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Pusat Tenaga Malaysia

Global PV Industry Research

April 2007

Prepared by
Pegasus Business and Market Advisory Sdn Bhd
16-C, Jalan SS22/25, Damansara Jaya. 47400 Petaling Jaya, Selangor D.E., Malaysia
Tel: 603 – 7726 5373 Fax: 603 – 7726 5358
CONTENTS
1. EXECUTIVE SUMMARY..........................................................................5

2. WORLD ECONOMY AND ENERGY OVERVIEW ........................................7


2.1 Overview on the World Economy ..............................................................7
2.2 Overview on Fossil Fuels .........................................................................9
2.3 Overview on Electricity Generation ......................................................... 11

3. THE PV VALUE CHAIN ........................................................................ 14


3.1 The PV Value Chain .............................................................................. 14
3.2 Product Range..................................................................................... 18
3.3 Drivers of Growth in the PV Value Chain.................................................. 21

4. INDUSTRY TRENDS AND OUTLOOK .................................................... 24


4.1 Photovoltaic Modules ............................................................................ 24
4.2 Crystalline Silicon Cells ......................................................................... 31
4.3 Polysilicon........................................................................................... 35
4.4 Thin Films........................................................................................... 41
4.5 Photovoltaic Inverters........................................................................... 45

5. DEVELOPMENTS IN DEVELOPED & EMERGING MARKETS.................... 49


5.1 Germany ............................................................................................ 49
5.2 Japan................................................................................................. 53
5.3 United States ...................................................................................... 58
5.4 China ................................................................................................. 63
5.5 Taiwan ............................................................................................... 67
5.6 Spain ................................................................................................. 71
5.7 South Korea........................................................................................ 75

6. MAJOR COMPANIES IN THE VALUE CHAIN ......................................... 80


6.1 PV Modules Assemblers ........................................................................ 80
6.1.1 Sharp ........................................................................................... 80
6.1.2 Kyocera ........................................................................................ 81
6.1.3 Sanyo........................................................................................... 82

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6.1.4 Suntech ........................................................................................ 83
6.1.5 Mitsubishi...................................................................................... 85

6.1.6 SolarWorld .................................................................................... 85


6.1.7 SOLON.......................................................................................... 86
6.1.8 Schott Solar .................................................................................. 88
6.1.9 BP Solar........................................................................................ 89
6.1.10 Isofoton ........................................................................................ 89

6.2 PV Cells Manufacturers ......................................................................... 90


6.2.1 Sharp ........................................................................................... 90
6.2.2 Q-Cells ......................................................................................... 91
6.2.3 Kyocera ........................................................................................ 93
6.2.4 Sanyo........................................................................................... 94
6.2.5 Mitsubishi...................................................................................... 95
6.2.6 Schott Solar .................................................................................. 95
6.2.7 BP Solar........................................................................................ 96
6.2.8 Suntech ........................................................................................ 97
6.2.9 Motech ......................................................................................... 98
6.2.10 SolarWorld .................................................................................... 99

6.3 Polysilicon Manufacturers .................................................................... 100


6.3.1 Hemlock ..................................................................................... 100
6.3.2 Wacker ....................................................................................... 101
6.3.3 REC............................................................................................ 102
6.3.4 Tokuyama ................................................................................... 103
6.3.5 MEMC ......................................................................................... 103
6.3.6 Mitsubishi Materials Corporation ..................................................... 104

6.4 Thin Film Manufacturers...................................................................... 105


6.4.1 United Solar Ovonic ...................................................................... 105
6.4.2 Kaneka ....................................................................................... 106
6.4.3 First Solar ................................................................................... 106
6.4.4 Mitsubishi Heavy Industries ........................................................... 107

6.5 Inverter Manufacturers ....................................................................... 108


6.5.1 SMA ........................................................................................... 108
6.5.2 Sharp ......................................................................................... 109

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6.5.3 Fronius ....................................................................................... 109
6.5.4 Xantrex....................................................................................... 110

6.5.5 Kyocera ...................................................................................... 111


6.5.6 Mastervolt ................................................................................... 111
6.5.7 Sputnik ....................................................................................... 112

