Thin Film PV

With 2012 just around the corner, Matt Carr of PV Insider attempts to clear the fog surrounding the thin film industry after a year of dramatic failures and important steps forward.

The year 2011 will be remembered as a turbulent year for the thin film industry, and the US market in particular has had its fair share of well publicized difficulties.  The collapse of Solyndra provided the stick which thin film’s critics used to beat the technology, particularly as the company was held up as a bastion for US jobs in renewables.

The recent announcement that Michigan-based Energy Conversion Devices have placed an indefinite suspension on their manufacturing puts the spotlight back on to the technology. But is thin film really on the brink?  Or can a leaner, fitter thin film industry bounce back stronger?

Good times, bad times

The first half of the year provided indicators that thin film was back on its feet after a period of consolidation and growing pains.  The technology accounted for almost 20% of the signed PPAs in US states with a high DNI, and 30% of US based PV production in the first quarter of 2011.  However, with silicon prices hitting rock bottom, the pressure was on the entire thin film eco-system to make a collective reduction in their costs.

Unfortunately, the pressure was too high for some, and the bankruptcy of Solyndra raised the questions that emerging technologies are never too far away from – such as bankability, stability and viability.  While Solyndra could not be considered a major player in the thin film industry, around $1.5 billion had been invested in the project.

The bankability question has been hanging over manufacturers since the inception of the technology, and the wider economic climate has forced investors to be even more cautious.

Joseph Hudgins, Principal Solar Scientist, Climate Business Group of the International Finance Corporation (IFC) explained that “it is very difficult to demonstrate commercial and economic viability of thin film manufacturing in the current market so investments will be difficult.  Separately, project installations are site specific but often financially viable. There needs to be a ‘compelling reason’ to invest in thin film PV versus other alternatives.”

Think about what end-customers want

If the cost of the module is crucial, then should a company pursue a cost leadership or differentiation strategy in the current climate?  Daniela Schreiber, Director at EuPD Research, argued that a compelling case can be made for both sides.  “If we would define innovation here as incremental improvement of efficiencies then I would say you can perfectly pursue innovation if you identified this as one of your most effective cost reduction drivers,” she remarked.  “However, in an increasingly commoditized PV market, a differentiation strategy may be a tactic to relieve some of the competitive pressure manufacturers are currently facing.

Obviously an effective differentiator or USP puts the manufacturer in the position to charge a premium, or increase sales. For instance, our latest market research shows that providing a module CO2 footprint certificate is a decisive buying argument for customers (under similar price/technology conditions).”

To address the question ‘Can thin film bounce back?’ we should attempt to understand if the damage was mostly cosmetic, or if the problems are more entrenched.  Again we return to Solyndra, to examine whether or not the reaction to their bankruptcy was exaggerated.

Peter Nieh, Managing Director and Founder of Lightspeed Venture Parters (an active investor in thin film), suggested that Solyndra was a “sort of perfect storm”.  The dramatic shift in the market between the time when the DOE selected Solyndra for investment and the summer of 2011 meant that conditions were completely altered. 

Polysilicon prices fell, supply increased as capacity had been built in the upturn, and demand dropped relative to supply with the poor macroeconomy and declining government subsidies.  “Solyndra, with its inherently poor cost position was undressed and beholden to a DOE loan with lots of strings attached.” Nieh explained. 

“So, there is a real rational story here of what happened, and it should not be generalized to bash the rest of the industry. Solyndra pretty much wasn’t going to make it under any reasonable world view.” 

Tarred with the same brush?

While the negativity surrounding Solyndra dominated the headlines, other companies were making waves in the industry for the right reasons. Thin film start-up Stion cut the ribbon on its 100MW manufacturing factory in Hattiesburg in September, and will see the first production of their CIGS modules begin later this year.

At the end of August, operations began at Global Solar Energy’s 35MW solar module factory in Germany, producing flexible CIGS.  200,000 CIGS modules from Q-Cells were installed at a 20.8MWp CIGS solar farm in Germany. 

The US Department of Energy have continued to demonstrate their confidence in the technology.  In August a $197 million loan guarantee was granted to SoloPower for a manufacturing facility that U.S. Energy Secretary Steven Chu announced would create around 450 permanent and 270 construction jobs. 

In the same month $967 million was guaranteed to the Agua Caliente Solar project, a 290MW PV solar generating facility in Yuma County, Arizona that will use thin film solar panels manufactured by First Solar.  But in order to build a self-sufficient industry that does not rely on government support, cost reduction is now of paramount importance.

Thinking ahead

Jean-Noel Poirier, Senior Vice President of Marketing and Business Development at CIGS manufacturer Global Solar Energy, noted that “political risk is real in the PV business. The changes in feed in tariffs in key markets such as Germany, France and Italy have proven it one more time in 2011. 

"Companies need to have a quick path to ‘grid parity’ without incentives in their targeted segments. In the short term, government incentives favoring innovation are good ways to allow the most advanced future technologies to get to market and raise the bar in the PV industry.”

Thin film PV has a role to play in the solar market, and it is inevitable that any emerging technology market will go through rounds of spectacular growth and heartbreaking consolidation.  It is vital now to establish what is fact and what is fiction about thin film and its PV competitors, and not to overstate the failures or glorify the successes. 

Meanwhile, those companies working to further the industry must look at innovations in balance of systems, manufacturing processes and installation as well as efficiency gains.  With sensible decision-making and clever cost reductions, a number of thin film companies should be well placed to take advantage of the niches, applications and opportunities that will inevitably open. 

Ultimately, a leaner thin film industry should be able to compete more effectively moving forwards.

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Matt Carr is the Event Director of the 4th Thin Film Solar Summit USA (1-2 December, San Francisco), where companies will learn how to seize new opportunities and reduce their costs to achieve success.  Full details of the conference can be found at www.pv-insider.com/thinfilmusa