How Thin-Film Solar Will Fare Against Crystalline Silicon's Challenge

Ted Sullivan, Senior Analyst, Lux Research
January 03, 2011 | 2 Comments

In the face of renewed pricing pressures, solar device manufacturers have had to refocus on minimizing costs and maximizing performance to maintain profit margins

Advances in crystalline silicon technology, and the falling cost of the polysilicon raw material, have only increased the pressure on manufacturers of emerging thin-film technologies, including thin-film silicon (TF-Si), cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS) – many of which are under the gun to improve margins or face extinction.

To forecast how module developers would reduce the key components of cost – capital, materials, utilities, and labor – a recent Lux Research report constructed cost-of-goods-sold (COGS) models through 2015 for the dominant technology – multicrystalline silicon (mc-Si) – as well as its thin-film competitors: TF-Si, CdTe, and CIGS (both glass and flexible substrates).

This week’s graphic sums up the report’s findings. Namely, it shows that as COGS decline across the board, mc-Si remains highly profitable throughout the value chain. Vertically integrated players will drive costs from $1.45/W in 2009 to $0.93/W in 2015, assuming poly pricing at $70/kg. Efficiency will be a key driver of cost reduction, rising from 14.0% in 2009 to 16.1% in 2015.

Oerlikon will give thin-film silicon new legs. Improvements enabled by Oerlikon’s new ThinFab line will push thin-film silicon efficiencies from 9.0% to above 11.0%. Significant improvements in output will cut depreciated capex per watt, and help to reduce TF-Si costs from $1.32/W in 2009 to $0.80/W in 2015.

CdTe technology remains the long term leader in terms of COGS. Led by First Solar, CdTe has a significantly lower cost structure than mc-Si, and its cost reductions will march onward, keeping it the most profitable solar technology, as COGS falls from $0.80/W in 2009 to $0.54/W in 2015.

Costs for select CIGS technologies drop dramatically. CIGS sputtered on glass – which is Lux Research’s benchmark given its critical mass of developers – will see COGS plummet from $1.69/W to $0.76/W as efficiency improves from 10.0% to 14.2%, and factory nameplate capacity and yields grow, allowing the top developers to earn gross margins over 30%.

This data came from the Lux Research report "Module Cost Structure Breakdown: Can Thin Film Survive the Crystalline Silicon Onslaught?"

2 Comments

John Bohland
January 5, 2011

Hey ecdfan,

The only number that matters is the LCOE of a utility-scale PV system. In this case, Juwi has shown, based on study of scores of thin-film CdTe Vs multi and single crystal silicon installations, that CdTe outperforms m and x silicon by 3 to 5%.

The market understands this. From 2008 to 2009 m-Si lost from 48 to 45% market share, x-Si was nearly stagnant at 35 to 37% and CdTe grew from 8% to 15%.

See here: http://www.thinfilmpv.eu/wp-content/uploads/2010/10/04-2PVTFC-Juwi-Collins11.pdf

Laboratory efficiencies are not as meaningful as integrated real-world performance data and LCOE produced.

ECD Fan
January 3, 2011

Discussing the module cost per Watt without the efficiency is not helpful. For example, a 14% efficient crystalline module made at $1.10 per Watt is cost-competitive with 11% efficient CdTe module made at 80c per Watt (despite having, on the surface, 38% higher cost), due to balance-of-system effects. Flexible modules could get up to 30c per Watt slack vs glass modules, due to somewhat easier and cheaper installation in certain cases.

Therefore:

1) 7% efficient flexible a-Si modules (whose precursor is pictured in the article) need to have 70c per Watt cost of manufacturing TODAY to be competitive with First Solar or the Chinese integrated crystalline modules. They don't. Not even close.

2) 10% efficient glass a-Si or CIGS or CdTe modules need to have costs of manufacturing of 70c per Watt TODAY to be competitive with First Solar or the Chinese integrated crystalline modules. They don't. Not even close.

Conclusion: First Solar and the Chinese integrated crystalline manufacturers will continue to take market share, and we will see a lot of inventory liquidation and going-out-of-business signs over the next three years.