Thin Film has dominated India's solar landscape until now. But crystalline-silicon modules are fast gaining ground with a high probability of a long-term future.
Indian PV watchers were quick to pick up on the statement made by First Solar’s chief finance officer in recent weeks. Mark Widmar’s admission that his company’s thin-film modules might not stand up so well in hot climates was, after all, a potential game-changer.
First Solar’s cadmium-telluride modules have spearheaded thin film’s dominance in the Indian market for three reasons.
The first is that US companie,s such as First Solar, have benefited from loans handed out by the Export-Import Bank of the United States (Ex-Im Bank) to help ship their modules.
A second is that Indian project developers wanting to use crystalline-silicon modules had to buy them from local suppliers, which was a challenge given the embryonic nature of India’s PV supply chain market. Both of these advantages are likely to be temporary, however.
Ex-Im Bank’s handouts will not last forever, one assumes, and India’s crystalline-silicon industry will ultimately mature, however slowly.
That meant the only apparently lasting advantage of thin film in India was its third claim to fame: that is has a better performance than crystalline silicon in India’s muggy climate. Widmar’s comments to a group of analysts seemed to knock that claim for six, however.
“We believe our PV modules are potentially subject to increased failure rates in hot climates,” the executive is quoted as saying. “Our experience has shown that our warranty rates for hot climates are slightly higher than for temperate climates.”
This was a pretty tough admission for a company that last September bagged a 100 MW thin-film module order from Reliance Power and which expects to get 20% of its business from India in 2012, according to analyst projections.
Hot countries, hot markets?
However, for Jenny Chase, solar insight manager at Bloomberg New Energy Finance, it was simply a case of the market leader realising it had to own up to a problem that sooner or later will affect all module vendors in hot countries.
“First Solar said they were increasing their warranty provisions by 1% because they were getting more claims on their warranty than they thought they would get in hot weather,” she explains in an interview earlier this month.
“I don't think that necessarily means anything versus crystalline silicon, because most modules installed globally have been installed in places where it wasn't very hot.”
The stress of hot climates might be expected to have a greater or lesser impact on all PV laminates, she continues. “They are the first company to have said hot weather panels don't perform as well in hot weather as they thought they would.
“But people have made this into 'solar panels do not work in hot weather,' which is not actually what the story is.”
The fact remains, though, that Widmar’s comments represent a knock for thin film’s image at a time when it faces growing competition from traditional modules in India.
“That gives crystalline silicon a bigger future,” states Josefin Berg, research associate at IHS Emerging Energy Research.
Shayle Kann, managing director of GTM Research’s solar practice, points out that: “A big portion of every market is crystalline silicon; in India as well.
“The one difference being in India is the domestic content requirements do not apply to thin film so thin film is a little more attractive there for foreign suppliers.”
As the Indian market grows in importance, he adds: “You'll start to see manufacturing moving to India to serve it. But that might take some time.
“Generally the overall competitive landscape globally is definitely in favour of crystalline silicon and those suppliers are very aggressively seeking growth opportunities, places where they can funnel demand, because they need it.
“So I think you have to expect crystalline silicon will take a bigger share longer term in India.”
In fact, according to the managing director of renewable energy consultancy Bridge to India, Dr Tobias Engelmeier, that increase in share is already happening as Chinese crystalline silicon manufacturers set their sights on the market.
While at the end of last year thin film accounted for around 80% of installed modules on the ground, he says that proportion is already heading towards 50%.
The trend will no doubt gather even more speed once India gets a few major crystalline-silicon manufacturers of its own, notes Chase at Bloomberg. “The trouble is there aren't really any tier-one crystalline-silicon players in India,” she says.
“Until there are some crystalline-silicon tier-one suppliers in India, or until they get some kind of financial support, it'll probably take a few years for Indian companies to ramp up their cost-effective crystalline-silicon operations.”
But with support for thin film on the wane, she thinks the likelihood of a decent home-grown manufacturer appearing on the scene before long is "probably reasonably good.
“They don't have to be international tier one,” she adds. “They just need to convince some banks that they are completely reliable.”