to several sources, the company shopped itself out for the latest round at a $2 billion valuation.

If that valuation keeps rising, the only options remaining will be a big-ticket acquisition by a larger company or, more likely, an IPO — but the company and its investors will probably want to wait until some of the current market woes have worked themselves out. That could be the end of this year, by which time it will likely be hungry for more capital anyway.

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A day after Silicon Valley solar cell company Nanosolar said it has begun manufacturing and sales of its solar cells, rival HelioVolt declared it too is building a solar cell production plant, in its hometown of Austin, Texas.

Both companies are competing to build cells from material called copper indium gallium selenide (CIGS), which they hope will lower the cost of solar cells dramatically, compared to the dominant material today: expensive silicon.

The timing of the announcement by HelioVolt, the second most heavily-funded CIGS maker after Nanosolar, might be intended to show the younger company isn’t falling too far behind its competitors.

However, the Austin HelioVolt plant will produce only about 20 megawatts worth of cells each year (update: the company says it will be able to scale production over 20MW), while Nanosolar’s San Jose plant is built to produce more than 400MW of cells a year. Nanosolar CEO Martin Rosecheisen remarked that HelioVolt’s effort looks more like a pilot project, not a commercial-scale plant.

The real challenge for the HelioVolt plant will be not in capacity, but in how cheaply it can make cells and how efficient they are in converting sunlight to electricity. So far, no player has nailed both of these well enough to threaten silicon’s dominance of the industry.

Until it begins producing cells — in late 2008, says HelioVolt — there’s no telling how closely it can compete with Nanosolar, which says it can churn out cells for less than a dollar per watt (an important price point, because it becomes competitive with other sources of electricity).

First Solar, a publicly traded company that uses a material called telluride to make similar thin-film solar cells, is also close to being able to produce cells for under a dollar per watt, and plans to have over a gigawatt of production capacity by early 2008. Its initial production runs quickly sold out.

Other CIGS startups, notably Miasole and Solyndra, have yet to set up their own plants. All of the CIGS makers have run into problems with production, to one extent or another, so it should be interesting to see whether HelioVolt remains on schedule to roll out its first cells late next year.