Producing Solar Below 70 Cents a Watt

Okay, so the sub-one dollar production cost is still a major milestone. But as more companies approach or cross the threshold, the solar industry is starting to compete at a much different level.

In 2009, industry leader First Solar was the first company to produce cadmium-telluride thin-film modules for below a dollar a watt. Today, the company is producing panels at 76 cents a watt – a benchmark by which all other solar manufacturers are compared. If a company can't provide a clear path to that cost range quickly, it probably doesn't have a good chance of competing in today's market. But First Solar certainly can't rest on its laurels.

In a big announcement this week, the equipment manufacturer Oerlikon says that its new fab line is able to pump out 10 percent-efficient amorphous-silicon (a-Si) thin-film modules for under 70 cents a watt.

“This certainly gives us a lot of confidence. We were able to meet the target we set for the end of 2010 earlier than expected,” says Chris O'Brien, head of market development at Oerlikon.

However, that doesn't mean that Oerlikon's customers (the solar companies making the modules) will definitely be producing solar below 70 cents a watt. Oerlikon is assuming that its customers can integrate the new line and reach those cost targets by 2011. So while the company has achieved this ground-breaking cost structure in a controlled setting, actually getting customers to that target will be harder.

"It's more of a calculation. Oerlikon doesn't produce the panels. At this point, it's more theory than practice," says Shyam Mehta, a senior solar analyst with GTM Research. "It's up to Oerlikon working with its vendors...to scale up and hit these targets."

Mehta cautions that this sort of cost target takes longer to reach than people expect. So for the time being, First Solar can still solidly call itself the leader in production cost and efficiency.

"First Solar is already there. It's definitely not an apples-to-apples comparison," says Mehta.

Even with all the "ifs," the news is good for the struggling sector. For the last two years industry analysts have been predicting the death of a-Si thin film, a technology plagued by high costs. In many ways, they have been right: A number of a-Si companies have gone belly up, and the most high-profile equipment producer, Applied Materials, got out of the business earlier this summer. The technology couldn't compete with conventional PV when prices for silicon dropped so dramatically.

“We ran into some enormous headwinds,” says O'Brien. “The advantages of thin film disappeared quickly. But we feel that's changing.”

O'Brien says the company has been constantly making changes to the fab line over the years. Those changes include a focus on higher-efficiency tandem-junction cells, thinner silicon layers, higher reflective backsheets, eliminating “dead zones” around the perimeter of the module, and reducing material needs. He says the effort has increased cell efficiencies and reduced the capital expenditure for its customers by 25%.

Oerlikon also announced the development of a new tandem-junction "micromorph" cell that is 11.9 percent efficient in the lab. The efficiency was verified by the National Renewable Energy Laboratory.

This announcement illustrates the new paradigm for solar manufacturers. Two years ago, producing solar at $1.50 a watt was pretty good. Today, that just won't cut it. If Oerlikon continues on a path toward steady cost reductions and efficiency improvements in line with that trend, the company could prove to be a major success story in an a-Si sector filled with bad news.

To hear more analysis on this announcement, listen to the podcast linked above.

Also, in the video interview below, Oerlikon's Chris O'Brien talks more about why the company has continued to improve while other a-Si players have struggled so badly.