6.6 Others.............................................................................................. 113


6.6.1 Turnkey Providers ........................................................................ 113
6.6.2 Plastic Films ................................................................................ 114
6.6.3 PV Testers................................................................................... 115

7. CASE STUDIES ................................................................................. 117


7.1 Case Study on Suntech....................................................................... 117
7.1.1 Background ................................................................................. 117
7.1.2 Financial Background .................................................................... 118
7.1.3 Management and Organisation ....................................................... 119
7.1.4 Technology Developments ............................................................. 120
7.1.5 Business Developments................................................................. 122
7.1.6 Ensuring Supply of Silicon Wafers ................................................... 124

7.2 Short Case Study on Yingli Solar .......................................................... 126


7.2.1 Background ................................................................................. 126
7.2.2 Management and Organisation ....................................................... 127
7.2.3 Developments.............................................................................. 127

8. CONCLUSIONS ................................................................................. 130


8.1 Future Challenges .............................................................................. 130
8.2 Future Directions ............................................................................... 131
8.3 Opportunities .................................................................................... 133

9. APPENDIX........................................................................................ 137

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Abbreviations

AC : Alternating current
a-Si : Amorphous silicon (thin film)
c-Si : Crystalline silicon
CdTe : Cadmium telluride (thin film)
CIS : Copper indium selenide (thin film)
CIGS : Copper indium gallium selenide (thin film)
DC : Direct current
EoG : Electronic grade (silicon)
FBR : Fluidised bed reactor
GDP : Gross domestic product
mc-Si : Multi-crystalline silicon also known as poly-crystalline silicon
MG-Si : Metallurgical grade silicon
OEM : Original equipment manufacturer
PV : Photovoltaic
R&D : Research and development
sc-Si : Single-crystalline silicon also known as mono-crystalline silicon
SoG : Solar grade (silicon)
TCS : Trichlorosilane (gas)
US : United States of America

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Cost of energy produced from PV is significantly high compared to electricity


produced by the utility companies. Thus growing government support for PV
in Germany, Japan and the United States will continue to be the main driver
of growth for PV. Consequently, government support in the emerging PV
markets of Western Europe (notably Spain and Italy), Korea and China will
also drive growth further in the coming years. Key programmes introduced
by various governments to stimulate demand for PV include:

„ Government mandated power buy back schemes from the utility


companies above the normal utility rates;

„ Direct government subsidies to the end-users to offset the costs of


purchase and installing the PV system;

„ Financing at low interest and tax incentives for purchase and


installing PV systems; and

„ Government mandate setting the minimum usage level for


renewable energy.

Production of PV cells and modules is estimated to increase from 1,727


MWp in 2005 to about 2,400 MWp by 2006. This report projects demand for
PV will increase by 20% annually in 2007-2010 to reach 5,000 MWp by
2010. China is becoming a leading manufacturer of PV modules with export
markets in Europe and the US.

However, increasing demand for PV in recent years and constraints in silicon


production has created global shortages of polysilicon causing prices of the
material to rise and increasing production costs. Construction of new
polysilicon plants will only begin in 2008-2009 to relieve the global
polysilicon shortage. Production of polysilicon for the PV industry is
projected to increase from 13,500 tons in 2006 to 49,300 tons by 2010.

Shortages and increasing prices of polysilicon in recent years have driven


demand for thin film modules. Thin film modules do not require polysilicon
and has a lower production cost than crystalline silicon cell modules. The
European Photovoltaic Industry Association predicts demand for thin film
modules would increase from 100 MWp in 2005 to 1,000 MWp by 2010
increasing its market share from 6% in 2005 to 20% by 2010.

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Diagram 1. Developments in the PV Value Chain

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2.1 Overview on the World Economy


Developments in the world economy. Traditionally economic
developments in the high-income countries of the US, European Union and
Japan have influenced the direction of the world economy. In recent years,
strong economic growth in China and India and their integration into the
global economy are beginning to influence the world economy. Despite
soaring global oil prices and rising interest rates in many countries across
the world, the world economy managed to sustain moderate economic
growth from 2004 to 2006. The world economy experienced a moderate
slowdown in its GDP growth from 4.1% in 2004 to 3.5% in 2005 before
regaining to 3.9% by 2006.1

Much of the world’s economic growth in 2006 occurred during the first half
of the year. However, the economies in the high-income countries of the US,
European Union and Japan began to show signs of cooling in 2006. While
GDP in the US grew marginally from 3.2% in 2005 to 3.4% in 2006, GDP
growth in Japan cooled from 2.7% to 1.4% during the period. However,
strong economic growth in China and India above 8.0% annually in 2005-
2006 minimised the impact of a cooling economy in the high-income
countries on the globally economy.

