EXECUTIVE SUMMARY | SHYAM MEHTA | GTM RESEARCH GTM RESEARCH MARCH 2010 THIN FILM 2010 2 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED TABLE OF CONTENTS 1 INTRODUCTION: BEYOND THE HYPE 9 1.1 What Factors Drive Thin Film Demand? 11 1.2 Report Structure 13 2 PV TECHNOLOGIES 14 2.1 Crystalline Silicon (c-Si) 14 2.2 Thin Films 14 2.2.1 Cadmium Telluride (CdTe) 15 2.2.2 Copper Indium (Gallium) DiSelenide (CIS/CIGS) 16 2.2.3 Amorphous Silicon (a-Si) 17 2.2.4 Multi-junction Cells 19 2.2.5 Tandem-junction/Micromorph PV 19 2.3 Third-Generation Thin Film 20 2.3.1 Dye-Sensitized Cells (DSC) 20 2.3.2 Organic PV (OPV) 21 3 MANUFACTURING 23 3.1 Batch vs. Continuous Manufacturing 23 3.2 Thin-Film PV Process Flow 24 3.3 Deposition Processes 25 3.3.1 CdTe 25 3.3.2 CIS/CIGS 26 Sputtering 26 Co-evaporation 27 Electroplating 28 Nano-Particle Printing 28 Ion Beam Assisted Deposition 28 3.3.3 Amorphous Si 29 3.4 Module Integration 30 3.5 Encapsulation 31 3.6 Glass Lamination 32 3.7 Materials Requirements 32 3.7.1 CdTe 32 3.7.2 CIS/CIGS 34 3.7.3 Amorphous Si 35 3.7.4 Commodity Materials 36 4 TECHNOLOGY CHARACTERISTICS 37 4.1 Efciency 37 4.1.1 Why Efciency Matters 37 4.1.2 Research Cell Efciencies 37 4.1.3 Commercial Cell vs. Module Efciency 38 4.1.4 Historical Module Efciencies 39 4.1.5 Projected Future Efciency 40 4.1.6 Limitations to Improvements: Theoretical Maximum Efciencies 41 4.2 Substrates 42 4.3 Module Degradation 43 4.4 Sensitivity to Temperature 44 4.5 Spectral (Light) Sensitivity 45 4.6 Energy Yield 46 4.7 Area Footprint 48 4.8 Module Weight 49 GTM RESEARCH MARCH 2010 THIN FILM 2010 3 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED 5 THIN FILM PV IN 2009 51 5.1 Surveying the Thin Film Landscape 51 5.2 Pricing Pressure 54 5.2.1 Polysilicon Prices Crash 54 5.2.2 Crystalline Module Price Drops 56 5.3 Bankability Poses Challenges 57 5.3.1 A Solution for Some: Product Guarantee Covers 58 5.4 CdTe: The First Solar Juggernaut Continues 59 5.4.1 First Solar in 2009 59 5.4.2 Other Companies 60 5.5 CIGS: Progress Slow but Steady 61 5.5.1 Increasingly Crowded Space 61 5.5.2 VC-Funded Companies Come Out 62 5.5.3 BIPV on the Horizon 62 5.5.4 Turnkey Equipment Vendors Enter the Field 63 5.5.5 Efciency Status: Continual Progress 64 5.5.6 Prominent Producers 65 5.6 Amorphous Si: An Inversion of Value Proposition 66 5.6.1 New Entrants and Equipment Sales: At Near - Standstill 67 5.6.2 Commercial Production and Sales Agreements 68 5.6.3 Pricing: Extreme Reductions and Regional Disparities 69 5.6.4 Efciency Progress: Tandem Holds the Key 70 5.6.5 Prominent Producers: A Crowded, But Nascent Space 71 5.6.6 Corporate Insulation Provides Differentiation 74 5.7 VC Investment in Thin Film 75 6 MANUFACTURING COSTS 78 6.1 Module Cost Structure 78 6.2 The Problem with Cost Estimates 79 6.3 Current Costs 81 6.4 Cost Roadmaps 84 6.4.1 First Solar: Onwards and Upwards 84 6.4.2 Applied Materials: $1/Watt Remains the Goal 85 6.4.3 Oerlikon: Too Good to be True? 85 6.5 Cost Forecasts 86 6.5.1 Capex Costs 88 6.5.2 Glass Costs 89 6.6 Module Prices 90 6.7 Gross Margins 93 6.8 Required Module Costs at Fixed Margins 94 6.9 Thin Film Price and Margin Sensitivity to Polysilicon Price 95 6.10 Pricing in Bankability 97 6.11 BOS Costs 99 6.11.1 The Case of Large-Area Modules 101 6.12 Project Economics: NPV vs. IRR 102 7 MARKETS AND APPLICATIONS 103 7.1 Grid-tied Residential 103 7.2 Grid-Tied Commercial 105 7.3 Grid-Tied Utility-Scale 107 7.4 BIPV 109 7.5 Off-Grid and Niche Applications 110 7.6 Should a Thin-Film Manufacturer Integrate Downstream? 111 GTM RESEARCH MARCH 2010 THIN FILM 2010 4 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED 8 CAPACITY 113 8.1 Capacity vs. Production 113 8.2 The Need to Derate 113 8.3 Capacity Projections 114 8.3.1 By Technology 114 8.3.2 By Region 115 8.3.3 Top Manufacturers 117 8.4 Equipment Market 118 9 THIN FILM DEMAND 119 9.1 Historical Production and Market Share 119 9.2 From Capacity to Production: Murky Waters 120 9.2.1 Thin Film Capacity: A Tenuous Notion 121 9.2.2 Potential Production: An Upper Bound 122 9.2.3 Exogenous Factors: Market Conditions, Product Value 123 9.3 Quantifying Thin-Film Demand: A Top-Down Methodology 123 9.4 Market Sizing 126 10 CONCLUSIONS 127 10.1 Predictions 127 10.2 Final Thoughts: The Road Ahead 128 11 APPENDIX: COMPLETE LIST OF THIN-FILM MODULE AND EQUIPMENT MANUFACTURERS 131 12 LIST OF PROFILES 136 GTM RESEARCH MARCH 2010 THIN FILM 2010 5 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Figure 1-1: Thin Film Production and Market Share, 2002 - 2008 9 Figure 1-2: Venture Capital Investment in Thin-Film PV, 2007 and 2008 10 Figure 1-3: Bankability Sensitivity: Module Price Discount vs. Relative Default Risk 11 Figure 1-4: Required Components of the Thin Film Production/Demand Model 12 Figure 2-1: Crystalline Silicon Value Chain 14 Figure 