It doesn’t appear anyone is making a lot of money in the solar power arena, but the players — working in different camps based on the materials they use — seem to positioning for a strategic victory based on cost and market share rather than performance.
For example, in a new report from Lux Research, the tech market research firm say that makers of crystalline silicon photovoltaic modules are outperforming thin-film module makers (e.g., those that use thin-film silicon, cadmium telluride and copper indium gallium diselenide) in lowering production costs and taking more market share.
That’s not news to Solyndra, a CIGS-based maker cylindrical PV units that I have written about in the past. Solyndra, which received in March 2009 a $535 million DOE loan guarantee to open a second and more efficient production plant in California, recently announced that would shut its first plant, delay construction on the new one and lay off 190 workers.
Lux indicates that all PV manufacturers are frantically working to “minimizing costs and maximizing performance to maintain profit margins,” but notes that advances in silicon technology and dropping prices for polysilicon feedstocks are aiding crystalline silicon module makers. Lux says many thin film makers are “are under the gun to improve margins or face extinction.”
The report, “Module Cost Structure Breakdown: Can Thin Film Survive the Crystalline Silicon Onslaught?” focuses on how multicrystalline silicon makers (80% of the crystalline silicon market) fare on a dollar-per-watt basis against TF-Si, CdTe and CIGS. Lux, in particular, details projections of cost-of-goods-sold for each technology through 2015.
“Crystalline silicon is dominant by volume and remains the cost/price benchmark for solar modules. Cadmium telluride is limited in efficiencies, but is the absolute leader in cost. We project these two technologies will continue to be highly profitable,” said Ted Sullivan, a senior analyst for Lux Research, and the report’s lead author. “The profitability of thin-film silicon is much dicier.”
Despite the difficulties facing Solyndra, Sullivan says, “[C]opper indium gallium diselenide is positioned to outplace crystalline silicon in profitability by 2013 as leading developers improve process stability.”
Here are some of the points Lux highlights (from their press release):
· Multicrystalline silicon remains highly profitable as COGS decline. The dominant technology will continue to be profitable throughout the value chain as vertically integrated players drive cost from $1.45/W in 2009 to $0.93/W in 2015, assuming poly pricing at $70/kg. Efficiency will be a key driver of cost reduction, rising from 14.0% in 2009 to 16.1% in 2015.
· OC Oerlikon, a Swiss technology conglomerate, will give thin-film silicon new legs. Improvements enabled by a new fab line will push thin-film silicon efficiencies from 9.0% to above 11.0%. Significant improvements in output will cut depreciated capital expenditures per watt, and help to reduce TF-Si costs from $1.32/W in 2009 to $0.80/W in 2015.
· CdTe technology remains the long term leader in terms of COGS. Led by First Solar, CdTe has a significantly lower cost structure than multicrystalline silicon, and its cost reductions will march onward, keeping it the most profitable solar technology, as COGS falls from $0.80/W in 2009 to $0.54/W in 2015.
· Costs for select CIGS technologies drop dramatically. CIGS sputtered on glass – which is Lux Research’s benchmark given its critical mass of developers – will see COGS plummet from $1.69/W to $0.76/W as efficiency improves from 10.0% to 14.2%, and factory nameplate capacity and yields grow, allowing the top developers to earn gross margins over 30%.
Consist with Lux’s reporting, one crystalline PV module maker, SunPower, recently beat analysts estimates for its third quarter return and profits. Just a month ago, SunPower boasted that in a joint effort with AU Optronics it had successfully manufactured solar cells with a minimum conversion efficiency of 22.2 percent.