Crystalline silicon will continue to dominate in 2012, for even if conversion efficiency for thin-film modules reaches 14%, it cannot compete with current prices for c-Si technology. However, materials suppliers persist to engage with and look for ways to benefit from this large and potentially huge market. Technologies that will likely see large-scale implementation in 2012 include pseudo-mono ingot growth, selective emitter technology, paste reduction techniques, and increased market share of thin-film manufacturing. Here, we provide the outlook from three leading analysts.

Okay, crystalline, inexpensive crystalline, inexpensive crystalline

Paula Mints, Director, Energy, Navigant, Palo Alto, CA USA

This could be a short column. All it needs is the title repeated again, and again, and again. Crystalline will remain the dominant technology in 2012. Unfortunately, manufacturers will continue to lose money for the foreseeable future. In 2011, c-Si will have a ~86% share, and in 2012, c-Si will have a ~86% share. Many will say that this is because of the significant progress made in reducing the manufacturing costs of crystalline technology, and some will say that it is because of c-Si’s higher efficiency. The real reason that crystalline will continue to control share of technology shipments is because current prices are artificially low, and because c-Si technologies are higher in efficiency than are thin films. In Q4 2011, the cost of third tier c-Si technology is <90 cents/Wp. This price is unreasonably low and does not reflect true manufacturing costs. Thin-film technologies, which are lower in efficiency, cannot compete with current low prices of c-Si technologies. As an update, there is (apparently) a thinning of the third tier c-Si Chinese manufacturers and module assemblers, and prices for c-Si cell technology have increased slightly.

The conventional wisdom about c-Si versus thin film technologies holds that because of the area penalty (because thin films have lower conversion efficiency than do c-Si technologies – efficiency, efficiency, efficiency), thin film technologies must be priced cheaper than c-Si. Over time, the spread between thin films and c-Si technologies has averaged 12%. When the c-Si price levels drop, the environment for thin-film technologies becomes … challenging. In 2012, even if conversion efficiency for thin-film modules reaches 14% (the average for medium efficiency c-Si) it cannot compete with current prices for c-Si technology. The necessary market correction (working off of inventory, consolidation and failure of third tier companies) will not happen overnight. Basically, there is no quick fix for the current market situation.

Crystalline technology manufacturers, including those in China, are uncompetitive at current price levels. In sum, this means that manufacturers are losing money again. PV manufacturers lost money until 2004. During the 2004 to 2008 timeframe, technology manufacturers enjoyed positive margins. This short period, from 2004 through 2008, is a blip in the ~40-year history of the PV industry.

All solar technologies are currently uncompetitive with artificially low prices of c-Si. CPV, currently emerging from demonstration to true commercialization, is under pressure, as is CSP, which takes, on the order of two years to install. For CPV, in DNI of >7 this technology is competitive without subsidies, that is, in an environment of normal pricing for PV technology.

The problem and consistent elephant in the room is, of course, that in an incentive driven market, there is no normal pricing environment. There is no true elastic and inelastic pricing, and there is no situation of true equilibrium price. Expectations have been set, and unfortunately, these expectations have been set by the PV industry, i.e., that prices would continue to decrease and that grid parity would be achieved. The fact that grid parity, which requires unsubsidized PV to compete with subsidized conventional energy, is an illusion does not matter. The PV industry promised grid parity. The historic industry practice of aggressive pricing for share compounded the PV industry’s current problem of decreasing profitability. Regardless …the technology forecast for 2012 is crystalline, crystalline, crystalline…at artificially low prices. In sum, the forecast is lower revenues and perhaps significant losses for all technology manufacturers.

Paula Mints is Director, Energy, Navigant and Principal Analyst, Solar Services Program, in Palo Alto, CA; [email protected]

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Solar materials: looked like a bed of roses, now a rollercoaster ride

Lita Shon-Roy, Techcet Group, Bozeman, MT USA

Material manufacturers around the world have been looking to profit from the rise of the solar industry, but the growth picture has been less than rosy for most suppliers. However, suppliers persist to engage with and look for ways to benefit from this large and potentially huge market. Given high sensitivity to cost, driven by the need to bring down the cost of solar technology, many material suppliers have been disenchanted by continued pricing pressure and low margins. This layered with the issues surrounding the economic recession started in late 2008, makes this market look like a rollercoaster ride. Where are the sweet spots in the PV process materials? And what’s their outlook?

Many of the problems and challenges that exist in supplying the solar industry stem from where most of the manufacturing is being done, i.e., China. Although ~80% of the solar cell demand comes from Europe, >55% of the production resides in China. China is the land of growth and pricing pressure into which many non-Chinese suppliers have had trouble breaking. When finally landing an opportunity, they find slim margins and difficulty in competing with Chinese suppliers that are either partially or wholly owned by the solar cell makers, or partially or wholly funded by the Chinese government.

Polysilicon is a key example, many Chinese solar fabs have close ties, often financially oriented, with in-country polysilicon makers, making it increasingly difficult for non-Chinese companies to compete and participate in the solar market. There are many new manufacturers in China willing to compete on the basis of price and are willing/able to handle lower margins. This market factor in combination with the softening of solar cell demand has forced down polysilicon prices more than 30% over the course of the past year. Polysilicon spot market prices are now ~ $50/kg and are anticipated to continue declining. What was expected to be >25% growth in polysilicon revenues, is now looking like < 20 % for 2011. Growth in the mid to low teens is expected for 2012 (see figure below).

Figure 1. Polysilicon average spot market price ($/Kg).