2-2: Comparison between Thin-Film and Traditional Crystalline Silicon PV 15 Figure 2-3: Thin-Film PV Manufacturing Process 15 Figure 2-4: CdTe Cell and Module 16 Figure 2-5: CIGS Cell Structure 17 Figure 2-6: Single-Junction Amorphous Silicon Cell Structure 18 Figure 2-7: Multi-Junction Amorphous Silicon (a-Si) Cell Structure 18 Figure 2-8: Multi-junction cell with gallium indium phosphide top cell, tunnel junction, gallium arsenide bottom cell 19 Figure 2-9: Tandem-Junction Cell 20 Figure 2-10: Dye-Sensitized Solar Cell 21 Figure 2-11: Organic PV Cell Structure 22 Figure 3-1: Batch vs. Continuous (Inline) Production 23 Figure 3-2: Tandem-Junction Amorphous Si Process Flow 24 Figure 3-3: Simplied Process Flow for Roll-to-Roll Manufacturing of CIGS on Flexible Substrate 25 Figure 3-4: Closed-Space Sublimation Process Used for CdTe 26 Figure 3-5: Sputtering Deposition Process 27 Figure 3-6: CIGS Co-evaporation Process 27 Figure 3-7: Nano-Particle Printing Using CIGS Ink 28 Figure 3-8: Ion Beam Assisted Deposition 29 Figure 3-9: CVD Process 30 Figure 3-10: Monolithic Module Integration 31 Figure 3-11: Cadmium Prices, 2005 - 2010 33 Figure 3-12: Tellurium Prices, 2004 - 2008 33 Figure 3-13: Projected Use of Tellurium in CdTe PV 34 Figure 3-14: Indium Prices, 2004 - 2009 34 Figure 3-15: Projected Use of Indium in CIS/CIGS PV 35 Figure 3-16: Projected Use of Commodity Materials 36 Figure 4-1: Best Research Cell Efciencies, 1975-2007 38 Figure 4-2: Historical Module Efciencies by Technology 39 Figure 4-3: Projected Module Efciency by Technology 40 Figure 4-4: Theoretical Maximum Cell Efciency by Technology Type 41 Figure 4-5: PV Substrate Comparison 42 Figure 4-6: Substrate Utilization by Technology 42 Figure 4-7: Module Degradation by Technology (Glass-Based Modules) Post Burn-in 44 Figure 4-8: Effect of Temperature on Effective Module Efciency 45 Figure 4-9: Spectral Sensitivity for Crystalline and Amorphous Silicon Cells. 45 Figure 4-10: Thin-Film Solar Modules Can Be More Tolerant to Shade 46 Figure 4-11: Simulated Operating Performance by PV Technology and Location 47 Figure 4-12: Module Area Footprint by PV Technology (Based on Current Module Efciencies) 48 Figure 4-13: PV Module Weight by Technology 49 Figure 4-14: CIGS Module Weight - Framed Module vs. Frameless Module 50 LIST OF FIGURES GTM RESEARCH MARCH 2010 THIN FILM 2010 6 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Figure 5-1: Estimated Preliminary 2009 Thin Film Production by Technology (MW-dc) 52 Figure 5-2: Top Ten Thin Film Producers, 2008 (MW-dc) 52 Figure 5-3: 2009 Industry Distribution by Technology 53 Figure 5-4: Thin Film Industry Distribution by Region and Technology 54 Figure 5-5: Chronology of Polysilicon Market Dynamics, 2006-2009 55 Figure 5-6: Quarterly Module Prices, Q4 2008 - Q3 2009, Canadian Solar 56 Figure 5-7: Module Vendors with Product Guarantee Cover 58 Figure 5-8: First Solar Manufacturing Capacity and Production, 2008 vs. 2009 59 Figure 5-9: Key Performance Metrics in 2009 - First Solar 60 Figure 5-10: Industry Players in CdTe 61 Figure 5-11: New Entrants in CIGS Manufacturing 61 Figure 5-12: Key Progress Indicators for VC-backed CIGS Firms in 2009 62 Figure 5-13: Powerhouse Solar Shingles 63 Figure 5-14: CIGS Turnkey Vendors 63 Figure 5-15: CIGS Module Efciencies, 2009 64 Figure 5-16: Prominent Industry Players in CIS/CIGS 65 Figure 5-17: Thin-Film Technologies - Comparative Economics, 2010 67 Figure 5-18: Amorphous Si Companies That Entered Commercial Production in 2009 68 Figure 5-19: Amorphous Si Sales Agreements and Project Deployment in 2009 69 Figure 5-20: Amorphous Si Module Pricing, 2009 70 Figure 5-21: Amorphous Silicon Module Efciencies, 2009 71 Figure 5-22: Single-Junction Amorphous Si Producers 72 Figure 5-23: Double- and Triple-Junction Amorphous Si Producers 73 Figure 5-24: Tandem-Junction Amorphous Si Producers 73 Figure 5-25: Amorphous Silicon Manufacturers with Large Corporate Parents 74 Figure 5-26: VC Investment in Thin-lm in 2009 75 Figure 5-27: Venture Capital Investment in Thin-Film PV, 2007-2009 76 Figure 6-1: Module Cost Structure 78 Figure 6-2: Manufacturing Cost vs. Plant Size, Logarithmic Relation 80 Figure 6-3: United Solar Production Cost as a Function of Run Rate, 2009 81 Figure 6-4: Fully Loaded Module Manufacturing Costs, Q1 2010 82 Figure 6-5: Single-junction Amorphous Silicon Cost Structure, 2010 83 Figure 6-6: Publicly Available Thin Film Cost Data 83 Figure 6-7: First Solar Cost Reduction Roadmap 84 Figure 6-8: Applied Materials Tandem-Junction Cost Reduction Roadmap 85 Figure 6-9: Oerlikon Module Cost Reduction Roadmap 86 Figure 6-10: Fully Loaded Module Manufacturing Costs, 2012 87 Figure 6-11: Fully Loaded Module Manufacturing Costs, 2015 ($/Wp) 88 Figure 6-12: Embedded Capex Costs by Technology ($/W) 89 Figure 6-13: Glass Cost as Percentage