Table 2.1a. World Economic Performance – Real GDP growth (%)


1980- 2000 2005 2006e

World 3.0 3.5 3.9

High-income countries 2.9 2.7 3.1

Developing countries 3.4 6.6 7.0

Asia-Pacific 8.5 9.0 9.2


South Asia 5.4 8.1 8.2
Europe and Central Asia 0.6 6.0 6.4
Latin America and Caribbean 2.2 4.5 5.0
Middle East and North Africa 4.0 4.4 4.9
Sub-Sahara Africa 2.2 5.5 5.3
Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and
Development/World Bank

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Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

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Overall, the developing economies experienced moderate to strong
economic growth from 2004 to 2006. While the high-income countries
experienced growth of 2.7% in 2005 and 3.1% in 2006, the developing
economies in various regions across the world experienced growth of 4.4%-
9.0% in 2005 and 4.9%-9.2% in 2006. Growth has been strongest in Asia-
Pacific contributed by China’s strong economic growth followed by South
Asia from India’s economic growth. Nevertheless, the developing economies
began to show signs of cooling in the second half of 2006.2

Outlook on the world economy. In the immediate term, the economies


of the high-income countries and the developing economies would cool at a
lower rate of economic growth in 2007. Projections are the US economy
would grow from 3.4% GDP growth in 2006 to 2.7% by 2007.
Consequently, China’s economy would grow from 10.7% GDP growth in
2006 to 8.7% in 2007 as the country implements fiscal and monetary
measures to control inflation. A major impact from a slower economic
growth in the major economies is reduction in imports subsequently
affecting the world’s economic growth. However, the positive impact is it
would reduce inflationary pressure on the world economy.

Table 2.1b. World Economic Forecast – Real GDP growth (%)

2007f 2008f 2008-2030f

World 3.2 3.5 2.9

High-income countries 2.4 2.8 2.4

Developing countries 6.4 6.1 4.0

Asia-Pacific 8.7 8.1 5.1


South Asia 7.5 7.0 4.7
Europe and Central Asia 5.7 5.5 2.7
Latin America and Caribbean 4.2 4.0 3.0
Middle East and North Africa 4.9 4.8 3.6
Sub-Sahara Africa 5.3 5.4 3.3
Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and
Development/World Bank

In the medium term, projections are the developing economies would


continue to grow at a faster pace than the high-income countries from 2007
to 2008 and continue to do so in the next decade. Forecasts are the
economy in the high-income countries would grow by 2.4% in 2007 and
2.8% in 2008. The developing economies would grow by 4.2%-8.7% in
2007 and 4.0%-8.1% in 2008. Among the developing economies, growth

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Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

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would be strongest in Asia-Pacific contributed by China’s strong economic
growth. China would eventually replace Germany as the world’s third largest
economy after the US and Japan within this decade and influence the world
economy through its imports and exports.2

Concerns on the direction of the world economy. Any significant


economic slowdown or recession in the US and China’s would adversely
affect the world economy. Movements in value of China’s currency follow
closely with the US dollar and currently undervalued. Thus a significant
decline in the value of the US dollar and the economies of the US and China
would adversely affect imports from these countries. This represents a
major threat to the world economy.

Another economic threat is the volatility of oil prices. Oil prices began to
show a decline from its peak (about US$75 per barrel) in 2006 but the
possibility of a return to higher oil prices remains. Geopolitical uncertainties
in Iraq and Iran would have a significant impact on the world’s oil prices.
Return to higher oil prices under a scenario of a cooling world economy in
2007 could dampen economic growth in 2008 and beyond. Furthermore,
return to higher oil prices would increase the potential for inflation.

2.2 Overview on Fossil Fuels


Developments in fossil fuels. The 10-year period prior to 2000 was a
period of low crude oil prices below US$20 per barrel. Thus, there were
limited efforts to invest in new oil wells to boost crude oil supply. Demand
for energy rose at a faster pace in 2000-2006 fuelled by economic growth in
the developing economies especially in Asia-Pacific and South Asia.

