Evergreen Solar Bowls No One Over

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Let's face it: First Solar's (Nasdaq: FSLR) first-quarter report was a terribly tough act to follow.

Evergreen Solar (Nasdaq: ESLR) did its best on Thursday to highlight the progress it's making at its Devens facility. Still, the fact that the company achieved a smaller "pro forma" operating loss compared with the fourth quarter wasn't wowing anyone. The shares are off more than 10%, which doesn't seem unreasonable given the challenges here. Before we get to the financing issue -- once again my primary concern -- let's look at the company's proposed China expansion.

Evergreen Solar told us last time around that, given the prohibitive cost of capital, its best path for expansion was likely a subcontracting solution, in which a third party would take the company's proprietary wafers and fabricate them into Evergreen-branded panels. The company has now unveiled just such an agreement, with China's Jiawei Solar.

Jiawei Solar has done work for Evergreen Solar, as well as SunPower (Nasdaq: SPWRA) (Nasdaq: SPWRB), so this isn't a name out of left field. Evergreen Solar expects that it will be able to finance about two-thirds of the cost of a new facility with a preliminary capacity of 100 megawatts, leaving it with a $15 million to $20 million commitment to take care of. Looking forward to 2012, the company hopes to ramp to 500 megawatts and achieve a total manufacturing cost of $1 per watt, which, given its conversion efficiencies, would enable it to compete with the thin film offerings of First Solar, Energy Conversion Devices (Nasdaq: ENER), and whichever of the dozens of start-ups are all grown up by then.

That future sounds nice enough, but Evergreen Solar is running low on cash today. It has about $60 million available, with $57 million earmarked for other major capital commitments this year. So the company doesn't have much of a working capital cushion, let alone the money for this Chinese project. After last year's hair-raising capital raise (which was pulled off remarkably well), the company's going back to the capital markets once more.

I know that SunPower appeared to effortlessly raise more than $400 million this week (following a feeble first-quarter report, no less), but I just don't see Evergreen Solar receiving as warm a reception.