of Module Cost, 2012 89 Figure 6-14: Module ASPs, Q1 2010 90 Figure 6-15: Module ASPs, 2012 91 Figure 6-16: Module ASPs, 2015 ($/W) 92 Figure 6-17: Module Prices, 2010 - 2015 92 Figure 6-18: Thin Film Gross Margins, 2010 - 2015 93 Figure 6-19: Required Thin-Film Module Cost at 25% Gross Margin 95 GTM RESEARCH MARCH 2010 THIN FILM 2010 7 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Figure 6-20: Thin Film Price Sensitivity to Polysilicon Price, 2012 96 Figure 6-21: Thin Film Gross Margin Sensitivity to Polysilicon Price, 2012 96 Figure 6-22: Module Price Discount versus Corporate Bond Rating 98 Figure 6-23: Module Price Discount vs. Relative Default Risk 98 Figure 6-24: Area-Related BOS Cost as Function of Module Efciency 99 Figure 6-25: BOS Cost, 0.70 m 2 vs. 5.7m 2 Applied Materials Amorphous Si Modules Utility-Scale 100 Figure 6-26: First Solar BOS Cost Reduction Roadmap 101 Figure 6-27: 2012 Module Price and Gross Margin, 0.70 m 2 vs. 5.7m 2 a-Si (Tandem-Junction) 101 Figure 6-28: Project Cash Flow NPV vs. Equity IRR, Fixed-Area Feed-in Tariff Based Installation, CdTe vs. c-Si 102 Figure 7-1: 5 kW Amorphous Silicon Residential Rooftop Installation, Germany 104 Figure 7-2: PV Module Power Density, 2009 vs. 2012 104 Figure 7-3: 900 kW Tandem-Junction Commercial Rooftop Installation, Japan 105 Figure 7-4: List of Commercial Thin Film Projects Installed/Under Construction in 2009 106 Figure 7-5: 21 MW CdTe Utility-Scale Project, Nevada 107 Figure 7-6: List of Utility-Scale Thin Film Projects Installed/Under Construction in 2009 108 Figure 7-7: 10 kW CIGS BIPV Faade 109 Figure 7-8: CIGS-Based Portable Solar Charger 110 Figure 7-9: Feasibility of PV Technology Deployment by End-Application 111 Figure 8-1: Global Thin Film Manufacturing Capacity by Technology, 2006 - 2012E 114 Figure 8-2: Global Thin Film Manufacturing Capacity by Region, 2006 - 2012E 115 Figure 8-3: 2012 Thin Film Capacity by Technology and Region 116 Figure 8-4: Projected Top Thin Film Manufacturers by Capacity, 2012 117 Figure 8-5: Global Thin Film Capacity by Equipment Vendor (MW-dc) 118 Figure 9-1: Historical Thin-Film Production and Market Share 119 Figure 9-2: Thin-Film Production by Technology, 2008 120 Figure 9-3: CIGS and Amorphous Si Mid-Year Capacity Utilization, 2006-2008 121 Figure 9-4: Thin Film Potential Production by Technology, 2009E - 2012E 122 Figure 9-5: Required Components of Thin-Film Production/Demand Model 123 Figure 9-6: Estimated Thin-Film Production, 2009 2012 (MW-dc) 124 Figure 9-7: Estimated Global Thin-Film Production by Technology, 2009E 2012E (MW-dc) 125 Figure 9-8: Global PV Market Share by Technology, 2012E 125 Figure 9-9: Thin-Film Module Market Size, 2009E 2012E ($ Million) 126 Figure 10-1: Mid-Year Capacity Utilization, CIGS and Amorphous Si, 2009 2012 129 Figure 11-1: List of CdTe Manufacturers 131 Figure 11-2: List of CIGS Manufacturers 131 Figure 11-3: List of Amorphous Si Manufacturers 133 Figure 11-4: List of Turnkey Equipment Providers 135 GTM RESEARCH MARCH 2010 THIN FILM 2010 8 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED ABOUT THE AUTHOR Shyam Mehta Shyam Mehta is a Senior Analyst at GTM Research, focusing on global solar markets. Before joining GTM Research, Shyam was a Financial Analyst at Goldman Sachs Global Investment Research where he covered equities in the alternative energy sector, primarily solar companies. Prior to Goldman, Shyam was a Research Analyst at The Brattle Group, an economic consulting rm, where his work focused on problems within the electricity industry. Shyam received his Bachelors in Mathematics from U.C. Berkeley. Research Assistance Richard Tesler | GTM Research GTM RESEARCH MARCH 2010 THIN FILM 2010 9 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED LIST OF COMPANIES Abound Solar Anwell Applied Materials ARENDI S.p.A. Astronergy (Chint Solar) Auria Solar Bangkok Solar Best Solar Calyxo GmbH (Q-Cells) Canrom centrotherm AG CG Solar China Solar Power Ltd China Stream Fund Solar Energy Clairvoyant Energy Dupont Apollo Energosolar ENN Solar EPV Solar Ersol Thin Film GmbH First Solar Flexcell (VHF Technologies SA) Formosun Free Energy Europe Fuji Electric Gadir Solar Genesis Energy Golden Photon Green Energy Technology Grupo Unisolar GS Solar GUANGHUI New Energy Hanergy Harbin Hopeful Star Heliodomi S.A. Heliosphera HK Solar Huilon ICP Solar (Intersolar) Inventux Technologies AG Jenn Feng Johanna Solar Kaneka Solartech Co., Ltd. Kenmos PV Lambda Energia LG Display Malibu GmbH Masdar Matsushita Battery Mitsubishi Heavy Industries Moncada Moser Baer Nanjing Lunt Co NanoPV Corporation Nanowin NexPower Technology Novergy Oerlikon GTM RESEARCH MARCH 2010 THIN FILM 2010 10 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Pa Yang (Efun) Parity Solar Polar Photovoltaics PowerFilm Solar (Iowa Thin Films) Pramac Swiss SA