Oerlikon Vows To Break 70 Cent Barrier With Thin Film

September 7, 2010

Equipment supplier Applied Materials stepped back from its troubled thin-film solar business this summer. Swiss rival Oerlikon Solar continues to push ahead toward lower cost, higher efficiency production.

Oerlikon said Tuesday it introduced a new line of production gear able to break the 70-cent-a-watt barrier for modules with cell conversion efficiencies as high as 11.9 percent. It expects customers to be in production by mid 2012.

Thin film solar. Oerlikon hopes it can compete.

The news, released at an industry conference in Spain, could set a new benchmark for amorphous thin-film production and is meant to challenge thin-film leader First Solar. First Solar makes thin-film modules using a cadmium-based technology and as of July produced modules at 76 cents a watt. Its target is to reach 52 cents to 63 cents by 2014. Module conversion efficiency was 11.2 percent in the second quarter.

Oerlikon says its improvements are the result of several technical changes. Its module design uses better reflective materials to bounce more light back into the module. Thinner layers of silicon and better factory throughput lower costs.

Oerlikon customers are producing modules at $1 to $1.25 today.

Applied in July killed its SunFab line of amorphous thin-film solar gear citing falling sales and mounting losses. Competitive pressures on amorphous thin film and thin film in general have risen since last year when the price of crystalline silicon cells fell sharply.

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Suntech Boasts It Is The Largest Solar Company, Warns Of Higher Wafer Costs

August 18, 2010

Suntech Power Holdings said a surge in second-quarter sales made it the world’s largest solar module producer by revenue.

But it warned of higher silicon wafer costs and said its next generation high-efficiency Pluto cells still struggle with manufacturing difficulties.

The Chinese producer reported quarterly sales Wednesday that rose 95 percent from last year to $625 million. Rival First Solar’s sales for its recent second-quarter were $588 million.

However, the company said silicon wafer prices were largely unchanged in the second quarter, but are showing signs of rising. Suntech could find itself exposed to short-term increases, said CEO Zhengrong Shi. The company indicated it would expand its wafer production capacity. (Suntech has a minority stake in wafer maker Shunda Holdings. Shunda is going through reorganization.)

The news led to warning flags from some analysts. “We believe (Suntech’s) costs will remain above its competitors due to near-term tightness in wafer supply,” cautioned Needham’s Y. Edwin Mok.

Suntech also acknowledged that Pluto production still faces hurdles. The company made progress eliminating some production bottlenecks, Shi said on a conference call. He noted that production increase to 6 megawatts during the quarter from 4 megawatts, and that more manufacturing capacity would shift to Pluto in coming months.

The cells are achieving 19 percent efficient on mono-crystalline wafers and are key to Suntech ability to compete with efficiency leader SunPower.

On the conference all, Suntech also said:

*Its decision earlier this month to kill trial production of amorphous thin-film solar cells was tied to the decline in crystalline silicon module prices over the past couple years and delays in final acceptance testing of the line. The company took a $54.6 million impairment charge for its thin-film production equipment.

*It would accelerate plans to add crystalline silicon module production capacity. The new target is 1.8 gigawatts by the end of the year, up from 1.4 gigawatts at the end of the second quarter. The company also increased its shipment target for 2010, to 1.5 gigawatts from 1.3 gigawatts.

*Non-silicon production costs fell to 52 cents a watt from 56 cents. The company said it is on target to reach 50 cents.

*Average module sales prices were down 4 percent in the second quarter, mostly due to the decline in the value of the Euro. Prices could decline slightly in the third quarter, but should be relatively stable in the second half of the year, the company said.

*The solar market remains solid. German business was strong in the second quarter and should remain so during the second half of the year, despite the July cuts in the nation’s feed-in tariff. Sales in France, Italy and the Benelux countries also should grow in the second half of the year.

