Evergreen Solar, Inc. (NasdaqGM: ESLR), a manufacturer of solar power products, has finalized its agreements to begin producing its String Ribbon™ solar wafers in China.
Evergreen Solar will manufacture the wafers at a leased facility being built by Jiawei Solarchina Co., Ltd. in Wuhan, China.
Jiawei will then convert the wafers into Evergreen Solar-branded panels on a contract manufacturing basis.
Evergreen Solar will reimburse Jiawei for its cell and panel conversion costs, plus a contract manufacturing fee. The actual price paid to Jiawei will be negotiated annually.
Evergreen Solar will invest $17 million in cash and equipment in the Wuhan String Ribbon operation. Wuhan Government’s Hubei Science & Technology Investment Co., Ltd. (HSTIC) will provide Evergreen Solar $33 million of 7.5% financing, which Evergreen Solar must repay no later than July 2014. Jiawei will make a similar investment for its cell and panel operations with the support of HSTIC.
Initial capacity will be approximately 100 megawatts (MW). Factory construction has begun and the parties expect that wafer, cell and panel production will begin in the spring of 2010.
The parties intend to expand production capacity of their respective manufacturing operations to approximately 500 MW by 2012, the timing and extent of any potential expansion will be determined in 2010.
In addition, Evergreen Solar and Dynamic Green Energy, Ltd, Jiawei’s parent company, have agreed to exchange warrants representing 1% of their outstanding shares. These warrants will have a five-year term and may be exercised for 20% of the warrant shares for each incremental 95 MW of production capacity achieved.
“Our String Ribbon wafer technology, combined with Jiawei’s low-cost manufacturing capabilities, should enable our products to stand out distinctly among customers seeking both value and dependability for their solar energy solutions,” commented Richard M. Feldt, Chairman, President and CEO. “As we reach the 25 MW quarterly capacity by the end of 2010, we expect total manufacturing costs of our String Ribbon panels produced in China to be in the range of $1.40 per watt to $1.50 per watt with both companies working aggressively to further improve technological performance as well as reduce manufacturing costs. Our mutual goal is to drive conversion efficiency and manufacturing performance so that panels are produced at the $1.00 per watt level by no later than 2012.”
Jiawei Solarchina Co., Ltd. Inc., through its subsidiary Jiawei Solar (Wuhan) Co. Ltd., is a manufacturer of solar products serving OEM and ODM customers around the world, including SunPower Corporation.
Hubei Science & Technology Investment Co., Ltd. (HSTIC) is a state-owned investment company focusing on science and technology development with registered capital of approximately 2.8 billion of RMB (US$410 million).
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