AVA Solar Continues Quest to be Next First Solar
Cambridge, Massachusetts, United States August 27, 2008

Huge Round Soon to Close Today

By Eric Wesoff

In their quest to create the next First Solar, VC investors are making enormous bets on new solar technologies, including the difficult Cadmium Telluride (CdTe) materials system.

I’ve just learned from a very reliable investor source that AVA Solar, a CdTe photovoltaics manufacturer in Colorado, has received a term sheet for a $100 million round at a $750 million pre-money valuation, with $50 million of that round coming from DCM. A contact at AVA Solar declined to comment. Valuations in these stratospheric ranges are becoming the norm for solar startups with very high expectations and very low revenues such as Solyndra, Nanosolar and Miasolé.

My source’s investment firm chose not to invest in AVA as the valuation was too rich for their blood. Another VC told Greentech Media’s Mike Kanellos that AVA Solar was a tough call, calling it somewhat of a copycat of First Solar and asserting that AVA’s success depends on execution while First Solar has shown time and time again that it is great at executing and manufacturing. First Solar looks to shortly enter the realm of Gigawatt capacity solar suppliers, joining a group of four or five vendors expecting to reach that volume by 2010.

AVA is targeting a very low cost per watt based on a continuous manufacturing process with technology developed at Colorado State University’s Material Engineering Laboratory. According to a source close to the company, AVA can show costs below First Solar and the ability to maintain that advantage with a very low risk ramp to the 200 MW level that they are targeting for 2010 (First Solar boasts costs nearing $1/W). According to this contact, “The ramp from 5MW to 200MW is the simplest and most obvious process you can imagine, a touch of genius.”

Pascal Noronha, AVA’s CEO, is an investor and entrepreneur with ties to Warburg Pincus and the Reliance Group in India. AVA closed its second round of financing in 2007, led by The Invus Group, a New York-based investment firm.

There is a toxicity risk to Cadmium Telluride that First Solar has confronted with a 100 percent take back program bonded by Swiss Re in the event that First Solar is not around in 20 to 30 years. There is also an availability risk in the Tellurium market so firms may need to buy old lead or gold mines and set up recovery systems. There are some reliable and not-so-reliable voices on the Web that speculate that First Solar and other CdTe PV firms will see price increases and material shortages in their raw material feedstocks.

Armed with their new funds, all AVA Solar has to do is flawlessly execute and ramp to 200-MW volume.

In addition to AVA and First Solar there are a few other firms working with CdTe.

Antec: A German CdTe PV firm that has had its share of financial fits and starts over the last few years.

Bloo Solar: According to Kanellos’ interviews, this early stage firm wants to use CdTe-coated nanorods to harvest sunlight, although Bloo can use other chemistries.

Calyxo: A subsidiary of Q-Cells founded in 2005 (acquired CdTe PV maker Solar Fields for $5M, forming Calyxo USA). This year, Calyxo is expanding its pilot plant to a capacity of 25MW and looking to construct a 60MW line.

PrimeStar Solar: With GE as their majority shareholder and NREL roots, PrimeStar is setting up parallel CdTe fabs in Colorado and New York.

Solexant: A next-generation CdTe manufacturer using nanoparticles. Funded by X/Seed Capital, Firelake Capital, Medley Partners, and Trident Capital.

Sunovia: Single-crystalline, CdTe on Si tandem solar cells.

ZiaWatt Solar: Very early stage CdTe supplier working on improved back contacts.