Centron Solar (Eugene, Ore.) has sold solar panels to Nike and the National Guard and aims to set up as many as six panel assembly sites in the U.S., said Ocean Yuan, president of the company that has been in business just since June 1.

Centron represents 30 companies in China that make panels, solar cells and their components. The private companies based in Jiangsu and Xiejiang provinces have an installed capacity of 500 Megawatts, Yuan said.

"We want to be the number one producer of solar panels in the world," said the young executive, sitting in a small conference room of a still-empty warehouse where a handful of Centron workers have offices.

Ocean Yuan President, Centron Solar

Centron aims to sell panels direct to installers for $2.48 per Watt compared to $2.80 to $4 per W for competing modules. "We're like a Walmart, said Yuan who previously worked for electronics distributors and contract manufacturers.

Price pressure has already reached extreme levels and China may become ground zero of an industry shakeout, according to DisplaySearch which recently released its first report on the solar market.

"Despite module demand shrinking 17 percent in 2009, so much cell manufacturing equipment was ordered and installed over the past year that capacity is still expected to grow 56% this year," said Charles Annis, vice president of manufacturing research at DisplaySearch and author of the report, speaking in a prepared statement.

Between January 2008 and July 2009, approximately 11.4 GW of new solar cell capacity was installed worldwide. A third of all production is now done in China which ramped its capacity starting in 2005, he added.

Indeed Yuan said Centron's partners hope to double their capacity to a GW by sometime in 2010. Meanwhile Spain and Germany, big drivers for worldwide demand, are ending and scaling back subsidies, respectively, he noted.

Thus vendors are "currently experiencing an enormous over-supply that is causing rapid price erosion and potentially setting the stage for the failure of multiple cell manufacturers," said Annis, adding he anticipates demand recovery next year.

Bridge across the Pacific
Centron is hoping its novel business model helps it survive the recession. Yuan said Centron is bucking the trend of big vertically oriented companies that make everything from raw polysilicon to finished panels—and some even do installation.

"This is crazy," he said. "Making polysilicon is a chemical process, solar cells are a semiconductor process and wafer slicing is a precision mechanical process.

"How can one company make everything and be the best in the world--that's old style," said Yuan. "The new business model we are creating is about horizontal integration."

Centron's partners include multiple polysilicon, wafer, solar cell and module makers. Centron will specify products the group will make and sell those panels direct to installers from final assembly plants in North America.

"We will be the lowest cost producer with our business model," Yuan said.

Centron also hopes to bridge the gap between as many as 300 China solar panel makers and a U.S. market of more than 20,000 generally small installers. To address concerns about quality from China's solar makers, Centron is providing a ten-year guarantee on the five- and six-inch monocrystalline panels it is initially selling.

Yuan met many solar panel makers in Jiangsu province working as President of Solarfun Power, a supply chain company. "All they did was crank out panels and take the European market for granted," he said.

After the late 208 crash in the solar market, the Chinese vendors saw Yuan as someone who could help them address the U.S. market with a new company bearing an English name. A University of Oregon graduate, Yuan decided to launch the company in Eugene because it was his second home.

He hired a Georgia Institute of Technology researcher as his chief technology officer. Now he is hosting panel experts from China on tours of possible assembly plant sites in the U.S. So far Vancouver, Texas and the Northeast corridor are under consideration.