Thin Film PV

Cadmium telluride has long reigned supreme among thin-film technologies, carving out an important niche in the solar energy business. But now that lead is increasingly being eroded.

It would be a feather in any PV company’s cap to be selected as the provider for the world’s largest solar project.

But for First Solar, supplying the 9 million panels for the 550MW Topaz Solar Farms project in San Luis Obispo County, California, USA, is not just a vindication of the strength of the company; it is also a thumbs-up for cadmium telluride (CdTe) thin film in general.

It is probably fair to say First Solar put thin film on the map using CdTe. By end of the last decade the company had cornered around a fifth of the global PV market. In 2008 it achieved the lowest manufacturing cost per watt in the industry, breaking the US$1-per-watt barrier.

And its outlook was bright: CdTe looked certain to maintain a cost advantage over crystalline silicon cells.

Its only threat was from newer thin-film variants, such as copper indium selenide (CIS), which promised greater efficiencies but had not yet reached sufficient volume production to significantly reduce costs.

That heady lead has all but evaporated in the last two years, however, in the face of plummeting crystalline silicon prices. As the cost of traditional PV has fallen, so have the fortunes of NASDAQ-listed First Solar and other CdTe players such as Abound Solar.

First-quarter loss

In April this year, First Solar shuttered its German production lines. Earlier this month it posted a first-quarter loss of $5.20 per share, after charges. Recent weeks have seen its shares trading at just above $13, a far cry from almost $128 a year back.

Meanwhile Abound Solar, which is backed by a $400m federal loan guarantee, in February halted production and fired 180 staff at its Colorado facilities.

Ostensibly, the shutdown is to allow Abound to re-tool for new, more efficient modules due for launch later this year, although chief executive Craig Witsoe acknowledged in a press statement that: “Current market conditions are challenging for all US solar manufacturers.” 

For the time being, nevertheless, news of projects such as Topaz make it difficult to write off CdTe, or at least First Solar, altogether.

As an increasing number of PV players shut up shop, First Solar still seems like a solid enough company to be able to offer a meaningful long-term warranty on its goods.

Plus the challenge of low-cost crystalline silicon has also hit thin-film players touting alternative technologies that could have dented CdTe’s lead. And thin film in general still has devotees. Crystalline silicon is no match for thin film in building-integrated PV applications, for example.

Hot climates

More importantly, though, thin film is generally considered to perform better than crystalline silicon in hot climates, which may be one of the reasons it has been able to grab a sizeable portion of the rapidly growing Indian solar market.

The hot-weather performance claim took something of a hit earlier this year when First Solar announced increased warranty provisions to cover higher-than expected failure rates in India.

However, Jenny Chase, solar insight manager at Bloomberg New Energy Finance, believes this was more of a reflection of First Solar’s greater experience of hot-climate PV than of any shortcomings of CdTe.

“They thought more modules would need to be replaced, but it wasn’t a huge amount,” she says. “It could be just because they have sold more modules in hot climates. I have a sneaking suspicion that hot climates have an impact on any kind of cells.”

Even so, the long-term outlook for CdTe remains uncertain. Despite First Solar’s dominance in India, partly aided by handouts from the Export-Import Bank of the United States, crystalline silicon is rapidly gaining ground in the market.

Its share has risen from around 20% last year to more than 50% currently, according to estimations by the Indian renewable energy consultancy Bridge to India, mirroring the widespread migration to crystalline silicon that has already happened in other markets.

Growing threat

And although most other thin film companies have either fallen by the wayside or are in the process of doing so, within what is left of the thin-film sector First Solar faces a growing threat from the CIS leader Solar Frontier.

Owned by the Shell subsidiary Showa Shell Skiyu, Solar Frontier has the financial muscle to go head to head with First Solar, and it is touting a potentially superior product.

Tellingly, Belectric, the world’s biggest installer of solar power, works with both companies but in March chose Solar Frontier rather than First Solar as the partner for a joint venture.

Josefin Berg, research associate for Europe solar power advisory at IHS Emerging Energy Research, says: “We have followed First Solar’s recent struggles and with the falling prices of crystalline silicon they are definitely facing a more difficult future. 

“Exactly what the outcome will be is difficult to say at this point. But the price advantage of CdTe is dropping.”