*Meanwhile, North American demand showed signs of improvement. Sales in the United States grew 35 percent sequentially in the quarter. Suntech also said it sees potential in Asia, particularly in India. The sun’s intensity is good there and the nation’s power grid is unreliable, says Shi. “The Indian market is a sleeping giant in terms of the potential for long-term solar demand.”

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First Solar’s Cautious Sales Outlook, Cost Improvement

July 29, 2010

First Solar offered a cautious outlook on sales this year, but said Thursday it cut manufacturing costs and promised a rapid expansion in utility-scale projects.

The thin-film giant reported second-quarter financial results with a 12 percent increase in sales. However, earnings were down primarily due to lower module selling prices.

The world’s largest solar maker acknowledged replacing some modules made from June 2008 to June 2009 because of declines in power output. It said replacement costs would add up to slightly more than $23 million for an anticipated 30 megawatts of modules.

Perhaps most significantly, the company cut its 2010 sales expectation to $2.5 billion to $2.6 billion from the $2.6 billion to $2.7 billion it forecast in April.

On a conference call, it said:

*Module manufacturing costs fell to 76 cents a watt, down 5 cents from the first quarter. Annual throughput per line was up 6 percent to 59 megawatts and material costs were lower. The company’s target is to reach 52 cents to 63 cents a watt in 2014.

*Utility-scale projects are expected to increase. First Solar said it anticipates building 500 to 700 megawatts of projects in North America during 2011, up from 175 megawatts this year.

*Demand is expected to exceed supply in 2010. First Solar expects production capacity to be 2.2 gigawatts by 2012, up from 1.4 gigawatts this year. Module conversion efficiency was 11.2 percent in the second quarter compared with 11.1 percent in the first quarter.

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Survival Path Seen For Amorphous Thin Film

July 23, 2010

Applied Materials pulled the plug this week on its turnkey SunFab line of manufacturing equipment for amorphous thin-film solar cells.

Competitor Oerlikon is making no such concession. The company says it is on target for an aggressive reduction in manufacturing costs – to 70 cents a watt this year – and foresees further reductions next year.

The claims of progress from Oerlikon Head of Market Development Chris O’Brien come as amorphous technology finds itself under assault. With crystalline module prices down 40 percent last year and financing for utility-scale projects under pressure, thin-film is finding the road ahead tough.

Applied’s answer was to pull back from the market and discontinue SunFab sales. The company vows to continue research and development, and to sell production equipment piecemeal.

Oerlikon says its Kai MT production machinery helped improve factory performance - keeping it in front of Applied Materials.

Equipment supplier Oerlikon, on the other hand, is not balking. O’Brien says he expects the global production capacity of amorphous cells to someday rival that of cadmium telluride, presently the most popular thin-film technology. First Solar, the world’s largest solar producer and the only significant maker of cadmium telluride, has about 18 percent of the global solar market.

Amorphous production capacity from manufacturers, such as Sharp and Konica Minolta, will add up, says O’Brien.

Thin-film advocates, such as Oerlikon, argue that a lot of the expected cost reductions have already been wrung from crystalline-cell manufacturing. Price declines will eventually slow.

This will leave an opening for thin film. It is an opening Oerlikon hopes to capitalize on. The company says the cost of thin-film cells made with its equipment will drop to 70 cents a watt by the end of the year, from $1 at the year’s start and a $1.50 in 2008.

This may not enable them to catch those from First Solar, which early this year reached 81 cents. (First Solar is likely to offer a new benchmark when it releases quarterly earnings next week.) But O’Brien sees competition increasing and says more significant cost reductions are expected next year. He declined to offer a target.

He says Oerlikon was able to avoid Applied Materials’ fate by maintaining a technological advantage. First, the company’s micromorph tandem junction technology is generating module efficiencies of 8.5 to 9 percent, up from the 7 to 8 percent of a single junction cell.

