Using our News Commentary feature (client registration required), Lux Research analysts have been tracking the energy storage space with unprecedented detail, covering more than 300 chosen individual developments during the past half year. These innovation-related events span from partnerships and investments to new research and new factories, and include information about the companies involved and our own takes on the developments. While this set of coverage is not meant to include every single development, it does capture much of what Lux analysts think is worth considering. The full dataset is available to Lux members to explore here, by clicking the News tab’s Energy Storage filter (client registration required), which includes interactive versions of the visualizations shown below. To help extract insights from this wealth of data, in this summary we analyze the trends that have emerged out of this in-depth coverage of how the energy storage landscape looks like in 2017 thus far, using the following heat map:
The idea of a solar-powered car has drawn another attempt from an optimistic manufacturer. Toyota has announced an optional 180 W Panasonic HIT (heterojunction with intrinsic thin layer) module for the roof of its plug-in hybrid electric vehicle (PHEV), the 2017 Prius Prime. This comes as Toyota’s second attempt; the 2010 Prius infamously could not connect its rooftop panels to the drive battery without strangely broadcasting radio signals, so the 50W panel only powered a fan to cool the interior. With more than triple the original wattage and new optimism from Toyota, the new module is intended to charge the drive battery and power unspecified car accessories. Toyota estimates that the module will add about 3.7 miles daily to the PHEV’s current range (25 miles electric, 615 miles gasoline). Continue reading
The stationary storage landscape is a complex and fragmented one, with battery manufacturers, power electronics providers, software developers, and system integrators all working together to complete projects. In this complex landscape, some partnerships have allowed battery manufacturers better access to the stationary market, while also giving system integrators a more reliable and affordable source of cells. Given this importance, we analyze partnerships in the stationary storage landscape and assess which technology providers have positioned themselves for success – and those that haven’t.
What They Said
SolarCity (client registration required) announced it achieved a world-record efficiency from a module off of its manufacturing line. The Renewable Energy Test Center measured SolarCity’s panel with a conversion efficiency of 22.04% using Silevo’s (client registration required) tunneling oxide and thin-film passivation cell architecture. SolarCity also claimed that the bifacial module is able to produce 30% to 40% more electricity than a similarly sized, standard monocrystalline silicon (c-Si) panel.
What We Think
The technology SolarCity acquired through Silevo (client registration required) will be SolarCity’s first move into module manufacturing. SolarCity’s world-record module foreshadows the potential of a gigafactory – the 1 GW module manufacturing plant that is set to produce these modules at full capacity by 2017 in the U.S. Whereas SolarCity has gone through the standard process of getting world-record status for the module, it is very possible that other high-efficiency manufacturers are currently producing modules at or above SolarCity’s reported efficiency. SunPower’s (client registration required) X-Series modules were rated with an efficiency of 21.5% when they began production in 2013, but it is likely the company is now producing modules at higher efficiency due to process improvements since the product’s certification.
In a world where a tenth of a percentage point absolute gain in efficiency can deliver the new record-holder, there is no clear manufacturer at the head of the pack. Panasonic, Trina Solar (client registration required) SunPower, and now SolarCity, will all be jostling to lead. Indeed, Panasonic has already announced that it will demonstrate a panel with an efficiency of 22.5%. A greater determinant of the winner in the market will be production costs, where SolarCity is positioned well.
In ramping up production at its 1 GW plant, SolarCity is expecting to achieve costs in the range of $0.50/W to $0.55/W by 2017. If that cost target is hit, SolarCity’s panels will be highly competitive with other high-efficiency modules, with modules currently produced at $1.00/W to $1.50/W (client registration required). Another differentiator is its gain in electricity generation. The company’s claimed 30% to 40% boost is likely from an unfair comparison of its bifacial module with a standard, lower-efficiency unifacial c-Si module. Nonetheless, the low temperature coefficient of Silevo’s technology can result in a 5% to 10% gain in generation in hot climates, such as Mexico (client registration required). SolarCity’s modules will not directly compete with others as they will primarily be used in the company’s pipeline.
