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SAN FRANCISCO (Reuters) - First Solar Inc, the world's largest thin-film solar panel producer, has set up a Silicon Valley lab for a thin-film technology with the potential for higher efficiency at a lower cost, sources said.
A big move toward panels based on CIGS, or copper indium gallium diselenide, technology would mark a major shift for First Solar into an area pioneered by others and would also lend support to critics who see limited room to improve the efficiency of the company's current cadmium telluride panels.
The company has said its cad-tel panels can exceed 11 percent efficiency in converting sunlight to electricity, and it aims to improve that further.
First Solar acknowledged on Thursday it has a small research and development unit in Silicon Valley but declined to comment further.
The Arizona-based company made a name for itself with these thin-film panels that are less efficient than standard panels based on computer processor-style silicon semiconductors, but are much cheaper to produce per watt of output.
CIGS offers the hope of cheap thin-film production costs with efficiency near the best of silicon solar cells, which can be as high as 20 percent.
First Solar, which has never discussed its Silicon Valley operations publicly, has had a research and development unit there for a couple of years, five industry sources with knowledge of the operation said.
The company is looking at low-cost processes to manufacture CIGS panels, one of the people said, though two other sources said the CIGS research appears to be in its initial stages.
Most First Solar operations are outside California, with its corporate headquarters in Tempe, Arizona, and factories in Ohio and Malaysia. The Silicon Valley unit, however, would benefit from the abundant engineering and semiconductor-related talent available in the San Francisco Bay Area.
In lab conditions, CIGS has demonstrated the efficiency of silicon cells. The U.S. Department of Energy's National Renewable Energy Laboratory set a new efficiency record of 19.9 percent for CIGS, nearing the record for crystalline silicon cells, but no company has come close to that in the factory.
First Solar Chief Financial Officer Jens Meyerhoff, when asked about new technologies at an industry conference last month, said the company monitors emerging technologies closely but hasn't seen major competitive threats.
First Solar has an "in-house effort that deals with assessment and evaluation of alternate material sets and technologies," Meyerhoff added.
The company has never publicly said it is doing research on CIGS-based solar panels.
Silicon Valley is home to many start-ups that are looking to commercialize CIGS-based panels, including MiaSole, Nanosolar and Solyndra.
CIGS has caught the attention of researchers and companies as it has the potential to match the photovoltaic (PV) efficiency of crystalline silicon cells.
"If you can do it, it's probably the cheapest PV solution out there," said Travis Bradford, Director of Prometheus Institute for Sustainable Development.
Ascent Solar, a publicly traded CIGS-based solar company, has said it has achieved efficiency as high as 11.7 percent for its modules.
Sales of CIGS panels are tiny compared to First Solar's sales of cad-tel panels, or those made by large competitors Suntech Power Holdings and SunPower Corp.
The cost of building CIGS cells is expected to fall to 50 cents per watt in the coming years, less than half the level of current silicon cells.
Reporting by Poornima Gupta; Editing by Richard Chang