Utility-scale solar systems are increasingly becoming competitive with conventional energy sources as tariffs continue to drop, largely as a result of sinking module costs. Under these market conditions, the U.S. Department of Energy SunShot Initiative – a support organization for the commercialization of solar technologies – announced it has reached its 2020 goal of an average cost for utility-scale systems at $0.06/kWh three years early. As such, SunShot has promised $62 million to support concentrated solar power systems and $20 million for supporting power electronics. The SunShot Initiative’s goal is to improve grid reliability and resilience as photovoltaic systems continue to become interconnected, but there is still significant understanding needed to improve the lifetime reliability of photovoltaic systems themselves. Continue reading
French oil major Total has made a billion-dollar bet on energy storage with its purchase of Saft – complementing its existing stake in solar major Sunpower and other investments in distributed generation. This move is just an opening salvo in a Darwinian competition emerging among energy supermajors to get ahead of the future of the power sector. The remaining energy storage landscape offers oil firms few appealing opportunities to respond – but they should aim to make deals nonetheless, and changes in the energy landscape mean that doing nothing is an even worse option.
By: Cosmin Laslau
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.
The high concentrating PV (HCPV) company, GreenVolts, is officially selling its assets after its primary investor, ABB, pulled support from the startup. GreenVolts outsourced its manufacturing to contractors such as Foxconn, so assets up for sale will largely be intellectual property.
GreenVolts obtained exactly what many small solar manufacturers are looking for: a large, well-positioned, strategic investor to add bankability and take responsibility for driving growth. Semprius found that in Seimens, and Miasolé had been looking for a buyer and recently closed with Hanergy. While the advantages of this gaining significant support from a strategic investor are numerous, there is also an inherent risk, as became apparent with GreenVolts and ABB. If the investor proves fickle and decides to cut losses, the solar company will not be able to survive. Strategic investors that invest in solar need to be willing to take a short-term loss for long-term gain.
For the broader HCPV industry, GreenVolts’ failure adds to concern surrounding the industry that has been growing since Amonix shut down its Las Vegas manufacturing facility (client registration required). We expect the situation to get worse before it gets better, but our favorites – Soitec, SolFocus, and Suncore as outlined in the Lux Research report, “Putting High-Concentrating Photovoltaics into Focus” (client registration required) – are still moving forward on capacity and installation targets, and can easily satisfy our 700 MW HCPV demand forecast in 2017.
As hype for HCPV dwindles, companies are starting to look into low concentrating PV (LCPV) as an intermediate technology between expensive, highly efficiency HCPV and cheap, less efficient flat panel PV. SunPower’s C7 product aims to do just that with reflectors that concentrate sunlight 7X onto SunPower’s interdigitated back contact (IBC) solar cells with 22.8% cell efficiency under 7X concentration. The company has an agreement with Tucson Electric Power to install 6 MW of the LCPV product. Low concentration allows for a broader range of reflector options as long as they are cheap and limit optical losses. SunPower’s C7 system uses parabolic trough glass mirrors, but startups like TenKsolar and Absolicon use 3M reflector films, Solaria uses patterned glass, and Cool Earth Solar uses a proprietary refractive film co-developed with Avery Dennison.
Monocrystalline silicon (c-Si) solar cells used in LCPV modules are many times cheaper on a per area basis than multijunction cells used in HCPV modules; however, c-Si cells are more susceptible to heat and UV degradation, and benefits from increased encapsulant transparency will multiply under concentration, which can translate to interesting opportunities for innovative material suppliers. Material and chemical companies may want to look to LCPV as a potential new market for innovative optical or encapsulation materials.
Following months of questions about the exact size of the Italian solar market, the Gestore Servizi Energetici (GSE), Italy’s grid interconnect agency released official installation numbers through March 2011: In total, the country has a little over 4.18 GW of cumulative solar installations. Yet, despite the official announcement, uncertainties remain.