Even if SolarCity no longer maintains its efficiency lead by 2017, benefits from vertical integration and technology performance will contribute to the evolution of the attractive financing options that have led to SolarCity’s dominance in the residential sector. SolarCity’s development of bifacial modules indicates that it is maneuvering to become a bigger player in the commercial sector, the application where bifacial modules are most advantageous. Clients should carefully monitor changes in the high-efficiency market as manufacturers continue to refine their production processes to incrementally boost efficiency, but vertical integration will be the determining factor of dominance in developed markets. The addition of scaled module manufacturing capabilities will allow SolarCity to reduce installed costs; the addition of a top-performing module will allow SolarCity to increase the value of its installations by increasing generation. Competitors will be hard-pressed to keep up with SolarCity’s continued innovation in technology, financing, and software.
Key players in the power electronics industry, including Infineon, ABB, Cree, and Rohm, are all looking to capture market share in individual end markets through technology innovation and differentiated market strategies. Some of this critical innovation includes pushing the limits of silicon’s performance to investing in new material flavors, such as gallium nitride (GaN) and silicon carbide (SiC). As for technologies, strategies also vary in terms of internal R&D versus partnerships, value returned to R&D and M&A activities, and geographic and application breadth. The question is, who comes out on top and which companies are struggling to make it in the power electronics industry? We benchmarked 12 leading power electronics companies, contrasting them on their innovation performance and their business execution. For the former, analysis of R&D spending and the last five years of patent portfolios, innovation-impacting acquisitions, divestments and partnerships, and overall new product portfolio was analyzed, weighted and aggregated. For business execution, factors included profitability, liquidity, solvency and acquisitions, whereas partnerships focused on market access.
Infineon is a clear winner on both metrics, having consistently maintained its market share (on a revenue basis) despite other companies clamoring to compete with it across all markets. In terms of technology innovation the company has invested and successfully released products not only in silicon – 1200 V and 1700 V IGBT modules, 1700 V integrated power modules, 600 V CoolMOS, and 650 V trenchtop IGBTs for automotive applications – but also in new flavors of materials, including SiC and GaN. NXP, Microsemi, and Rohm follow behind Infineon. NXP, for example, scored lower on its patents and product releases (it has released only two new power electronics products in the last few years), bringing its overall innovation score down. Without any major acquisition or a breakthrough product, none of these companies is likely to offer Infineon tough competition in the near future.
At the opposite end of the spectrum are the likes of Renesas, ON Semiconductor and Panasonic. Renesas, for example, scored poorly on both business and technology-related acquisitions and partnerships as well as new product releases. While Renesas has a core strength in microcontrollers for the automotive industry, it lacks strength in any other product segment. ON Semiconductor has some ongoing work in GaN with Transphorm to develop power supplies, although it has no concrete strategy to execute on this. Panasonic falls to the bottom on this grid given its weak scores across the board. The company acquired Sanyo in 2010, but that did not give Panasonic the strength it needed in power electronics. The company has a very narrow portfolio of products, which it has failed to expand on or offer any real technology differentiation. Fairchild, too, has barely managed to stay alive; without drastic measures, it could be wiped out entirely.
The laggards should look to diversify away from power electronics in to the Internet of Things (IoT) market. These companies will need to invest in sensors-related technologies – whether that has to do with developing sensors or powering them – to survive. ON Semiconductor has made a big move in this space by acquiring Aptina – a CMOS image sensor company. Fairchild released its first MEMS product in July 2015, which appears to be the silver lining in the company’s story. However, if it does not act fast, it will be wiped out of the industry. In contrast, Infineon will need to watch out for competition from high-profile GaN startups to stay ahead of the innovation game in GaN. The company may ultimately need to acquire a startup like GaN Systems or VisIC that gives it the competitive edge in GaN.
Innovation and business strategies are available for any existing or aspiring market participant to shore up their respective activities or acquire pieces that go on the offense around the vulnerabilities of others. Knowing those strengths and vulnerabilities in the markets that will grow is the key.
While the carnage of tier-2 and tier-3 solar manufacturers continues in the solar industry as a result of impending industry consolidation, tier-1 companies are planning expansions as their capacity utilization nears 100%. The level of capacity expansions are certainly not the same as they were in 2008, but they do indicate a turn towards positive momentum for the upstream solar industry.
Polysilicon: While the Chinese polysilicon capacity is expected to go down as tier-2 and tier-3 manufacturers are left to go out of business, there are capacity expansions planned outside of China.
- Tokuyama Corporation has established a wholly owned subsidiary, Tokuyama Malaysia, and is currently constructing two production plants with 6,200 tonnes at the first plant, and 13,800 tonnes at the second plant, located in the Samalaju Industrial Park in Sarawak, Malaysia. The first plant came online in September 2013, while the second one will come online in April 2014. Tokuyama has recently invested in an innovative and low-cost kerfless wafer developer 1366 Technologies (client registration required) that is planning to expand its own capacity to 250 MW.
