Before 2015, no solar PV cell manufacturer had ever produced more than 3GW of cells in a single calendar year. In fact, very few had exceeded the 2GW level. This year, three companies are poised to manufacture more than 3GW each, with almost 10GW collectively. Not surprisingly, these three c-Si cell manufacturers will occupy the top-3 solar cell production rankings come the end of the year.

This blog provides an overview of the collective impact of this achievement, and discusses the broader implications of the industry having a small group of multi-GW cell manufacturing powerhouses.

As we move towards the end of 2015 – and leading up to PV-Tech parent company Solar Media Ltd.’s new PV Manufacturing & Technology Quarterly market report – additional blogs will feature the key trends around the new GW-scale cell manufacturers in the PV industry today.

The problem with OEM supply

In recent years, there has been somewhat of a frenzy to assume pole position in having the greatest MW (or multi-GW) level of solar module shipments.

Most of the big-six module suppliers - featured in our recent blogs on PV-Tech covering the Silicon Module Super League of 2015 - have been using outsourced OEM module supply as a means of boosting shipment levels. Recent analysis showed the degree to which outsourcing, or asset-light activities, are being used to grow near-term shipments and revenues, with minimal capex.

Ultimately, there has to be a strong driver in shipping an outsourced module. Often, this tactic is used to meet in-house downstream project developments, or to third-party sales channels in geographies where ASPs are above global norms and can absorb more fat through the supply chain.

Ultimately however, selling rebranded modules is really nothing more than acting as a glorified distributor, or as an EPC assuming site ownership before flipping a site as-built to an asset holder.

Manufacturing is still the key differentiator

There is a strong case to be made that having low-cost in-house production is something that is hard to sacrifice, especially in a sector where ASPs are generally declining faster than anyone would really like.

Certainly, the question has to be asked for companies that seem to be stuck today with the basic question: is my company a manufacturer, a project developer, or an asset-holder/energy-provider? Or are we doing two of these roles, or even all three at the same time?

Is the solar PV industry really a place where being best-in-class across each of these three very different operating activities can possibly be achieved? Especially today, when cash is still proving hard to come by, and most companies with a downstream play are favouring project capex over technology/R&D/expansion based upstream spending.

Of all the stages within the solar manufacturing value-chain (let’s include both c-Si and thin-film, poly to module and anything CPV), the c-Si cell stage is still the key part of the value-chain.

Battered and bruised during the midstream price squeeze that characterised the industry between 2012 and 2014, cell production is likely to regain priority once the industry goes through its current post-austerity shake-out phase.

10GW solar cells from three companies in 2015

Capacity additions from the top three cell makers have come from a combination of line debottlenecking, wafer improvements, throughput optimization and new factory builds.

Capacity conversion rates (production as a percentage of effective capacity) have been in the high 90% range so far this year, and this trend is expected to continue in Q4’15, but with a slight dip due to new capacity coming online in Southeast Asia.

The figures above show the production metrics for the three cell makers combined. Capacity shown is either as quarterly or annual effective capacity, not nameplate. Therefore, the correct productivity metric is capacity conversion, not utilization. It may seem pedantic on the nomenclature, but getting these correct is fundamental to the methodology that underpins fab and line productivity.

The recovery in fab productivity is evident by capacity conversion rates shifting from the 80% mark in 2013 to the mid-to-high 90’s this year. During each quarter in 2015, our big-3 cell makers are hitting the high 90’s, with the dip in Q4’15 expected to arise mainly from new line additions (outside China) that will have a short-term impact on productivity.

However, Q4’15 will see record cell production from the three companies of approximately 2.7GW, comfortably exceeding an annualized 10GW figure.

Before we reveal the three cell manufacturers, we are going to examine collective trends from the top-3 cell makers in more detail, in forthcoming blogs. This will be followed by ring-fencing the GW+ cell producers in 2015, leading up to the year-end top-10 forecasting and technology summary trends.

Next up this week will be a blog on the c-Si cell capex and technologies of the big-3, and whether this suggests any difference in approach when compared to the module shipments from the big-6 Silicon Module Super League, we recently reviewed on PV-Tech.

Finally however, the fact there are three companies moving forward into the 3GW+ annual cell production territory is significant. Many other companies – such as SunPower and REC Solar – are essentially capacity constrained at the cell level, and adding new capacity is not straightforward for these companies, when compared to the speed that Chinese (or Korean if we pull in Hanwha Q CELLS) seem to be able to add c-Si capacity (at cell or module level).

Most others have no intention of adding cell capacity, or simply have no cash or access to finances to keep up with the end-market growth. Companies pushing the premium n-type banner (SolarCity/Silevo, First Solar/TetraSun and Shunfeng/Suniva) as a c-Si entry strategy may still be analysing R&D data when competition has broken the 4GW level as part of modules with silicon and non-silicon costs moving rapidly to the US$0.30-0.35/W level.

The net effect is that within a couple of years, we could see a handful of 5GW cell manufacturers globally, and it is not inconceivable that we could even have a cell equivalent of GCL-Poly, which has a dominate 14GW of wafer capacity that would come to the fore through merger or consolidation activities.

Until now, perhaps the only factor preventing this from happening has been trade-wars/tariffs. Should these be relaxed – and ASPs in the US and Japan also decline rapidly on decreasing government incentives – then the industry could see some very large changes to the make-up of global production, with cell manufacturing possibly being the part of the c-Si value-chain most affected.