In the solar electricity market, consolidation and contraction are the buzzwords of the day. Today, all solar PV manufacturers face an over-supplied and underfunded PV market. The oversupply and drop in subsidy across Europe and the US has forced crystalline silicon manufacturers to sell panels below manufacturing costs. As the weeks tick by, major manufacturers, one after another, are announcing bankruptcies or plans for a major scaling back of their operations. Thin-film solar panel manufacturers have not been able to stay out of the fray, with many struggling to keep up.
MJ Shiao, author of THIN FILM 2012-2016: Technologies, Markets and Strategies for Survival, argues that thin-film may be dying, but it isn’t dead yet. He points out that venture capital investment continues in the sector and key players have large expansion plans.
Thin-film Advantages Over Crystalline PV
Crystalline PV has the cost advantage now with slightly more efficient panels selling for right around US$1/W. SolarBuzz’s March 2012 report shows mono-crystalline silicon PV panel price at $1.10/W and multi-crystalline silicon PV panels selling for $1.06/W.
But thin-film works better in diffuse-light conditions and in hot environments, which means that in certain sun-drenched areas of the world, thin-film turns out to have a lower levelised cost of energy (LCOE) – the final cost to produce a kilowatt-hour of solar power. So while a crystalline silicon PV panel may have a higher efficiency, meaning that it can convert more sunlight to power when the sun is shining, that same crystalline panel will produce energy for a shorter amount of time during the course of the day. And that same panel will experience greater degradation of power in hot environments than the thin-film panel, according to experts.
Couple thin-film’s lower LCOE in hot environments with the fact that the solar market is shifting towards more remote, unsubsidised markets that already experience high electricity prices, and it is clear that thin-film could take on more market share in the future.
Key Players in the Industry
Thin-film solar panels are created through three different manufacturing techniques that use different core components: amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium diselenide/copper indium sulfur/selenide (CIGS/CIS).
The only small silver lining to the cloud that is very low solar power panel costs, according to Chris O’Brien, head of market development at Oerlikon Solar is that low module prices are driving increased demand for solar power in general.
With Oerlikon recently acquired by Tokyo Electron (TEL), O’Brien points to markets in the Middle East, Africa and India as areas where there is a growing interest in solar PV. Whereas PV projects in those regions used to be in the sub-megawatt range, he says they are now coming in in the multi-megawatt range. This is a trend that many in the industry expect to continue.
O’Brien also notes that pricing will remain low and that only those manufacturers that can innovate enough to bring down costs will be able to compete.
‘All solar bids in California are coming in the range of $.09/kWh. I think what that reflects is not just the current low prices but an expectation that the price will continue to go down. In that case the RAM [renewable auction mechanism] was for deliveries in 2016.’
Oerlikon, which manufactures the equipment to build amorphous silicon (a-Si) thin-film module manufacturing plants, has seen a drop in equipment upgrades so far in 2012. ‘Most estimates are that the investment this year will be down by more than 50% compared to last year,’ O’Brien said.
O’Brien explained that in 2010 and 2011 manufacturers expanded aggressively, at what have turned out to be unsustainable rates. He called it a manufacturing equipment bubble. ‘A number of aspiring manufacturers wanted to copy the success of the 2009 emerging market leaders in China, like Suntech, Trina, Yingli,’ he said. Those tier 1 manufacturers successfully expanded to 2 GW of manufacturing capacity in 2009, he said, resulting in a glut of panels on the market. Today, many of those manufacturers which aggressively expanded are now left sorely in debt, stuck with equipment that might not be sellable in the near future.
‘I expect there might be some buyer’s remorse,’ O’Brien observed.
Oerlikon is waiting for the next manufacturing equipment investment cycle to begin and O’Brien expects that to happen by the end of 2012. ‘I think the market is catching up to the investment that was made in 2010, 2011,’ he said.
‘What will be different for the next investment cycle,’ he continued, ‘is that the cost requirement will be much lower.’ O’Brien said he expects that manufacturers will need to diversify in order to stay afloat, which might mean that some crystalline silicon manufacturers will differentiate their lines.
‘I don’t expect that PV module prices will increase,’ he said. ‘The next investment cycle will be shaped by what technologies can provide a sustainable business model at PV module prices that are at or below today’s prices.’
O’Brien said that Oerlikon can deliver a 140 MW manufacturing line that will produce 10.8% efficient panels at $0.50/W as long as it is running at full capacity. He looks forward to working with Tokyo Electron (TEL) to further improve the line after the early March announcment that it was being sold to TEL, a leading semiconductor equipment supplier from Japan.
a-Si thin-film manufacturers producing panels with Oerlikon equipment include Astronergy, Auria, Baoding Tianwei, Bosch Solar Energy, Gadir Solar, HelioSphera, Inventux Technologies AG, Schott Solar, Pramac and Sun Well Solar. In addition to these players, Sharp Solar has an a-Si thin-film line.
First Solar – Cadmium Telluride (CDTE) Thin-Film
First Solar has robust plans for the future, according to David Erhart, marketing communications manager. Erhart explained that it is First Solar’s thin-film technology that ‘takes a simple piece of glass and turns it into a complete solar module in less than two and a half hours’ that has fuelled the company’s success so far.
To date, the company has more than 5 GW of modules installed worldwide and was the first company to break the $1/W cost barrier. It currently manufactures its panels at a cost of less than $0.75/W and the company won’t stop there, according to Erhart. A recently announced restructuring of First Solar should bring the company’s average manufacturing to $0.70-$0.72/W in 2012, below prior expectations of $0.74/W. In 2013 the company estimates average module manufacturing costs will range from $0.60-$0.64/W.
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