Increasing demand and tightening supplies caused a surge in oil prices from
below US$20 per barrel in 1999 to nearly US$75 per barrel by the third
quarter of 2006. Furthermore, geopolitical uncertainties in the Middle East
and adverse weather conditions affecting oilrigs on the US Gulf Coast
exacerbated the supply situation. Prices of natural gas paralleled with oil
prices from 2000 to 2006. However, thermal coal only followed suit in 2004
as an alternative to oil and natural gas to fuel the economies of China and
India.

Prices of the three fossil fuel categories began to decline by the fourth
quarter of 2006. Prices of oil declined from its peak of US$75 per barrel
during the third quarter of 2006 to as low as US$50 per barrel by the first
quarter of 2007. Factors contributing to the decline were a slowing global
economy, production from new oil wells constructed after 2000 and warmer
winters in Europe and North America.

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Figure
Figure 2.2.
2.2. World
World Fossil
FossilFuel
FuelPrices
Prices
Historical
Historical (1990-2005) & Forecast (2006-2010) atCurrent
(1990-2005) & Forecast (2006-2010) at CurrentPrices
Prices
80
80 11
00

99
70
70
88
60
60
77
50
50 66

40
40 55

30 44
30
33
20
20
22
11
00
11
-- 00

Crude
CrudeOil
Oil Thermal
ThermalCoal
Coal Natural
NaturalGas
Gas

Source: BP Statistical Review of World Energy (June 2006) and Pegasus forecast

Energy consumption between the developed and developing


economies. World consumption of energy has been growing at an average
of 2.0% annually in recent years. The OECD countries currently consume
slightly more than half of the world’s energy but consumption has been
growing below the world’s average at 1.0% annually. Reasons for the
slower growth in consumption are slowing population growth, maturing
economy and energy conservation practices in the OECD countries.

Table 2.2. Regional Growth in Energy Demand


Average Annual
Grouping Region Growth in 2003-2030

OECD North America 1.3%


Europe 0.7%
Asia 1.0%
Total OECD 1.0%

Non-OECD Europe and Eurasia 1.8%


Asia-Pacific 3.7%
Middle East 2.4%
Africa 2.6%
South and Central America 2.8%

World Average 2.0%


Source: International Energy Outlook 2006, US Department of Energy

However, energy consumption from the non-OECD countries has been


growing at a higher rate than the world’s average in recent years. Energy

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consumption among the non-OECD countries in various regions of the world
was 1.8%-3.7% fuelled by economic growth in the developing economies.
Growth in consumption has been strongest among the developing
economies especially from China and India brought about by the countries’
vibrant economic growth.

Outlook on fossil fuels. Though prices of crude oil have declined from its
peak of US$75 per barrel, analysts are in the opinion that prices of fossil
fuels in 2007 and beyond would not decline to levels prior to 2000. Energy
consumption in the developing economies especially in Asia-Pacific would
continue to outstrip consumption in the OECD countries in this decade and
the next fuelled by economic growth. The US Department of Energy predicts
that by 2015, the proportion of the world’s energy consumption from the
non-OECD countries would outstrip the OECD countries.

The oil and gas reserves of the Middle East, North Africa and Russia would
play a major role in meeting the world’s future need for energy. These
regions remain under-exploited and meeting future needs would depend on
new investments in downstream and upstream activities. Uncertainties
remain on the amount and speed of new investments to increase production
and availability for exports. Any significant shortfall in investments would
adversely affect the global energy balance and contribute towards volatility
in future energy prices.

2.3 Overview on Electricity Generation


Developments in world’s electricity generation. Worldwide electricity
generation grew from an average of 2.9% annually in 1996-2000 to 3.3%
annually in 2000-2004. From 2000 to 2004, electricity generation grew from
14,595.7 billion kWh to 16,599.1 billion kWh according to the US Energy
Information Administration (EIA).

„ Electricity generation in the OECD countries slowed from an


average growth of 2.3% annually in 1996-2000 to 1.4% annually in
2000-2004.

