When asked by a reporter about his illness, poverty, and possible upcoming death, Mark Twain replied, “The report of my death was an exaggeration.” Lately there have been whispers about the death of amorphous silicon (a-Si) and micromorph, along with hints about other thin films, but as with the illness and death of Mark Twain, these are exaggerated.
The primary cautionary points are these: 1) All PV technologies chase the twin goals of higher efficiency and lower manufacturing costs. Crystalline leads in efficiency and is getting cheaper to manufacture. In the efficiency race, crystalline wins. In the low-cost manufacturing race, crystalline wins; and 2) When higher-efficiency crystalline modules are cheap, thin films must be (on average) 12% cheaper –meaning constrained margins. And, when c-Si is priced aggressively cheaper, the majority of thin films are uncompetitive.
Many investors leapt enthusiastically into turnkey manufacturing expecting to be ramped up to full production in six months and sold out into the foreseeable future. All investors with these expectations were (and likely still are) disappointed. During the 2004-2008 period, customers lined up to buy product and everyone reported sold-out conditions — whether or not they had produced even one kilowatt of PV.
There is no sugarcoating the lesson currently being experienced by all thin-film manufacturers (except low-cost leader First Solar): when the price of crystalline technologies falls, the price of thin films must fall even lower. The reason that thin films must be priced cheaper than crystalline products comes down to efficiency. Thin films make up for the area penalty (more land/roof, more hardware) suffered because of lower efficiency with lower price points for modules. Over time, the average difference between the price of a thin-film module and a crystalline module is around -12%. New entrants chose to believe that the promise of lower-cost manufacturing was the only requirement for success, and they were by and large disappointed.
Because of downward price pressure brought about by decreasing incentives, and growth of the utility-scale market (which values cheap kilowatt hours over other attributes of solar), thin films are in for a difficult ride. Manufacturers must deal with bankability issues (brought about partly by the failure to commercialize as rapidly as promised), and with strong competition by inexpensive and high-quality crystalline silicon technology. Manufacturing costs must be brought down in order for thin films to have comfortable (or even slightly uncomfortable) margins. In the meantime, and likely for at least a couple of years, the dominant thin-film manufacturer will be First Solar, continuing to enjoy lower costs and stronger margins. Over the next few years, thin-film market share (of total shipments) will likely hover around 13%-15%, with crystalline continuing to dominate for the foreseeable future.
A few years ago, it was assumed that thin films belonged in large fields, while crystalline would dominate on the rooftop. This assumption does a disservice to both technologies – but particularly to thin films, by broadcasting that they are not competitive on rooftops. This is categorically untrue, and thin-film manufacturers should work to overcome this unhelpful marketing. In the future, BIPV will help buoy up thin-film market share, but BIPV has struggles of its own. The solar industry is moving into multi-gigawatt deployment, and thin-film technologies will play a part in the future of the industry.
Paula Mints is Director, Energy, Navigant Consulting, Inc., and Principal Analyst, Solar Services Program, at Navigant Consulting, 3000 El Camino Real, 5 Palo Alto Square, Suite 225, Palo Alto, CA 94306 USA; ph.: 650.849.1142; email [email protected].
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