Solar power accounted for 10 percent of Germany’s total electricity production in May, an increase of 40 percent from the previous year, as reported by the Federal Association of the Energy and Water Industry. The significant jump stemmed from heightened capacity complemented by sunny days. This surge in green power generation reveals that the nation is well on its way to expanding the proportion of renewables in the energy mix. The strong market is paving the way for new foreign investors such as bSolar, an Israel-based solar PV cell company. Solar industry experts from Germany Trade & Invest (GTAI) will be at booth #7635 at the Intersolar North America Exhibition in San Francisco from July 10-12 to discuss opportunities within the sector.
“Germany’s decision to replace nuclear energy with other sources is proving to not only be possible, but is creating many valuable prospects for the renewables sector. The continued strength of the solar market has sparked greater investment from abroad,” stated Tobias Homann, photovoltaic industry expert from Germany Trade & Invest in Berlin.With the support of GTAI, bSolar established a plant in Heilbronn that produces high-efficiency bifacial cells. Its decision to invest in Germany reflects the country’s longstanding status as the world’s key PV market. The rooftop cells have the ability to produce more electricity at lower costs.
“Germany is one of the largest producers of PV technology as well as the biggest consumer of per capita solar energy worldwide,” said Dr. Yossi Kofman, Co-founder and CEO of bSolar. “Strong demand partnered with a highly skilled workforce, intensive R&D and a political framework supportive of renewables make Germany an obvious point of investment,” Kofman continued. Germany Trade & Invest is the foreign trade and inward investment promotion agency of the Federal Republic of Germany. The organization advises foreign companies looking to expand their business activities in the German market. It provides information on foreign trade to German companies that seek to enter foreign markets.
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Solar Manufacturing: To Compete or Not To Compete
June 28, 2012 |
WASHINGTON, D.C. — Last year, the global market for clean, renewable energies reached a record $260 billion – and is expected to grow into the trillions over the next 20 years. Solar manufacturing in particular is growing dramatically in the United States and around the world. In fact, according to the Solar Energy Industry Association, America’s solar industry now employs 100,000 workers – doubling since 2009.
The question is no longer whether America will be a major customer for the solar industry – we will. The real question is whether the U.S. will also continue to be a major manufacturer of solar technology, producing many new jobs for American workers.
Some in Washington believe that the United States cannot, or should not, compete with China when it comes to solar manufacturing – and aren’t willing to make any investments or take on any risks to win the global clean energy manufacturing race. Meanwhile, China offered more than $30 billion in government backed loans to its solar manufacturing companies in 2010 alone and is surging to capture roughly half the market. That’s because China realizes this is a huge global market and a competition worth winning.
We respectfully disagree with those who are willing to cede thousands of high paying jobs and the innovations to come over the next decade and beyond to our competitors in China and around the world. Americans invented solar technology, and with the right support our companies can out-innovate and out-build any competitor, anywhere in the world.
But we also know that our competitors are not simply going to cede that fight to us, and that the global solar manufacturing industry is facing market conditions that are straining even the strongest of our global competitors. In such an intense competition and with the price declining 47 percent last year alone, not every company, nor every investment, will be a success – but America will be stronger and more competitive if we continue to support and build a thriving solar industry here at home.
Through our Loan Program, the Department is working to answer the challenge from China and others by supporting a large number of solar projects. The vast majority of those are power generating projects that benefit from falling prices for solar panels and – as the Independent Report by Herb Allison noted earlier this year – carry very limited risk to the taxpayer because they have firm contracts in place with utilities to buy the power they produce.
Of our total loan portfolio, about 35% was for solar generating projects – which benefit from falling prices – while less than 4% was for solar manufacturers, an industry that is suffering around the world from the steeper than expected collapse of pricing for solar modules, which has been driven in part by what the Commerce Department has found to be unfair practices by competitors in China.
Next week, Abound Solar, a startup company that borrowed $70 million through the Department’s loan program, will close its doors and file for bankruptcy. Abound was an innovative manufacturer of next-generation, cadmium telluride thin-film photovoltaic modules that had developed and demonstrated a process for producing thin-film solar panels at a cost that was expected to be substantially less than traditional solar panels. When the cost of polysilicon was high, Abound’s technology offered the promise of a lower cost alternative that would be built here the United States.
In 2007, the Department awarded the company a grant to support a pilot project to demonstrate the viability of its manufacturing process. In December 2010, the Department issued a loan guarantee to support the construction of two commercial scale plants: one in Longmont, Colorado and a second new facility in Tipton, Indiana. The Tipton facility was an abandoned auto parts manufacturing facility that Governor Mitch Daniels wanted to help convert to solar manufacturing.
The company received widespread support, including from members of Congress and Senators from both parties and the private sector. As of December 2011, Abound had raised more than $300 million in private equity financing. Its backers included large and established energy investors — including BP Alternative Energy, the Invus Group, DCM and others.
When the floor fell out on the price of solar panels, Abound’s product was no longer cost competitive. As a result, the company was unable to meet some of the financial milestones built into the loan agreement to protect the taxpayers and – in September 2011 – the Department halted disbursements on the loan. Of the $400 million that Abound was originally approved for, the Department only lent the company less than $70 million.
Because of the strong protections we put in place for taxpayers, the Department has already protected more than 80% of the original loan amount. Once the bankruptcy liquidation is complete, the Department expects the total loss to the taxpayer to be between 10 and 15 percent of the original loan amount.
While disappointing, this outcome reflects the basic fact that investing in innovative companies – as Congress intended the Department to do when it established the program – carries some risk. As Herb Allison noted in his report earlier this year, the solar manufacturing projects in the loan portfolio carry increased risk as compared to other projects in the portfolio. But those risks are taken into account by the loan-loss reserve established by Congress to offset losses. For projects like this, the Allison report estimated that the credit subsidy amount computed for projects like Abound was approximately 24% of the total loan origination amount.