Primestar Solar Qingdao Chengye Glass QS Solar Roth & Rau CTF Solar Russian Nano Solar Technologies Sanyo ENEOS Sanyo Solar Schott Solar GmbH Sencera Sharp Shenzhen Sumoncle Shenzhen Topray Solar Shihua Signet Solar Sinonar Solar Array Ventures, Inc Solar Cells (Koncar) Solar Plus Solar Thin Films SolarMorph Solarpro Solems Soltech Sun Well Solar (CMC) Sunlm AG SUNGEN International Limited Sunner Solar Sunovia T-Solar Terra Solar Tianjin Jinneng Solar Cell Co. Tianwei SolarFilms Co Trony Solar ULVAC United Solar Willard & Kelsey Solar Group XsunX Xunlight Yuanchang Group Yutong Light Energy Zia Watt Solar GTM RESEARCH MARCH 2010 THIN FILM 2010 11 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED EXECUTIVE SUMMARY E.1 Introduction: Beyond the Hype From only 17 MW in 2002 to 966 MW in 2008 (a compounded annualized rate of 96%), thin lms rise over the last decade has been remarkable, indeed. Fueled by the greatest success story in the PV industry cadmium telluride producer First Solar thin lm has captured the imagination of industry participants and interested observers alike. First Solar represents the disruptive potential of thin-lm PV in full high throughput (1,111 megawatts in 2009), competitive efciency (11%), and an industry-leading cost (currently 83 cents per watt), enabling signicant prot (the only pure-play solar company to be listed on the S&P index).From market entry in 2002, the company has gone on to become the largest PV module producer in the world in what has seemed like the blink of an eye. The basis for this remarkable turnaround was a fundamental insight on part of investor/ entrepreneur Harold McMaster in the early 1980s: that the essential cost element of large area solar arrays was glass, and [he] could treat the actual solar cell as simply a different kind of coating on glass. In other words, thin-lm PV represented a technology that could be manufactured using glasss high-throughput coating process instead of the slow, cumbersome batch process of traditional crystalline silicon wafer-based PV -- and one that had one-hundredth the feedstock requirement. FIGURE E-1: THIN FILM PRODUCTION AND MARKET SHARE, 2002 - 2008 Source: The Prometheus Institute, GTM Research GTM RESEARCH MARCH 2010 THIN FILM 2010 12 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Thin lm PV, though, was not born with First Solar, nor was it even rst commercialized by the company: Sanyo introduced an amorphous crystalline hybrid cell as early as 1974, and many Japanese companies (e.g., Fuji, Kaneka, Mitsubishi) were selling thin-lm modules by the late 1990s. Interest in mass-producing thin-lm technologies, however, remained marginal until the mid-2000s, when the emergence of a polysilicon bottleneck-restricted crystalline silicon PV supply and it made it more expensive. The search for alternative technologies led to a tidal wave of investment and entrepreneurial activity in thin lm, with 46 companies entering the market between 2004 and 2008, as well as $1.8 billion in venture capital investment in the space. As market share rose from a mere 3% in 2001 to 12% in 2007, companies spoke condently of hundreds of megawatts of production at below a dollar per watt being within arms reach. It was only a matter of time before thin lm would replace crystalline silicon as the dominant PV technology, nally enabling the long sought-after dream of grid parity. FIGURE E-2: VENTURE CAPITAL INVESTMENT IN THIN-FILM PV, 2007 AND 2008 Source: GTM Research Or was it? As of 2010, only one other company besides First Solar triple-junction amorphous silicon rm United Solar has produced in excess of 100 MW annually. If another company has broken the $1-per-watt module cost barrier, they have not announced it. The cost structure of most amorphous silicon, considering its low efciency, is barely competitive with crystalline silicon, and CIGS producers have GTM RESEARCH MARCH 2010 THIN FILM 2010 13 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED encountered technical issues in manufacturing that have forced them to delay commercial production since 2007. To make matters more difcult, capital constraints made banks and developers shy away from thin lm in favor of more mature and abundant crystalline silicon modules for projects in 2009. First Solar aside, one would have to admit that the results have yet to live up to the talk. As Asian crystalline silicon PV producers continue to ramp down costs and increase capacity beyond the gigawatt level, the question must be asked: will results ever meet expectations, and if so, when? In other words, will thin lm fulll its potential and make meaningful inroads into the solar energy landscape, creating new markets in the process? Or will it be relegated to a bit-player role in the growth of the global PV market? FIGURE E-3: BANKABILITY SENSITIVITY: MODULE