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Wednesday, August 11, 2010

Solar Stocks Commentary; Developments at XsunX (OTCBB: XSNX), Sunpower (NASDAQ: SPWRA, SPWRB), Chevron Energy (NYSE: CVX)

Solar Stocks Commentary; Developments at XsunX (OTCBB: XSNX), Sunpower (NASDAQ: SPWRA, SPWRB), Chevron Energy (NYSE: CVX)

Hybrid Manufacturing Solution May Lower Solar Costs

August 11, 2010 ( renewable energy/green newswire) and its green investor portals release commentary on solar trends from Lisa Springer, CFA, Equity research analyst and financial writer. Featured within the report is solar stock, XsunX, Inc. (OTCBB: XSNX), a solar company developing CIGSolar™ Technology.

Hybrid Manufacturing Solution May Lower Solar Costs
Public Companies within this article include: XsunX (OTCBB: XSNX), Intevac (NASDAQ:IVAC), Sunpower (NASDAQ: SPWRA, SPWRB), Chevron Energy (NYSE: CVX)

Lisa Springer, CFA
Equity research analyst and financial writer

The US solar module market grew 36% in 2009, according to market research firm Solarbuzz, fueled by lower cost photovoltaic (PV) cell modules, government incentives and increased use of solar energy by the utilities sector. Solar energy incentives at the state level supported approximately 30% of PV installations, but experts expect federal government incentives to be the primary driver of demand over the next two years. Solarbuzz forecasts 10-fold growth in the solar market growth by 2015, which is equivalent to 30% annual growth.

Market leaders in solar installations include Sunpower (NASDAQ: SPWRA, SPWRB), Chevron Energy (NYSE: CVX) and SPG Solar. In addition, REC Solar and Solar City are big beneficiaries of rising residential demand.

The main obstacle to wider-scale adoption of solar energy is cost. While sunlight is free, solar panels are expensive and not especially efficient. Regionally-based coal and natural gas utilities produce electricity, deliver it to customers and require little or no infrastructure investment from the customer, but solar requires large up-front investments from the user. Even with declining costs and financing that allows installations costs to be amortized over many years, solar power costs can be nearly twice coal or natural gas costs in certain areas. Depending on location and the type of solar technology used, a kilowatt hour of solar electricity can cost more than 20 cents, far more than electricity from coal or natural gas, which costs between 2 and 10 cents a kilowatt-hour, according to the U.S. Energy Information Administration. The silver lining for solar, however, is that per kilowatt hour costs are calculated by dividing the amount of power produced over a multi-year period into the cost of the solar system. This means that at some point the original cost of the system is fully amortized and future operating costs are minimal, while coal and natural gas continue to consume valuable resources at ever increasing costs.
Solar panels are expensive because of high silicon, assembly materials, and labor costs. Manufacturers compete with the semiconductor industry for silicon supplies and the result has been periodic silicon shortages and volatile prices. To reduce manufacturing costs, solar companies are investing in alternative technologies and assembly methods such as thin films that require less silicon and can be produced on highly automated assembly lines. Thin film is a process where material is coated onto a substrate via a plasma field or some form of vapor deposition. A much smaller amount of material is used to achieve the required solar absorber thickness. As a result, thin film cells are just a few micrometers thick, unlike conventional silicon cells, which exceed 100 micrometers in thickness. However, a drawback of most thin film devices is lower electrical power production efficiencies than silicon. This is because red and near-infrared photons don't stay trapped inside some thin film absorbers long enough to be fully absorbed.

One thin film technology called CIGS-(Copper, Indium, Gallium, and Selenium) has the potential to reduce solar cell manufacturing costs significantly and improve production yields. CIGS has several characteristics that make it a valuable PV material. It is highly absorbent, capturing 99% of sunlight energy in the first micrometer of the solar device, thus enabling even thinner films. In addition, CIGS retains its performance characteristics and degrades more slowly than other thin films over the 20 to 30 year life span of installed solar systems, is amendable to automated production and potentially offers much higher conversion efficiencies. CIGS holds the world record for thin film energy conversion at nearly 20%, making it a top contender to replace more costly silicon.

Investors are making big bets on CIGS solar cell manufacturing and companies such as MiaSole, Global Solar, NanoSolar, Solyndra and others have received significant funding. Solar Frontier, which is part of Showa Shell, is building a 900 megawatt factory in Japan, Stion just raised $70 million to expand manufacturing capacity and Solyndra is using a $535 million federal loan to build a factory.

Solar companies are investing tens of millions of dollars in the development of manufacturing technologies and related equipment, and will likely wait several years to realize a return on investment. Solar technology company XsunX (OTCBB: XSNX) is taking a different approach. Instead of building infrastructure, XsunX is working on an innovative CIGS manufacturing solution (CIGSolar™), which combines reliable manufacturing techniques from the hard disc (HD) industry with small area co-evaporation deposition processes that produce high efficiency CIGS thin films. XsunX believes its hybrid technology may improve manufacturing output, boost cell efficiency and production yields, and reduce overall costs significantly. This would allow CIGS produced electricity to compete more favorably with conventional coal and natural gas produced electricity.

The Company is working with Intevac (NASDAQ:IVAC), a world leader in HD manufacturing equipment, under a joint business development agreement to develop its equipment and processes. XsunX plans to license its technology through joint ventures with larger companies and generate revenues from licensing fees and manufacturing royalties. With this approach, XsunX capitalizes on growth in the solar market while minimizing investment in infrastructure and accelerating its path to profitability.

XsunX began full scale development efforts last year and completed a fully functional CIGS thin film solar device in early 2010. The Company is working to complete its hybrid manufacturing approach and recently applied for a grant from the Department of Energy, which is helping to fund breakthrough products or processes in the PV industry.

IBIS Associates, a technology consulting firm hired to assess the potential of XsunX’s CIGSolar™ technology, estimates solar module manufacturers who currently use multi-crystalline solar cells in their products could reduce costs by more than $646 million over the next five years by replacing a portion of the silicon solar cells used with products based on CIGSolar™ technology.
At present, the Company is assembling co-evaporation chambers that will allow it to develop full-size CIGS cells and proof the interoperability of the Company’s hybrid approach. The Company’s work plan was temporarily delayed by an industry-wide component shortage, but XsunX received the necessary parts in mid-July and is on track to complete assembly and begin calibration of a system for full-sized CIGS cells in the next few weeks. In the second half of 2010, XsunX plans to complete the design of its production equipment, lay the groundwork for JV manufacturing partnerships, build and install a pilot line and develop relationships with other recognized third parties who can validate the benefits of its technology.

Lisa Springer, CFA
Bio and disclaimer:

The author, Lisa Springer, was compensated for writing this article and doesn't own shares of any of the companies mentioned in this article.

About XsunX, Inc. - Solar Products for Life on Earth
XsunX, Inc. (OTCBB:XSNX) is working to provide a clean and capital efficient solution for the mass production of the highest efficiency, lowest cost CIGS thin-film solar cells using our new CIGSolar™ technology.

See the XsunX, Inc. Flash Video - The CIGSolar Difference
View Video here

Visit the Company Profile page for XsunX, Inc. (OTCBB: XSNX)

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