Solar

Land of Giants: PV Players and Prospects

Issue 1 and Volume 11.

The weather may be gloomy in Europe right now, but the outlook for solar players on both sides of the Atlantic could hardly be better. With production capacity expansion a recurring theme and many players announcing record operating results, it is hard to imagine a cloud on the horizon for the PV industry. Here we present the first part of our look at the major players and events of 2007, and take a peek into what 2008 may hold. David Appleyard reports.

An industry is always more than the sum of its parts, but considering the major players can give a convincing insight into both the state of individual companies and, by implication, the performance for the market as a whole. Take a look at the photovoltaic industry’s shining lights together with their plans and prospects, and it is easy to draw some conclusions regarding the course of the market over 2008 and beyond. Without exception, the prospects seem bright for the big hitters in the world of photovoltaics. Furthermore, while some have seemingly been frustrated in their plans to introduce thin film technologies to the marketplace – this has not apparently impeded overall progress in achieving the ultimate goal of price parity with the grid as the production ramp-up accelerates.

aleo solar AG

Market prospects for pure play module manufacturer aleo solar remain solid if its latest figures are anything to go by. Announcing its nine month results, the company raised its sales revenue forecast for 2008 by €10–30 million, up to €270 million. And, ahead of its full year results, in December it declared that it had already reached €210 million in revenue on the year.

The company raised its forecasts on the back of what it described as ‘sustained high demand for solar modules and existing supply contracts for solar cells.’

Board member Heiner Willers observed that Germany remains the world leader in photovoltaic systems as far as annual newly installed output is concerned, although international demand also remains strong. ‘In addition to Spain, Italy is also increasingly turning in an excellent performance,’ said Willers. Revenue generated from outside Germany is expected to amount to approximately 35%, with the company aiming to generate 50% of its revenue from overseas until the end of 2010.

As if to make the point, in December aleo announced that several Spanish project developers have ordered its modules in a deal worth a total of over €45 million and reports firm orders for 2008 in Germany of more than €25 million.

The company also intends to expand its production capacity in 2008 from 100 MW to 180 MW with a production boost at its site in Prenzlau, Germany, from 90 MW to 170 MW due to be running at full capacity by autumn 2008. Its 10 MW production site near Barcelona will also run at full capacity in this year.
Back in late June aleo noted that the supply of solar cells was improving; with expanding production and new players emerging, especially from Asia. Said Willers: ‘The procurement market is easing,’ adding that aleo’s strategy has been to invest in long and medium-term contracts for solar cells that had secured a total of around 240 MWp of solar cells for 2008–2010. A large part of this came from a 100 MWp package with Q-Cells announced in February, doubling the delivery volume of two existing contracts. Overall, aleo says it has signed contracts with three prominent suppliers for a total volume of well over 600 MWp over the next decade.

On the thin-film front, the market launch of aleo’s T 50 thin-film module is slated for 2008, although revenue generated from thin-film modules is not included in the forecast and plans to present a prototype of the system in September were postponed. The thin-film technology comes from its partner company Johanna Solar Technology GmbH, of which it owns nearly a fifth. Nonetheless, a 30 MWp capacity plant producing the Copper Indium Gallium Diselenide (CIGSSe) thin-film modules is planned, with regular production start scheduled for 2008.

Jakobus Smit, Chief Executive of aleo, expanded on the company’s plans: ‘Our approach is not based on capital-intensive and time-costly backwards integration, but rather concentrates on economies of scale. We are focusing our resources on building and expanding our production capacities, which will lead to rapid organic growth.’

BP Solar

BP ended 2007 on a high note with the announcement that the company is to build another 300 MW PV module assembly factory in Spain.

A second phase may add a further 200 MW at some stage in the future ‘dependent on the conditions of the market’ said BP Solar, in a year in which the company had already announced more than 600 MW of new production capacity plans.

Back in late March the company had declared its intention to develop two large-scale manufacturing facilities, one in Madrid, Spain, and one in Bangalore, India.

One of the facilities, at its European headquarters in Tres Cantos, near Madrid, will see its annual cell capacity increase from 55 MW to around 300 MW in what BP describes as ‘Phase 1’ of its plans.
The second facility is at joint venture Tata BP Solar, in Bangalore, India – its majority held venture with Tata Power Company Ltd which ‘could add another 300 MW by 2010.’