PRICE DISCOUNT VS. RELATIVE DEFAULT RISK Source: GTM Research E.2 What Factors Drive Thin Film Demand? Assessing thin lms impact on the global PV market in the years ahead requires an understanding of the factors that inuence demand for this technology, and how these factors interact when determining technology selection in PV markets. Essentially, these are all the variables come into play when computing the values of a specic set of nancial metrics on a risk-adjusted basis for the project at hand, which include capital cost, levelized cost of energy (LCOE), IRR, or net present value depending on the market and application. As shown in Figure E 4, this list can be very extensive. It includes: GTM RESEARCH MARCH 2010 THIN FILM 2010 14 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Operational characteristics such as module degradation rate, temperature coefcient, and spectral response; System cost variables such as module price and balance-of-system costs; The price and availability of substitutes, i.e., crystalline silicon PV; Market characteristics, such as incentive structures, market application type, and environmental conditions (temperature, humidity, insolation); Potential supply, which in turn depends on available manufacturing capacity, throughput, and yield; Qualitative factors such as perceived supplier, technology, and product risk, which determine whether the project will ultimately receive nancing. FIGURE E-4: REQUIRED COMPONENTS OF THE THIN FILM PRODUCTION/DEMAND MODEL Source: GTM Research Each of the above factors ends up playing a material role in inuencing demand for thin-lm PV and driving its installation. Thin lm economics, for example, become a lot more attractive when polysilicon prices rise. Conversion efciencies affect both balance- of-system costs as well as viability in space-constrained (rooftop) markets. Capacity, throughput, and yield become gating factors for how much thin-lm PV can potentially be produced, and therefore deployed. Temperature coefcients come into play when considering projects in hot climates and desert environments. Incentive structures determine whether capital cost minimization or energy output maximization is the end goal. Moreover, supplier and technology-specic risks prevented many thin lm projects from receiving nancing in 2009, even though project economics were very attractive for $1 per watt amorphous silicon panels sold by suppliers like China-based QS Solar. In practice, however, an analytical model that quantiably links all of these variables to estimate thin lm production/demand by technology has yet to come into fruition; particularly challenging is the question of quantifying the highly subjective factor of GTM RESEARCH MARCH 2010 THIN FILM 2010 15 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED supplier and technology risk. Absent such a model, the best one can do is to shed as much light as possible on each of these different drivers, with the hope that this will lead to accurate insights about the evolution of the thin lm market and its impact on the global PV landscape over the next half-decade. That is the goal of this report. E.3 Report Findings The following are some of the major ndings of this study: 1. Thin-lm capacity will stand in excess of 10 GW of thin-lm capacity by the end of 2012. Figure E 5 displays historical and estimated global thin lm capacity. Capacity grew from just 349 MW at the end of 2006 to over 4.4 GW by the end of 2009, more than doubling every year. This reects the attractiveness of investment in thin lm due to the impact of the polysilicon shortage during that time. A large part of this was due to the rampant build- out of First Solars operations, from just 25 MW in 2006 to 1.2 GW by the end of 2009, as well as the emergence of a number of small and mid-sized turnkey amorphous silicon manufacturers in 2008 and 2009. From 2010 onwards, the rate of expansion is expected to slow materially; this reects more sober plans in the aftermath of global oversupply, low consequent capacity utilization, and the lack of nancing. Still, there will be over 10 GW of thin lm capacity by the end of 2012, and there is room for upside adjustment if demand grows faster than expected. Amorphous silicon is expected to constitute a dominant majority at 5.65 GW, while CdTe and CIGS will have roughly even capacity share at 2.47 GW and 2.11 GW respectively. FIGURE E-5: GLOBAL THIN FILM MANUFACTURING CAPACITY BY TECHNOLOGY, 2006 - 2012E Source: GTM Research GTM RESEARCH MARCH 2010 THIN FILM 2010 16 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED 2. Amorphous silicon and turnkey CIGS production will dominate Asian production. Looking at Figure E 6, which breaks out estimated 2012 capacity by both region and technology, it is clear that Asian countries have adopted amorphous silicon as the