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.


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.


Is Ivanpah The World’s Most Efficient Solar Plant?

June 21, 2010

BrightSource Energy’s planned Ivanpah plant will be one of the world’s largest solar farms and possibly its most efficient.

When the solar-thermal plant is built on the edge of the Mojave National Preserve (construction is expected to start this year), it will operate at 18 percent efficiency and earn a capacity factor of 30 percent.

BrightSource boasts of 18 percent plant efficiency and a 30 percent capacity factor.

This performance should make the 392-MW facility more efficient than plants with crystalline-silicon panels, thin-film cells or rival thermal technologies using parabolic mirrors, according to analysts.

The plant is to be laid out on three nearby tracts covering 3,500 acres of desert and should run at full capacity 10 to 11 hours a day. The company says a back-up natural gas system will aid performance during its long hours of operation, easing power fluctuations on cloudy days. This consistency of power should put electricity costs on par with natural-gas plants, something photovoltaic plants will take another two years to achieve, some analysts say.

While comparing plants is complex and imperfect, the newly available figures from BrightSource make the exercise a useful chore. Sun intensity, atmospheric moisture levels and power transmission costs of course differ plant location to plant location.

But determining who holds the industry’s bragging rights – as well as who deserves project investment dollars – is a task utilities attempt everyday, despite the difficulties.

In an interview, BrightSource Product Manager Andy Taylor described Ivanpah’s efficiency as a sunlight-to-electricity calculation based on two years of testing the company’s Luz Power Tower 550 in Israel’s Negev Desert. At the top of the towers, boilers absorb sunlight reflected from 7-square-meter ground-mounted mirrors and heat water to more than 1,000 degrees Fahrenheit, the highest temperature in the industry. The super-heated steam drives turbines.

The company says a back-up natural gas system permits the long operating hours and the ability to run most of the day at full capacity. The gas is used to warm boilers in the morning and augment solar power on cloudy days to keep output high.

“We’re pretty much a sun-up-to-sun-down resource,” Taylor says.

BrightSource, which has so far raised more than $300 million in financing, expects the plant’s efficiency to rise as the company moves beyond its first-generation technology. Higher-efficiency turbines are already in the market, and additional mirrors, or heliostats, can be deployed. Water temperatures also will rise to above 1,100 degrees.

In contrast to Ivanpah’s 18 percent efficiency, the efficiency of utility-scale crystalline silicon and thin-film plants is likely less than 12 percent. Solar-thermal plants with parabolic mirrors also have difficulties keeping up. Ivanpah’s higher boiler temperatures give it an advantage, and dual-axis tracking can more accurately follow the sun through the seasons. The average efficiency of other solar thermal plants is 13 to 15 percent, says Cara Libby, project manager at the Electric Power Research Institute.

That doesn’t mean Ivanpah won’t have competition, One crystalline-silicon vendor, SunPower, with industry leading 18 percent efficient solar cells, could give BrightSource a run for its money, says Travis Bradford, president of the public-policy think tank, Prometheus Institute. A SunPower farm with a single axis tracking could have an efficiency of 15 percent, maybe slightly higher depending on the location, he says.

Broader competition will come with falling solar-panels prices, unless a stronger Chinese currency slows the trend. Panel prices tumbled about 40 percent last year and, while they are more stable this year, they continue to decline more rapidly than solar thermal efficiency is improving.

BrightSource responds that plant efficiency is only one measure of performance, and not necessarily the best. Capacity factor, a calculation of a farm’s ability to deliver full power over time, may be more important, the company says.

Ivanpah’s capacity factor (including the use of natural gas) should be 30 percent, Taylor claims. A wind farm in an ideal location (think Tehachapi) can have a factor of 40 percent. Photovoltaic plants generally are lower. A Carnegie Mellon Electricity Industry Center study estimates a PV plant in Arizona should be closer to 20 percent.

Another useful metric is the delivered cost of electricity. BrightSource claims this measure makes Ivanpah “extremely competitive,” but declines to release figures to back up the claim. The calculation looks at plant output versus costs and factors in development and financing charges.

An examination of California Public Utilities Commission documents shows only that expected delivered costs are to be less than 12.5 cents a kWh. It doesn’t state how much less.

Nevertheless, Nathaniel Bullard, a solar analyst at Bloomberg New Energy Finance, calculates that the cost of Ivanpah’s electricity will be lower than photovoltaic power and about the same as natural gas. Of course no one knows for sure until the plant is built. “We’ll see if they can meet the targets they have in place,” Bullard says.