Total investment required to achieve the plant’s full designed potential of 300 MW is estimated to be in the order of US$300 million by 2010. The next phase of the expansion will see an additional 128 MW of cell manufacturing capacity added through to the end of 2008.

BP Solar will begin construction of its latest €100 million module assembly plant – in the industrial park of La Nava II, in Puertollano in Castilla La Mancha – in the second quarter of 2008. Construction of the new Madrid manufacturing facility is already under way. The announcement of the Tata Solar expansion came at the inauguration of a new 36 MW PV cell production line with a doubling of module capacity, from 45 MW to 85 MW, which was to follow by the end of 2007. All of the new plants will use screen printing technology with fully automated wafer handling.

BP hasn’t ignored the US either. Back in July the company broke ground on a $97 million expansion project at its Frederick, Maryland, facility that will nearly double the current ingot casting and sizing capacity to approximately 150 MW and allow for space to enlarge its wafer manufacturing capacity further to more than 400 MW. Construction is slated for completion by the end of 2009.

BP Solar said the decision came about ‘due to confidence in the growth projections of the European market.’ In making the announcement, Lee Edwards, BP Solar’s CEO said the move cemented the company’s ‘commitment to maintain a market leadership position in PV.’ He added: ‘The new cell technologies we are using, our intellectual property in casting with Mono2 and the contracts we have signed to secure preferential access to metallurgical grade silicon are all important steps towards our goal.’

ersol Solar Energy AG

Thuringia-based ersol is particularly confident with regard to the future of the PV market. The company has announced a strategic plan to ramp up its cell production from the current 180 MW to 400 MW by 2010, and 500 MW by 2012, with its nominal crystalline cell capacity set to reach 220 MWp by the end of 2008.

Referring to silicon supply agreements with Wacker in Germany and Hemlock in the USA, Sonja Teurezbacher, a spokesperson for the company, told REW, ‘We have secured nearly 100% of our silicon requirements up to our full anticipated capacity.’ Some 10% of the company’s silicon requirements also come from its subsidiary SRS Silicon Recycling, located in California. This echoes recent comments from Dr Claus Beneking, chief executive of ersol who observed: ‘ersol still believes that silicon will remain the limiting factor in the PV industry in the near future.’ Teurezbacher explaned, ‘Our strategy has three parts, first we secure the silicon, then ramp up production with sales.’

Indeed, ersol only opened its second cell production plant for crystalline solar cells – boosting capacity by 100 MWp – in November and almost simultaneously announced that it would deliver silicon solar cells to module producer asola/Quantum, under a long-term €230 million deal running from 2008–2017. Weeks later ersol signed a new silicon supply contract with Wacker Chemie AG from 2010 onwards, enabling an additional 300 MWp of crystalline cells to be produced over nine years.

Stating that the company holds a ‘conservative’ view of the market, Teurezbacher added, ‘We have also already sold 60%–70% of our products from the full 500 MWp of capacity.’ She also singled out the US and southern Europe as key growth markets.

The latest company figures back up Teurezbacher’s blunt assessment, with sales revenue increasing year-on-year by 10.9% to €106.5 million, with growth chiefly seen in Spain and the US.

However, in a statement accompanying its nine month results ersol also noted that due to the decision in the ersol Modules segment to prepare for the launch of micromorphous technology in 2008 and to postpone the start of production of purely amorphous modules, no revenues are expected from the company’s thin-film activities in 2007.

The company expects its first revenues from the thin-film segment in 2008, although these will turn out lower than was forecast at the beginning of 2007. Accordingly, the company has adjusted its sales forecasts (€300–€320 million) down by around €10–€20 million for the 2008 financial year. More details on financing, sites and plant purchasing for the capacity expansion is expected in ersol’s full-year results, due to be released in late February.

Evergreen Solar, Inc.

Evergreen Solar announced a number of highlights for 2007, including groundbreaking for its new 75 MW Massachusetts facility – which is expected to open in the second half of 2008 and reach full capacity in early 2009 – and a supply agreement with Nitol that fulfills its silicon requirements through 2010. This was followed in December by a new ten-year polysilicon supply agreement with Silicium de Provence S.A.S. (Silpro) with shipments beginning in mid-2010 and a six year deal, commencing in 2009, with Nitol that will enable Evergreen to produce approximately 400 MW over the term of the contract.