Finally, as Allison’s report also noted, our loans are not static entities. The Department has tools in place to reduce the risk associated with the projects they support. In fact, those tools are the reason Abound was not able to draw down the full loan amount.
This effort has seen many successes as well as a few setbacks, but one thing is clear: America must continue playing to win in the clean energy race. We need not allow our dependence on foreign oil to be followed with a dependence on foreign solar panels and wind turbines. Instead, we can and must fight to ensure that the next generation of solar panels is invented in America by American innovators, built in America by American workers, and sold around the world.
U.S. Solar Industry Posts Solid Q1 With 506 MW Installed
New Hampshire, USA — For all the turmoil surrounding the American solar industry, the U.S. followed up its record fourth quarter of 2011 with its second-strongest quarter yet.
According to new figures released by GTM Research and the Solar Energy Industries Association (SEIA), 506 megawatts (MW) of new installations came online during the first quarter of 2012. That robust figure followed the American industry’s record-setting 780 MW that came online between October and the end of December, and it puts it on pace to easily surpass last year’s installation mark.
The new numbers are increasingly meaningful as the industry looks to assess the fallout from a string of potential market disruptions. The Section 1603 grant expired at the end of 2011 and the low-cost Chinese panels driving much of the U.S. industry were recently hit with hefty tariffs, the largest of which dates back to February of this year.
But so far, so good from an installation perspective as an 85 percent growth over the first quarter of 2011 has increased confidence that the industry will maintain its momentum through 2012. The better-than-expected first-quarter figures has led GTM Research to bump up its 2012 projections by about 15 percent to 3.3 gigawatts (GW), which would represent a big leap over the 1.8 GW installed in 2011. From there, the projected growth is relatively flat in 2013 as the impacts of the 1603 expiration and the new tariffs finally catch up with the industry. But strong growth is still projected for 2014 (about 5.3 GW), 2015 (about 6.6 GW) and 2016 (about 8.4 GW) as the U.S. emerges as a global market leader.
The readjusted 2012 outlook, coupled with expected declines in the European market, would push U.S. market share into double digits at nearly 11 percent. This would be up from 7 percent in 2011 and 5 percent in 2010, and it’d make the U.S. the fourth largest global PV market. The upward trajectory would also make it one of four large-scale international markets with expected long-term growth, with the others being China, India and Japan.
Two major factors helped fuel U.S. installation in the first quarter, according to the report. At least 1 GW of modules were “safe harbored” at the end of 2011, a common strategy used to qualify modules and inverters for the 1603 grant ahead of its expiration. Many of those modules were deployed during the first quarter of 2012. While the smaller countervailing duty was announced during the first quarter, the much larger anti-dumping tariff wasn’t announced until May. The first quarter was marked by uncertainty and new strategies to avoid penalties. The report notes that anecdotally, some Chinese suppliers became the importer of record, so they could absorb the tariff themselves and sell “tariff-proof” modules. Still, many developers have shifted some procurement to non-Chinese producers.
The role of American panel manufacturing has taken center stage in the political fight surrounding the solar industry. From that perspective, the first quarter proved to be disappointing as U.S. solar panel production amounted to 160 MW, less than half the amount produced during the first quarter of 2011.
Other key takeaways from the report include:
- New Jersey was the largest state market, with 174 MW of installations in Q1 2012.
- Blended module prices for Q1 2012 were down to $0.94/W, a staggering 47 percent lower than Q1 2011 levels of $1.78/W.
- Installed prices fell in every market segment year-over-year compared to Q1 2011. Residential installed prices fell 7.3 percent, commercial installed prices fell 11.5 percent, and utility prices fell 24.7 percent over Q1 2011. The overall blended average installed price
fell 17.2 percent year-over-year.
- Utility-scale installations, which accounted for more than half of the 2011 fourth-quarter figures, represented a much smaller percentage in the first quarter of 2012. Utility installations reached 124 MW in the first quarter. Most of the utility-scale installation is expected to come during the second half of the year, and GTM Research is 1.8 GW to come online by the end of the year
- Cumulative operating PV capacity in the U.S. now totals 4.4 GW.
- A total of 1.1. GW of concentrating solar power (CSP) is now under construction.
- Abengoa’s Solana Generating Station received a $125 million investment from Capital Riesgo Global, a subsidiary of Banco Santander, for an equity stake in the CSP project.
- Construction of the CSP power tower at the Crescent Dunes Solar Energy Project was completed in February 2012.
PV Industry Outsourcing is a Secret No More
Shocking though it may be, outsourcing is commonplace in the PV industry. Basically, with outsourcing Manufacturer A buys cells or modules from Manufacturer B and both report the outsourced product as in-house production. Outsourcing, which, pardon the cliché, is as old as the hills, has led to a systematic oversizing of the photovoltaic industry. The practice of oversizing also includes module assembler production – referring to module assemblers who do not develop or manufacturer photovoltaic technology in-house. Again, outsourcing is common to all industries that manufacture widgets of any type, and has been practiced by the photovoltaic industry for its entire kilowatt-to-gigawatt size history.
Outsourcing is an open secret in the PV industry. It is specific to the crystalline sector, practiced by most (if not all) manufacturers and widely denied by everyone. The rush to sell more, grow larger, and be recognized as shipping or producing the most technology has led to a high degree of secrecy as to who actually made what. This makes counting annual shipments difficult and simply reporting the production figures that companies provide much easier. “Ask and repeat” is the mantra concerning annual production and shipment figures. Forecasts, of course, are based on trends established over time. A forecast based on double counting is likely to be quite robust, misleading, and in an industry were success means lower incentives, dangerous.