technology of choice in the thin lm department due to its low barrier to entry, although similar trends have also emerged in CIGS production in Asia of late. Amorphous silicon is also likely to lead Europe as well, with a number of early Applied Materials and Oerlikon customers being based there. Although all three technologies are expected to be fairly equally represented in North America by 2012, the growth in this region going forward is expected to be largely due to the growth of a few of the many CIGS manufacturers in the U.S. First Solars Malaysia plant will make up 85% of the ROW (rest of the world) category in 2012, signaling that thin lm is yet to take off outside PVs core manufacturing regions. FIGURE E-6: 2012 THIN FILM CAPACITY BY TECHNOLOGY AND REGION Source: GTM Research 3. Best-practice producers across all technologies will achieve costs of 80 cents per watt by the beginning of 2012, but there will be signicant variation across producers. Figure E 7 displays forecasted module costs for the beginning of 2012. CdTe costs are expected to drop to about 70 cents by this time. While possible tellurium price spikes present some risk to these numbers, the threat is limited by a thinner lm (down GTM RESEARCH MARCH 2010 THIN FILM 2010 17 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED to 2-2.5 nm) and higher feedstock utilization from conversion efciency gains. In the case of amorphous silicon, it is expected that single-junction technology will hit its practical efciency ceiling (8% to 8.5%) for many producers by 2012, and will start getting phased out thereafter. Tandem- junction, which just began to spread its wings in 2009, will take its place and become more representative of the a-Si market, at 10% efciency. Costs for these technologies are expected to range from $0.80 to $1.20 per watt. CIGS should show an exponential improvement in costs from 2010 to 2012, due to the commercialization of high-throughput manufacturing through roll- to-roll processes by a few producers. For these rms, costs could be as low as 80 cents a watt. On the other end, smaller fabs that persist with glass substrates could be up to 50% more expensive, at $1.25 per watt. FIGURE E-7: FULLY LOADED MODULE MANUFACTURING COSTS, 2012 Source: GTM Research 4. First Solar will continue its dominance, remaining the largest thin lm manufacturer in the world over the next three years. Figure E 8 presents the top 20 thin lm companies by estimated manufacturing capacity as of 2012. As shown, First Solar is expected to maintain its lead as by far the largest thin lm manufacturer in the world, with over 2 GW of capacity spread across its plants in Germany, France, Ohio, and Malaysia. It is followed by Sharp (tandem-junction a-Si), Showa Shell GTM RESEARCH MARCH 2010 THIN FILM 2010 18 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Sekiyu (CIS), Solyndra (cylindrical CIGS), and QS Solar (double junction a-Si). Put together, the rms on this list made up almost 90% of total thin- lm production in 2008, implying that most of the top current producers should continue to be amongst the biggest in the industry in the near term. They also make up almost two-thirds of total thin lm capacity in 2010 and 2012. Interestingly, for all of China/Taiwans regional dominance, only one company (QS Solar) is in the top ten, suggesting that many of the producers from this region are small and mid-sized rms whose survival over the course of the next several years remains questionable. FIGURE E-8: TOP 20 THIN-FILM MANUFACTURERS BY 2012 CAPACITY Source: GTM Research 5. CIGS and amorphous silicon (particularly turnkey line production) will likely not see meaningful market share until 2012, when cost reductions and efciency improvements will nally start to drive a competitive product offering at an adequate margin. This is also the time horizon required for bankability concerns to be alleviated for thin lm companies with quality modules. Figure E-9 displays thin-lm market share for two scenarios, a low-penetration scenario where overall market share stagnates at 21% by 2012, and a high-penetration share that assumes a share of 30% by this time. In both cases, there is limited opportunity for a-Si and CIGS producers after assuming 90 percent utilization for First Solar. GTM RESEARCH MARCH 2010 THIN FILM 2010 19 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-9: GLOBAL PV MARKET SHARE BY TECHNOLOGY, 2012E Source: GTM Research 6. High-margin thin-lm production will be a game played by the select few. A return to normal silicon prices over the next ve years and the dramatic improvements that Chinese manufacturers have made in conversion cost and silicon utilization will mean that the race between thin-lm and crystalline silicon PV will remain a close one over the next ve years; the window of opportunity is small and