‘With the Silpro agreement, we now have contracts for 100% of the silicon that we need to meet our previously stated cumulative sales goal of over 1 GW of solar panels from 2008 to 2012, including over 500 MW of sales in 2012,’ said Richard M. Feldt, Chairman, President and Chief Executive Officer of Evergreen. The company’s crystalline silicon PV technology, known as String Ribbon, uses significantly less silicon than conventional approaches, says Feldt: ‘At less than 5g/W today, we believe we are the clear industry leader in efficient polysilicon usage. Our new Quad wafer technology should enable us to further reduce our silicon usage to approximately 2.5g/W over the next few years.’

It achieved sales of $62.9 million for the product in the third quarter of 2007, up approximately 41% from the second quarter. This included $47.5 million of sales generated by EverQ from its existing 30 MW and new 60 MW facility launched last June using technology licensed from Evergreen in a joint venture with equal partners Renewable Energy Corporation (REC), and Q-Cells.

In late October Evergreen and partners announced approval for the construction of a third integrated wafer, cell and panel facility for EverQ, which is set to be open in early 2009 at the Thalheim site in Germany, at a cost of some €125 million. This will increase production capacity from 100 MW to approximately 180 MW and the partners have also agreed to expand EverQ’s production capacity to approximately 600 MW by 2012.
‘Combined with our own aggressive expansion plans to reach 500 MW of capacity by 2012, EverQ’s growth plans will make String Ribbon one of the leading technologies in the photovoltaic industry,’ said Feldt.

To support these growth ambitions, REC has offered an additional supply agreement with EverQ for polysilicon of approximately 4000 tonnes beginning in 2010 and continuing through 2015. Evergreen Solar, REC, and Q-Cells have also executed a binding memorandum of understanding detailing the required steps to prepare EverQ for an IPO.

‘We believe that the solar industry will remain robust and continue to experience rapid growth over the next several years,’ concludes Feldt.

First Solar, Inc

Thin-film module company First Solar began 2007 with the news that it had amended four of its existing long-term module supply contracts to increase the total volume by an aggregate of 264 MW between 2009 and 2012.

The move appears to indicate that the Arizona-based company has lost none of the momentum it had gathered during 2007 and which was reflected in its latest results, with a three-fold increase in sales compared with the corresponding quarter of 2006. For the third quarter ending on 29 September, revenues were US$159 million, up from $77.2 million in Q2 and $40.8 million in Q3 2006.

The company had closed out 2007 announcing new long-term module supply agreements for a total of 557 MW, allowing for additional sales of approximately $1 billion over the period 2008 to 2012. The new agreements, with a subsidiary of international investment managers Babcock & Brown, and Ecostream Switzerland GmbH – a subsidiary of Econcern BV – expand on existing contracted module volume.
To meet the additional demand, First Solar is to develop a fourth manufacturing plant in Malaysia. The new plant is scheduled to start production in the second half of 2009 and will be built adjacent to the three previously announced plants currently under construction there.

The development follows five deals secured last July for the manufacture and sale of 685 MW of modules which are expected to generate sales of approximately $1.28 billion from 2007 to 2012.

Included in the new agreements are long-term agreements with EDF Energies Nouvelles and Sechilienne-Sidec. As part of these new contracts, the Juwi Group has also agreed to increase volumes under an existing long-term supply agreement. Juwi Solar GmbH is behind an order for 40 MW of thin-film modules for a plant in the Saxony region of Germany in the municipality of Brandis.

Michael J. Ahearn, Chief Executive of First Solar, commented: ‘We continue to see solid demand and price elasticity as a low cost manufacturer in the industry.’ He added that the new supply contracts ‘signal a major expansion into the solar market by leading energy firms with significant resources and capabilities and will accelerate the continuing evolution of the solar industry.’

First Solar also broke ground on its new Malaysian facility in Kedah in 2007. Each of the four plants will have an expected minimum annual nameplate capacity of 158 MW, with full volume production of its first plant expected by the end of 2008. The total single plant investment is estimated to be $150 million. ‘Our expansion in Malaysia is enabled by the continued strong demand we are experiencing,’ noted Ahearn, adding that the expansion accelerates cost reduction efforts.

