Coming into Focus: Are Concentrating PV Players Finally Getting Respect?

Victor Valley College and SolFocus last month brought state and local dignitaries to celebrate the completion of a 1-MW (AC) solar energy field in Victorville, a town northeast of Los Angeles. Planted in dusty earth, each of the 122 systems comes with a dual-axis tracker holding up a giant array with 8.4-kW of generation capacity. The college, which spent roughly $4.66 million to own the project, expects the field to generate about 54.76 million kilowatt hours (kWh) over 25 years, enough to supply 30 percent of its needs.

“SolFocus has borrowed a lot of technologies from the automotive industry in terms of manufacturing, so it has a highly automated and very inexpensive manufacturing process,” said Rob Koch, managing director of NGEN Partners, a SolFocus investor. “That’s very different from thin-film manufacturing, which requires a huge amount of capital for factories.”

SolFocus, based in Mountain View, Calif., is one of a few CPV companies that have found true believers — customers and investors — lately. Seal Beach, Calif.-based Amonix, is another one, having lined up $129.4 million in private equity. Amonix also has partnered with an undisclosed developer to build two projects totaling 14 MW (DC) and sell the electricity to Tucson Electric Power, said Carla Pihowich, senior director of marketing at the company. Solaria in Fremont, Calif., meanwhile, raised $45 million. Emcore Solar also has scored with a deal to sell power from a 2-MW (DC) plant to Tucson Electric Power, the utility said.

Amonix and Solaria also found new company heads in the last seven months. Brian Robertson, co-founder and former president of SunEdison, became Amonix’s chief executive last November. Daniel Shugar, former president of PowerLight, took over the CEO role at Solaria in January.

Although the sizes of these completed and pending projects are relatively small, they represent an important step forward for a class of technologies that promises to deliver cheap electricity but hasn’t found many converts yet in potential customers such as utilities and large businesses.

“This is a new technology, and new technology takes a while to get accepted by the community,” said Mark Crowley, CEO of SolFocus, during the dedication ceremony.

Critics would say that time is a luxury CPV developers don’t have. This class of technologies uses mirrors and other optics to concentrate the sunlight onto slivers of solar cells to produce electricity, and each system comes with a tracker to make sure the solar cells get as much sun as they can throughout the day. The technology must compete with a slew of established and emerging methods of producing solar electricity.

“Because no standardized product has been rolled out and tested at large volume, banks are extremely unwilling to provide debt for projects using CPV equipment — even if they were cheaper than crystalline silicon,” wrote Jenny Chase, manager of Solar Insight at Bloomberg New Energy Finance, in an email. “This is a huge nontechnical barrier to market penetration — difficult to overcome without a strong strategic partner to back the product with warranty and brand name.”

The Best and Worse Timing

CPV technologies garnered the spotlight about half a dozen years ago, when the price of silicon, the key material for solar panels, was sky high and fetched hundreds of dollars per kilogram. Then, some startups set out to figure out how to concentrate sunlight hundreds of times while simultaneously getting rid of the resulting heat.  Other CPV startups thought that using lower concentration technologies could offer the right savings for building and operating a solar energy field.

Evangelists say CPV technologies have several key advantages. For one, they cut material costs by using far less silicon or other expensive semiconductors than the amount used by conventional solar panels. The optics and trackers help to boost electricity production.

A low-cost design must be matched by low-cost manufacturing, which typically is achieved through large-scale production. The scale for CPV equipment overall remains small for now, with companies such as Amonix planning to expand their capacities.

“I’ve been looking at solar of all kinds since ‘70s, and frankly I’ve thought that concentrating PV in the past had always been too expensive on balance,” said Maurice Gunderson, a senior partner at CMEA Capital, which has invested in Solaria, a low-concentrating PV developer whose optical design concentrates sunlight two times and directs the light to monocrystalline silicon cells. “For the first time, there is a case where the concentrating PV panels themselves are cheap enough to market [thereby] making up the cost and complexity of the tracking systems.”

CPV companies might have found it easier to sell their products in the early stages of commercialization if silicon prices hadn’t fallen so dramatically in the past year and half.  

New silicon factories revved to life around the time when recession hit, and for a while banks weren’t willing to loan money to project developers. In the middle of last year, New Energy Finance pointed out that the 2009 contract prices for silicon had fallen about 50 percent from a year ago and were getting close to the spot market price of $67 per kilogram.  Spot market price had jumped above $300 per kilogram in 2008.

The spot market price dropped to around $54 per kilogram last month. Silicon makes up less than 20 percent of the cost of manufacturing a panel while silicon solar cells could contribute to around two-thirds of the cost of the panel, Chase said.