„ However, generation from the non-OECD countries grew at a faster


rate from an average of 4.0% annually in 1996-2000 to 6.1%
annually in 2000-2004.

As a result, the proportion of the world’s total electricity generation from the
OECD countries declined from 62.4% in 2000 to 58.0% in 2004 while the
proportion from the non-OECD countries increased from 37.6% to 42.0%
during the period.

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Gains in energy efficiency, slower population growth and a maturing
economy in most of the OECD countries have slowed growth in electricity
consumption and generation. However, stronger economic growth among
the non-OECD countries has fuelled consumption and generation of
electricity at a faster rate than the OECD countries.

„ Strong economic growth in the non-OECD countries of Asia created


the fastest increase in electricity consumption growing at an
average of 9.1% annually in 2000-2004. Thus, Asia’s share of the
world’s electricity generation increased from 17.0% in 2000 to
21.2% in 2004.

„ China was the main contributor to Asia’s growth in electricity


generation and is the world’s second largest generator of electricity
after the United States. China’s share of the world’s electricity
generation increased from 8.9% in 2000 to 12.5% in 2004.

Table 2.3a. Regional Growth in Electricity Generation

Elect. generation Average annual Share of world


(bil kWh) growth generation
2000 2004 1996- 2000- 2000 2004
2000 2004

OECD
North America 4,589.4 4,794.4 2.5% 1.1% 31.4% 28.9%
Europe 3,040.3 3,250.2 2.3% 1.7% 20.8% 19.6%
Asia 1,476.3 1,585.9 1.7% 1.8% 10.1% 9.6%
OECD 9,106.0 9,630.5 2.3% 1.4% 62.4% 58.0%

Non-OECD
Europe and Eurasia 1,372.6 1,497.1 -0.1% 2.2% 9.4% 9.0%
Asia 2,479.5 3,517.1 6.3% 9.1% 17.0% 21.2%
Middle East 437.9 566.6 6.5% 6.7% 3.0% 3.4%
Africa 416.9 505.4 3.2% 4.9% 2.9% 3.0%
S’th & C’trl America 782.8 882.4 4.3% 3.0% 5.6% 5.3%
Non-OECD 5,489.7 6,968.6 4.0% 6.1% 37.6% 42.0%

World 14,595.7 16,599.1 2.9% 3.3% - -


Source: US Energy Information Administration

Outlook on worldwide electricity generation. The US EIA projects world


electricity generation to grow at an average rate of 2.8% annually between
2003 and 2030. In a maturing economy, electricity generation in the OECD
countries would grow at an average of 1.6% annually. However, stronger
economic growth in the non-OECD countries would increase generation at
an average of 4.2% annually.

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Table 2.3b. Regional Projection in Electricity Generation

Electricity generation Avg. annual Share of world


(billion kWh) growth generation
2003-2030
2003 2010 2030 2010 2030

OECD:
North America 4,442 5,109 6,944 1.7% 25.7% 22.0%
Europe 2,975 3,471 4,350 1.4% 17.4% 13.8%
Asia 1,465 1,799 2,257 1.6% 9.0% 7.2%
OECD 8,882 10,380 13,551 1.6% 52.2% 42.9%
Non-OECD:
Europe and Eurasia 1,377 1,985 3,071 3.0% 10.0% 9.7%
Asia 3,014 5,027 10,599 4.8% 25.3% 33.6%
Middle East 448 738 1,108 3.4% 3.7% 3.5%
Africa 408 607 1,035 3.5% 3.1% 3.3%
S. & C. America 756 1,162 2,196 4.0% 5.8% 7.7%
Non-OECD 6,003 9,518 18,009 4.2% 47.8% 57.1%
World 14,885 19,898 31,560 2.8% - -
Source: US Energy Information Administration

The non-OECD countries of Asia would continue to show the strongest


growth though at a slower pace averaging 4.8% annually from 2003 to
2030. This would increase the Asia’s share of the world’s electricity
generation from 21.2% in 2004 to 25.3% by 2010 nearly equal to North
America’s share. China’s strong economic growth would continue to be the
main contributor in Asia increasing at an average of 4.9% annually from
2003 to 2030. Thus, China’s share of the world’s electricity generation
would increase from 12.5% in 2004 to 15.1% by 2010.