Second, the company’s new generation Kai MT production machinery offered a big improvement in factory throughput this year. Added to that, Applied was unable to match the company’s transparent conductive oxide, or TCO, which offered an improvement in efficiency.

O’Brien separately says he sees strong growth in the U.S. market over the next three years. Module sales should almost double this year to 800 megawatts of capacity from 440 megawatts last year. By 2013, analysts project the market should expand to 1,600 megawatts, and that outlook could be too conservative, he says.

How much of that will go to thin film is hard to say.

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The Solar Module Market: Concerns Ahead

July 19, 2010

The solar module market has had a solid 2010, and expectations are the second half of the year will be good, too, despite the feed-in tariff cuts in Germany.

However, questions are arising for 2011.

Pricing and product demand remains favorable as the back half of 2010 begins. That was the word from Intersolar last week. Demand in Germany, the world’s largest market, should pick up later this quarter, after a modest start.

Analysts say they have seen solar cell prices rise a bit this year.

Sales in other European countries, Italy, Spain and the Czech Republic, are moving ahead in advance of tariff cuts of their own. This is leading prices to be stable and wafer prices to even climb a bit. According to Y. Edwin Mok, an analyst at Needham & Co., crystalline cell pricing has risen to $1.35 a watt, compared with $1.25 a watt or so in the first quarter.

This could help vendors such as SunPower, JA Solar and Suntech Power Holdings.

The danger is that this year’s strength will turn into next year’s softness. The fear is especially high in Italy and Spain, which are facing large tariff cuts, says Mok. German installations could decline as well, he adds.

Mok is not alone in his assessment. John Hardy at Gleacher & Company said he expects the world’s largest module maker, First Solar, to post better-than-expected second-quarter sales later this month and speak favorably about the rest of the year.

“The big industry test is coming” in the first quarter of 2011, he says. That’s when sales could slump and another rapid decline in prices could spark worries of another 2009.

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Solar In For Turbulent Times

May 26, 2010

The solar market is in for turbulent times.

Sales this year should grow a robust 58 percent to 11.2 GW, recovering from a difficult 2009. And while they should rise modestly again next year, over capacity will push prices sharply lower

This difficult combination will cause sales dollars – and profit margins – to fall.

Weathering this market will be difficult for all but the lowest cost manufacturers, warns an annual market forecast from Greentech Media Research.

Solar market revenue from 2003 to 2013. Source: Greentech Media Research

Here are some observations from the study:

*High electricity prices will make Japan and Italy the first markets to see solar reach cost parity with fossil fuels. Select projects will begin to reach parity in the next three years with widespread cost parity after that.

*German demand for solar energy will peak in 2010 following cuts in the country’s feed-in tariff beginning in July. In 2011, demand will decline to 4 GW from 5.5 GW this year and remain steady through 2013.

*Italy will become the world’s second largest solar market (after Germany) in 2010. Demand of 1.4 GW will be spurred by feed-in tariff cuts planned for 2011.

*Excess manufacturing capacity for solar modules will increase each year through 2013. Excess capacity of more than 6 GW this year will increase to more than 13 GW by then.

*Module pricing will once again come under pressure. After a slight uptick in the first half of 2010, prices will fall in the second half of the year and tumble another 19 percent in 2011. Margins at manufacturers will shrink.

*Thin-film solar cells will make up about a third of the market by 2013 as new technologies – as well as First Solar’s cadmium telluride cells – see expanding demand. Only a few companies will achieve high margin, thin-film production.

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Solar Becoming Greener But Key EU Decision On Cadmium Awaits In June

May 25, 2010

Top solar manufacturers are making progress on greening their supply chains and recycling efforts, but a key European Union decision on cadmium could redefine what it means to be good for the environment

The EU’s decision on whether to exempt solar makers from regulations on hazardous chemicals, such as cadmium and lead, could come as soon as next month.

Its repercussions could be profound, particularly on market leader First Solar, which makes a cadmium-telluride thin-film cell. But First Solar is not alone in feeling the pain. General Electric and its partner PrimeStar Solar also work with cadmium, as does Abound Solar.

