Michael Kanellos

Wind Farm Developer Gets Into Solar as Solar Follows ‘Dell’ Model July 9, 2008 at 3:38 PM

Applied Materials has struck again. This morning, the company announced that it will build a 40-megawatt solar panel factory for Moncada Energy in Sicily.

Moncada is a wind park developer, but it’s not the first novel buyer of Applied’s SunFab manufacturing lines for making thin film solar panels. A few weeks ago, the oil-rich sultanate of Abu Dhabi (the guys who just sought a controlling interest in the Chrysler building) signed a contract with Applied to invest $2 billion with Applied over the next several years on SunFab lines. Applied also cut deals with Signet Solar, a company formed by several execs from the chip and semiconductor manufacturing fields.

The Moncada factory, which will start production in 2010, will produce solar panels measuring 2.2 by 2.6 meters. These panels cover 5.7 square meters and are the same size as the sheets of glass used to make LCD TVs in the most advanced factories. Moncada will likely sell its panels to utilities and power providers, the same customer base as First Solar. The active ingredient in First Solar’s panels is cadmium telluride. In the Moncada’s panels, the ingredient will be amorphous silicon.

Applied claims that its panels are 17 percent cheaper to install than smaller thin film panels. Hmm. wonder who they could be thinking of?

Right now, Applied has contracts with eight large manufacturers. The company’s customers will have around 278 megawatts of capacity in the ground by the end of this year and the figure is expected to climb beyond 4.2 gigawatts by 2012.

The more I think about what’s going on here, the more I’m prompted to come up with metaphors. And my latest attempt is likening what these new companies are doing is to what Dell did in PCs. Dell started from a dorm room and leveraged the R&D capabilities of Microsoft and Intel to the hilt. Dell handled logistics and sales, but left the back-end science to Wintel. Packard Bell did the same thing, but the company burned out after a few years because of complaints about quality and too much reliance on the U.S. consumer market.

Here, Applied is taking care of the heavy-duty problem of building a factory. These separate client states will tweak their solar panel formulas but what will likely separate them is their ability to carve out and sustain a customer base.

Dell, of course, also helped drop PC prices over a decade. With a bunch of newcomers with light R&D budgets, we could see the same here.

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