The business size of an industry is the amount of the product shipped to the first point of sale (first buyer) and the revenues resulting from these shipments. As previously stated, in PV the first buyer can be another manufacturer. As the industry size has increased, the practice is not necessarily more common, it just involves larger amounts of technology. The secondary market, anything past the first point of sale, is something different, as are installations, etc. For many years the PV industry has been chasing a success that has driven it into or to the edge of bankruptcy. Figure 1 presents PV industry metrics for 2011 into 2012.
Previous promises to grow ever larger while costs and prices decline rapidly and in conjunction have seemingly been kept … but oh the cost of those promises. For most of its history the PV industry and its observers and stakeholders have described success in terms of ever larger shipments. Bigger has been considered better whether or not it resulted in profits. In 2011, PV manufacturers began to lose money and fail with these failures continuing into 2012. The current correction and the accompanying consolidation is painful to watch, but much more painful to experience as it brings with it the loss of true expertise and innovation. Figure 2 presents revenues for the PV industry from 2001 through the 2016 forecast.
It seems as if overnight the reluctance to admit to outsourcing has disappeared. The reason for this is certainly not altruistic, nor does it spring from a sudden desire to right-size the industry. A clause in the current US tariff on imported PV technology from China has a loophole. Basically, modules from China with cells from somewhere else (typically Taiwan) do not pay the tariff. Suddenly companies that previously denied – vigorously in most cases and as if the very idea of buying cells or modules from another manufacturer and rebranding them had never occurred to them – are now stating that every module sold into the US had cells from Taiwan inside of it. This should be very good for cell manufacturers in Taiwan. It should also make everyone wonder … just what is the true size of the PV industry? This is not just a good question for 2012, it should be asked for past years too.
Market research is a specific discipline that requires that widgets (or whatever is being counted) be counted a specific way. That is, from point A to the first point it stops, and then to the next point, and then to the next point. At the end, you should have a roadmap that describes industry behavior very specifically so that an industry’s behavior is clear and so that decisions can be made. This is always difficult, for every industry, not just PV. Believing that exponential growth will be never ending is not healthy, particularly for an industry with traditionally low margins and now, a traffic pile up of failures.
The photovoltaic industry develops and manufactures a clean, high quality, reliable and low-maintenance DG technology for which the fuel is free. For doubters, everything requires maintenance and this is an unavoidable fact of all technologies. Future advances for PV will come from balance of systems innovation along with innovation in system design and deployment. The PV industry should also consider focusing on its high quality and reliability instead of being the cheapest source of electricity. After all, if you want an energy source that lasts over 25 years you are not really talking about something that is cheap.
In the meantime, now that the non-secret of outsourcing is temporarily out in the open, it is time to right size the industry and focus on its recovery, continuing innovation, and deployment. For the future, hopefully it will be remembered that bigger ain’t always better.
Worth the Trouble: New Market Tax Credits
The investment tax credit (ITC), production tax credit (PTC), and 1603 Treasury cash grant get a lot of attention for their importance in spurring renewable energy project development. But they have a less-prominent sister incentive: new markets tax credit (NMTC).
Established in 2000 under the U.S. Community Development Financial Institutions (CDFI) Fund — a program of the Treasury — the NMTC has thus far provided 664 tax credits worth a cumulative $33 billion. The purpose of NMTCs is to catalyze economic activity and job creation in under-served areas. Unlike the low income housing tax credit, the NMTC program is not permanently authorized, but rather it is extended via periodic congressional allocations. In February, the program announced it would issue $3.5 billion of new credits with applications opening in April, with a June deadline.
NMTCs provide a 39 percent tax break on eligible project costs — aka qualified equity investments (QEIs) — paid out over seven years (5 percent in each of the first three years and 6 percent in the four years thereafter). Only certified community development entities (CDEs) with the following characteristics can apply for NMTCs:
- Is a domestic corporation or partnership at the time of the certification application
- Has a primary mission of serving, or providing investment capital for, low-income communities or low-income persons
- Maintains accountability to residents of low-income communities through representation on a governing board of or advisory board to the entity.
Once a CDE receives an allocation, it can “shop” the credits to investors. The CDE must first seek to partner with for-profit subsidiaries, and if that is not possible, the NMTCs can be offered to unrelated investors. Investments must be made in qualifying “low-income communities” as defined by the 2000 census tracks with either (1) a poverty rate of at least 20 percent or (2) a median family income that does not exceed 80 percent of the median family income for the state or area. Updated tracks based on the 2006-2010 American Community Survey are forthcoming.
In the basic NMTC finance structure, the tax credit investor receives a preferred equity payment in exchange for providing the QEI (i.e., project capital). The CDE, in turn, passes the capital on to a “qualified low income community business” and requires a closing fee in the area of 3 percent of the QEI.
According to Dan Martin, Managing Director of Sperry Van Ness/Prism Commercial Real Estate, the net value of the tax credits is equal to a minimum of 20 percent of project costs. The difference between the allocated tax credit (39 percent) and value (e.g., 20 percent) is due to the complex financial structure and number of parties. In an effort to address the high transaction costs, the CDFI Fund issued a notice for public comment in November of last year to garner suggestions on how the program can improve its effectiveness and reduce the cost burden on participants. The comment period closed in February. As of June 2012, no known actions have been taken in response to the public comment process.
An additional challenge with NMTCs is that CDEs have a wide range of investment interests. If renewable energy investments are not directly aligned with the mission of the CDE, it may be difficult for the project to gain involvement by the CDE, which is key to moving the project forward. Also, it is not feasible to become a CDE within a short timeframe, and therefore projects looking for CDE partners for the current open solicitation would need to collaborate with an existing CDE.
NMTCs have been used to support renewable energy projects, such as the City of Denver’s 1 MW of solar photovoltaics (PV) on city buildings. And more recently, NMTCs were used (along with just about every other incentive under the sun) to support a 1.65-MW PV project in Salt Lake City. However, it appears that no renewable energy projects were selected to receive NMTC allocations in 2011 (although there could have been applicants, and it is possible these details were omitted from available sources).