The EU could decide whether to exempt the solar industry from hazardous chemical regulations in June, including those on cadmium, a component of many cells.

Industry sources say the EU review may not be finalized until the fall, but the exemption should be decided by the end of June. If it is not granted, chemicals such as cadmium could eventually be banned from use.

Already this year seems to be a big one for solar’s efforts to manage its supply chain, improve manufacturing  and scale-up recycling. In Europe, a voluntary recycling program created to take back spent solar panels is ready to begin, and the number of companies participating has almost doubled to more than 25.

“This is a key year for PV recycling,” says Ben Santarris, public affairs manager at crystalline silicon cell maker SolarWorld. The program calls on companies to aside money ahead of time to process the panels they sell, a step Sheila Davis, executive director of the Silicon Valley Toxics Coalition, considers critical for the industry.

For companies such as SolarWorld, which has had a panel-recycling program at a factory in Germany since 2003, the new efforts don’t represent a big change. For others, the change is more significant.

However big changes do confront SolarWorld – specifically the removal of lead from its cells and panels. “We are committed to beginning to remove lead from our production facilities this year,” says Santarris.

The effort is a challenge both chemically and financially, and without an exemption from EU hazardous chemical regulations, could be mandated. The company uses lead during metallization, to coat silicon wafers with circuitry, and then to connect cells inside modules. A substitute is hard to find.

While the amount of lead is small enough not to violate California’s strict regulations, says Santarris, the pressures on the industry are considerable.

These pressures may weigh heaviest on cadmium telluride companies. First Solar defends its use of cadmium and has stepped up efforts to monitor the material in its supply chain.

Cadmium is a byproduct of zinc refining and purification, and would go to waste if not used, says Lisa Krueger, vice president of sustainable development. More so, by the time it ends up in the cadmium telluride compound First Solar uses, it is very stable and insoluble to water, so it doesn’t run off with the rain.

The compound is then placed between two pieces of glass, insulating it from exposure to the environment. “There is very little opportunity for the cadmium to be exposed to people or the environment,” says Krueger. “We’ve done a lot third-party validation.”

She also points out that a cadmium-telluride cell takes less energy to manufacture than a crystalline-silicon one. This means the CO2 output is lower, 14 to 15 grams per kWh of product compared with 28 to 29 for crystalline silicon, she says.

The company is nonetheless stepping up its efforts to monitor its supply chain. “There are things we can do to improve (our) supply chain,” acknowledges Krueger. One thing is to peer deeper, all the way back to the refiners and purifiers who handle raw materials. It is an effort now underway.

That means getting more information and validating the information suppliers do release, Krueger says. The company already audits some of companies. It will decide whether to audit more.

Still, long term, it doesn’t seem possible Europe will leave the industry unregulated. “Solar has an impact,” says Davis. “If it wants to be green, it needs to proactively address those impacts.”

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Solar Shakeout Will Hit This Year

May 17, 2010

Over production will wreck havoc on solar module makers in the next three years, with some firms forced to exit the market.

The amount of excess solar cell production capacity reached 5.2 GW in 2009, or about half of anticipated 2010 sales

This fallout is the result of many factors. Sinking demand due to last year’s recession pushed many manufacturers to sharply cut prices. The lower pricing hurt profits. At the same time, key cuts in feed-in tariffs (Spain last year and Germany, Italy, France and the Czech Republic this year) reined in growth expectations, with sales slowing again later this year.

But the gap between production and demand is the big challenge for the industry and one that will continue for three years or more as healthy companies add factories and weak ones find they can no longer fill theirs.

Johnanna Schmidtke, an analyst at Lux Research, estimates the excess capacity reached 5.2 GW at the end of 2009 – or the equivalent of roughly half of all 2010 sales.