- Wacker is also continuing with expansion of its Tennessee plant in the U.S. with 15,000 MT/year new capacity to be completed by mid-2015. Wacker is one non-Chinese polysilicon company that is free of any polysilicon trade tariffs by the Chinese government, giving it an edge over Hemlock, REC, and MEMC.
- There are also two polysilicon plants under construction in Saudi Arabia funded by Al-Rajhi Capital, with a total capacity of 16,000 MT, that are to come online by Q4 2014.
- Qatar Science and Technologies (QSTec) is also building a 10,000 MT polysilicon plant with plans to come online by Q1 2015.
Wafers and ingots:
- Comtec (client registration required) announced earlier this year that it is expanding its n-type ingot and wafer capacity (client registration required) and building a 1 GW ingot and wafer manufacturing facility in Malaysia, given that the company expects increasing demand of n-type wafers from its current customers, SunPower and Panasonic. Malaysia’s Chief Minister Tan Sri Abdul Taib Mahmud said that Tokuyama will provide Comtec with polysilicon for ingot and wafer production from Tokuyama’s Malaysian polysilicon plant. Comtec’s facility is scheduled to come online in Q1 2014.
Cells and modules:
- SunPower (client registration required) announced last month that it will expand its cell and module manufacturing capacity by 25% as it runs its existing plants at full utilization to meet surging demand. The company will build a factory in the Philippines that will be able to produce 350 MW of cells a year and is expected to go into production in 2015. This expansion will bring total annual cell capacity for SunPower to 1.8 GW.
- Earlier this year, Yingli’s (client registration required) CEO also announced that the company is targeting to have 6.5 GW of module manufacturing by 2015, given it is running at near full capacity in 2013 and expecting local demand growth. However, the company will have to resolve its debt issues before expanding.
- Nexolon America, which is a wholly owned subsidiary of South Korean Nexolon (client registration required), has also broken ground on a 200 MW cell and module manufacturing facility in San Antonio, TX with the first 100 MW to be completed by spring of 2014 and the second by Q2 2015.
- TS Solartech (client registration required) that has existing cell manufacturing capacity of 70 MW has plans to expand to 560 MW by 2017, as the company currently has 100% capacity utilization.
- Motech also announced that it plans to expand its PV module production capacity in Q4 2013 and cell capacity in 2014. The details of the expansions were not disclosed. The company currently has 1.6 GW of cell and 92 MW of module capacity.
- Within thin-films, Heliovolt (client registration required) that received $19 million in Q3 2013 by the South Korean conglomerate SK Group, is planning to expand capacity from 25 MW today to 100 MW in 2014.
These capacity expansions are a good impetus for chemicals and materials companies to target solar manufacturers that are planning capacity expansions for strategic supply agreements to enable revenue generation after a slow two years. Moreover, these expansions also indicate that there will be solar manufacturing activity outside of China specifically in Malaysia, the Philippines, and the U.S., which should be considered as corporations lay out their business development plans for 2014.
What They Said
Applied Materials (AMAT) and Tokyo Electron (TEL) announced a merger on Tuesday that would result in a combined market value of $29 billion. While the primary focus for both companies is the semiconductor industry, AMAT is heavily invested in solar manufacturing equipment. The company has developed wafer and cell equipment for years, including wafer saws, plasma vapor deposition, and screen printing tools. The company also acquired Baccini for $334 million and Varian Semiconductor (client registration required) for $4.9 billion, which has a selective-emitter ion implantation technology for solar cells in addition to its semiconductor tools. TEL acquired Oerlikon Solar’s thin-film silicon (TF-Si) technology (client registration required), an old competitor to AMAT’s SunFab line that AMAT abandoned in 2010.
What We Think
The semiconductor industry has been going through significant consolidation. The number of chip-makers has come down to a handful of large players like Intel, Taiwan Semiconductor, and Samsung. As such, equipment sales come in large cycles, and recent years have been difficult for equipment suppliers. Like the semiconductor industry, solar is also going through consolidation, but is simply at an earlier phase. Solar equipment sales boomed from 2008 through 2011, but as solar wafer, cell, and module manufacturers trudge through recent hard times, capex spending was cut and equipment suppliers suffered. As the solar industry recovers (see the report “Market Size Update 2013: Return to Equilibrium” — client registration required), we expect a gradual rise in capex spending starting with relatively simple, low-cost equipment like selective and passivated emitter tools, then ramping to larger investments for new technology like back contact cell lines in the medium-term.