Ultimately, NMTCs remain a viable program but one with limited use by renewable energy developers. Perhaps without revival of the 1603 Treasury cash grant, that will change.
Know of a recent clean energy project that has used NMTCs? Tell us about it in the comment section.
This article was originally published on NREL Renewable Energy Finance and was republished with permission.
Virtual Metering: Solar Benefits Without an On-site Solar PV Array
Are you interested in the benefits of a solar PV array but don’t believe you can afford it? Is your home in a heavily-shaded area that would prohibit a good return-on-investment from solar? Do you rent? Maybe you live in a community with a homeowners’ association, where you’re not permitted a rooftop solar array?
Virtual metering may be the answer. Virtual metering is when your solar PV array is located off-site so you can receive clean, low-cost renewable energy generated by solar panels mounted in another location. Often, this concept is called “Community Solar,” since the solar is provided by the utility company, the municipality or even investors.
Mike Taylor, director of research for the Solar Electric Power Association, explains: “It’s somewhat similar to leasing solar panels from a solar company that puts them on your home, except in this case, the utility is putting a larger system somewhere in their service territory. The utility company takes on the risk of owning and maintaining it; customers benefit from no- or low-cost solar, low contract obligations, and portability.”
Not that a solar PV array requires much maintenance or a lot to think about, but this type of virtual metering works especially well in places like apartment buildings, houses that are part of homeowners’ associations, or homes in heavily-shaded areas — three market segments that typically could not benefit from solar power for a variety of reasons. Virtual metering also works well for lower-income homeowners without the cash to pay for a solar array or the credit history to get any sort of financing in the form of a solar lease or a loan.
Could Virtual Metering Be the Solar Model of the Future?
Taylor thinks its one piece of the puzzle that will increase the percentage of electric power that comes from the sun. “A lot of utilities are interested in the concept,” Taylor says. “Lower solar prices are enabling that interest. Getting solar benefits to a broader range of income demographics, not just high-income or early adopter customers, is a notable goal. It wouldn’t surprise me if 30 utilities offered community solar by the end of the year.”
“But,” Taylor adds,” this is a niche area of development and there are larger issues at play.”
Some of those larger issues, he says, involve economics and utility cost recovery. “Theoretically, if half of all customers reduced their electricity use by 25 percent, utilities wouldn’t be able to recover the costs of running the electric grid and would have to raise electric rates. Even people with solar still need the electric grid – it’s much cheaper than batteries. People who didn’t have solar and/or weren’t efficient would absorb that increase more than others.”
The issues Taylor brings up echo HelioPower’s senior vice president of sales Scott Gordon’s thoughts on the “grid of the future.” Gordon asserts that utilities will move to a distribution, rather than generation or creation, model for electricity as more customers move to renewable energy sources. But if utilities are creating energy through community solar programs, it reduces their loss.
Taylor says: “Community solar can promote solar to a broader customer base, at potentially lower costs than rebate programs at a customer’s site, at potentially less revenue loss than net metering.”
He, too, speculates on the “grid of the future.”
“Can utilities do business differently in ways that minimize costs and expand benefits? I see virtual metering as one test bed for that transition. Community solar isn’t a perfect solution, but it’s looking in the right direction.”
This article was originally published on EcoOutfitters and was republished with permission.
Staying Alive: Could Thin-film Manufacturers Come Out Ahead in the PV Wars? Part 2
New Hampshire, U.S.A. — Thin-film solar panels are created through three different manufacturing techniques that use different core components: amorphous silicon (a-Si), cadmium telluride (CdTe) or copper indium gallium diselenide (CIGS) and copper indium sulfur/selenide (CIS).
In part one of this article, we talked with a-Si equipment manufacturer, Oerlikon Solar, which was recently purchased by Tokyo Electric. Here in part two, we talk with two heavy-hitters in the thin-film solar industry to hear their thoughts about the future of thin-film PV and the future of their technologies.
First Solar – Maker of Cadmium Telluride (CdTe) Thin-film; Developer of Utility-Scale Projects
First Solar has robust plans for the future, according to David Erhart, Marketing Communications Manager at the company.
Erhart explained that it is First Solar’s “thin-film technology that takes a simple piece of glass and turns it into a complete solar module in less than two and a half hours in a continuous automated process,” that has fueled the company’s success so far.
To date, the company has more than 5 gigawatts of modules installed worldwide and was the 1st company to break $1 per watt cost barrier, he said. It is currently manufacturers its panels at a cost of less than $.75 per watt and the company won’t stop there, according to Erhart. A recently announced restructuring of First Solar should bring the company’s average manufacturing to $0.70-$0.72 per watt in 2012, below prior expectations of $0.74 per watt. In 2013 the company estimates average module manufacturing costs will range from $0.60 to $0.64 per watt.
Erhart said that First Solar is the current world-record holder for CdTe PV cell efficiency at 17.3 percent and PV module efficiency at 14.4 percent, numbers that have been verified by the National Renewable Energy Lab. The company plans to take those efficiencies to scale. “We expect to take cadmium telluride thin-film solar technology to levels that it has never been before,” he said.
In addition to module manufacturing, First Solar has become the world’s largest builder and operator of utility-scale power plants. It boasts the “largest pipeline in the industry with more than 2.7 GW of solar PV plants under construction or in development with PPA,” Erhart said.
He pointed to three U.S. projects — the 290-MW Aqua Caliente, the 550-MW Topaz Solar Farm and 550-MW Desert Sunlight projects — as examples of some of the power plants that First Solar is developing, which also happen to be among the largest PV power plants under development in the world.
First Solar has now set its sights on the developing world, in line with many other solar power players.
While acknowledging that markets can shift on a dime, Erhart said “regardless of where the existing markets go, we want to invest in what we call long-term sustainable markets.” That makes a lot of sense when considering how the on-again, off-again subsidies that are in place in Europe have really dominated market development.
