Abound Solar promises to bring a big new industry to central Indiana, but first the company has to prove its manufacturing efficiency.

Colorado-based Abound will receive $400 million in federal loan guarantees to scale up production at its Longmont facility and to add a second factory, the unused Getrag-Chrysler transmission plant in Tipton. The company says it will hire 900 to 1,200 people in Indiana, but first, it must focus on successfully scaling up its existing facility.

"It's not a demand issue," Abound Marketing Director Mark Chen said. "It's purely execution and us being able to ramp up capacity."

Venture capital-backed Abound has been in commercial production since last fall, but now plans to triple capacity in Longmont to 200 megawatts, or about 3 million panels, by the end of 2011, Chen said.

Work on the plant in Tipton would begin sometime in 2011, Chen said. Manufacturing would not begin until 2012, he said, and Abound hopes to achieve a capacity of 600 megawatts or more by the end of 2013. Chen said the company doesn't yet know how quickly it would ramp up production, or hiring, in Tipton.

Abound will compete with publicly traded First Solar, which also make thin-film photovoltaic panels using cadmium telluride. The technology is cheaper to produce than traditional silicon-based photovoltaics, but it offers less solar efficiency, said Dan Ries, managing director of the London-based brokerage Collins Stewart. Ries follows First Solar and other firms.

As the price of silicon photovoltaics drops, First Solar and its upstart competitors must become more cost-effective so they can maintain a price difference of 10 cents to 15 cents per watt, Ries said. First Solar's production cost is now about 80 cents per watt, he said, and the company predicts it will drop to about 70 cents per watt by the end of 2011.

"The thing that’s going to determine whether they go ahead or not will largely be the cost at which they can produce," Ries said of Abound's second plant in Tipton. "They’d have to see a roadmap of 80 cents or cheaper."

Abound has an option to buy Getrag's unfinished, 800,000-square-foot plant on U.S. 31 in Tipton. The seller is the group of contractors who were owed about $45 million when the project ground to a halt in October of 2008. The bankruptcy court in Detroit awarded the property to the contractor's group, led by Industrial Power Systems in Toledo.

Jerry Albrecht, president of now-defunct Moorehead Electric in Marion, said the contractor group plans to sell the property to Abound for about $25 million and the deal is supposed to close by September. Moorehead Electric was one of the largest subcontractors on the Getrag plant. "Most of the contractors will recover through this sale about 50 percent of what they're owed," he said.

Abound says it will invest $500 million in the two plants, with the majority of it spent in Tipton. The company will also receive state and local tax incentives.

The federal loan guarantee will help Abound secure a round of $50 million in equity financing from a still-unnamed party, Chen said.

Abound targets commercial-scale solar installers and electric utilities. Its main customers so far are Juwi and Wirsol, both based in Germany. Abound's panels are in use at the first "green" Burger King, a project installed by Wirsol in Waghausel, Germany.

Abound says it intends to manufacture in the United States, though most of its customers are overseas. "We believe our low-cost manufacturing technology provides such an advantage, we can produce in the U.S. and export around the world," Chen said.

Leading competitor First Solar has plants in Perrysburg, Ohio, as well as Malaysia and Germany.

Abound's process for turning a sheet of glass into a photovoltaic panel is fully automated. Chen said labor needs revolve around running equipment, handling raw materials, maintaining the plant, and quality control. 

Cadmium is a toxic heavy metal, but Chen said Abound produces no toxic byproducts or waste. Leftover cadmium telluride is sent back to the supplier, which breaks the material down to its components, cadmium and tellurium.