Late last month, once-promising cadmium telluride (CdTe) start-up Abound Solar filed for bankruptcy. We pegged the company as one of five solar suppliers that would struggle in 2012 (Client registration required). Abound’s $400 million U.S. Department of Energy loan guarantee (of which it only used $70 million) to expand and build a 640 MW facility in Indiana has the wheels of political media turning – in most cases, likening the failed company to Solyndra. Such comparisons, in large part, are erroneous.
Solyndra was likely plagued by poor manufacturing yields (Client registration required), but more so by high costs that were exaggerated when polysilicon costs crashed, making it wildly uncompetitive on price. In mid-2011, the company’s manufacturing costs were between $3/W and $4/W while the x-Si market was barreling towards $1/W.
Abound’s problem was not manufacturing costs. The company claimed 97% to 99% electrical/mechanical process yields, and had begun expansion for 640 MW of capacity – surely enough scale to bring costs down significantly. Fellow CdTe supplier First Solar, though struggling today, is the cost leader in the solar industry. We’ve heard that Abound’s biggest problem was module performance. As of our last profile, the company was barely breaking the 10% efficiency barrier, whereas competitor First Solar documented average module efficiencies more than 12.5% in its Q1 2012 earnings call. Further, performance issues in CdTe are likely a function of copper present in back contact pastes, which diffuses across the CdTe/CdS junction and negatively affects performance (for more on this issue, see the Lux Research report “Key Issues and Innovations in Photovoltaic Metallization. Client registration required.).
Solyndra failed on cost and Abound on performance – and attributing either to Chinese manufacturing alone is incorrect. What they have in common is that both received loan guarantees from the U.S. government, and so both will remain political punching bags well into the 2012 presidential election – Solyndra more so, as it received more funding and has questions surrounding its political connections; whereas Abound’s expansion was also supported by the Republican governor of Indiana at the time. What should be more of a concern for the solar industry is that the shakeout isn’t over.