For solar technology, however, TEL does not bring much to the table, as the company’s TF-Si technology will likely not be a major focus for the combined company as AMAT is pessimistic about TF-Si (client registration required). TF-Si module efficiencies, manufacturing yield, and throughput lag behind competing PV technologies (see the report, “Module Cost Structure Update: Path to Profitability” — client registration required), and a vast majority of the world’s solar capacity is crystalline silicon. Technologically, the merger benefits the companies’ other business sectors more than solar.
While AMAT already has a significant presence in the region, TEL’s status in Japan may give AMAT another avenue in Japan through which to sell solar manufacturing equipment to manufacturers like Sharp, Kyocera, and Panasonic. These Japanese solar manufacturers are producing near 100% capacity, yet cannot satisfy domestic demand, allowing low-cost Chinese competitors into the market. Japanese manufacturers need to differentiate themselves from Chinese competition and could expand capacity to fully capitalize on the booming domestic PV market; both strategies are attractive for equipment suppliers like AMAT.
Additionally, the size and strength of the merged companies will help it compete against emerging Chinese equipment suppliers (see the report, “Turning Lemons into Lemonade: Opportunities in the Turbulent Photovoltaic Equipment Market” — client registration required). For example, AMAT spent approximately $1.3 billion and TEL $0.8 billion on research and development over the last 12 months. Expect to see the combined resources of the semiconductor equipment suppliers in addition to the companies’ interests in solar yield significant technological improvements in the coming years.
Panasonic’s lithium-ion (Li-ion) battery division is resurgent: In Q2 2013, it
made about $40 million in profits, a turnaround from one year before, when it lost $20 million in Q2 2012. As a result, Panasonic will invest $200 million over the next year to expand its Li-ion production lines in Osaka and Kasai, making batteries destined for automotive applications.
The company’s improved Li-ion fortunes coincide with its customer Tesla Motors beginning to ship the Model S, an electric vehicle (EV) that packs a massive 60 kWh to 85 kWh worth of batteries. About 16,000 Model S units have been sold thus far, accounting for more than $400 million in revenues for Panasonic. Moreover, Panasonic has become the leading battery supplier for plug-ins and hybrids sold in the U.S. Its market share by capacity sold has increased to 54% during the last year, overtaking LG Chem and Nissan’s AESC in the process. This breakthrough has been four years in the making and involved Panasonic investing $30 million in Tesla in 2010.
Remarkably, the upstart Tesla now drives more of Panasonic’s battery revenues in the U.S. than the world’s largest automakers, like Toyota and Volkswagen. A mere 20,000 Tesla Model S units use three times more battery capacity than the U.S. sales of Toyota’s popular Prius hybrid family (which moved about 230,000 units during the past year). Tesla’s battery demand now outweighs all other OEMs in the U.S., taking 49% of the market share for battery capacity shipped in the U.S. plug-in and hybrid market in Q2 2013. Others are taking notice of Tesla’s increased clout: Samsung SDI, BYD, and LG Chem have reportedly been in talks with the automaker, seeking to supplement or displace
Panasonic. However, they may have to wait for Tesla’s next model, because Tesla could find it difficult to mix cells from different suppliers, due to battery management system considerations, and because the Panasonic-Tesla contract stipulates supplying 80,000 vehicles by 2015. Interested parties should now expect increased development and more pricing pressure for the Panasonic-Tesla battery solution, including more research on 18650 automotive cells and a strengthening nickel cobalt aluminum (NCA) cathode value chain.
Recently, the auto industry has been abuzz over the partnership formed between Toyota and Tesla Motors to develop a passenger all-electric vehicle (EV) for less than $30,000. Additionally, Toyota has committed to purchasing $50 million worth of common stock immediately following the closure of Tesla’s IPO, on the condition that Tesla completes the IPO by December 31, 2010. The unnamed vehicle will consist of Tesla’s powertrain technology, with the rest of the car comprising traditional Toyota hardware and design. This move is a change in course for Toyota, since the automaker has stated in the past that it is unsure of the market potential for EVs, citing that the cost of the battery packs make the vehicles economically unfavorable. It’s possible Toyota feels its title as the greenest car company is being usurped by Nissan Motor with the early sales and hype of its EV, the Leaf. With the Mitsubishi Motors i-MiEV planned for pricing above $30,000, it is likely that the early EV market in the United States, such as it is (see the report “Unplugging the Hype around Electric Vehicles” – client registration required) will be dominated by Nissan and Toyota, as they will have the cheapest EVs on the market for the foreseeable future.