Not surprisingly, planned reductions to Italy’s feed-in-tariff (FIT) led installations to soar to nearly 1 GW in December, bringing the total for 2010 to 2.33 GW. In February, announcements from the GSE and a flurry of news from installers and other research firms suggested that number reached 6 GW based on the number of applications received. But, given that 713 MW had been connected to the grid between January 1 and March 30 by the GSE’s count, much uncertainty remains about whether the missing 3 GW of applications were ever actually installed.
As of this writing, all eyes are on The Fourth Conto Energia and what reductions or caps it will introduce to the FIT policy at the end of April. An FIT reduction is certain, but the exact percentage remains to be seen. Reuters reported in mid-April morning that the current draft decree pegged it at an immediate 25% cut, with another 8% planned for January 2012.
A bigger concern is that the GSE will introduce a cap on new installations, which would dramatically hurt the solar market. Reuters further reported it could actually fall below 2010 numbers, at 1.55 GE to 1.8 GW for 2011 and 2.8 GW for 2012. Further, the article suggests the cap will be based on volume, and not total subsidy burden. That means price decreases will not enable higher installation figures.
The greatest concern to the growth of the Italian solar market, however, has been wild announcements of installations that are supposedly in the ground but not yet grid connected. If these 3 GW of phantom systems actually exist, the Italian market may have already exceeded the 2011 cap – effectively closing the market in 2011.
Due to these remaining uncertainties, we are hearing that module players and project developers are already rerouting inventories and supply to the U.S. as the short window between now and the June decree makes it unlikely they will be able to install systems before any possible cap. From our previous conversations, the module vendors with the most exposure to the Italian market include First Solar, Uni-Solar, SunPower, and the major Chinese players like Trina, Yingli and Suntech Power. In general, Italy’s scenario signifies the globe’s most severe case of reductions by a bankrupt government, but we expect to see more of the same elsewhere in the near future.
Last month, we released the Q1 2010 version of the Lux Research Solar Supply Tracker (see Solar Supply Tracker, Q1 2010 – client registration required). It includes figures on production and capacity data throughout the value chain through 2013.
Notably, the Tracker revealed that total module production for 2010 will be 12.6 GW, an increase of about 4.7 GW from 2009 production. We’ve also updated the Lux Research demand forecast, which predicts 12.1 GW of market demand in 2010, signifying a slight oversupply this year.
Crystalline silicon (x-Si) will account for 76% of total new module production in 2010. Most of the remaining share will be split between inorganic thin-film PV – particularly thin-film silicon (TF-Si) fueled by a slew of entrants – and cadmium telluride (CdTe), overwhelmingly provided by First Solar. Each will each account for 11% of 2010 module production. Companies like Avancis, Würth Solar, and Solibro will each produce a handful of Copper indium gallium diselenide (CIGS) modules in 2010, to round out the balance of new module production.
In terms of geography, Asia continues to dominate the manufacturing scene, accounting for 45% of polysilicon production, 78% of wafer production, and 71% of module production in 2010. Though Asia dominates in absolute production, several companies are adding capacity in North America, hoping to capitalize on promising demand in the U.S. and Canada, including Canadian Solar, SunPower, and Yingli.
A number of companies made notable changes to production and plans in Q1. Upgraded metallurgical silicon (UMG-Si) producers Dow Corning and Timminco stopped production at their Brazilian and Canadian facilities, respectively. Both companies cited decreased market demand, and will leave capacity idle with plans to reevaluate demand in a few years.
While UMG-Si players are hurting, top-tier polysilicon suppliers are thriving. The top six polysilicon producers – Hemlock, Wacker, GCL, OCI, REC, and MEMC – will supply 75% of the total polysilicon to the market in 2010. Further downstream, several companies beat expectations and are accelerating ramp schedules. Taiwanese wafer player Green Energy Technology, cellmaker Neo Solar Power, and Chinese module manufacturer Solarfun all increased or accelerated capacity addition plans, citing increasing customer demand. Although Solarfun garnered more market share with its increasing capacity, it could not crack the top five module manufacturers. First Solar remained in the top spot, followed by Suntech Power, Sharp, Canadian Solar, and Trina Solar.