An example of rosy promises unrealized are the nitrogen tri-fluoride (NF 3 ), silane (SiH 4 ) and ammonia (NH 3 ) market segments. These gases were at once considered high growth potentials and anticipated to outpace semiconductor process consumption as a result of the promising a-Si thin film solar market. However, given the major slow down in a-Si production, exacerbated with Applied Materials closure of their SunFab business (July 2010), and Solyndra’s plant closure/bankruptcy (August 2011), the markets for NF 3 , SiH 4 and NH 3 have been limited. What was hoped to be 500mT of silane by 2011 is now approximately <200mT for both thin film and silicon wafer based solar cell production (<7% of electronic production consumption) [electronic production includes semiconductor devices, thin film transistor (TFT) displays and solar cell devices]. NF 3 used in this market now totals <450 mT (<10% of electronic production consumption). NH 3 consumption for the solar market represents ~900mT (~15% of electronic production).

Other opportunities in the PV process materials market that have been somewhat rosy but a bit difficult have been in the area of phosphor doping (i.e., phosphorous oxychloride, etc.) and wet chemicals (HNO 3 , KOH, etc.). The opportunity here is limited to suppliers who already have positions in this market and are satisfied with supplying locally. Pricing pressure continues to beat down margins in both areas, making transportation costs a burden, with prices varying widely between Asia and the U.S. It is anticipated that as the US market evolves, prices will eventually mirror those of Asia.

Despite the repeating theme of pricing pressure, new opportunity still exists in the solar materials area, especially with regard to thin-film solar cells, namely CIGS/CIS (copper indium gallium and selenium/copper indium sulfide) and CdTe (cadmium telluride). A number of new materials relating to conductive pastes, as well as evaporated and sputtered metal alloys, now exist. In particular, sputter targets composed of copper indium gallium and selenium have been in production over the past few years and now total 220,000 pounds for 2010; growing at a 5 year CAGR of 20%. In the CdTe arena, molybdenum sputter targets now total approximately 380,000 pounds for 2010.

The PV market is certainly not for the faint of heart. Opportunities for suppliers with existing positions in these materials are certainly worth bringing forth into this market. Future opportunities will continue to exist especially in the PV thin film segment, supported by healthy growth in the CIGS/CIS as well as CdTe markets.

Lita Shon-Roy is senior managing partner at Techcet Group, [email protected]

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Jumping the chasm in 2012

Mark Thirsk, Managing Partner, Linx Consulting LLC, Mendon, MA USA

Yet another year of twists and turns for the PV industry draws to a close, and 2012 does not look as though it will be any easier. 2011 has been a year of dramatic reductions in cell and modules cost. In reaction to weak end market demand around the world, cell and module makers have worked hard to strip out more cost despite already running lean. Unfortunately, all their efforts will have to be redoubled in 2012 if the industry is to stay on track. Economic conditions and political sensitivities are putting a crimp on subsidies and lowering the limits by which installations are judged economically attractive.

Materials technology and process optimization have gone a long way in delivering the cost savings and novel technologies will continue to reduce production costs and increase module efficiencies. Technologies that will likely see large-scale implementation in 2012 include pseudo-mono ingot growth, selective emitter technology, paste reduction techniques, and increased market share of thin-film manufacturing.

For crystalline silicon technology there will be an extension of the incremental improvements in materials consumption and process technology, combined with the implementation of innovations. The pseudo-monocrystalline ingots utilize seed crystals in DSS furnaces that produce substantially monocrystalline wafers at a multi-crystalline wafer manufacturing cost. After several years of development, various selective emitter technologies will be rolled out in high-volume manufacturing resulting in cells with increased efficiency. By combining these improvements with reductions in silver paste consumption achieved through paste formulation improvements, double-printing, and careful pattern optimization, the cost/Watt of cells and modules will continue to reduce.

Further improvements in crystalline cells are waiting in the wings for introduction in 2 to 3 years. These include wrapped emitter and metal technologies, passivated rear contact architectures, and perhaps a switch to n-type wafers. These changes, combined with moving the cell interconnect onto the back sheet form a consensus roadmap that is supported by multiple material and equipment suppliers. This alignment of technical effort will accelerate the introduction of these new technologies more efficiently.

However it is likely that economic troubles will challenge the introduction of new technologies by reducing the ability of manufacturers to invest in their implementation. All top-tier manufacturers will face the requirement to deliver cost savings and demonstrate returns on capacity additions installed in 2011. This economic brake, combined with healthy market skepticism of the durability and reliability of new technologies, will act to slow the pace of innovation.

The secondary effect of the global economic problems could be an increased willingness in China to stimulate PV installations. While stimulating domestic demand, there may well be a willingness to use lower-cost materials of domestic manufacture that do not meet European or American certification standards. In the long-term, these suppliers will gain experience and improve quality, becoming viable global competitors.

Lastly, 2011 has seen significant capacity increases for thin film modules. As production capability for all of the flavors of CIGS improves, 2012 may become the breakout year for this technology. Certainly the theoretical cost benefits should make CIGS attractive over some crystalline silicon modules. Added to this the improved cost of manufacture for thin-film silicon modules, both single and tandem junction, may bring a third thin-film competitor into the market that is capable of manufacturing at deep sub-one dollar/Watt costs.

2012 will certainly be an interesting year for all in the supply chain of the PV industry. No one knows if the ramp is big enough to get us across to the other side where modules are cheap enough to be viable without subsidy support.

Mark Thirsk is a managing partner at Linx Consulting LLC, Mendon, MA 01756; [email protected]