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SolarCity moving into its giant new RiverBend factory

SolarCity is moving into its giant new factory in Buffalo.

About 20 percent of the equipment that will be used at the plant has been delivered, said Peter Rive, SolarCity's chief technology officer and co-founder, during a conference call with analysts on Tuesday evening. Rive also said SolarCity's potential partnership with consumer electronics giant Panasonic won't affect the type of equipment needed. SolarCity has proposed working with Panasonic to produce the solar cells that will be used in the solar panels made in the new factory at Buffalo's RiverBend.

The state is spending $750 million to build the 1.2 million square foot factory on South Park Avenue and buy the equipment that SolarCity will use to make solar panels there. Rive said about 15 percent to 20 percent of the equipment already has arrived at the factory, based on the financial value of the machinery. "The majority should arrive by the end of next year," he said.

SolarCity plans to start making solar panels in Buffalo by next summer. Although the plant eventually is expected to produce enough solar panels annually to generate 1,000 megawatts of electricity, production will begin on a smaller scale, probably in the 250 megawatt range, and ramp up from there, company executives have said.

Elon Musk, who doubles as SolarCity's chairman and Tesla's CEO, said he expects the arrangement with Panasonic to work similar to the partnership the companies have to produce battery cells at the gigafactory Tesla is building in Nevada. That agreement between the two companies still must be finalized, and it also hinges on shareholders approving the $2.2 billion merger between Tesla Motors and SolarCity in votes that will be held on Nov. 17.

At the gigafactory, located outside Reno, Nev., Panasonic makes battery cells that are used in batteries that go into Tesla's electric vehicles and other products.

[Gallery: Inside SolarCity plant]

"The way things work at Tesla is Panasonic makes the battery cell," Musk said.  "But then Tesla does everything past the cell level. And we would expect something similar in Buffalo."

Musk said discussions with Panasonic "have gone very well."

The potential partnership with Panasonic would bring an experienced solar panel manufacturer into a key role at the Buffalo factory, which is expected to be the biggest solar panel plant in the Western Hemisphere when it reaches full production.

The scale of the Buffalo factory had raised concerns among some analysts, since SolarCity's experience in making solar panels has been limited to a small factory in China and a pilot facility in Fremont, Calif. Tesla has experience making batteries and electric vehicles, but it has never made solar panels.

Musk also said the potential collaboration with Panasonic will allow the companies to combine elements of Panasonic's solar cell technology with the technology that SolarCity has been developing, based on its acquisition of Silevo two years ago.

"We think the combination of SolarCity’s technology on a cellular front with - added to Panasonic’s cell technology, will make it the most efficient and ultimately the cheapest solar cell in the world, just as it is with the battery cell. We have the best cell in world and also the cheapest cell," Musk said.

Panasonic and SolarCity are using similar technology to produce high-efficiency solar panels, which Rive believes will allow the companies to combine elements from each firm's technology, leading to the production of a "hybrid" solar cell.

"We’re basically going to bring the best learnings from both of them" Rive said.

[Gallery: SolarCity unveils new roof styles]

Silevo, for instance, developed technology that allows it to produce high-efficiency solar cells from a 6-inch silicon wafer, while Panasonic does not, Rive said. "Panasonic has yet to transition to 6-inch wafer. So we’ll kind of take the Silevo’s learnings on 6-inch and apply that to the learnings that Panasonic has kind of achieved over the years," Rive said.

As Tesla and Panasonic develop their hybrid solar cell technology, Rive said he does not expect any changes in technology to cause any "material changes" in the equipment that the Buffalo factory would need. "We expect all of the equipment to be perfectly applicable for the new cell process," he said.

As the solar energy industry's growth has slowed this year, the prices of conventional solar panels have dropped. Many of those panels can convert between 16 percent and 18 percent of the sun's energy into electricity. The high-efficiency panels that the Buffalo factory will make will have efficiency rates approaching 22 percent.

That higher efficiency rate will help reduce the overall cost of a rooftop solar installation, since it will require fewer panels, less wiring, a smaller mounting system and less labor to install than a system using conventional panels, Musk said. Those savings can reduce the cost of a rooftop solar installation by as much as 15 cents per watt.

"It’s a very significant factor," Musk said.

Rive said he believes the Buffalo factory will be able to produce solar panels with a cost of about 40 cents per watt as production ramps up and volumes increase. Eventually, he thinks the panels could have efficiency rates as high as 24 percent, which would further reduce costs.

"You don’t want to compete just on price point," Musk said. "That’s just a not a very good business."

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