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3.1 The PV Value Chain


Activities in the value chain. Currently crystalline silicon cells account for
94% of the PV modules produced in the world. Thin films using a-Si
followed by CI(G)S and CdTe account for the remaining 6% of the modules
produced. Crystalline silicon cell modules would continue to dominate the
PV market but forecast thin films share of the module market would
increase to about 20% by 2010. The following describes the players in
value chain for the PV industry.

„ Producers of silicon - process and refine silicon into semiconductor


grade silicon as the feedstock.

„ Producers of ingots and wafers – cast silicon into ingots and


subsequently slice ingots into thin silicon wafers.

„ Cell producers - applies coatings and electrical contacts to the


wafers or thin films to convert it into light absorbing conductors.

„ Module manufacturers – frames and laminates the assembled cells


and installs the electrical contact points to produce the modules.

„ Component manufacturers - manufactures other electrical and non-


electrical components that make up the PV system.

„ Installers and system integrators - designs and installs a complete


PV system for operation.

Diagram 3.1a. Value Chain for the Photovoltaic Industry

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Table 3.1a. The Activities of the Value Chain

Value Description of Activity


Chain

Silicon Silicon is in abundance in the form of sand, quartz, granite, clay and
feedstock mica. Silicon is initially mined and then extracted to produce
metallurgical grade silicon (MG-Si) and has wide usage in the
aluminium and chemical industry. For silicon to reach semiconductor
grade for use in electronics and PV, MG-Si has to be processed into
polysilicon that forms the feedstock to produce the ingots.

There are companies specialising in recycling silicon wastes, broken


silicon wafers and off spec silicon sourced from the semiconductor and
PV industry while some cell manufacturers conduct their own recycling.

Ingots and Wafer manufacturers receive the polysilicon feedstock and process it
wafers into polysilicon (mc-Si) or monosilicon (sc-Si) ingots. These ingots are
then sliced or sawed into thin wafers.

„ Production of sc-Si ingots is through the float zone or Czochalski


process. Ingots produced through the flat zone process produces
purer sc-Si ingots than the Czochalski process.

„ Production of mc-Si ingots is generally through the directional


solidification or casting process. It is less costly to produce mc-Si
ingots but have a lower light conversion efficiency then sc-Si.

An alternative method is to process the polysilicon feedstock into thin


sheets or ribbons of specific length and then cut into wafers.

Cells PV cells produced from the wafers are the light absorbing materials.
Wafers produced from sawed ingots have a damaged surface and
therefore etched with an alkaline solution. Phosphorus is used to
diffuse the surface of the silicon wafer doped with boron. An anti-
reflective coating (silicon nitride or titanium dioxide) is usually applied
to increase the amount of light absorbed by the cell. The wafer is then
metallised by screen-printing (usually with a silver paste) to form grid-
like contacts on the front of the wafer. The rear of the wafer is also
screen-printed (usually with aluminium) covering the area or in a grid-
like pattern.

Many companies involved in manufacturing PV cells from wafers are


also involved in manufacturing thin film cells. Others specialises only
on manufacturing thin film cells. Production of thin film cells involves
thinly depositing light absorbing materials on low cost backing

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Table 3.1a. The Activities of the Value Chain

Value Description of Activity


Chain

materials such as glass, metal sheets or plastic. The most common


light absorbers used in thin films is a-Si and others include CdTe and
CI(G)S. A transparent layer of oxide (such as tin oxide) forms the front
electrical contact and a metal layer forms the rear electrical contact.

PV Modules Many PV cell manufacturers are also manufacturers of PV modules.


Manufacturing PV modules is basically an assembly process. The cells
are “stringed” to form a large circuit on a panel and framed with
aluminium. A sheet of glass (usually tempered glass) covers and
protects the panel and the panel backed with laminates, electrical
connections and fitted with junction boxes. Typical modules are flat
panels and available in various sizes. Modules are also available as
building integrated modules in the form of roof tiles, hipped roofs,
windows and walls.

Components Besides the modules, other components comprise a PV system. These


include the mounting structures to hold the PV modules, inverters to
convert direct current (DC) into alternating current (AC), power
controllers, meters, connectors, electrical cabling and battery storage
devices.

