Solar Frontier, the Next-Generation First Solar

While many Silicon Valley thin-film solar startups are finally moving into the early stages of commercial production and winning attention from potential customers, here comes Solar Frontier, a division of Japanese oil refiner Showa Shell, who has leapt over everyone. Solar Frontier expects to reach full scale production of its copper-indium-gallium-selenide (CIGS) panels at its 900MW solar factory in Miyazaki prefecture, Japan, this summer, and the company says it’s already selling solar panels to customers like General Electric (s GE).

Greg Ashley, chief operating officer of Solar Frontier Americas, said during an interview at the Photon Thin Film Conference in San Francisco on Wednesday, that Solar Frontier has already started commercial production at its factory, after breaking ground on the factory in September 2009 and piloting the new equipment last November.

The factory makes Solar Frontier the second largest thin film manufacturer in the world in terms of production capacity, behind industry leader First Solar (s FSLR). First Solar, which makes solar panels using cadmium and tellurium as the ingredients to convert sunlight to electricity, has been the only thin film giant in a sea of solar panel manufacturers that make silicon-based solar panels. The new factory is the third for Solar Frontier, which has two other factories in Japan with a total production capacity of 80 MW. Thin films refer to ultra-thin solar panels that use little or no silicon.

The new factory “allows us to provide that cost advantage to our customers,” Ashley said, though he declined to divulge the company’s manufacturing cost, and that makes it difficult to say for certain whether Solar Frontier’s CIGS panels can compete with silicon panels and even panels from First Solar, which still claims to be making solar panels cheaper than anyone else.

But manufacturing is about scale – the bigger you are the easier it is for you to cut manufacturing costs. Solar Frontier has vaulted from a size that was comparable to many other thin film startups, to a scale that is many times some of its startup Valley competitors. First Solar had 1.4 GW of capacity in 2010, and it plans to reach 2.7 GW by the end of 2012. A greater number of silicon panel makers are approaching or already have crossed the gigawatt line, including Suntech Power and Trina Solar. Sharp, another major silicon panel maker, opened a 160 MW thin film factory in Japan to make amorphous-silicon panels last year.

About 80 percent of the solar panels made today use silicon. First Solar’s panels made up 40 percent of thin films made in 2010, according to Solarbuzz.

CIGS solar panel developers like to talk about the potential of their technologies to be more efficient than other thin film technologies. But efficiency isn’t the only major metric for success. First Solar is able to rack up a good profit and build new factories even though its solar panels aren’t as efficient at converting sunlight to electricity as other thin film startups and silicon solar panel makers.

“You can brag all you want about (efficiencies), but there is a lesson there. You need to come up with scale to really claim scale in addition to efficiency,” said Rommel Noufi, who heads the thin film program at the National Renewable Energy Laboratory, during the Photon conference.

Solar Frontier’s panels from its new factory are larger than its previous products; these are 130- to 150-watt panels with 10-12 percent efficiency, Ashley said. That efficiency range is what many of its CIGS peers such as MiaSole, Stion and HelioVolt are claiming. Silicon solar panels can do even better on efficiency. First Solar reported about 11.3 percent efficiency last October.

Solar Frontier’s new panels have already received the necessary safety and performance certification for the Japanese and European market, and it expects to get the same stamp of approval for the U.S. market in the second quarter of this year, Ashley said. The company inked a deal to make solar panels under GE’s brand last October, and its’ been shipping panels to GE.

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Image courtesy of Solar Frontier