Ascent Solar Technologies has signed a definitive agreement to establish a joint venture entity (JV) with the Government of the Municipal City of Suqian in Jiangsu Province, China (Suqian).

Under this definitive agreement, Suqian will provide cash of approximately $32.5 million as well as five year rent-free use of approximately 331,000 square feet of factory and office space in the Suqian Economic and Industrial Development Science Park.

The JV will build a 100MW factory over six years to manufacture Ascent's proprietary thin-film CIGS photovoltaic modules on flexible polyimide in addition to related consumer products.

Ascent will purchase the factory within five years at the initial construction cost, and will also hold the right to purchase Suqian's ownership interest in the JV after five years at 1.5 times of Suqian's cash cost.

In the initial phase of the project, Ascent and Suqian will form a JV in which Suqian will inject approximately $4.8 million in cash and have majority interest of 75 percent. Ascent shall inject approximately $1.6 million in cash and hold a minority interest of 25 percent.

Subsequently, during 2014 Suqian will further inject the balance of the committed $32.5 million while Ascent will contribute its proprietary technology and intellectual property, as well as certain equipment from its Colorado facility. This will increase its shareholdings progressively up to 80 percent ownership. By the first quarter of 2016, the JV is expected to operate an end-to-end manufacturing plant of 25 megawatts capacity and related consumer products.

Suqian will also provide a package of additional incentives. This includes a five year corporate tax holiday and a further 50 percent tax rebate over the next five years. The second is a full rebate of value-added tax for the first two years and 50 percent rebate for the subsequent three years. Also free accommodation will be provided for up to three years for key scientists, engineers and management personnel of the JV.

Finally, as Phase two of this program is implemented, Ascent will have the option to purchase approximately 215,000 square feet of land zoned for commercial usage at a favourable price at 10 percent above the government's prevailing cost, which may generate income for Ascent.

"The signing of this definitive agreement is a strong endorsement of Ascent's industry leading flexible CIGS technology," says Victor Lee, President and CEO of Ascent. "This partnership enables us to accelerate our transformational consumer-centric strategy with the EnerPlex consumer brand and specialty off-grid applications given China's huge and growing consumer base and readily available contract manufacturers."

"We are very excited and honoured to be partnering with Ascent Solar. The Suqian Government is fully committed to this partnership and shall provide the utmost support and incentives to Ascent. We are convinced that CIGS, and more specifically Ascent's proprietary CIGS technology utilising a flexible plastic substrate, is the next breakthrough in photovoltaics," adds Lan Shao Min, Top Leader and Governor of the Municipal City of Suqian.

"The aim of our alliance with Ascent is to build a state of the art industrial park in Suqian for solar and solar-related products, anchored by Ascent's manufacturing presence, as well as equipment suppliers, contract manufacturers and other supporting industries," continues Min.

Amit Kumar, Chairman of Ascent, comments, "We are pleased with progressing our alliance with Suqian. The funding and other subsidies will enable Ascent to develop the scale of manufacturing needed to bring the cost of CIGS down substantially, and provide product for the large demand we expect to see in the next few years."

"The combination of cost reduction and high margin EnerPlex products along with other specialty market applications will enable Ascent to transition to its next stage as a high-growth company. The alliance with Suqian will provide a means for Ascent to build positive cash flow from numerous sources," Kumar continues.