Installation The final part of the value chain involves installing the modules and its
components to form the PV system. Installation may be grid-connected
or off-grid systems. Players in this segment of the value chain range
from small local businesses to large multinational companies. Small
businesses generally install PV systems of less than 10 kWp in homes.
Some module manufacturers are also involved as systems integrators
installing larger PV systems in stadiums, commercial buildings and
power plants.

Characteristics of the value chain. The beginning of the value chain is


characterised as small number of players involved in large-scale production
of silicon. As the value chain moves downstream, the number of players in
each sector of the value chain increases and characterised with smaller
scale production capacities. Consequently, as the value chain moves
upstream, the number of players decreases and characterised with larger
scale production capacities.

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Compared to manufacturing PV modules, manufacturing silicon requires
high investments in capital (per MWp), technological know how and large-
scale production to produce the economies of scale. As the value-chain
moves downstream, investments in capital (per MWp) reduces and smaller
scale production is feasible to achieve reasonable economies of scales - the
barrier to entry decreases downstream along the value chain. Thus, the
barrier to entry is highest to manufacture silicon with few players in the
industry while the barrier to entry to install PV systems is the lowest with
the greatest number of players.

Diagram 3.1b. Characteristics of the value chain

Studies also show that profit margins are highest in the upstream activities
of the value chain and generally decline as activities move downstream. The
following are the typical profit margins across the value chain in 2005-2006:

„ Manufacturing polysilicon - 50%-60%;

„ Manufacturing wafer - 35%-40%;

„ Manufacturing PV cells - 25%-30%;

„ Manufacturing PV modules - 5%-10%;

„ Manufacturing inverters – 25%-30%

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„ Installing PV systems - 20%-25%;

Integration across the value chain. Very few players have integrated
across the value chain except for the larger companies. Increasing demand
for PV with constraining supply of silicon in the last three years has resulted
in some companies involved in cell and module manufacturing to move
upstream into wafer manufacturing and some into silicon production to
ensure security of supply. Moving upstream in recent years has been mostly
through acquisition, partial stake in companies or forming joint ventures PV
industry is beginning to shows signs of consolidation.

Table 3.1b. Example of Major Companies Involve in the Value Chain


Ingots/ Cell Module
Company Silicon wafers production assembly Components Installation

Sharp S S S S S

Kyocera S S S S

Sanyo S S S S S

Mitsubishi S S S S

SolarWorld S S S S S

Isofoton S S S S

Q-Cells S S S

BP Solar S S S

Suntech S S S S

Motech S S

Unisolar S S

REC S S S S S

MEMC S S

Hemlock S

Wacker S
S Includes subsidiary companies and joint ventures. S Planning

3.2 Product Range


Major categories of modules manufactured and commercially available are
crystalline silicon and thin film cell modules. Crystalline silicon cell modules
account for 94% while thin film cell modules account for 6% of the modules
produced worldwide in 2006.

18
„ Crystalline silicon modules. Modules are either mc-Si or sc-Si
cells produced from sawing ingots into wafers, which produces a
significant amount of waste. An alternative method to reduce waste
is to process silicon into sheets or ribbons of specific length and
then cut into wafers.

„ Thin film modules. These modules use non-crystalline light


absorbing materials thinly deposited on a low cost material such as
glass, stainless steel or plastic. Common thin film modules
produced and commercial available are a-Si (silicon in a different
form), CdTe and CI(G)S.

Other categories of cells include silicon powder melted on a low cost


conducting substrate but currently suffer poor uniformity and surface
roughness. Conductive polymer solar cells can be produced at low cost but
suffers degradation from ultraviolet (UV) light and therefore has a short
lifespan. Another is mc-Si thin film on glass developed by CSG Solar but
currently is not yet widely available.

Diagram 3.2. Categories of Cells and Modules

Currently crystalline silicon cells are the mainstay of most PV modules in the
market. Technically crystalline silicon is not the ideal material for a light
absorbing semiconductor but benefits from decades of R&D. Furthermore,
silicon cells are stable with good light conversion efficiencies. Crystalline
silicon cells account for 94% of the modules in the global market in 2006;

„ mc-Si cells produced from sawn silicon ingots account for 57% of
the modules.

„ sc-Si cells produced from sawing high-purity single crystal boule


account for 33% of the modules.