“We don’t want to wake up every day dependent on these subsidies,” said Erhart, explaining why the company is interested in more stable markets such as “markets that have a need for electricity, that have high irradiance, and have high costs of electricity,” he said.
First Solar CFO, Mark Widmar, echoed the company’s expansion plans in a conference call to investors. “Over the next couple of year, we also intend to make progress in sustainable markets,” he said. More details will be available during the company’s first quarter earnings call, scheduled for early May, after this article goes to press.
First Solar modules use “98 percent less semi-conductor material than the semi-conductor materials required for traditional crystalline silicon manufacturing processes,” said Erhart. That has meant that the company has had a significant cost advantage over the years, although GTM Research’s MJ Shaio points out that the cost-advantage window is closing.
“Scores of thin-film silicon manufacturers, drawn by the pied piper of propped poly prices, suddenly saw utilization rates collapse and their low efficiency, very low cost product turn into a very low efficiency, average cost product, evaporating any competitive advantage they might once have had,” he said in his thin-film report.
In terms of competition, Erhart sees the “usual suspects” as First Solar’s main rivals in the space. These are the crystalline solar PV module makers below:
However, he explains that it is not always just other solar companies that First Solar is in competition with: “When you are going into these emerging markets to help them with their dire energy needs, you are not necessarily competing with other solar panel manufacturers, you are competing with other forms of renewable energy,” he said. “In Saudi Arabia, for example, we are competing primarily with diesel, which they would rather sell as gasoline or petrochemicals than burn for their own domestic electricity.”
And as a builder of power plants, the company also can go head to head with “very large construction firms that have been building power plants for a long period of time,” he said.
While those firms have a lot of experience, First Solar has a lot to be proud of as well, according to Erhart. He said that the company has the lowest balance of systems (BOS) costs in the industry; an award winning safety record; and the fastest installation velocity in the industry.
First Solar CFO Widmar echoed Erhart’s enthusiasm about the company’s future. “Our captive pipeline shows that many of the world’s most sophisticated renewable energy investors continue to invest in projects using our technology, which is being deployed in some of the largest sites in the world, under the toughest desert conditions,” he said.
Other existing CdTe thin-film firms have not had quite the success that First Solar has had so far. Abound Solar recently announced plans to layoff 180 employees while it builds its next-generation higher-efficiency module.
GE, which acquired PrimeStar Solar last year, said it would be building a 400-MW CdTe factory in Aurora Colorado. The facility is under construction right now and GE has said that it expects panels to come off the assembly line this year.
Solar Frontier, CIS Thin-Film Developer
With the exception of GE’s more recent entrance into the thin-film market, Solar Frontier is the only major thin-film player that has a huge parent company. Showa Shell Sekiyu K.K. owns Solar Frontier and having such a wealthy parent company means there is little doubt that Solar Frontier will be able to make strides in the solar power industry.
“So far, it’s a good year for us,” said Greg Ashley, the company’s Chief Operating Officer for the Americas. “Even though global prices have stayed low, they pretty much stabilized over the past few months,” he continued.
Solar Frontier manufactures copper indium selenium (CIS) solar panels and has a 1-GW factory in Japan and several smaller facilities in other areas of the world.
Ashely said that CIS has a few advantages over CdTe and a-Si panels. “Our measured performance ratio is still higher than CadTel,” he said. “I think the fact that we’ve stayed with a very strong framed module, whereas most of the other thin-film folks have gone to frameless, or stayed with frameless gives us some installation/design flexibility that they don’t have,” he explained.
“And our modules are slightly larger so the combination of the frame and the larger size, we typically have lower BOS and are easier to handle,” said Ashley.
Ashley said the company has its eyes set on Japan. “Demand for us in Japan is exploding [as the country is] getting ready for the new feed-in tariff,” he said.
Japan’s feed-in tariff is supposed to go online July 1 as the country sets to aggressively pursue renewable energy as a result of losing much of its nuclear power capacity. “So we are positioned pretty well,” said Ashley.
Like the other executives we spoke to, Ashley echoed the market shifts taking place. He said that for Solar Frontier, the U.S. holds great potential. “The sun belt is probably going to be, in the long run, the biggest market. Everyone expects it to be,” he said. In addition, he said the company is doing business in the Caribbean, and that it is “pursuing business in Hawaii and we are also pursuing business in Latin America.”
But Japan is where it really plans to grow: “Japan is probably a bigger, faster, easier growth market for us…but in the long run, it’s all the sun belt countries, the developing countries,” he said.
With Shell as a parent company, Solar Frontier doesn’t have a lot of trouble penetrating new markets. Shell has a long history in the global energy markets said Ashley. “We’ve got a very strong presence in a very large historical network of relationships both with the private and public sector,” he said.
He said the company is “treated with respect” and “granted some preferential access to the right types of opportunities with the right types of companies, with the right types of partners” in the emerging markets across the globe. For example, “we have EPC partners with some of the larger players in India…same thing in Thailand and Malaysia and other parts of the world,” he said.
To date, however, Solar Frontier is working on smaller projects than its rival First Solar. Ashley said that for now, even its utility projects are in the one to two-megawatt range. Except of course for the 130-MW Catalina solar project, which is located in Kern Coutnry, Calif. and being developed my enXco. Solar Frontier shipped 30 MW of panels to the Catalina project in the last quarter of 2011 and expects the project to be completed by mid-2013.
Like Oerlikon’s O’Brien and First Solar’s Erhart, Ashley believes that PV module manufacturing pricing will remain in the one dollar per watt range but “in this race to get to installed cost of one dollar per watt, I think we are very far off from that,” he added.
Ashley said that the solar industry’s biggest problem right now is the excess inventory that has built up, a problem that he thinks could be resolved by the country that manufactured a lot of it: China.
