Archive for the ‘PV Technology’ Category

As discussed in my previous post, photovoltaic (PV) module prices have dropped by 50% or more over the past 18 months. Recent Wall Street guidance by Tier 1 crystalline (c-Si) companies says that they will easily reach a manufactured cost of $1/Watt by mid 2011.  First Solar, the leading thin film manufacturer, already has an aggressive cost structure at $0.80/W currently (and is heading to $0.74/W in 2011).  Together, these two price drivers make the launch of a new solar energy PV modules product extremely difficult.

Thin-film on Glass Production

Many new thin-film photovoltaic companies have been caught off-guard by the steep economic downturn and the lack of access to technology development and expansion capital. During this time, mature PV module companies greatly expanded their manufacturing capacity, lowered non-material production costs and increased yield ( Grade A salable product) resulting in the cost advantages described above. Thin-film companies’ strategic models created 4- 8 years ago used assumptions that c-Si companies would never achieve a manufactured cost below $1.50/W and they are now scrambling to compete with these new solar energy market dynamics.

Unfortunately for many of these promising companies, the days of doing incremental 50MW to 100MW capacity expansions annually is over. While expansion capital is hard to secure in the best of circumstances, the real problem is the manufacturing economies of scale required to reach production costs below $1W. Most successful companies with aggressive <$1/W cost structures are close to, or exceed 1GW of production capability.  Going from less than 100MW total production to 1GW has never been done before in the PV industry (although Solar Frontier is bravely in that process now). The operational scale-up risks of not “getting it right” is quite high, not to mention that finding approximately $1.3B in capital to finance that scale of production is almost impossible to secure. To overcome this GW scale necessity, new thin-film companies need exceptional (>12% efficient) solar cell technology combined with very lost-cost manufacturing machinery costs. This is a very rare combination, as semiconductor machinery is very high-cost and production line solar cell efficiencies are 6% – 11% depending on technology type. A good piece on this situation from Vinod Khosola can be found here.

Thin-film Production Line

Products based on amorphous silicon (a-Si) photovoltaic technology are under the most pressure, as solar cell efficiencies are generally below 10% and manufacturing costs are well above $1.45 on average. Recent scaling back announcements from early stage Sunfilm and Signet Solar are examples of this pressure, as is ENER’s running at substantially less than 50% of full production capacity with negative gross margin sales data. These are well run companies that unfortunately have been caught by exceptional market dynamics.

The PV module industry is heading toward the perfect storm of commoditization and temporary oversupply. Downward sales price pressure will continue while solar energy module supply in 2011 will exceed demand by more than 50%. M&A activity along with bankruptcies will be on the rise. And this is happening before the hyper-efficient electronics manufacturing giants such as Samsung, Foxconn and others drive down costs further as they become fully operational in the fast approaching $100B global PV marketplace.

There are 6,500 megawatts (MW) of PV project development currently in process across the United States.  Clearly the PV industry is poised for strong growth but the hurdles for PV project developers are numerous, and many of these MW

How long before this technician could go to work?

may not be implemented. These hurdles include extensive permitting regulations which vary widely at the local, regional and national levels, interconnection standards that vary across thousands of utility companies, and locating new transmission lines for large projects to name a few. A good example of the challenges and complexity for PV project developers can be found here.

A recent article regarding new transmission lines for a large solar farm in Colorado for the utility company Xcel Energy highlights one of these challenges. With an objection to the new 140 mile transmission line by one landowner, PV project developers are now unable to secure project financing until this issue is cleared up. This could take months or years. This type of project roadblock can happen as a result of any number of matters that must be checked off by developers.

While German PV project developers work under a national set of standards and can implement projects in as little as 6 months, their American counterparts face a cornucopia of various technical and installations standards, permitting requirements, and environmental requirements, which can result in a year or more of wrangling before most large projects can simply break ground.

Historically, the residential and commercial rooftop solar energy market sectors have been dominated by solar modules using crystalline silicon wafers. Recently, the utility Southern California Edison began implementing the first phase of a 500MW project plan which is mainly supplied via 1MW installations on large (larger than 100,000 ft2) roofs. The program, which demonstrates the unique distributed generation nature of PV, is using First Solar thin-film product for some of the installation sites along with crystalline vendors including efficiency leader Sunpower . Once the exclusive domain of crystalline wafer modules only, the cost and efficiency of high performance thin-film product like First Solar’s produces acceptable internal rate of return for system owners on rooftops where many variables line up for this technology type. An article today in USA today features a good overview of the program and a picture of installers placing First Solar modules into service.

A financial industry client recently asked whether “thin-film” PV product can ever compete with highly established crystalline PV technology based product which currently has 85% market share.  His question was prompted by a spate of recent press articles that talk about the 50% drop in module sale prices in the last year, with claims of margin pressure on the thin-film category.  A good summary of the situation, here.

Like all things related to solar energy generation, there are many factors to consider.  First, thin-film is a broad term; there are many technology types with different performance capabilities, cost points, and structures which factor heavily in a comparison to crystalline products.

Read the rest of this entry »