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US Solar Startup Silevo Moves to Hangzhou

Startup company starts work on 30 MW photovoltaic facility after raising US$55 mil

Solar startup Silevo moves to ChinaOn October 12th, Silevo, a California start-up solar technology company, announced plans to manufacture their new hybrid solar cell in China. 

According to statements from Chris Beitel, vice president of business development for Silevo, China’s incentive programs offered Silevo the opportunity to manufacture at a lower cost. Beitel, pointed out, however, that the company's manufacturing to China was not an easy decision. “We absolutely did an intense assessment of all the various options—we looked at California, Oregon, and Arizona,” he said.

Financial support from the Chinese government played a significant role in drawing the project to China and to Hanghzou. Silevo’s co-founder and CEO, Zheng Xu, has taken advantage of the Chinese government's incentives for alternative energy projects and for high tech projects founded by returning Chinese businesspeople to help secure a financial package that includes tax breaks, grants and land, Beitel said. Building the factory in China will be $0.18-$0.20 cents per watt lower than building the factory in the U.S., Beitel said.

The decision by Silevo was paralleled a week later when another solar cell startup, Sunpreme announced its decision to set up production in Jiaxing, China near Shanghai.  In September, innovative battery developer, Boston-Power announced similar plans to relocate to China.

Aside from the incentives, Beitel explained that China appealed to the owners of the company because both had business ties in China from previous ventures. The availability of China-based venture capital also played a significant role in making this new phase of the company's growth possible.

Silevo has raised $55 million in venture capital from investors, including three China-based firms: DT Capital (affiliated with Madrone Capital),  NewMargin Ventures, and GSR Ventures (connected to Mayfield Fund), said Beitel.

The company is using the proceeds of its fundraising to build a 30 MW factory in Hangzhou, China, and expects to bring the factory into full production mode during the first quarter of 2012. The company plans to add another 200 MW in 2013 if demand is there. Beitel declined to discuss whether the company has customers at this stage.

While China will house their manufacturing for now, the company may look to new locations when they outgrow their future site. “It’s a commitment that we have for phase one,” said Beitel. “When we look to expand to a phase two, we will certainly look into our options.”

Although the company is based in California and will distribute mainly in the U.S., the choice to manufacture in China takes a primary business component offshore. But, as Beitel points out, the choice is not at all uncommon for U.S. businesses.

“For us, it’s very important to have the right cost ratio,” he said. “We do that two ways—one is through the operation strategy, and the second is through our fundamental product. The manufacturing strategy was a difficult decision, but if you look at other peers, like Intel or Apple, all of their manufacturing has been done offshore in China. We thought this was the appropriate stage for us moving forward.”