New Incentive Deal with Chinese City Brightens Ascent Solar’s Future

7/12/13Follow @MichaelXBD

Maybe it’s an example of the old saying “if you can’t beat them, join them.”

Ascent Solar Technologies, a Colorado-based designer and maker of thin-film photovoltaic technology, announced this week it has entered into an agreement with the Chinese city of Suqian that could lead to a total of $500 million in investments that would benefit Ascent. The investments would primarily come from Suqian, according to an SEC filing.

Ascent (NASDAQ: ASTI) believes the deal will help it lower production costs, increase capacity, and ideally re-enter market segments it has left over the past few years, Ascent spokesman Justin Jacobs said.

“It’s a game-changer for us,” Jacobs said.

The deal also is a rare example of an American solar technology manufacturer taking advantage of cheaper production costs and incentives that have helped Chinese companies gain an edge on American competitors in the PV manufacturing industry.

“We’re going back across the Pacific. Traditionally the Chinese have been manufacturing and trying to sell in the States. Now it’s an American company going the other way,” Jacobs said.

Ascent is based in Thornton, a suburb of Denver, where it has a 30 megawatt manufacturing plant. Ascent has about 150 employees, Jacobs said.

Ascent manufactures copper-indium-gallium-selenium photovoltaic modules on flexible and lightweight films. Thin film solar cells like Ascent’s compete against crystalline silicon technology, which are used in most photovoltaic systems.

In theory, thin-film technology will be cheaper to manufacture, but companies are having a hard time getting the technology right or producing at scale. There have been a number of high-profile casualties in the thin-film sector, most notably Solyndra and Abound Solar, which was based in Colorado before ceasing operations in 2012. General Electric had planned on building a 400 MW factory in Aurora, CO to build thin-film panels, but last summer announced the project was on hold.

Ascent’s had its ups and downs as well but has managed to survive. The company lost $28.8 million in 2012 and $105.7 million in 2011, according to the SEC. New managers and investors came on board in 2012 and oversaw Ascent’s transition away from the market for building-integrated PV systems, Jacobs said.

Ascent’s new focus is on developing “quality consumer solar products” that integrate thin film PV cells with consumer electronics, Jacobs said. One example is the cases/battery packs Ascent is developing for iPhones and the Samsung Galaxy S that can charge the phones using solar power. The technology could be extended to other phones, tablets, cameras, and digital devices.

The company also is selling portable solar systems for recreational, commercial, or military use.

Other companies have developed smartphone cases that include solar cells, but by and large those are cheap and flimsy products, Jacobs said. Ascent is marketing its EnerPlex line as a lightweight and durable alternative.

Changing the company’s focus from powering buildings to supplying the dozens of small electronic devices everyone now owns is a big leap, Jacobs said.

“It’s a paradigm shift not just for Ascent, and not just for the thin film sector, but for solar. This is a new playbook that no one has ever cracked open before, and we are the first people who’ve been able to take advantage of the incredible interest in CIGS technology,” he said.

But Ascent does not want to abandon the market for large PV systems forever.

“We pivoted to the consumer space because the margins were so low,” Jacobs said. “If we’re able to realize these economies of scale and drive our costs down, we’ll be able to in the future re-enter those markets in force.”

The deal with Suqian is crucial to Ascent’s plans, and the terms look highly advantageous for Ascent. It would establish a joint venture in which Ascent will have an 80 percent interest. Initially, Suqian will provide about $32.5 million in cash for the joint venture, while Ascent will put up about $1.6 million in cash. The company also gets rent-free use of a 270,000-square-foot factory that is being built in Suqian, a city of more than 5 million between Beijing and Shanghai.

Ascent will have the option to buy out Suqian’s share, according to the company. It also has the option to expand and buy the plant and surrounding land.

Ascent has agreed to move equipment from Colorado to the new Chinese plant and contribute proprietary technology and intellectual property. The plant in Thornton will continue operating at its current output, but new production will take place in China, Jacobs said.

“Right now we are not decreasing manufacturing capability in Thornton,” he said.

Ascent will keep its headquarters and research and development staff in Colorado in the long term.

“Our global headquarters for the next decade I think will be in Colorado. We are an American company, we intend on staying in the states. Beyond just patriotic reasons, we know the brain trust we’ve built here,” Jacobs said. “We have access to more of the bright minds and great technology here than we ever would if we wanted to move the whole company to China.”

This week Ascent also announced it has signed a new distribution partnership to sell products in the United Kingdom and Ireland. In May, Ascent began selling its solar phone chargers in China.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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