Alexander F. Yuan/Associated Press
The chief of MiaSolé, John Carrington, left, at the announcement of the company’s purchase by Hanergy Holding Group, for which Zhou Jiesan is an executive.
Just a few years ago, Silicon Valley investors were pouring money into solar technologies and talking about how they would bring the same kind of innovation to green energy that they had to the computer chip.
But few anticipated that prices for silicon, the main component of traditional solar panels, would plummet or that Chinese manufacturers, backed by enormous subsidies from their government, would increase solar production capacity by a factor of 17 in just four years.
The resulting plunge in solar panel prices wiped out the dream of a new Solar Valley. Despite making advances in the new technology, known as thin-film solar, the American companies just couldn’t compete.
The federal government’s imposition of steep tariffs last year on Chinese conventional panels helped, but the industry had waited so late to apply for the tariffs that balance sheets had already been crippled with accumulated losses and investors had lost interest.
Some thin-film companies went bankrupt, including Solyndra, which had received half a billion dollars in federal subsidies. Others, like Stion, licensed their technology or formed strategic partnerships with large corporations.
On Wednesday, the chief executive of MiaSolé, one of the most promising Silicon Valley solar start-ups, appeared in Beijing for the announcement that Hanergy Holding Group of China had completed the purchase of his company and its technology for a fraction of what investors had put in. Hanergy made its money building hydroelectric dams.
Hanergy’s purchase of the 100-employee MiaSolé, based in Santa Clara, Calif., follows its acquisition in September of the 400-employee thin-film solar unit of Q.Cells, an insolvent German solar company. The two deals have allowed Hanergy to acquire at low cost an array of patents developed for hundreds of millions of dollars of venture capital investments.
“Going head to head against the Asian low-cost, mass-volume crystalline silicon manufacturers is not a wise strategy if you’re trying to produce an ultracheap module in the United States or in high-cost markets,” said Neil Z. Auerbach, managing partner of Hudson Clean Energy Partners, a SoloPower investor. “But if you’re adopting advanced technology, you have a niche strategy in which those incumbents do not have a competitive edge because they don’t really have a product that suits.”
The industry’s broad competitive challenges have prompted American investors to shun the sector. Last year, venture capital financing in the solar sector plummeted nearly 50 percent to $992 million in 103 deals from $1.9 billion in 108 deals in 2011, according to Mercom Capital Group, a clean-tech research and communications company.
Chinese regulators, too, have begun trying to deal with the overcapacity, discouraging their banks from making more large loans to the solar panel sector.
Li Hejun, the chairman of Hanergy, said at the news conference in Beijing that the company’s hydroelectric dams produce several hundred million dollars a year in free cash flow, so it can finance its own investments in solar, which already include six thin-film solar factories, plus three more under construction.
“Everyone knows about the overcapacity in solar energy industry in China, but for us industrial insiders, this overcapacity is but a relative one,” he said. “For those who have technology, the situation is the opposite.”
The thin-film technology championed by the Silicon Valley start-ups uses more exotic materials than conventional solar panels, which are made from crystalline silicon.
Most thin-film modules are slightly less efficient at converting sunlight into electricity than conventional panels, but they are much lighter, which makes them easier to mount in locations that may not support the weight of conventional panels.
Supporters of thin-film technology contend that it has the potential for considerable further efficiency gains that may not be possible for conventional panels, which have been researched for decades. And some research has shown that thin-film can outperform conventional silicon-based panels at high temperatures, such as in deserts, where solar farms are often located.
The technology’s promise attracted the attention of the Obama administration, which provided clean-energy grants and loans to some of the companies, although not to MiaSolé.
Chinese Firm Buys an American Solar Technology Start-Up
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