Issue Date: May 20, 2013
Thin-Film Solar Firms Revamp To Stay In The Game
A global glut of cheap Chinese-made solar energy parts during 2011 and 2012 was good for firms involved in installing solar energy systems. But it was bad for most everybody else in the solar power industry. Shrinking profit margins took down a number of solar component manufacturers, including many using thin-film technology.
The story of Solyndra’s demise is well-known: Despite receiving significant investor backing and government support, the thin-film solar firm went bankrupt in 2011. Less well-known is that several other thin-film players followed Solyndra into oblivion. The companies that remain say they have learned how to survive, but the future looks a lot less bright than it used to.
Solyndra made thin-film solar cells out of layers of copper indium gallium selenide, or CIGS as they are known in the industry. Solar modules— connected assemblies of solar cells—made with CIGS cells convert a higher percentage of light into energy than do traditional crystalline silicon modules, but they also carry a higher price tag per watt.
The standard photovoltaic module sold today is made on wafers of mono- or polycrystalline silicon, using a design that originated in the 1950s. These modules have become commodities as Chinese producers ramped up production using off-the-shelf manufacturing equipment.
Most thin-film companies tried to fight it out in the same markets as traditional module makers, that is, utility projects and rooftop applications, says Shyam Mehta, solar analyst at GTM Research. “They must compete on a delivered-cost-of-power basis. That is the benchmark.” The strategy didn’t work for Abound Solar, MiaSolé, Nanosolar, Solibro, or Uni-Solar, which all went out of business or were sold on the cheap.
But Tempe, Ariz.-based First Solar and Japan’s Solar Frontier are optimistic about the future. And smaller firms such as Alta Devices and Ascent Solar claim they will survive with unique technology and a strategy that targets non-grid-connected applications such as consumer electronics chargers and other mobile uses.
First developed in the 1990s mainly to reduce raw material costs, thin-film solar has hung around as the sleeker little brother of traditional silicon panels. Proponents anticipated the solar materials would be integrated into building facades, but the idea never took off. In 2012 thin film accounted for only 11% of photovoltaic sales, down from 21% in 2009, according to GTM Research.
In 2009, First Solar, which makes thin-film modules from cadmium telluride, sold more modules, measured in megawatts, than any other company. CdTe as practiced by First Solar is less efficient than CIGS, but First Solar could make the modules more cheaply than traditional ones. It sold large numbers of the modules in Europe, where governments put strong incentives in place for solar power.T
That strategy quickly became a lead anchor for profitability. European countries including Germany and Spain drastically cut incentives, and demand plunged. Meanwhile, cheap imports from China pushed down prices. First Solar responded by turning itself into an integrated developer of installed solar projects, using its own cells and keeping more of the profits.
But traditional solar module prices kept falling. So First Solar stopped a planned production expansion and went back to the drawing board. “The cadmium telluride cell is our most important competitive asset. So one year ago we decided to focus on improving the technology,” said Raffi Garabedian, First Solar’s chief technology officer, during an April investor day presentation.
CdTe has the highest theoretical efficiency and the lowest inherent manufacturing costs of any solar material, Garabedian explained. It has the largest optical band gap, meaning it absorbs energy from the widest range of the solar spectrum.
First Solar’s team of research chemists and material scientists has a plan to shrink the nonabsorbing area of the module, improve electrical connections, and add an antireflective coating. By the end of 2016, First Solar plans to have increased module efficiency to 18%, compared with 13% today and about 15% for the average silicon module.
So far, First Solar has remained profitable. But its quarter-to-quarter results hinge on uneven revenues from its solar project work, and investors have lost much of their enthusiasm for the company’s stock.
Looking ahead, “overall cost and efficiency targets look encouraging,” Vishal Shah, research analyst at Deutsche Bank, told investors in a recent report. He highlighted First Solar’s target cost per watt of 40 cents by the end of 2017, down from 63–66 cents in 2013. GTM’s Mehta says traditional module makers are targeting 50 cents per watt by the end of this year.
Most of First Solar’s sales come from North America, where 2012 saw an increase in utility-scale solar installations. But First Solar says it is shifting its geographic focus to developing regions including South America, the Middle East, Asia-Pacific, and Africa.