“Actually the market in China itself will have a big influence,” he said. Ashley thinks China will begin soon to stimulate its own internal demand and that will reduce the impact that oversupply is having on the market.
In addition to Solar Frontier, other CIGS players include MiaSole, Avancis, Global Solar, Nanosolar, Sotecture and Solibro, which is owned by Q-Cells. Q-Cells filed for bankruptcy in early April, leaving the fate of Solibro up in the air.
But Solar Frontier’s Ashley remains incredibly optimistic about thin-film. He said he believes that “thin-film is competitive with crystalline even at the lowest prices” and “not just our technology.”
“There’s going to be more thin-film manufacturers and it’s good that there are and it’s good that the existing ones continue to grow and thrive,” he said. “I’m very hopeful for all my competitors, as well as my own company.”
GTM Research forecasts that global thin-film production and total market value will dip below $3 billion in 2012, it’s latest report projects an up-tick in thin film demand in 2015/16, where the total market, according to GTM will recover to $7.6 billion.
GTM believes that industry’s rebound will be predicated on the continued, though muted, success of First Solar and the execution of efficiency, yield and scale roadmaps from other thin film manufactures.
In particular, GTM predicts strong growth in the copper-indium-gallium-diselenide (CIGS) technology segment, forecasting production at 4 GW in 2016. Even though in 2011, Solar Frontier is the dominant supplier with roughly 400 MW of CIGS PV shipments GTM said that companies like MiaSolé and TSMC could emerge in the next few years as top thin-film suppliers with cost of manufacturing approaching $0.50 per watt. Venture investments in CIGS surpassed $305 million in the past two quarters, albeit at depressed valuations. Coupled with increased interest from global industrial conglomerates on the sidelines, GTM Research predicts major acquisitions in the near future.
Solar Boom Heads to Japan Creating $9.6 Billion Market
By Chisaki Watanabe, Bloomberg
TOKYO — Japan is poised to overtake Germany and Italy to become the world’s second-biggest market for solar power as incentives starting July 1 drive sales for equipment makers from Yingli Green Energy Holdings Co. to Kyocera Corp.
Industry Minister Yukio Edano set today a premium price for solar electricity that’s about triple what industrial users now pay for conventional power. That may spur at least $9.6 billion in new installations with 3.2 gigawatts of capacity, Bloomberg New Energy Finance forecast. The total is about equal to the output of three atomic reactors.
“The tariff is very attractive,” said Mina Sekiguchi, associate partner and head of energy and infrastructure at KPMG in Japan. “The rate reflects the government’s intention to set up many solar power stations very quickly.”
Prime Minister Yoshihiko Noda’s effort to cut dependence on atomic energy that provided about 30 percent of Japan’s power before the Fukushima nuclear meltdown in 2011 will help a solar industry suffering incentive cuts across Europe. It’s also raising concern among Japanese business groups that clean power aid will raise bills and slow Japan’s economic recovery.
“This is a mechanism with a high degree of market intervention by setting tariffs artificially high and making users shoulder the cost,” said Masami Hasegawa, senior manager of the environmental policy bureau of Keidanren, Japan’s most powerful business lobby, which counts Toyota Motor Corp. and Nippon Steel Corp among its members. “We question the effectiveness of such a scheme.”
Twice German Rate
Utilities will pay 42 yen (53 cents) a kilowatt-hour for 20 years to solar power producers, almost twice the rate in Germany, the world’s biggest market by installations. The solar tariff was among incentive rates for clean energy announced today by the Ministry of Economy, Trade and Industry.
Developers are counting on the subsidies and have accelerated solar-park construction plans this year.
“We hear every day a new announcement of a megawatt-scale project,” Izumi Kaizuka, a solar industry analyst at RTS Corp., said in Munich, referring to projects 1 megawatt or bigger.
Japan ranked sixth worldwide by new installations last year, when it added 1.3 gigawatts of solar to bring its installed base to 5 gigawatts. Next year builders will erect roughly triple that level, or another 3.2 gigawatts to 4.7 gigawatts, New Energy Finance forecasts. A gigawatt is enough to supply about 243,000 homes in Japan.
Comparison With China
Only China will exceed Japan in terms of solar capacity growth as it supplants Italy and Germany, which held the top two positions in 2010 and 2011, London-based New Energy Finance estimates.
Japanese companies such as Kyocera and Sharp Corp. that kept the photovoltaic industry alive when the U.S. scrapped investments in the 1990s are gearing up to supply their home market, as the government converts a pilot program into one aimed at large, commercial solar farms.
“We no longer have enough electricity, especially during the day, and that is when solar power can help,” said Mikio Katayama, chairman of the electronics manufacturer Sharp Corp. and the Japan Photovoltaic Energy Association. “This is a very good rate to promote investment and mega solars.”
Germany’s Q-Cells SE overtook Sharp as the biggest solar cell producer in 2007, according to the International Energy Agency. Now Chinese manufactures such as Suntech Power Holdings Co. and Yingli dominate the industry as their lower prices helped push Q-Cells and several other Western rivals into bankruptcy protection.
Japan got about 1.6 percent of its energy from renewables in 2011, the smallest portion among Group of Seven countries after Canada. It trailed the U.S. and France in the G-7 in atomic power consumption. The shift toward solar reflects concern that the cost of imported fossil fuels will rise in the coming decades.
“Japan’s manufacturing economy was severely challenged by the oil crisis of the 1970s,” said Arthur Mitchell, senior counselor in the Tokyo office of the law firm White & Case LLP, whose expertise includes environmental and power policies. “Assuming that the price of energy and almost everything else will rise, Japan is betting it will once again become the most efficient user of energy.”
A 42-yen solar rate, targeted for 10-kilowatt or bigger plants, is above the 38 yen price for 15 years the industry expected, said Takashi Watanabe and Daiki Takayama, Tokyo-based analysts for Goldman Sachs Group Inc., in a note in April.