Looking out several years, supply remains slightly above demand throughout the value chain – except at polysilicon, where a significant supply overhang remains. As we witnessed this quarter, this supply overhang forced more expensive producers to shut down production lines, as their processes are no longer economically viable. Expect more consolidation and additional polysilicon players shutting down production facilities, as well as significant shuffling of market share as new technologies gain traction, the vertical integration trend continues, and delayed subsidy cuts in Europe keep demand high.
Late last year, the Chinese government began taking more aggressive steps to shore up the financial position of key polysilicon producers, which had been struggling due to the price collapse of polysilicon during 2009. First, on November 17, LDK Solar announced that it had sold a 15% stake in its 15,000 MT polysilicon plant in Xinyu, China. The stake went to Jiangxi International Trust and Investment, an investment arm of the provincial government, for RMB 1.5 billion ($219 million) – valuing just the polysilicon plant at $1.46 billion.
Then, two days later, GCL Silicon announced that it had sold 20% of the company to China Investment Corporation – a state-sponsored investment vehicle – through the issuance of new shares to raise about $715 million. Additionally, GCL secured investment for a joint venture company to develop solar projects, with a total investment of $500 million. The latter move resembled those of MEMC, SunPower and others who have sought to integrate downstream to ensure demand (see the October 29, 2009 LRSJ – client registration required).
These two investments are notable in that they show more drastic action by government agencies to shore up favored polysilicon manufacturers. Chinese import restrictions on polysilicon helped to buoy the price of the material just a few months ago (see the August 20, 2009 LRSJ – client registration required) – but apparently not enough. The subsequent steps demonstrate the most overt case of government support to date.
Companies in the U.S. and Europe have long complained about the stealthy industrial subsidies received by Chinese firms, arguing that Chinese imports should be restricted on these grounds, and this case gives them the strongest ammunition yet to argue for protectionism predicated on unfair government subsidies. Expect the case for protectionism to continue to heat up as prices fall and European manufacturers struggle to cut costs to remain competitive.
Further, the new funds all but guarantee capacity ramp of these two major players, and this significant amount of capacity coming online over the next few years will further depress the prices of polysilicon, and make it difficult for smaller, independent players to exist. Indeed, increasingly, polysilicon makers can be divided into three groups: incumbents (such as MEMC, Hemlock, Wacker, and REC); state-sponsored firms (GCL, LDK, and Nitol); and those tied up with major device manufacturers (Fine Silicon, Asia Silicon, Joint Solar Silicon). Though a few exceptions, such as OCI and M.Setek, will likely weather the storm, it will be tough going for players without a corporate or government sponsor with deep pockets.
Crystalline silicon (x-Si) PV modules comprise the largest and most established portion of the photovoltaic (PV) module market, holding roughly 81% of the global PV market in 2008. These x-Si modules also have significant penetration in all sizes of grid-tied applications – from residential to large-scale utility installations.
A handful of large, top-tier manufacturers dominate the market, but smaller start-ups with differentiated technologies are still entering. As the module oversupply rolls through 2009 and 2010, some crystalline silicon module manufacturers will be at the heart of the shakeout.
Examining the performance of companies in this technology area, we find that:
- Large corporations with differentiated technologies are among the strongest performers.Many of the highest ranking companies are large corporations that stand out due to top-level high-efficiency products and large corporate backing. Their backing provides support for module warranties, capacity expansions, pricing battles, and technology development.
- New competition from low-cost manufacturers is driving down the value of European leaders. European module manufacturers with high-quality x-Si module technologies are beginning to struggle as module production becomes increasingly commoditized. Their quality advantage is beginning to slide as new low-cost manufacturers gain access to higher-quality materials, dropping their scores on technical value scale.
- Even with promising technologies, start-ups face formidable barriers to growth. The most successful pure-play solar firms got an early start in the market, and offer either differentiated technologies, sharp business execution, or both. New entrants to the solar market need more than a novel design or slight technical advantage to succeed. Companies building capacity, especially those based on a novel technology, score lower than those with existing capacity because they must play catch-up with more traditional and established manufacturers. The outlook is increasingly bleak for start-ups with unique technologies that are yet to build production capacity.