Evergreen Solar Marches On

Evergreen Solar, Inc. (Nasdaq: ESLR), the Marlboro, MA, manufacturer of solar power products made four significant announcements on March 17 which indicate that the company is progressing rapidly on a plan to produce and market its proprietary, low-cost String Ribbon™ wafer technology. (click to enlarge the image of a string ribbon furnace)

• It announced the construction of a new $150 million facility, expected to be located on the campus of the Massachusetts Technology Collaborative (MTC) in Westborough, MA, that will increase its production capacity in Massachusetts by 70 MW and double its employee base in the state to more than 600 employees. A Commonwealth of Massachusetts financial incentive program is expected to include up to $23 million in grants, up to $17.5 million in low-interest loans and a low-cost, 30-year lease of MTC land. Construction of Evergreen Solar’s new facility is planned to begin in early fall 2007 with completion expected in late 2008.
• It has signed a multi-year polysilicon supply agreement with DC Chemical Co., Ltd with shipments beginning in late 2008 and continuing through 2014. Under the agreement, Evergreen Solar will receive sufficient polysilicon to manufacture a total of approximately 1 GW of photovoltaic solar modules through 2014. Concurrent with the execution of the supply agreement, DC Chemical agreed to purchase 3 million shares of Evergreen Solar common stock for $12.07 per share, representing the closing price of Evergreen Solar’s common stock on the Nasdaq Global Market on April 16, 2007. Evergreen Solar agreed to issue 4.5 million shares of restricted common stock and 625 shares of restricted preferred stock to DC Chemical. DC Chemical Co., Ltd is a leading Korean chemicals producer with annual consolidated revenues in excess of $2.4 billion.

It announced financial results for the quarter ended March 31, 2007.

• Its sales were $12.6 million compared to $11.6 million in the first quarter of 2006. Total worldwide sales of String Ribbon product were $40.2 million in the first quarter, including $27.6 million of sales from EverQ, Evergreen Solar’s joint venture with Q-Cells A.G. and Renewable Energy Corporation ASA.
• Gross margin was $2.8 million, or 20.0%, including income of $1.5 million related to the marketing and sale of EverQ modules by Evergreen Solar and royalty payments for Evergreen Solar’s technology contribution to EverQ. In the first quarter of 2006, gross margin was a negative $1.5 million or 12.5%.
• Net loss was $6.2 million, or $0.09 per share, for the first quarter of 2007, compared to $8.1 million, or $0.13 per share, in the first quarter of 2006.

Guidance for Second Quarter 2007

• Product revenue from Evergreen Solar’s Marlboro facility for the second quarter of 2007 is expected to be approximately $12.5 million to $13.5 million, compared to the $12.6 million in the first quarter of 2007. Other revenue is expected to be approximately $1.5 million to $1.75 million, consisting of fees from EverQ for the marketing and sale of EverQ modules by Evergreen Solar and royalty payments for Evergreen Solar’s technology contribution to EverQ.
• Gross margin is expected to be in the range of 22.0% to 24.0%. Operating expenses are expected to be in the range of $10.25 million to $10.75 million, including research and development costs of $5.25 million to $5.5 million and factory start-up costs of approximately $500,000 relating to Evergreen Solar’s announced expansion initiative.
• Operating loss is expected to be in the range of $7.0 million to $7.25 million, and net loss is expected to be in the range of $8.0 million to $8.25 million, or $0.10 per share, including approximately $1.25 million for Evergreen Solar’s share of EverQ’s expected quarterly loss as it continues to incur start-up costs associated with the EverQ-2 factory. The Company anticipates that the EverQ-2 factory will commence product shipments during the second quarter of 2007 and reach full manufacturing capacity by the end of 2007.

“The 60 MW EverQ-2 factory (in Germany) is on track for beginning production in the second quarter,” said Richard M. Feldt, Chairman, President and Chief Executive Officer of Evergreen Solar. “In addition, we continue to make substantial progress with our developmental Quad Ribbon furnace. During the quarter, yield on our Quad test furnaces consistently equaled our dual ribbon production standard. With advanced software and laser cut on the fly techniques, we see substantial opportunity to significantly increase yield, and hope to make Quad the manufacturing standard for new factory locations opening in 2008 and beyond.”

[The EverQ-1 factory is rated at 30 MW giving Ever-Q a current total capacity of 90MW in Germany.  Ever-Q in Thalheim, Germany is jointly owned, by the equal partners of Evergreen, Q-Cells AG (XETRA: QCE.DE) and Renewable Energy Corporation ASA (OSEAX: REC.OL) (REC). Ever-Q has a long term silicon supply agreement with REC, ramping up to supply Ever-Q with 1390 tones of silicon annually by 2010 and will be in effect until 2014. Ever-Q plans to have a capacity of 300MW by 2010.]

• It announced that it has formed an alliance with NSTAR (NYSE: NST), an electric and gas utility based in Boston, designed to increase the role of solar power in Eastern Massachusetts. The alliance will leverage Evergreen Solar’s unique solar power technology with NSTAR’s expertise, capabilities and customer relationships to promote cost-effective solar options for consumers. NSTAR transmits and delivers electricity and natural gas to 1.4 million customers in Eastern and Central Massachusetts.

Evergreen Solar, Inc. develops, manufactures and markets solar power products using proprietary, low-cost manufacturing technologies. The Company’s patented crystalline silicon technology, known as String Ribbon™, which uses approximately half the silicon and avoids the sawing of conventional approaches. They manufacture everything, wafers, cells and panels, all under one roof for ultimate quality control.

See earlier post for more information about Evergreen.

Comments

[David Grenier]

So is the facility being built a manufacturing plant or just an engineering/research lab?

[Jimmi]

With them saying this, "that will increase its production capacity in Massachusetts by 70 MW and double its employee base in the state to more than 600 employees" I would assume it's a manufaturing plant but it's on the MTC campus.

[Nol Browne]

I'm the biz developer for Evergreen so I think I can speak with some authority on this: The MTC location will be a factory only; research will remain in Marlborough and our personel overhead should not really increase with the build. The vast majority of the addtional workers are production not administrative or research.

I love this blog btw... cheers.

[Jimmi]

Thanks for the insite Nol. I've been following ESLR for about 6 months and wish you guys all the luck on your String Ribbon technology.

Can anyone make a comparison with the String Ribbon technology vs. the technology of let's say First Soloar's cells??? Solar specs are something I'm a complete novice at so any info would be appreciated.

[Dante Paolillo]

Jimmi:
In few words, First Solar's cells are cheaper, but are less efficient than Evergreen's ones.
You'll need more pannels (more surface) to obtain the same power.
First Solar: 7% conversion efficiency
Evergreen Solar: 14,5% conversion efficiency

[Kit P]

Jimmi, this site www.worldwater.com provides some real time data. Three locations in California at capacity factors if 4%, 5%, and 18%. One NJ site had 13%.

Doubling conversion efficiency does not addup to very much electricity with poor capacity factors.

When it comes to solar, let the buyer beware. The solid state components that convert variable solar panel output to usable 120VAC coat about $5000 and have a warranty of 5 years. If you connect to the grid you must have a special breaker and a contract with the utility. It is a safety thing. I know of one case where solar panel never produced electricity because the cost of the lawyers to negotiate the contract was not factored into the project. It did make a pretty picture on a government web site.

Oh, those evil utilities. In this case it was a muni that claimed to be the greenest.

[D. Crow]

Why is the stock going down?

[American Attorneys]

well I think this is a great idea, I'm glad, and I really expect that you keep talking about this