This massive over supply will force second-tier producers to begin to idle factories late this year and eventually shut them down. Among the most vulnerable are Perfectenergy of China, Sunfilm of Germany, Solland of Holland and Malibu of the U.S., says Schmidtke.

Others will be forced to outsource manufacturing to cut costs. Candidates include SolarWorld, Q-Cells and Evergreen Solar, says Schmidtke.

Market leaders such as First Solar, Suntech and SunPower will likely ride through the tough times, but not without feeling cost and margin pressures.

Crystalline silicon and cadmium telluride thin film cells will likely dominate the market in two years, just as they do today. But prices will be lower. As to other thin film technologies (CIGS in particular) there will be fewer companies to vend them.

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Can Old Fashion Polysilicon Solar Cells Survive?

April 22, 2010

Polysilicon solar cells may be more efficient, but they may never be cheap enough to compete with oil.

So claims Tom Tiller, CEO of the solar firm Abound, which produces a competing thin-film cell made with cadmium telluride.

Abound CEO Tim Tiller thinks his company can be cost competitive with the thin film cadmium telluride solar cells of First Solar

Tiller’s claim rests purely with price. The best polysilicon, or crystalline silicon, cells are manufactured at $1.40 a watt today. In four or five years, the cost will fall to $1.05 or $1.06, he projects. At $1 a watt, solar will be able to compete head to head with electricity produced from coal without government subsidies.

That leaves polysilicon high and dry, even though the cells it produces are significantly more efficient at converting sunlight to power than thin film. When it comes to lower costs, “I think it’s unlikely for the technology to do that,” he says.

Tiller, who joined the company in December, expects cadmium telluride will steal the show. He is not alone. GE, long a producer of polysilicon cells, said in March it would begin making cells with cadmium telluride. Already First Solar has carved out a market leading position in solar with the technology.

Not surprisingly, Tiller thinks he can best this industry behemoth. Today, First Solar has a 50 percent cost advantage over polysilicon competitors. “We expect to be cost competitive” with the company, he says, or better.

Abound has a simpler manufacturing technique, with only one processing step compared with First Solar’s six, he says.

Some experts question this view, including Energy Department Secretary Steven Chu. In a speech earlier this year, Chu questioned whether low cost thin-film cells can outsell polysilicon, which today makes up the majority of market. Polysilicon cells keep making gains in efficiency, he pointed out.

What’s clear, however, is that there are big opportunities for low cost producers. Solar sales will grow at a 40 percent annual pace for the next few years, Tiller projects.

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California Solar Market Shows Strength In 1Q, But Financing Hard To Get

April 5, 2010

California’s solar panel market showed solid growth in the first quarter of the year, but financing remained hard to get for many homeowners.

Solar installations were up 43.5 percent in the first quarter in California.

California’s market is the most developed in the U.S. and steady growth here is a signal that other markets, particularly New Jersey and Florida, could follow suit.

According to an analysis of data from the state-funded California Solar Initiative, solar installations in the state rose 43.5 percent in the three months. This comes despite declining state incentives, says FBR Capital Markets analyst Mehdi Hosseini, who crunched the numbers. The greatest growth was in the San Diego area, where installations have lagged northern sections of the state.

And yet, applications for new residential solar systems were soft, increasing just 28 percent. The soft economy and the difficulty with higher credit requirements explain the weakness, says Hosseini. Large commercial projects also suffer from a lack of credit, continuing a trend from last year, he said.

On the other hand, utilities such as PG&E have shown an appetite to finance residential projects, as have some banks, such as U.S. Bank, suggesting a change a foot in financial markets.

SunPower continued to be the largest seller of modules in California. However, China’s SunTech took over the number two spot from Sharp. On the whole, SunPower, Sharp, Japan’s Kyocera, and number one worldwide solar cell maker First Solar all lost share as Chinese and other Asian module makers shifted their focus from Europe and channeled low-price product to California and the U.S. market.

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