First Solar currently operates a 119 MW manufacturing plant in Ohio and a 158 MW plant in Germany.

Kyocera Corporation

Kyocera, which operates a fully integrated manufacturing process for multi-crystalline silicon solar cells, has said it expects to see strong global demand for solar energy products. In light of this assessment the company recently secured silicon supply agreements to permit a significant expansion in its business and plans to boost capacity to 500 MW annually by March 2011, about triple its current output.

As part of this process, upgrades will be made to the solar cell plant in the new wing at the Yohkaichi plant in Shiga, Japan. An investment of about ¥5 billion (US$47 million) will be made each year up to a total of about ¥20 billion ($188 million) in order to establish the 500 MW of capacity, up from the current 180 MW.
In order to respond to increasing demand, Kyocera has also focused on research to improve quality, and the company has now secured silicon from several suppliers.

Kyocera already operates solar module manufacturing sites in Japan, China, the Czech Republic and Mexico, and has established local production and supply systems for solar modules in Japan, Europe, the US and China, which it says are the world’s four largest markets. Along with the phased increase of solar cell production to 500 MW, new factory wings will be constructed and additional manufacturing facilities will be installed at each of the four bases for module assembly, too.

The Ise plant, in Mie, Japan, will have a 10 MW capacity boost by 2011 to 110 MW with the new factory building due for completion in March and production due a year later.

For the European market, its Kadan Plant in the Czech Republic will see its capacity grow to 150 MW from the current 25 MW, as will its Tijuana Plant in Mexico. Both these expansions are due by March 2011.

Meanwhile, in the Chinese market its Kyocera (Tianjin) Solar Energy Co., Ltd., unit will triple capacity at its Tianjin plant to 90 MW.

When the production of 500 MW has been reached in 2011, the company will have shipped a cumulative 2.16 GW of solar cells, it says.

In its latest major contract, Kyocera cells will be exclusively used in a 13.8 MW plant in Salamanca, Spain. The development consists of three solar arrays on a 36 ha site incorporating about 70,000 Kyocera PV modules. Madrid-based Avanzalia Solar is the initiator of the project, which Kyocera says is made economically feasible by the feed-in tariff adopted in Spain.

Q-Cells AG

German player Q-Cells is the world’s second-largest manufacturer of solar cells and managed its expansion with an increase in production to more than 256 MW by the end of September. This was up by some 42% on the first nine months of 2006, which came in at just over 180 MW. Furthermore, following the start-up of its new production line V in late October, production volume in the third quarter of 2007, at 96.8 MW, was well up on the previous quarter’s 81.8 MW. For the full financial year a production volume of some 370 MW is predicted, along with sales of well over €800 million.

Q-Cells is another company that has raised its forecasts for 2008 and 2009 recently, in this case on the back of a 50% increase in sales to €577.1 million on the first nine months. Operating income meanwhile grew by 44% to €131.1 million over the same period, while exports increased to 59.5% of product as part of a ‘rationalization’ strategy.

For 2008 Q-Cells is now expecting a far higher sales volume of approximately €1.2 billion and is also adjusting its sales expectations for 2009 significantly upwards to approximately €1.7 billion.

Meanwhile, in 2010, a production volume in its core business – the manufacture of polycrystalline and monocrystalline solar cells based on silicon wafers – of more than 1 GWp is forecast, and of between 400 and 600 MWp in its thin-film business.

Subsidiaries Calyxo and Brilliant 234, now called Sontor, have also started manufacturing test modules based on different thin-film solar technologies. Both companies are presently expanding their pilot lines into initial production lines with a capacity of about 25 MW. Commissioning of these factories is scheduled for the first quarter of 2008. Also Solibro GmbH, established as a joint venture with Swedish company Solibro, is expected to start production at its new 25–30 MW production facility in the immediate vicinity of line V by mid-2008. Q-Cells is investing €60 million in the first phase of the production line.

In June, the company announced that it would start production of silicon wafers from the end of 2008. It followed this in December with the news that it had concluded a supply agreement for silicon wafers with the Chinese solar company LDK Solar Co., Ltd. The 10-year take-or-pay contract covers 2009–2018 with a total volume sufficient to enable Q-Cells to manufacture more than 6 GW of cells, in addition to its current expansion plans.

