New Hampshire, US 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.#rewpage#
Erhart said First Solar is the current world-record holder for CdTe PV cell efficiency at 17.3% and PV module efficiency at 14.4%, NREL-verified numbers. The company plans to take those efficiencies to scale. ‘We expect to take cadmium telluride thin-film solar technology to levels that it has never been before,’ he said.
In addition to manufacturing, First Solar has become active in building and operating utility-scale power plants. It boasts the ‘largest pipeline in the industry with more than 2.7 GW of solar PV plants under construction or in development with PPA,’ Erhart said.
He pointed to three US projects – the 290 MW Agua Caliente, the 550 MW Topaz Solar Farm and the 550 MW Desert Sunlight projects – as examples of some of the power plants that First Solar is developing, which also happen to be among the largest PV power plants under development in the world.
First Solar has now set its sights on the developing world, in line with many other solar power players.
While acknowledging that markets can shift on a dime, Erhart said: ‘Regardless of where the existing markets go, we want to invest in what we call long-term sustainable markets.’ This view evidently makes a lot of sense when put in context and considering the on-again, off-again subsidies that are in place in Europe and which have really dominated market development.
‘We don’t want to wake up every day dependent on these subsidies,’ said Erhart, explaining why the company is interested in more stable and attractive markets such as ‘markets that have a need for electricity, that have high irradiance, and have high costs of electricity,’ he said.
First Solar’s CFO Mark Widmar echoed this view on market development, telling REW: ‘Over the next couple of years, we also intend to make progress in sustainable markets’.
First Solar modules use ‘98% less semi-conductor material than the semi-conductor materials required for traditional crystalline silicon manufacturing processes,’ said Erhart. That has meant that the company has had a significant cost advantage over the years, although GTM Research’s MJ Shaio points out that the cost-advantage window is closing. ‘Scores of thin-film silicon manufacturers, drawn by the pied piper of propped poly prices, suddenly saw utilisation rates collapse and their low-efficiency, very low-cost product turn into a very low-efficiency, average-cost product, evaporating any competitive advantage they might once have had,’ he said in his thin-film report.
In terms of competition, Erhart sees the ‘usual suspects’ as First Solar’s main rivals in the space. These are the crystalline solar PV module makers.
However, he explained that it is not always just other solar companies that First Solar is in competition with. ‘When you are going into these emerging markets to help them with their dire energy needs, you are not necessarily competing with other solar panel manufacturers, you are competing with other forms of energy,’ Erhart said. ‘In Saudi Arabia, for example, we are competing primarily with diesel which they would rather sell as gasoline or petrochemicals than burn for their own domestic electricity.’
First Solar has a lot to be proud of as well, according to Erhart. He said that the company has the lowest balance of systems (BOS) costs in the industry; an award-winning safety record; and the fastest installation velocity in the industry.
Other existing CdTe thin-film firms have not had quite the success that First Solar has had so far. Abound Solar recently announced plans to layoff 180 employees while it builds its next-generation higher-efficiency module. GE, which acquired PrimeStar Solar last year, said it would be building a 400 MW CdTe factory in Aurora, Colorado. The facility is under construction is expected to begin producing panels this year.
Solar Frontier, CIS Thin-Film Developer
With the exception of GE’s more recent entrance into the thin-film market, Solar Frontier is the only major thin-film player that has a huge parent company. Showa Shell Sekiyu KK owns Solar Frontier and having such a wealthy parent company leaves little doubt that Solar Frontier will be able to make strides in the solar power industry.
‘So far, it’s a good year for us,’ said Greg Ashley, the company’s COO for the Americas. ‘Even though global prices have stayed low, they pretty much stabilised over the past few months,’ he continued.
Solar Frontier manufactures copper indium selenium (CIS) solar panels and has a 1 GW factory in Japan and several smaller facilities in other areas of the world.
Ashely said that CIS has a few advantages over CdTe and a-Si panels. ‘Our measured performance ratio is still higher than CadTel [CdTe],’ he said. ‘I think the fact that we’ve stayed with a very strong framed module, whereas most of the other thin-film folks have gone to frameless, or stayed with frameless gives us some installation/design flexibility that they don’t have,’ he explained. ‘And our modules are slightly larger so the combination of the frame and the larger size, we typically have lower BOS and are easier to handle.’
The company has its eyes set on Japan. ‘Demand for us in Japan is exploding [as the country is] getting ready for the new feed-in tariff (FiT),’ he said. Japan’s FiT is set to go live 1 July 2012.
Nonetheless, Ashley also echoed the market shifts taking place. He said, for Solar Frontier, the US holds great potential. In addition, the company is doing business in the Caribbean, and is pursuing business in Hawaii and Latin America.
But Japan is where it really plans to grow: ‘Japan is probably a bigger, faster, easier growth market for us… but in the long run, it’s all the sun belt countries, the developing countries,’ he said.
With Shell as a parent company, Solar Frontier doesn’t have a lot of trouble penetrating new markets due to its long history in the global energy markets said Ashley. ‘We’ve got a very strong presence in a very large historical network of relationships both with the private and public sector,’ he noted.
He said the company is ‘granted some preferential access to the right types of opportunities with the right types of companies, with the right types of partners’ in the emerging markets across the globe. For example, ‘we have EPC partners with some of the larger players in India… same thing in Thailand and Malaysia and other parts of the world’.
To date, however, Solar Frontier is working on smaller projects than its rival First Solar. Ashley said that for now, even its utility-scale projects are in the 1-2 MW range – except, of course, for the 130 MW Catalina solar project, in Kern County, California, USA.
Like Oerlikon’s O’Brien and First Solar’s Erhart, Ashley believes that PV module manufacturing pricing will remain in the $1/W range but ‘in this race to get to installed cost of $1/W, I think we are very far off from that,’ he added.
Ashley said that the solar industry’s biggest problem right now is the excess inventory that has built up, a problem that he thinks could be resolved by the country that manufactured a lot of it: China. ‘The market in China itself will have a big influence,’ he said. Ashley thinks China will begin soon to stimulate its own internal demand and that will reduce the impact that oversupply is having on the market.
Other CIGS players include MiaSole, Avancis, Global Solar, Nanosolar, Sotecture and Solibro, owned by Q-Cells, which filed for bankruptcy in April, leaving the fate of Solibro up in the air.
Ashley remains incredibly optimistic about thin-film. He believes that ‘thin-film is competitive with crystalline even at the lowest prices’ and ‘not just our technology… there’s going to be more thin-film manufacturers and it’s good that there are and it’s good that the existing ones continue to grow and thrive,’ he said. ‘I’m very hopeful for all my competitors, as well as my own company.’