Nanosolar thin-film solar cells are made using a roll-to-roll process and then the cells are assembled into panels in another factory in Germany.

Thin-film solar company Nanosolar said today it has secured sizable customer orders and it expects to match solar industry cost leaders in a few years.

Nanosolar, one of dozens of companies founded last decade to use thin-film cells to lower the cost of solar, said it has customer orders that could be as much as 1 gigawatt worth of solar panels over six years if the company meets technical milestones and ramps up volume as it projects. The panels are designed for utility-scale solar projects over 1 megawatt in size.

The contracts are a boost to San Jose, Calif.-based Nansolar, which has raised close to $500 million but replaced its CEO last year, a sign of some troubles at the company. The contracts are with existing partners, solar developers Belectric from Germany, EDF Energies Nouvelles of France, and Plain Energy from Germany.

By the end of this year, Nansolar expects to manufacture solar cells at a rate of near 115 megawatts per year in San Jose. Those cells are transported to Germany where another factory makes panels specifically designed for utility customers.

Once it's at full capacity in its San Jose plant, Nansolar expects its production costs will be at a $1 per watt, making its costs lower than panels made with traditional crystalline silicon cells, according to Brian Stone, Nanosolar's vice president of sales and marketing.

The company expects that improved efficiency of its solar cells, from 10 percent now to 14 percent in 2014, will get production costs below 60 cents a watt by the end of 2013, making it competitive with other thin-film solar manufacturers. The key to its lower production costs is Nansolar's roll-to-roll cell manufacturing, said CEO Geoff Tate, who joined the company about one year ago.

Most thin-film solar companies use a vaccum deposition process where solar cell material is layered on to a substrate. Nanosolar's photovoltaic material, made from a combination of copper, indium, gallium, and selenium (CIGS), starts in a liquid form and is coated onto an aluminum foil. The layer evaporates and then is heated to create a crystalline structure needed for a solar cell, explained Tate.

The manufacturing process, where cells are essentially printed, allows for faster production and greater cost reductions over time, compared to both other CIGS makers and companies that make cadmium telluride thin-film cells, including industry price leader First Solar.

"We believe CIGS has higher efficiency potential but printing is actually more important than whether we are doing cad tel or CIGS because it gives us a cost structure that none of the others have," said Tate.

The solar panels themselves are designed specifically for utility-scale projects, with relatively large panels able to produce 200 watts each and a mounting system which saves on material and cabling.

To get to the company's projected volume target, Nansolar doesn't need to raise any more money. In 2008, the company raised $300 million, bringing the total raised to near $500 million. After ramping up to full scale at its current locations in California and Germany, the company intends to double its manufacturing capacity with new plants, said Tate.