Ascent Solar Technologies Inc of Thornton, CO, USA, which makes lightweight, flexible copper indium gallium diselenide (CIGS) thin-film photovoltaic modules that it integrates into its EnerPlex series of consumer products, has signed a definitive agreement to establish a joint venture entity with the Government of the Municipal City of Suqian in Jiangsu Province, China. The deal reinforces and supersedes the previous framework agreement announced on 9 July.
Suqian is a prefecture-level city in northern Jiangsu Province with an area of 3303 square miles and a population over 5 million. Strategically located between the Yellow River and the Yangtze River, the city is connected to both Beijing and Shanghai in less than 3 hours by high-speed train. Suqian is one of the fastest-growing prefecture-level cities in China, with a gross domestic product (GDP) of $25bn in 2012 and growing nearly 13% annually.
Suqian will provide $32.5m (RMB200m) in cash as well as five-year rent-free use of about 331,000 square feet of factory and office space in the Suqian Economic and Industrial Development Science Park. The JV will build a 100MW factory over six years to manufacture Ascent's proprietary CIGS PV modules on flexible polyimide in addition to related consumer products.
Ascent will purchase the factory within 5 years at the initial construction cost, and will also hold the right to purchase Suqian's ownership interest in the JV after 5 years at 1.5 times of Suqian's cash cost.
In the initial phase of the project, Ascent and Suqian will form a JV in which Suqian will inject $4.8m in cash and have a majority stake of 75%. Ascent will inject $1.6m in cash and hold a minority stake of 25%. Subsequently, during 2014 Suqian will further inject the balance of the committed $32.5m while Ascent will contribute its proprietary technology and intellectual property, as well as certain equipment from its Colorado facility, thereby increasing its shareholdings progressively up to 80% ownership. By first-quarter 2016, the JV is expected to operate an end-to-end manufacturing plant of 25MW capacity and related consumer products.
Suqian will also provide a package of additional incentives including:
a 5-year corporate tax holiday and a further 50% tax rebate over the next 5 years; full rebate of value-added tax for the first 2 years and 50% rebate for the subsequent 3 years; free accommodation for up to 3 years for key scientists, engineers and management personnel of the JV; as Phase two of the program is implemented, Ascent will have the option to purchase about 215,000 square feet of land zoned for commercial usage at a favorable price 10% above the government's prevailing cost, which may generate income for Ascent.
"This partnership enables us to accelerate our transformational consumer-centric strategy with the EnerPlex consumer brand and specialty off-grid applications, given China's huge and growing consumer base and readily available contract manufacturers," comments president & CEO Victor Lee.
"The Suqian Government is fully committed to this partnership and shall provide the utmost support and incentives to Ascent," says Lan Shao Min, governor of the Municipal City of Suqian. "CIGS, and more specifically Ascent's proprietary CIGS technology utilizing a flexible plastic substrate, is the next breakthrough in photovoltaics," he believes. "The aim of our alliance with Ascent is to build a state-of-the-art industrial park in Suqian for solar and solar-related products, anchored by Ascent's manufacturing presence, as well as equipment suppliers, contract manufacturers and other supporting industries," he adds.
"The funding and other subsidies will enable Ascent to develop the scale of manufacturing needed to bring the cost of CIGS down substantially, and provide product for the large demand we expect to see in the next few years," says Ascent's chairman Dr Amit Kumar. "The combination of cost reduction and high-margin EnerPlex products, along with other specialty market applications, will enable Ascent to transition to its next stage as a high-growth company," he believes. "The alliance with Suqian will provide a means for Ascent to build positive cash flow from numerous sources."