German Subsidy Cut
Germany is cutting subsidies and plans to offer 0.135 euros to 0.195 euros (17 to 24.6 U.S. cents) a kilowatt-hour, depending on size. Italy’s rate is 0.128 euros to 0.237 euros.
Utility-scale projects may earn 6 percent internal rates of return, and that could increase to more than 18 percent if developers can bring system costs closer to international levels, Travis Woodward, a New Energy Finance analyst, wrote in a note on June 6. He also estimates residential solar systems are being sold in Japan for $6.28 a watt, more than double the $2.70 a watt price in Germany.
Japan is one of the highest average selling price markets dominated by a few large installers, Jefferies Group Inc. analysts Jesse Pichel, Min Xu and Scott Reynolds said in an April 30 report. “We expect Chinese and Taiwanese producers to erode the high domestic share through local partnerships to drive down cost,” the analysts said.
Surcharge to Consumers
Under the new program, utilities will buy solar, biomass, wind, geothermal and hydro power. All costs will be passed on to consumers in surcharges, which the government today said will average out at 87 yen a month per household. The government’s previous average estimate was 100 yen.
The industry ministry will set terms and rates annually for projects whose contracts are signed the same year with utilities.
The measures beginning in July expand on a program started in November 2009 that requires utilities to buy solar power that the generator didn’t need. That expanded the market for rooftop residential panels.
The new incentives will encourage utility-scale projects. Japan’s five largest solar projects planned or under consideration were all announced between October and April, as the government worked out details of the feed-in tariff program, according to New Energy Finance.
Dozens of companies have announced plans to take advantage of Japan’s subsidies. Yingli, based in Baoding, China, has set up a unit in Japan.
Closer to Customers
“Being closer to the customers is extremely important for Yingli,” Masaki Mizuta, managing director of Yingli Japan, said on May 4. “We also believe that this is a key success factor in Japan.”
Kyocera Corp. is “aggressively” expanding its solar division, said Sanae Iwasaki, a spokeswoman for the company that’s based in Kyoto, Japan. It doesn’t disclose production targets, though it’s considering a 70-megawatt station with IHI Corp. and Mizuho Corporate Bank Ltd. in Kagoshima on the southern island of Kyushu, which would be the largest in Japan when completed.
“More players will enter the market for investment purposes,” Iwasaki said. “‘There will be more importance on the quality. We will pursue cost-cutting by producing panels with higher conversion efficiency.’’
Panasonic Corp., which also owns Sanyo Electric Co., plans to boost supply for its home market by shipping solar products from its new plant in Malaysia, said Kazuhiro Yoshida, who heads the company’s solar panel operation.
‘‘Japan is where the demand is,’’ Yoshida told reporters May 23. The plant will begin production in December, boosting the company’s capacity to 900 megawatts from 600 megawatts, according to the company’s statement.
Japanese home renovation company West Holdings Corp.’s entry into the solar business was putting panels by Sanyo on rooftops five years ago. The company now gets almost all panel supplies from Chinese and Korean makers, Senior Managing Director Toshihisa Nagashima said.
‘‘The quality of foreign panels is comparable and their prices are more competitive,” compared with Japan-made products, Nagashima said in an interview on May 18 in Tokyo. “Customers are becoming less picky about who makes them.”
West Holdings now plans to start making modules in July with Taiwanese company Eversol Corp. in western Japan.
Other manufacturers are focusing on technology that uses little or no silicon, the main raw material used in most solar panels. Solar Frontier K.K. is working on thin-film modules using copper-indium-gallium-selenide, or CIGS, technology. The unit of Showa Shell Sekiyu K.K. is projecting its domestic sales this year will account for 60 percent of revenue, compared with 30 percent last year.
The Tokyo-based company boosted its production capacity to about 1 gigawatt with the start of operations at a 900 megawatts plant in February 2011. The CIGS technology “will become a core technology in solar power,” Senior Vice President Atsuhiko Hirano said in an interview.
Copyright 2012 Bloomberg.
Solar Provides 10 Percent of Germany’s Electricity in May
WASHINGTON, D.C. — Last month was a big one for the German solar industry. According to figures released by a German water and energy trade association, distributed solar photovoltaic systems produced 10 percent of Germany’s total electricity consumption for the month of May. That’s a 40 percent increase over May of 2011.
On the 25th and 26th of May, Germany was able to meet one third of its peak demand with solar alone.
There are now over one million solar systems installed across Germany. In 2011, solar accounted for 3 percent of the country’s total electricity generation — a 60 percent increase over 2010.
A sunny month and a continued boom in installations contributed to the increase in generation. In the first quarter of 2012, deployment of solar PV systems was more than three times higher than the first quarter of 2011. In the rush to get systems placed in service before Germany administers steep cuts to its feed-in tariff program, installers put 1,800 MW online in the first three months of the year. That’s roughly what the entire U.S. industry installed in 2011.
But the continued growth in German installations and increase in solar generation is also sparking calls for more cuts to the country’s incentives. The feed-in tariff, which provides system owners with a guaranteed rate for every unit of energy fed into the grid, has been the key reason for Germany’s success. But with solar costs dropping and generation increasing, the premiums given to producers have been reduced substantially in an effort to cool the market.
In 2011, Germany got roughly 20 percent of its electricity from all renewable energy technologies.
This article was originally published on Climate Progress and was republished with permission.
Two Years In, SunShot Steadfast In Its Solar Mission
June 15, 2012 | 9 Comments
New Hampshire, USA — Ramamoorthy Ramesh is a man in a hurry. As the director of the Department of Energy’s SunShot Initiative, he hears the clock ticking as the program inches toward its mission to slash the installed costs of solar 75 percent by the end of the decade.