Reputable silicon panel makers were selling their products at around €1.2 [US $1.68] per watt during the first quarter of this year, Chase added. The prices have gone up to about €1.70 per watt since then because of a rush to build projects in Germany ahead of an anticipated fall of the country’s feed-in tariff in July, but the prices could fall back to the first-quarter levels or drop even lower over the next 12 months, she said.

How much lower can silicon panel prices go? Not much more, Robertson said. He argued that some large silicon producers already are making the material with fully paid-for factories while others are receiving government subsidies in order to sell silicon at a competitive price. All these producers must rely on cheap power, something they can’t always count on given that power comes from fossil fuels, which could get more expensive as more countries are considering capping carbon emissions and requiring power producers to pay for emitting above the cap.  

"There is not a lot of headroom for cadmium-telluride or silicon to cut costs. CIGS (copper-indium-gallium-selenide) might, but people can't get it to work yet. We have wider headroom,” Robertson said.

Looking at the Numbers

Although CPV companies all say they are confident about offering comparable or even lower prices than silicon panel manufacturers, they are reluctant to disclose their price points or the costs of building power plants using CPV systems.

However, SolFocus’s showcase project at the Victor Valley College provides some insight. The public college spent about $4.66 million from a voter-approved construction bond and other funds for the 1-MW project.

The college expects the project to generate 54.76 million kWh of electricity over 25 years, taking into consideration that the power plant is likely experience a decline in energy production over time.

For the first 10 years, the college will pay SolFocus a total of nearly $410,000 to operate and maintain the power plant, said Al McQuilkin of Gkkworks, the college’s project manager. The college expects to pay around $655,000 for year 11 through 25, though it hasn’t awarded the contract yet, McQuilkin said.

The college is likely to see savings of roughly $15 million over 25 years, a number that factors in a series of costs and benefits, including state incentives, renewable energy credits, special rates offered by Southern California Edison, avoided electricity purchases, operating expenses and rising electricity rates.

To calculate the levelized cost of energy, the college divides the project’s price ($4.66 million) by the power output over 25 years (54.76 million kWh) and arrives at 8.5 cents per KwH, McQuilkin said. The LCOE doesn’t include the operational and maintenance costs. The LCOE would go down to 1.5 cents per kWh if you include incentives that will be based on the amount of energy the power plant produces, he added.

SolFocus’s own calculation, which takes into account all costs but no incentives, would yield about 14 cents per kWh for the first year, said Nancy Hartsoch, vice president of marketing and sales. This figure would take into account such factors of a 2.5 percent inflation rate and a 7.5 percent discount rate for the capital. It’s not uncommon to see the LCOE falling below 10 cents per kWh when factoring in various federal and state incentives, she added.

SolFocus is using highly efficient cells of gallium arsenide on a germanium substrate, which can convert close to 39 percent of the sunlight that hits them into electricity (under high concentration). By concentrating the sun 650 times, each SolFocus panel can achieve 26 percent efficiency, Hartsoch said.

Amonix, another high-concentrating PV developer, has developed a far larger system in order to lower the cost of manufacturing trackers and installation costs, its executives said. Each system consists of seven panels (called MegaModules by the company), which use similar triple-junction cells. The panels are able to squeeze 31 percent efficiency, Pihowich said.

Bullish Outlook

The power plant at Victor Valley College can be a great advertising tool for the CPV sector. It certainly will be a good model for schools or other public agencies that could use low-cost bonds to finance solar energy projects and take advantage of rebates that are based on a project’s power output, such as the program available in California, Hartsoch said.

The CPV Consortium expects to see about 30 MW of high-concentrating PV projects installed worldwide this year, compared with 2 MW in 2009, said Hartsoch, who also is a director of the consortium. The forecast calls for 150 MW to be added in 2011 and 515 MW in 2012.

Companies such as Amonix are increasing their production capacities to meet anticipated demand. Amonix, which currently runs a factory at its headquarters in California, already announced plans to build assembly plants in Nevada and Arizona.

Solaria has an 8-MW factory at its headquarters and contracts with an undisclosed manufacturer in Asia for another 40 MW of annual capacity, Koch said. This year will be marked by pilot projects and commercial orders, which should grow significantly in 2011, said Koch, who declined to provide specifics. 

“In 2009, the company was focused predominantly on product development,” Shugar said. “They need to ramp up the operations and sales, and that’s where I come in.”

Ucilia Wang is a California-based freelance writer who covers renewable energy technologies and policies. She was the associate editor at Greentech Media.