Meanwhile, a flexible pilot line for new cell designs in the immediate vicinity of line V is expected to commence operations in the first quarter of 2008. The company identifies this as a crucial step in reaching efficiency targets of 18% for polycrystalline and 21% for monocrystalline cells.

The Q-Cells strategy is based on the two essential pillars of growth and cost cutting, the company says.

REC ASA

With all this activity it was almost inevitable that for Renewable Energy Corporation (REC) – the world’s largest manufacturer of polycrystalline silicon wafers for solar cells – 2007 would prove to be a hit.
A quick glance at the latest balance sheet figures reveals that compared with 2006 figures, REC revenues for the first nine months of 2007 were up a whopping 58% at NOK4768 million (US$888 million).

Closing out 2007 with a final flourish, REC announced in December that it is to supply wafers to Solland Solar Cells BV until 2015 in a contract worth around €500 million. Deliveries of wafers will increase over time up to a level of around 80 MWp per year.

The move capped a productive year for REC, which included a deal with Photovoltech potentially worth approximately €670 million out to 2015 in which deliveries will begin in 2009 and level out at around 100 MWp per year. REC is also to supply Sumco TechXIV Corp (STC), the new name of Komatsu Electronic Metals. Under the terms of a 7-year deal, polysilicon worth around NOK4.8 billion ($894 million) will be supplied to STC until 2013, adding some 6000 tonnes of additional silicon to an earlier agreement.

2007 also saw REC secure a deal with a unit of India’s Moser Baer for wafers worth around $880 million over the next 8 years. Delivery of the wafers will start this year, increasing as capacity grows.

Indeed, REC has also made significant steps to boost its production capabilities over the coming years by announcing plans to develop new facilities in a number of regions.

Singapore has been chosen for one of its new manufacturing sites, which is to be developed in stages and incorporating wafer, cell and module production facilities. When fully developed, the manufacturing complex could have a production capacity of up to 1.5 GW annually, REC says.

The initial investment decision for the greenfield site – located in Tuas View, in western Singapore – is expected to take place as soon as the pre-engineering activities for the first phase have been completed some time during first half of 2008. Depending on the final capacity and site development, total investments in the Singapore site may exceed €3 billion within the next 5 years, REC adds.

The company is also boosting monocrystalline wafer capacity at its existing plant in Glomfjord, Norway, from approximately 35 MW to more than 300 MW by 2010.

REC had already decided to invest NOK200 million ($37 million) in an additional 50 MW of wafer capacity in Glomfjord back in April. These equipment installations are due to be completed in the next few months, enabling ramp-up from the end of the second quarter 2008.

REC says it is to invest approximately NOK1350 million ($251 million) overall expanding monocrystalline wafer production at the site, with the second phase ramp-up due during 2009 and the first half of 2010.
Based on cell efficiency of 15%, the total production for REC Wafer is expected to be around 1.4 GW in 2010.

Meanwhile, in Sweden, REC is to invest SEK74 million ($11 million) to increase its module production there by 50 MW, bringing the total capacity of its Glava module plant up to 150 MW.

The company is also expanding its silicon production with a new $485 million US plant in Butte, Montana, that will produce an additional 9000 tonnes of silane and 6000 tonnes of polysilicon capacity from the start of 2010. As a result of this capacity increase, annual production capacity for REC Silicon is expected to be approximately 29,000 tonnes of silane gas and 19,500 tonnes of polysilicon in 2010.

‘We continue to see a positive demand for our products. Further expansions within polysilicon production will contribute to continued cost reductions, through both additional de-bottlenecking and more FBR capacity,’ said Erik Thorsen, President and Chief Executive, adding ‘With the additional polysilicon, we can further expand our manufacturing capacity for wafers, resulting in improved operational efficiency and reduced unit cost. This increased production will also provide us with additional opportunities within cells and modules.’

However, power outages affecting REC Silicon hit production at both the Moses Lake and Butte plants, slicing 300 tonnes off the full year output. This prompted the company to release a statement saying this had negatively impacted earnings by more than NOK30 million ($5.6 million) in the third quarter.

Furthermore, in REC Wafer, the tight polysilicon supply situation motivated the higher use of internal recycled material, which presented negative costs of more than NOK40 million ($7.5 million).

