UPDATE 1-INTERVIEW-Evergreen CEO sees profit, Asia expansion

Reuters - Thu May 29, 2008 12:53am BST

• Evergreen expects to be profitable in Q1 2009
• Plan is in works to expand into Asia.
• Targeting 850 megawatts of capacity within four years

By Jason Szep

MARLBORO, Mass., May 29 (Reuters) - U.S. solar panel maker Evergreen Solar Inc (ESLR.O: Quote, Profile, Research) expects to profitable in the first quarter of 2009 and is considering expanding into Asia under a plan to dramatically boost capacity, its chief executive said on Wednesday.

"Once we get into the first quarter of next year we should start making money. We should go into the black and hopefully stay there," Chief Executive Richard Feldt said in an interview with Reuters during a tour of the company's production unit.

The Marlboro, Massachusetts-based company reported last month a first-quarter net loss of $25,000, or break-even on a per share basis, compared with a loss of $6.2 million, or 9 cents per share, in the year-earlier quarter.

Evergreen's new photovoltaic solar cell manufacturing plant -- stretching the length of more than three American football fields, or about 1,000 feet, in the Massachusetts town of Devens -- opens in June and will be capable of producing 80 megawatts of wafer cells and panels a year.

Evergreen announced last week that it had signed a new long-term sales contract with Germany's Ralos Vertriebs GmbH, worth about $750 million for panel deliveries, bringing its contractual backlog to about $1 billion.

The panels, to be delivered beginning in 2008 and extending through 2013, would be manufactured at Devens.

"We will take occupancy next month and slowly start ramping production so by the end of this year, that facility should be at about a 75 to 80 megawatt run rate. We have already broken ground on phase II which will add another 80 MW," he said.

"So in the next four years we are going to go from the 15 megawatts that we have here to the 850. A lot of that is going to be outside of the U.S., some will be in Asia," he said.
The company had yet to identify an Asian country to base a plant, he said. One of its rivals, SunPower Corp (SPWR.O: Quote, Profile, Research), announced this month it would build a plant in Malaysia capable of producing more than 1,000 megawatts of cells per year.

Evergreen Solar has been among a wave of solar companies to capture public interest amid surging oil prices and mounting environmental concerns over fossil fuels.

Its thin-film solar products require less of the costly silicon used to make traditional solar cells and panels, allowing Evergreen to carve a niche as a tight global market for silicon constrains capacity expansion in the industry.

LOFTY VALUATIONS

But some analysts advise caution.
A surge in solar shares is stoking concerns over lofty valuations. Evergreen's stock price jumped 134 percent from the start of 2007 to the end of the year. California-based SunPower soared 253 percent in the same period and Colorado-based Ascent Solar Technologies Inc (ASTI.O: Quote, Profile, Research) jumped 785 percent.

Ronan Wolfsdorf, a solar and renewable energy analyst at consultancy Macroenergy Monitor, said much of last year's gains reflected a combination of favorable global subsidies toward solar power and record-high oil prices, but that many investors are growing increasingly concerned of regulatory risk.

Washington, for example, is unlikely to extend tax credits in the sector before the summer recess. "And in Europe, the top growth market, Spain, is likely to disappoint in its final subsidy resolution," added Wolfsdorf.

"The stocks ran on the rich subsidies that created very attractive economics, the general buzz that was going on over energy security and energy independence and the green theme," he said. "But the U.S. Congress is yet to demonstrate a real commitment in subsidizing an alternative energy policy.

"And while Europe has led in renewables policy, ministries in its two top markets, Germany and Spain, are beginning to reflect concerns on overall costs," he added.

Feldt said that while subsidies are crucial in nurturing a strong solar sector, he expected solar companies to fend for themselves without government help in the next decade.

"More would happen in the U.S. if there were more subsidies. No doubt about it," he said. "But the Holy Grail of the industry is to use your costs efficiently so that you can have an installed cost sitting on a roof and the amortized cost of the energy it generates is equal to or less than what you would pay to the energy grid.

He said he believed that was still 5 to 7 years away.
"I think that it is probably no sooner than three years but within five to seven years. I think it is going to be more in the five to seven year range," he said.

Evergreen Solar shares closed 6.2 percent higher at $11.26 on Wednesday, its highest close in a month-and-a-half. But the shares are still down 35 percent so far in 2008.

(Editing by Carol Bishopric)