Two years into this ambitious program, Ramesh and his staff are still guided by the dual principles of zero-subsidy solar and that looming 2020 target.
“There is a sense of urgency because the stakes are so high,” said Ramesh during an interview ahead of the program’s gathering this week in Denver, Colo.
In an industry often judged by yesterday’s stock prices, quarterly installation numbers and incremental increases in efficiency, Ramesh’s role is to take a holistic, multi-year view of the industry, whose value he says will extend well into the trillions of dollars. What are the challenges, where are the bottlenecks and what are the technologies that will make solar a free-standing industry that will produce 15 to 18 percent of America’s electricity generation by 2030? And how can the program better align America’s growing installation capacity with its shrinking manufacturing base?
The SunShot Initiative is trying the elicit the same national focus that was launched by President Kennedy’s challenge to land a man on the moon by the end of the 1960s. That became a movement defined equally by innovation and pride. The SunShot Initiative certainly won’t ascend to that level in the national consciousness, but those politically invested in the program — from the White House on down — are looking to mirror the moon landing’s successes in linking new technologies with American manufacturing and buying power.
The DOE’s SunShot Initiative is working to do this as well, and it’s looking at more than just the crystalline silicon panels that are currently dominating the industry. What it’s seeking are those high-risk, high-reward technologies and models that challenge conventional wisdom and redefine the possibilities of the American solar market.
The program, with a $310 million budget planned for next year, is looking at many options, from lowering costs for concentrating solar power (CSP), concentrated photovoltaics (CPV) and all sorts of thin films to re-examining financing and policy models. But it’s doing so in a way far different that the program’s much maligned loan guarantee program. Rather than pump large sums to private companies to effectively scale-up, the SunShot directs smaller amounts of cash to national laboratories and academic institutions as well as private companies — all with the goal of reducing installed solar’s bottom line.
This is all being done against the backdrop of political reality. Organizations like the Heartland Institute have criticized the program as another example of “solar getting a handout,” and it’s unlikely the program would receive a vote of confidence from a Romney Administration. So with that in mind, the initiative is in even a greater hurry to prove its effectiveness and to chart a viable course toward its stated $1 a watt installation goals.
In the past few days alone — as it geared up for a two-year update of sorts in Denver — the program announced a series of endeavors that could drive cost reduction in manufacturing, financing and installation. And in typical SunShot fashion, it’s done so in a way that unites stakeholders through a shared vision. Here are three recent projects that underscore the diversity of the program’s approach.
Manufacturing: Competition Through Cooperation
A winner of a SunShot investment in 2011, The U.S. Photovoltaic Manufacturing Consortium (PVMC), an industry-led coalition that will create a roadmap for thin-film CIGS technology, announced this week its leadership team while further detailing its plans to unite the supply chain.
The technology that uses copper indium gallium selenide lags far behind crystalline silicon in terms of market share, but companies like Japan’s Solar Frontier are starting to make a dent. The new group aims to bring together companies and organizations, from labs and material makers to module producers, integrators and utilities.
To help CIGS catch up to low-cost panels coming out of China, the group is turning to some leaders with deep experience in the solar space — Alain Kaloyeros of the College of Nanoscale Science and Engineering; Dan Armbrust, President and CEO of SEMATECH; Larry Kazmerski, Director of the National Center for Photovoltaics at the National Renewable Energy Laboratory (NREL); Joseph Laia, most recently President and CEO of American CIGS manufacturer Miasole; and Richard Swanson, founder and current president emeritus at SunPower.
“One important objective of PVMC is to build leadership around roadmapping to establish the disciplines of financial and cost modeling, strategic planning and other long-term activities for CIGS PV manufacturing and applications,” said Armbrust. “PVMC will take a lead role in bringing in the entire industry supply chain to collaborate in defining critical challenges and potential solutions for over the next decade.”
The collaboration will be headquartered at the College of Nanoscale Science and Engineering (CNSE) of the University at Albany in New York.
Installation Costs: The $2 A Watt Challenge
The big headlines tend to come with the major utility-scale announcements. These mammoth projects have come to define much of the American solar industry, and in fact they could turn out to be the legacy of the Department of Energy’s Loan Guarantee Program.
Rooftop solar, though, remains a vital component of the mix and it is in many way the best approach for bringing solar into the living rooms of everyday Americans. But there are pricing challenges, and right now the installed costs of solar are hovering around $6 a watt, a figure much higher than the installed costs we’re seeing for commercial and utility-scale installations.
To address this, the SunShot Initiative just unveiled a $10 million rooftop challenge. The issues are complex, but the premise of the competition is simple: The money will go to the first three teams that install 5,000 small-scale (defined as up to 15 kW) rooftop solar systems at an average price of $2 per watt or less by the end of 2014. If that target isn’t reached, then the money will be returned to the United States Department of Treasury.
Financing: Everyone Pitches In
Panels and balance of systems play a huge roll in the overall cost of solar. But soft costs are increasingly being seen as an area where serious gains could be made. According to Energy Secretary Steven Chu, these costs associated with permitting and financing can make up about 25 percent of a system’s actual price tag.
As someone with a deep technology background, Ramesh says he’s increasingly aware of how financing drives solar costs. For its part, the DOE is working to reshape the solar financing landscape. “Financing is a major part of getting the cost of solar down. There is a huge difference between borrowing at 12 percent versus 10 percent versus 8 percent,” said Chu.
SunShot recently awarded a $2 million grant to a new company that is working to take solar mainstream by building an online crowdfunding platform to drive individual investment.
California-based Mosaic, which recently raised $2.5 million in venture capital, says it will make it easier for homeowners, business and community groups to invest in solar projects. During the company’s first phase, hundreds of individual investors funded more than $350,000 to complete five rooftop solar projects in California and Arizona with a combined capacity of 73 kW. In addition to the installation jobs created, the company says it helped community groups save a combined $600,000 on their utility bills.