is constantly contracting. In particular, amorphous silicon will be a low-margin product for most manufacturers, as shown by Figure E-10. There is a serious need for producers to differentiate themselves from one another in this space, and those that have had a head start will have a signicant advantage in developing differentiated products; examples include Sharp (higher efciency) and Signet Solar (downstream partnerships, parallel-wiring architecture). Single- junction a-Si will become obsolete by 2012, as its cost/efciency combination will no longer result in a protable product. GTM RESEARCH MARCH 2010 THIN FILM 2010 20 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-10: THIN FILM GROSS MARGINS, 2010 - 2015 Source: GTM Research 7. Amorphous silicon will have disproportionately higher market share in non-European, non-feed-in-tariff markets. The success of amorphous silicon will largely be dependent on the development of utility-scale solar in the Middle East, U.S., India, and China given their suitability for this technology (as simulated operating results from Figure E-11 suggest for hotter climates). In particular, the technology will struggle to penetrate rooftop feed-in-tariff markets where space is a constraint and maximizing gross returns is considered paramount. GTM RESEARCH MARCH 2010 THIN FILM 2010 21 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-11: SIMULATED OPERATING PERFORMANCE BY PV TECHNOLOGY AND LOCATION Source: NREL Solar Advisory Model, GTM Research 8. As efciencies improve beyond the 12% level, thin-lm modules will enjoy increasing share in the residential market. BIPV products introduced in 2011 and 2012, such as Dows solar shingles, will serve to expand thin lms reach in this segment. Figure E 12 indicates CIGS module efciencies for all manufacturers in the commercial stage. While in 2008, top CIGS module efciency stood at 11.5% (Wrth Solar) and 11 rms had module efciencies of 9% and above, today these metrics stand at 13% and 14 rms respectively, indicating that signicant progress has been made by manufacturers in increasing efciencies. At this rate, it is not inconceivable that CIGS efciencies could one day catch up with those of traditional multicrystalline silicon, which currently has module efciencies of around 14%. GTM RESEARCH MARCH 2010 THIN FILM 2010 22 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-12: CIGS MODULE EFFICIENCIES, 2009 Source: Company datasheets, GTM Research 9. All signs point to one of the venture-backed CIGS companies (Solyndra, Nanosolar, Miasol) emerging as successful representatives of this technology. The future of CIGS as a low-cost technology lies in producing it on exible substrates at large scale. At the same time, exible substrates also have lower efciencies, meaning that continual R&D investment will be required to improve efciencies and drive competitiveness. For the most part, CIGS on glass will be a niche market. While prior to 2009, most VC-backed exible substrate rms had precious little to show for all the investment, the past year saw three of them enter into commercial production and achieve key technological milestones. Nanosolar, which uses a unique process that involves printing nano-particle CIGS ink onto aluminum foil, announced that it was producing modules at an annual run rate of 12 MW, had top cell efciency veried by NREL at 16.4%, and unveiled its TUV/IEC-certied Utility Panel for large-scale deployment. Solyndra, which produces cylindrical panels for commercial rooftops, indicated it had sold 17.3 MW in the rst nine months of 2009, including a 1.9-MW system in Belgium, and had reached module efciency of 11% to 14%. Moreover, Miasol, which deposits CIGS on exible steel rolls using a sputtering process, announced it had started shipping panels in October 2009. Figure E 13 summarizes these developments. GTM RESEARCH MARCH 2010 THIN FILM 2010 23 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-13: KEY PROGRESS INDICATORS FOR VC-BACKED CIGS FIRMS IN 2009 Source: GTM Research 10. Past 2013, low-cost CIGS systems will rapidly begin stealing share from crystalline silicon (and perhaps CdTe) in IRR-governed U.S. utility-scale markets. By 2012, a few CIGS producers will begin to attain manufacturing costs and efciencies on par with First Solar, which will drive competitive economics, especially in non feed-in tariff markets where minimizing capital costs is paramount. Nevertheless, CIGS adoption at the utility scale will be far from immediate, especially in the U.S., given the demonstrated risk-averseness of U.S. utilities; this will also be true when it comes to nancing large-scale CIGS utility systems in Europe. Performance and degradation concerns will have to be alleviated before mass adoption proceeds, which may take two or more years. 