Strong demand for solar also has developed in Japan, to the benefit of homegrown thin-film producer Solar Frontier. Since the 2011 Fukushima nuclear disaster, the island nation has been backing solar, and in July 2012 the government instituted a generous incentive. According to analysts at IHS iSuppli, the Japanese market will grow 120% in 2013 compared with 2012.
“We have doubled our domestic sales in 2012 compared to 2011. And in 2013 we aim to double domestic sales again,” says Yuichi Kuroda, a vice president at Solar Frontier. The firm’s large new facility in Japan is operating at full capacity, he reports. In the past, Germany and the U.S. were big markets for Solar Frontier, but this year Japan will get the biggest share.
Solar Frontier makes a version of CIGS cells that it calls CIS. Unlike both CIGS and CdTe, however, CIS cells do not contain cadmium, a toxic metal. The company started in the residential rooftop segment, but utility-scale installations are on the rise. It is working with Development Bank of Japan on a huge installation at Kansai International Airport.
At its Atsugi Research Center, Kuroda says, Solar Frontier has 200 scientists working to increase conversion efficiency, improve production technology, and enhance the photovoltaic system. Its current so-called champion module—not yet in production—has an efficiency of 14.4%.
First Solar and Solar Frontier are the giants in thin-film solar, according to GTM’s Mehta. “Of the roughly 50 companies in this space, they have 60% of the market.” He anticipates that the Chinese firm Hanergy will soon join them. In 2012 it bought the assets and technology of California-based MiaSolé and Germany-based Solibro, two struggling CIGS firms.
In contrast, many other thin-film firms are small and new to the market. “There may be questions about financial and technical stability. These modules must perform for 25 years,” Mehta observes. Deep pockets and brand-name backing can help new solar products, however.
For example, Dow Chemical has introduced the Powerhouse solar shingle, made with flexible CIGS material, for residential rooftops. Dow’s recent purchase of start-up NuvoSun, its CIGS supplier, means the chemical company is serious about this market, Mehta says, and the recognizable Dow name will likely be attractive to homeowners.
Smaller firms such as Alta Devices and Ascent Solar are not household names. Both are developing high-efficiency, flexible thin-film cells that the companies admit are too pricey to compete in grid-connected applications. Alta’s cells are based on gallium arsenide, a technology long used in space, explains Rich Kapusta, the firm’s vice president of marketing. Alta’s terrestrial version is cheaper and smaller but quite efficient; a test panel scored 23.5% at the National Renewable Energy Laboratory, which provides independent testing of solar modules.
Rather than utility or rooftop solar, Kapusta says, Alta is targeting “anything that moves or can be carried or even worn.” That includes mobile electronic devices, cars, buses, airplanes, and clothing—where the major constraints are surface area, weight, or both. Currently, Alta is developing products for the U.S. military such as portable charging mats and solar modules for unmanned aerial vehicles.
Meanwhile, Ascent Solar has introduced CIGS-based solar charging products for two smartphones, Apple’s iPhone and Samsung’s Galaxy S III. Until 2012 the company had its sights on the stationary market, but it changed strategy to focus on consumer electronics chargers. “Our cells are durable and lightweight and go where traditional solar cannot go,” says John Maslanik, Ascent’s business development manager. The CIGS material is put on a polyamide backing that can be rolled up. “It feels like a thin piece of rubber,” he says.
GTM’s Mehta agrees that “thin film has an impenetrable advantage over crystalline silicon in the consumer market.” However, he characterizes the size of this market as “minuscule.”
For any company, but especially for small ones, success in thin film is a challenge, Mehta adds. “Most companies don’t have the intellectual property or balance sheet for investments to improve the technology and change up the business model.”
Ascent’s Maslanik says his firm’s biggest constraint is that CIGS is not yet used widely, so the technology doesn’t have the cost breaks that come with large-scale production. “If a firm wanted to license our technology, we could provide the expertise for fabrication and scale,” he says.
But the interested companies would most likely be in China, the country that turned traditional modules into a cheap commodity, Mehta says. If that should happen with thin film, the cost would no doubt fall. “If they go that route, there’s a very good chance thin film could be extremely competitive,” he says.
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