Ascent Solar Technologies Inc of Thornton, CO, USA, which makes lightweight copper indium gallium diselenide (CIGS) thin-film photovoltaic modules integrated into its EnerPlex series of consumer products, has signed a framework agreement for the establishment of a joint venture with the Government of the Municipal City of Suqian in Jiangsu Province, China, covering a multi-faceted, three-phase project over the next six years.
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.
In the first phase, Ascent and Suqian will form a joint venture in which Ascent will have majority interest of up to 80%. The JV will build a factory to manufacture Ascent's proprietary CIGS PV modules on flexible thin films. Ascent will contribute proprietary technology and intellectual property, about $1.6m in cash and certain equipment from its Colorado facility. Suqian will provide cash of about $32.5m as well as rent-free use of a 270,000 square foot factory that is currently being built in the Suqian Economic and Industrial Development Science Park. This factory is expandable to 1,000,000 square feet for phases two and three of the agreement. The total project size of Phase 1 of the alliance is expected to be about $160m. Ascent will have the right to purchase the factory anytime within the first 5 years at the initial construction cost, as well as the right to purchase Suqian's ownership interest in the JV for a modest nominal cost above Suqian's cash investment.
Suqian will also provide a package of additional incentives including a multi-year corporate tax holiday, coverage of substantial operational costs for scientists, engineers and management personnel, and housing subsidies and tax incentives for key JV staff. As Phases 2 and 3 of the program are implemented, Ascent will have the option to purchase about 1.3 million square feet of land zoned for commercial usage at a favorable cost, as well as the right to arrange the sale or lease of land and factory rights to suppliers and support industries brought in by Ascent, which may generate additional meaningful cash flow for the JV.
"This partnership enables us to accelerate our paradigm shift into consumer electronics and specialty market applications, given China's very large and growing consumer base and readily available contract manufacturers for our EnerPlex range of consumer products," says Ascent's president & CEO Victor Lee.
"We are convinced that CIGS, and more specifically Ascent's proprietary CIGS technology utilizing a flexible plastic substrate, is the next breakthrough in photovoltaics," comments Lan Shao Min, Top Leader & Governor of the Municipal City of Suqian. "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 the Ascent factory, but including 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," says Ascent's chairman Amit Kumar. "The combination of cost reduction and our higher-margin EnerPlex products and other specialty market applications will allow Ascent to carry on to its next stage as a high-growth company. The alliance with Suqian, as it develops over the next six years, will provide a means for Ascent to build positive cash flow from numerous sources, including control of the real-estate rights in the Suqian Economic and Industrial Development Science Park."