11. The coming years should see a great deal more consolidation than has been witnessed so far in the thin lm industry. Many companies that lack the cushion provided by a large corporate parent will lose the race between protability and solvency. Mid-sized amorphous silicon companies will be especially susceptible to this trend, as there is a natural t for companies that use equipment from the same vendor (as in the example of Applied customers Sontor and Sunlm). In the case of CdTe and CIGS, this will take the form of selling and licensing of IP assets (as has been witnessed in the case of CIGS startup Daystar). Evidence for this thesis comes from Figure E 14, which displays mid-year capacity utilizations for CIGS and amorphous silicon. COMPANY TECHNOLOGY CAPACITY PRODUCTION EFFICIENCY CERTIFICATION Nanosolar Nano-printing on aluminum foil 640 MW 12 MW (annualized run rate) 16.4% (best cell), 11-12% (median cell) TUV, IEC Solyndra Cylindrical panels 70 MW 17.3 MW (Jan - Oct 2009) 11 - 14% (module) IEC, UL Miasol Sputtering on exible steel 60 MW 10.2 - 10.5% (average module) IEC, UL GTM RESEARCH MARCH 2010 THIN FILM 2010 24 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED FIGURE E-14: MID-YEAR CAPACITY UTILIZATION, CIGS AND AMORPHOUS SI, 2009 2012 Source: GTM Research 1.1 Report Structure As discussed above, the aim of this report is to comprehensively analyze all of the rst-order drivers that come together to inuence thin lm demand in the nal analysis. Accordingly, each section of this report is focused on a specic determining factor. Section 2 provides an overview of the various PV technologies currently under development and production. Section 3 discusses the advantages and challenges of thin lm manufacturing processes and material requirements. Section 4 examines key operating and technical characteristics, including conversion efciencies, degradation rates, light and temperature sensitivity, module weight/area footprint, and energy yield. Section 5 provides a comprehensive overview of major developments and trends in thin-lm PV in 2009. Section 6 looks at existing markets and applications for PV and how well thin-lm products are suited to each. GTM RESEARCH MARCH 2010 THIN FILM 2010 25 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED Section 7 analyzes manufacturing cost structure for thin-lm modules and the evolution of costs, prices, and prot margins over time. Section 8 covers historical and projected module manufacturing capacity through 2012 by company, region, and technology. Section 9 discusses historical and projected thin lm production and market share. Section 10 summarizes the key insights and predictions that emerge from the report and offers concluding thoughts. Section 11 proles prominent and upcoming thin lm manufacturers, detailing key information such as company history, conversion efciency, manufacturing process, location of production facilities, and capacity and production projections. GTM RESEARCH MARCH 2010 THIN FILM 2010 26 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED ASTRONERGY (CHINT SOLAR) Year Founded 2006 Year Production Started 2009 Technology Type a-Si/cSi Location China Module Efciency (%) 9 Substrate Type Glass Manufacturing Process Oerlikon CVD Website www.astronergy.com/ Formerly known as Chint Solar, Astronergy is a member of Chint Group, which is a player in the low-voltage electrical, power transmission and distribution industries in China with 2006 sales of $2 billion. The company purchased turnkey equipment from Oerlikon and began production of amorphous silicon modules in 2009. It also produces conventional crystalline silicon modules as well. It is targeting the utility, commercial, and BIPV markets with its amorphous Si products. In March 2009, it raised $50 million from Cybernaut China Investment and Shanghai Lianhe Investment to expand its manufacturing operations. The company won a bid for a 2-MW rooftop project in Hangzhou Energy and Environment Industrial Park in China, and was awarded at least six of the 275 Golden Sun PV power plant demonstration projects announced by the Chinese Ministry of Finance in December 2009. Astronergy Year-end Capacity Astronergy Production YEAR 2007 2008 2009E 2010E 2011E 2012E Historical / Potential Production 0.0 0.0 11.3 56.3 90.0 90.0 Year-end Capacity 0.0 0.0 30.0 120.0 120.0 120.0 SAMPLE COMPANY PROFILE GTM RESEARCH MARCH 2010 THIN FILM 2010 27 COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED OWNERSHIP RIGHTS All Reports are owned by Greentech Media protected by United States Copyright and international copyright/intellectual property laws under applicable treaties and/or conventions. User agrees not to export any Report into a country that does not have copyright/intellectual property laws that will protect Greentech Medias rights therein.
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