In a presentation at last week’s Intertech-Pira Photovoltaics Summit in San Francisco, Spire Corp. chairman/CEO Roger Little made his case for what he called a huge opportunity for investors to make money by investing in crystalline silicon plants in the US.
by Debra Vogler, senior technical editor, Photovoltaics World
June 11, 2009 – In a presentation at last week’s Intertech-Pira Photovoltaics Summit in San Francisco, Spire Corp. chairman/CEO Roger Little made his case for what he called a huge opportunity for investors to make money by investing in crystalline silicon plants in the US.
With no hesitation, Little told attendees that crystalline silicon (c-Si) will dominate the PV solar market, and he sees little reason to expect that the ratio in market share between c-Si and thin films will change much from its current 80/20 split. By his calculations, investing in fifty 50MW c-Si module plants to meet a projected shortfall in solar PV module production (by 2012) will create about 30,000+ jobs within a three-year period. Furthermore, he believes these plants should be built near solar farms to reduce costs and stimulate even more local jobs to support the plants.
For Little, the c-Si pros are several: polysilicon costs are down to ~$60/kg, c-Si has a higher efficiency that drives down the cost of the overall system, and (perhaps most importantly) it has a demonstrated 20-year lifetime. This last point is key, Little noted, because the PPA (purchased power agreement) market will demand data that demonstrates system longevity. “Crystalline silicon is the system that gets the most energy out for the lowest dollar amount in a 20-year lifetime,” he said.
According to Little’s calculations, if the industry is to meet the projected need for 3GW of solar power in the US by 2012, the c-Si sector has to step up and meet its 80% share of the market, or ~2-2.5GW. But after adding up the c-Si module capacity that has been announced publicly so far, he found only ~800MW that will be online, leaving a huge shortfall. Using his assumptions for the investment ($10M) required to put a 50MW c-Si module plant (automated assembly line, cells with efficiency ~16%) into production, and accounting for both federal and state tax credits ($3M and $5M, respectively), Little said that if the product can be sold at $2.80/W, the revenue is about $140M/year. With a cost-of-goods-sold (COGS) of ~$117M and taking into account SG&A, he estimates that the EBITDA would be ~$17,200,000; this translates to a cost of ~$0.54/W to turn a cell into a module, and most of that cost is materials driven, he said. Little urged attendees to jump in and invest now. “Today, you can buy cells for about $1.80/W, therefore with a module cost at 50MW/yr, the cost would be ~$2.34/W,” said Little. “So this gets pretty attractive.”
Little also noted that because the size of the plants he is proposing (50MW) is rather limited, he sees little chance of the plants competing with each other, even those in surrounding states. He also thinks that PPAs will drive growth — via centralized PV (not distributed PV i.e. on rooftops, etc.) — because utilities have the money and they’re getting tax credits. In the next 3-5 years, 80% of solar power will be driven by centralized PV applications in the US, he predicted.
What attracts PPA investors to crystalline silicon is its demonstrated lifetime — they “want a sure thing, a system that can go the distance,” he said. The industry hasn’t seen all the thin-film technology out there, he noted, and until investors see it out in the field they will hold back investments in it. Also driving domestic investment, he explained, is the federal government’s requirement that for every dollar the US invests in solar, the number of jobs created has to be reported on a regular basis. He believes the US will not repeat what happened in Spain, where many thousands of jobs went overseas, primarily to China. He further noted that the quality of the US workers is high enough that investors will want to keep the manufacturing jobs here.