This transaction with Tesla provides a fast, low-cost, low-risk option for Toyota to enter the EV market. For the small price tag of $50 million, Toyota can lean on Tesla’s experience and avoid much of the R&D expense of developing an EV on its own. This is a bargain for Toyota, considering that General Motors advertised that it spent upwards of $1 billion developing the Volt. In exchange, Tesla is receiving validation from the Toyota name, along with the manufacturing and marketing support that Toyota is likely to provide. Perhaps most valuable to Tesla, the jointly developed vehicle will most likely be sold through Toyota dealerships, allowing it significantly greater penetration into the market. Meanwhile, Panasonic, which provides batteries both for Tesla and for Toyota’s Prius (see the October 21, 2009 LRPJ – client registration required), will strengthen its position in the vehicle battery market. The announcement is a clear win for all three parties involved. However, this news by no means implies that the Toyota EV will sell, since like all EVs it still faces many economic and behavioral hurdles to mass adoption (see the February 3, 2010 LRPJ – client registration required).
Nissan recently announced the U.S. pricing for its all-electric vehicle (EV), the Leaf: $32,780 before incentives, or $25,280 after a $7,500 federal tax credit. Notably, Nissan decided not to lease the battery separately, like Nissan Renault is doing with Better Place in Israel (see the August 5, 2009 LRPJ – client registration required). Instead, it will offer the entire vehicle including the battery for $349/month for 36 months after an initial payment of $1,999. In January, Nissan selected AeroVironment to provide chargers that will fully charge the Leaf’s 24 kWh pack in eight hours with a connection to a 220 V power line.
According to the Wall Street Journal, the Leaf will sell for ¥3.76 million ($40,700) in Japan, or ¥2.99 million ($31,600) after incentives. For comparison, the Toyota Prius hybrid electric vehicle (HEV) starts at $22,800 in the U.S. and about ¥2.05 million ($21,700) in Japan. One way to view this information is that the Leaf will be competitive with the Prius when it goes on sale in select markets in the U.S. in December. After the federal tax credit, the Leaf’s invoice price is less than $3,000 above the Prius’s; and in some states, prospective purchasers get additional state tax incentives (California, one of the most progressive states, offers $5,000).
However, apart from price, the Leaf faces additional challenges that the Prius does not. First, a director-level executive from a major California utility emphasized that before a would-be EV buyer takes possession of the vehicle he or she has just purchased, there is a 20-day to 60-day (more likely 60-day) waiting period to allow the utility and the city to ensure the grid can handle the additional load (see the February 3, 2010 LRPJ – client registration required). Second, unlike the Prius, EV owners have to overcome the range anxiety of owning a vehicle with a 100-mile range without the benefit of a widespread municipal charging infrastructure. Finally, while Nissan hasn’t released information on the Leaf’s cargo/passenger space, its hefty 24 kWh battery pack certainly will take up a lot more room than the 1.3 kWh pack of the Prius, even after accounting for the higher energy density of Li-ion compared to NiMH.
Even if the Leaf does sell successfully, some question remains whether or not Nissan will actually make money on its new EV? Our most current estimates have pack costs over $920/kWh today. That means the 24 kWh Leaf pack most likely costs over $22,000 today, which would imply that Nissan (or its battery partner NEC) is losing money on every vehicle Nissan sells for $32,780. While we see pack prices dropping to just over $700/kWh by 2015, even at these prices the Leaf packs will still account for over half of the total price of the vehicles. Unless Nissan and its battery partner NEC have unlocked the magic Li-ion formula that allows them to manufacture batteries at half the cost of their competitors, Nissan/NEC is almost certainly taking a loss on every Leaf it sells in the U.S., in order to encourage EV adoption and unseat Toyota/Panasonic as the greenest auto-making team. While this strategy might make Nissan the market leader in EVs and boost NEC’s battery sales, it may impose a big financial hit in the process if the EV market fails to develop quickly – as we have argued (see the report “Unplugging the Hype around Electric Vehicles“).