Despite this blow, Thorsen is optimistic: ‘We are determined to pursue our strategy and commitment to grow solar. However, with our aggressive expansion ambition in polysilicon production, we also see an opportunity in continued supply of some polysilicon volumes to important customers in the electronic segment. This diversification will allow us to further pursue de-bottlenecking opportunities at our Butte plant and potentially reduce production cost further in existing production assets.’

SolarWorld AG

SolarWorld, and its 100%-subsidiaries Deutsche Solar AG and Deutsche Cell GmbH, is one of the biggest global players for mono and polycrystalline silicon wafers, cells and modules out of its site in Freiberg, Saxony near Dresden. Deutsche Cell has an annual solar cell production capacity of 30 MWp and the capability to expand to at least 60 MWp per year.

Reporting third quarter figures for the parent company that leapt by 67% in comparison with the previous quarter, SolarWorld confirmed an operating result of €44.3 million on the quarter. One factor responsible for the strong earnings was the module and wafer business, said the company, announcing that in the first three quarters of 2007 earnings reached €117.4 million with the external wafer business contributing €26 million to the group-wide growth, due to expansion of its production capacity.

The big news for 2007 came in July when the company revealed plans for another integrated solar factory, the so-called GigaFab, in Freiberg, increasing the capacity of wafer production in Saxony by 500 MW to 1 GW. This is on top of plans to double current capacity to 500 MW by 2009. This doubling of the previous expansion target is due to the high international demand for silicon wafers, said the company, adding that an integral part of the plan is the direct processing of half of the wafers into solar cells and modules. Module capacities at Frieburg were 120 MW by the end of 2007. In addition, the group has the equivalent of 160 MW worth of solar cell capacity at the site.

This news was followed in October with plans for a similar integrated solar cell and module production facility in South Korea, aimed at satisfying demand in Asia, together with local company SolarPark Engineering Co. Ltd. Initial investment of €60 million is anticipated to develop the 60 MW annual capacity, which will be increased to 120 MW later on. Production is planned by the end of 2008 and the plant will procure its silicon-based wafers from the SolarWorld Group.

SolarWorld has also been sure to secure raw materials, forging a joint venture with Evonik Degussa GmbH (formerly Degussa GmbH) to construct a solar silicon plant.

Majority owned by Evonik Degussa, the company – Joint Solar Silicon GmbH & Co. KG (JSSI) – will operate at its Rheinfelden location producing an annual capacity of 850 tonnes of silicon after the ramp-up in 2008.
Dr Alfred Oberholz, Managing Director of Evonik Degussa, noted that the plant will use novel technology in which trichlorosilane is converted into the intermediate product monosilane, saying: ‘In comparison with other processes we only need 10% of the energy employed so far.’

In parallel with the expansion of its solar wafer capacities, SolarWorld also launched subsidiary group Sunicon AG, which will be responsible for securing raw materials and includes the JSSI venture.
Deutsche Solar has backed up these investments by securing sales. The company entered into long-term agreements for wafers with a number of globally operating cell and module manufacturers in 2007 worth a total of €1.5 billion until 2018.

Deutsche Solar says its order book for external customers now amounts to some €5 billion until 2020, 90% of these orders come from abroad, with 43% from Asia alone. Some 40% of the total volume is shipped to Europe, excluding Germany which accounts for 10%, while 7% goes to the USA.

SolarWorld’s installations are certainly not to be sniffed at either, with some substantial projects underway. In 2007 the company clocked up contracts for a 15 MW solar power project with Gochang Solarpark Co Ltd in South Korea due for completion this year. And, four solar power plants with a total of 8.5 MW capacity on the Mediterranean island of Majorca, due to be connected in early 2008.

Deutsche Solar says it will also take account internal demand by making roughly the same order of magnitude of wafers available for further processing to SolarWorld’s own solar cell and solar module factories. Frank H. Asbeck, chairman of SolarWorld explains: ‘Our long-term strategic goal is to sell 50% of the wafers made by Deutsche Solar AG to external customers. The other 50% are to remain within the integrated production of our Group, ending up in complete solar power systems and kits.’

This article is the first of a two-part examination of a selection of leading companies in the photovoltaic industry. Part 2 will appear in the next issue of Renewable Energy World.

David Appleyard is Associate Editor of Renewable Energy World