Q-Cells (CQEG) investing big in thin-film, goal is 1 gigawatt production

CQEG investing a billion euros in thin-film, aiming for 1 gigawatt annual production

UPDATED INTERVIEW, Q-Cells plans plant abroad to cut costs
Thu Dec 6, 2007 9:25am EST

(Adds more detail from interview)

By Eva Kuehnen

THALHEIM, Germany, Dec 6 (Reuters) - Q-Cells (QCEG.DE: Quote, Profile, Research) plans to expand production outside Germany to cut costs and benefit from the weak dollar as it seeks to triple output by 2010, the company's chief executive told Reuters in an interview.

The world's second-largest solar-cell producer after Japan's Sharp Solar (6753.T: Quote, Profile, Research) also wants to invest more than 1 billion euros ($1.46 billion) by 2010 in thin-film technology to reduce its dependency on silicon, a scarce material in the solar industry whose cost has soared, Anton Milner said.

Q-Cells aims to reach production output in its core business of 1 gigawatt peak (GWp) by 2010 from 370 Megawatt peak (MWp) this year and another 400 to 600 MWp in its thin-film technology business in the same period from 25-50 MWp expected for 2008.

"We are building next year -- and this is going to be one of our main investment thrusts -- a huge manufacturing complex potentially at a new location," Milner said.

"Some correlation to the U.S. dollar" was key given the U.S. currency's weakness against the euro, Milner said, adding that Q-Cells had scanned 26 sites and was in the closing stages.

But he ruled out China, saying: "The intellectual property rights and the know-how protection is difficult. We've got some pretty sexy stuff coming."

Milner said the efficiencies achieved in Q-Cells' thin-film activities so far justified "very major investments".

It plans to invest more than 1 billion euros in the business by 2010 to make the targets, having spent about half of last year's total investments of 400 million euros in the segment.

Q-Cells shares fell 2 percent to 90.37 euros by 1417 GMT, double the decline in the German Tecdax index .

Thin-film technology is an attractive alternative to traditional crystalline silicon cells, which require 200 times more silicon, considering that silicon accounts for between 40 and 50 percent of a module's costs.

However, so far thin-film cells are less efficient than crystalline-based cells, which means more space is needed to achieve the same output.

Analysts have said the targets for Q-Cells' new technologies were too ambitious as production was still at an early stage, but Milner was bullish.

"This is the target we've set ourselves and when Q-Cells sets itself targets, it gets there," he said.

First Solar (FSLR.O: Quote, Profile, Research) of the United States was now the biggest player in the segment, and Japan's Sharp has said it would invest $200 million to boost output capacity for thin film by more than tenfold by October 2008.

Prices for silicon have risen sharply over the past years as increasing demand from the solar and the semiconductor industry led to a supply bottleneck. But rising capacity should ease the shortage at the end of 2009 or in 2010, Milner said.

EVERQ LISTING

Q-Cells affiliate EverQ offers another technology that reduces production costs by using less silicon as it pulls solar wafers from melted silicon, avoiding the sawing process.

EverQ -- a joint venture with U.S. firm Evergreen Solar (ESLR.O: Quote, Profile, Research) and Norway's Renewable Energy Corporation (REC.OL: Quote, Profile, Research)

(REC) -- produces solar wafers, cells and modules.

It aims to raise production capacity to 600 MWp by 2012 from 100 MWp today, Q-Cells said, which would, among other things, be funded via an initial public offering, probably in the second half of next year or in 2009.

Most shares on offer would probably come from a capital increase, it said. The free float is seen at 20 to 30 percent.

"None of the three companies really need to use an IPO for financing purposes," Milner said. "The key priority will be to get key investment funds into EverQ."

(Editing by Quentin Bryar)

($1=.6870 Euro) Keywords: QCELLS EXPANSION/

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