Nanosolar has been trying hard over the past year to repair its public image as a startup that raised a huge amount of money but had little to show for. It hired a new CEO, semiconductor industry veteran Geoff Tate, early last year and began to provide more realistic numbers about its factory capacity and production rates.

The San Jose, Calif., company on Thursday said it also has made progress in lining up customers and has signed agreements to supply its copper-indium-gallium-selenide solar panels to two German firms, Belecrtric and Plain Energy, and to French company EDF Energies Nouvelles. The agreements range from three to six years and set out prices over the length of the contracts, and if Nanosolar hits production, efficiency and cost targets, the contracts could add up to a total of 1 gigawatt, said Brian Stone, vice president of sales and marketing at Nanosolar.

EDF is not only a customer but also an investor who first announced its plan to buy panels from Nanosolar in early 2008. In fact, Nanosolar’s former CEO, Martin Roscheisen, used to boast about having lined up $4.1 billion worth of contracts. Belectric and Plain Energy also are Nanosolar investors.

Being able to deliver on those contracts will be a big deal for Nanosolar not just because of the size of the contracts. Nanosolar has taken a while to make that leap from research and development to mass production after raising roughly $500 million. The company claimed it began commercial production in December 2007, but it wasn’t until September 2009 that Nanosolar said it could mass-produce its panels. Even then, it was only producing 1 megawatt per month, or 12 megawatts per year, a pilot-scale production that still raised questions about its ability to scale up manufacturing to compete in a market where many competitors that could produce more than 100 megawatts of solar panels annually.  

Stone said company is more transparent about its capabilities and goals these days. The company has a solar cell factory in San Jose and a factory in Germany to assemble the cells into panels. The solar cell factory currently has equipment to produce 30 megawatts annually while the German factory could do 100 megawatts, Stone said.

Both factories have space to add more equipment, and Nanosolar plans to bring the production capacity to 115 megawatts annually by fall of this year. Adding installing new equipment, there is a test-run period to bring the production online and running at desirable production rates. Nanosolar expects to hit around 60 megawatts annual production rate by the end of the year and up to 96 megawatts in early 2012, Stone said.

The company produced “several megawatts” of panels in 2010 and is aiming for 15 megawatts in 2011, Stone said.

Further out, the company plans to roughly double its production capacity each year in the near term. The San Jose factory can accommodate 250 megawatts of annual production capacity.

The company’s production cost roadmap calls for hitting below $1 per watt around the end of 2011, 70 cents per watt in 2012 and 60 cents per watt in 2013, Tate said. The company believes it lower its manufacturing costs at a faster rate than industry leader First Solar, so that Nanosolar can produce panels at comparable cost as First Solar without having to achieve First Solar’s production capacity.

First Solar’s production capacity hit 1.4 gigawatts at the end of 2010, and it plans to expand that to 2.7 gigawatts in 2012. The Arizona company was producing panels at 75 cents per watt and is gunning for 52-62 cents per watt in 2014.

“We don’t know for sure what they will do, but we can be very competitive with them at much lower volumes,” Tate said.

First Solar isn’t the only serious competitor. The market is dominated by silicon solar panel makers, who can produce more efficient panels but not at the same low cost as First Solar, whose panels, at 11.6 percent, are less efficient than silicon panels that typically hit the mid-teens.

Nanosolar is shipping frameless panels that have an average efficiency of 10 percent, Stone said. The efficiency should go up to 11 percent by the end of 2011 and hit 12 percent in early 2012, he added. The efficiency gains will be accompanied by increase in power ratings of the panels, from 200 watts now to 240 watts in 2012. After that, the plan is to reach 13 percent in 2013 and 14 percent in 2014.