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.


More Trouble For Applied Materials’ SunFab

May 20, 2010

The slump in Applied Materials’ SunFab solar line continued Wednesday with sales and orders tumbling in the second quarter and the red ink increasing.

With the business now at perilous levels, Applied Chief Mike Splinter said sharp cuts were on the way, even after an $83 million second-quarter write down of SunFab equipment the company doesn’t think it can sell.

“We are taking decisive steps to redesign the business with a lower outlook,” Splinter told analysts on a conference call.

Applied to scale back operations at SunFab as sales and orders slump.

The move will push Applied’s entire solar energy business into the red for the year and delay its first profitable quarter until 2011. Applied had hoped for profits by late 2010.

The move is a blow for the beleaguered operations. Applied has maintained that SunFab has a lucrative future making large solar panels for utility-scale solar farms. (Costs make it less competitive in the residential and commercial rooftop markets.)

It claims panels can reach 10 percent efficiency this year – an important step in competing with crystalline cells.

However, the challenges continue to mount. In April, key SunFab customer SunFilm filed for bankruptcy in Germany. Meanwhile, the fabs continue to be expensive to build and need to operate at full capacity with high yields to justify the spending.

Splinter tried to put a brave face on the set back. He said the company is in business discussions with large utilities in India and China, where large-scale facilities might make sense.

Applied has accumulated a significant amount of data about production yields and plant efficiencies and knows the formula for success, he said. The key is gigantic fabs, where upfront costs can be spread over a large output.

But success seems more distant. The company admitted the backlog of orders for SunFab equipment fell to $400 – roughly two thirds of what it was a couple quarters ago. On top of that, sales for the entire energy and environmental business fell 54 percent in the recent quarter to $166 million, primarily because of a thin-film shortfall. The operating loss for the division was $145 million, including the inventory write down.

“Applied sounded more like it is going to wind down or reduce this business,” said Neeham & Co. senior analyst Edwin Mok, who listened to the conference call. “They are scaling back.”

In contrast, sales of equipment used to make crystalline silicon solar cells boomed in the quarter. Orders reached record heights with manufacturers racing to add capacity, says Chief Financial Officer George Davis. “We’re seeing very strong demand, mostly from China,”

Unfortunately it is not for thin film.


Bill Joy Sees Enormous Opportunity In Thin Film Solar Cells

February 13, 2009

Enormous opportunities lie ahead for thin-film solar cells, said Bill Joy, partner at the venture firm Kleiner Perkins Caufield & Byers.

But the fall in the price of oil threatens a generation of green-energy entrepreneurs, setting back the nation’s efforts to combat global warming, Joy said this week during an on-stage interview at the Churchill Club.

We take the climate status quo too lightly, say Bill Joy

We take the climate status quo too lightly, say Bill Joy

Joy, a co-founded Sun Microsystems who now invests in clean-tech startups at KP, said the government could bring stability to alternative-fuel markets by demanding a percentage of the country’s energy come from renewable sources.

At the same time, Silicon Valley can play a role in developing thin-film solar cells because of its expertise with semiconductors, he said. But the valley will not be the only center of innovation in green tech, Joy added, suggesting Boston, Pittsburgh, Atlanta and Germany have specialties to harness.

At Kleiner, partners have been working with former Vice President and climate crusader Al Gore to find solutions to global warming. – and investment ideas.

The alternative is letting the planet become inhospitable. “We take the status quo too lightly,” said Joy.


Thin-Film Solar Company Approaching Cost Of Fossil Fuels, CEO Says

December 17, 2008

SoloPower has big ambitions. The San Jose company hopes to see utility-scale projects using the flexible, lightweight solar cells it makes by electroplating material on a sheet of tin foil.

SoloPower expects sample products expected in the first quarter, says Homayoun Talieh

SoloPower expects sample products expected in the first quarter, says Homayoun Talieh

Homayoun Talieh, CEO, says the company will have samples of its thin-film cells available in the first quarter of 2009 to demonstrate the reliability of its manufacturing.

The technology also “will be at a $1 a watt in the near future,” making it more attractive for generating electricity than fossil fuels, he said Tuesday. Talieh claims his copper indium gallium selenide technology (CIGS thin film is known for its high efficient) will even do better than products from thin-film competitor Solyndra.

The advantage of electroplating its that no raw material is left over after the coating is done, he says.

Talieh declined to discuss the expected efficiency of his solar cells.


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