PHOTO: Gehrlicher Solar

Before First Solar's manufacturing innovations, cadmium-telluride photovoltaic cells were the size of postage stamps; now the company makes them as big as window panes

It’s easy to make a small pile of money off photovoltaic cells but very hard to make a big one. The reason is one of the most fundamental in free-market economics: the larger the market you aim for, the more competitors you’ll have to face.

If you just want to power a billion-dollar space probe, almost any price per watt is acceptable. If you are selling to lonely farmhouses, you just have to charge less than the cost of running a power line to the boondocks. In some parts of the world, competing with grid electricity itself may be an easy game during peak consumption hours. But if you want the off-peak market, you’ll have to price your cells at about US $1 per watt. That price is called grid parity, and it’s the holy grail of the photovoltaic industry. At least 80 firms around the world, from Austin to Osaka, are in the chase.

Surprisingly, at the moment no company is ­closer to that grail than a little start-up called First Solar, which until very ­recently had been known only to specialists. It’s located in Tempe, Ariz., and analysts agree that it will very likely meet typical grid-parity prices in ­developed countries in just two to four years. It’s got a multibillion-dollar order book, it’s selling all the cells it can make, it’s adding production capacity as fast as it can, and its stock price has rocketed from $25 to more than $250 in just 18 months.

The most tantalizing fact about First Solar? The company will not talk to reporters. At all.

The company’s coyness seems to be related to the nature of its industrial secrets. These have less to do with First Solar’s device—a decades-old design based on a thin film of cadmium telluride—than with the way the company manufactures it. Somehow, First Solar has scaled up the light-catching area from postage-stamp to traffic-sign dimensions. What the company does ­reveal is that its product has three massive cost benefits. Its ­active element is just a hundredth the thickness of the old standby, silicon; it is built on a glass substrate, which enables the production of large panels; and manufacturing takes just two and a half hours—about a tenth the time it takes for silicon equivalents.

Of course, it’s not enough that First Solar match the costs of fossil-fuel generation on the grid; it must also maintain its economic edge over other photo­voltaics. There are additional nascent technologies, including cells based on copper indium gallium ­diselenide (CIGS), silicon on glass, and the combination of ­germanium, gallium arsenide, and gallium ­indium phosphide. Even conventional silicon ­technology, which has dominated the market since its commercial launch in the 1950s, seems to have a lot of kick left in it. Currently, though, it’s suffering from its own success, as an insatiable demand for silicon cells has led to a scarcity of raw material. However, if the silicon shortage disappears by the end of the decade, as expected, the sale price should drop substantially from recent levels, which have fluctuated between $3 and $4 per watt.

Right now, First Solar depends mainly on a ­government-subsidized program in Germany, where it has contracts worth more than $6 billion through 2012. Other markets with the same type of subsidies (known as feed-in tariffs, which spread the cost of ­alternative energy among all customers) include France, ­Italy, Spain, South Korea, and Ontario, Canada. To fill these orders, the company is undergoing a massive expansion of its manufacturing facilities that should boost annual production capacity to just over 1 ­gigawatt by 2009. This capacity could supply one-sixth of that year’s ­estimated global solar-cell business, which is currently growing at 50 percent per year.

This rapid ramp-up is impressive for a ­company founded only in 1999, after it acquired its cadmium ­telluride (CdTe) technology from the purchase of Solar Cells Inc. (SCI). Cash for the launch came from the equity firm JWMA, whose president, Michael Ahearn, became First Solar’s CEO and is still running the company.

First Solar began by developing its manufacturing technology at its Perrysburg, Ohio, facility. Commercial operations started in January 2002 with a 25-­megawatt base plant, which began high-volume production a couple of years later. Since then the company has replicated its manufacturing line at the Ohio site, built four more lines in Germany, and begun constructing a fourth plant in Malaysia, which will bring the total number of production lines in that country to 16. Ahearn ­recently told investors that the first Malaysian plant has just started to produce cells and that it should be ­operating at full capacity by the end of next year. Line capacity has risen also, to 45 MW.