19
„ Crystalline silicon sheets and ribbons account for 4% of the
modules.

Table 3.2a. Major Players in PV


Crystalline Silion a-Si CI(G)S CdTe
(mc-Si and sc-Si) Thin Film Thin Film Thin Film

Sharp United Solar Shell Solar First Solar


Kyocera Kaneka Showa Shell Antec Solar
BP Solar Fuji Electric Wurth Solar
Q-Cells Sharp Daystar
Mitsubishi Mitsubishi Nanosolar
SolarWorld Schott Solar
Sanyo
Schott Solar
Isofoton
Motech
Suntech

Crystalline silicon wafers account for 40%-50% of a module’s production


cost. The high cost of silicon especially in the last 3-4 years has led the
industry to seek lower cost materials and thin films shows promise. Besides
its lower cost, production allows for greater use of automation and therefore
less labour intensive. Furthermore, thin films allows for an integrated
approach to the module design.

However, thin films have yet to make any significant impact to the maturing
crystalline silicon technology. Thin films account for 6% of the modules
produced and marketed in 2006:

„ Thin films from a-Si are the most widely developed of the thin film
technologies and account for 4.5% of the world’s module
production.

„ CdTe thin films account for 1.5% and CI(G)S account for less than
0.5% of the world’s production of PV modules.

Though current technologies using thin film are potentially cheaper to


produce than crystalline silicon, thin films have lower conversion efficiency.
Furthermore, some thin films have shown degradation in efficiency over a
period by as much as 15%-35%.

20
Table 3.2b. PV Modules and Efficiency Range

Type of Cells/Modules Module Efficiency

mc-Si 12%-15%
sc-Si 14%-17%
a-Si (thin film) 6%-9%
CdTe (thin film) 8%-10%
CI(G)S (thin film) 9%-11%

3.3 Drivers of Growth in the PV Value Chain


PV technology initially had niche applications in space, telecommunications
and consumer electronics (e.g. calculators) and has diverse into larger scale
electricity generation. Despite PV’s strong growth in recent years, it is
starting from a small base and currently accounts for less than 1% of the
world’s electricity generation. Furthermore, cost of electricity produced from
PV is significantly high compared to conventional electricity produced by the
utility companies and other forms of renewable energy such as wind power
and biomass.

Drivers of growth in the PV value chain. Electricity produced by many


power plants across the world is very much dependent on non-renewable
fossil fuels. Higher fuel prices and political instability, war and threat of
terrorism in the oil producing countries have forced governments to
consider renewable energy to ensure security in the energy supply to
sustain economic development.

Awareness on global warming among citizens and governments in many


countries has generated interest for renewable energy. Many governments
have signed the Kyoto Protocol agreeing to reduce greenhouse emissions,
which contributes towards global warming. Furthermore, governments are
setting stricter standards on air pollution and renewable energy including PV
is an option to reduce pollution.

Escalating demand for PV and constraining supply of silicon in recent years


has constrained production of crystalline silicon based PV systems. The
result has been escalating prices across the PV value chain from production
of silicon to modules. This has generated interest to develop and
commercialise thin film technologies that uses minute amounts of silicon (a-
Si thin films) and thin films that do not use silicon (CIS, CIGS and CdTe thin
films).

Escalating demand for PV and constraining supply of silicon has also


generated interest among manufacturers across the value chain to reduce

21
production cost through improvements in production efficiency and efficient
utilisation of silicon. This is an important driver within the value chain since
successes of companies greatly depend on their ability to reduce cost and
become more efficient. This is would be very relevant in the future in the
event of reduced government subsidies, slowdown in demand and
increasing competition. Reducing cost would also result in PV becoming
more affordable generating greater interest from the end-users.

Diagram 3.3. Market Drivers for the PV Value Chain

Government support for PV. Current cost to generate electricity through


PV remains very high compared to conventional electricity produced by the
utility companies and other forms of renewable energy. Thus government
support for PV through financial incentives has been a key driver leading to
increasing end-user demand and growth of the industry. Thus government
support in Germany, Japan, United States will continue to drive the PV
industry. Consequently, government support in the emerging PV markets of
Western Europe (notably Spain and Italy), China, Korea and Taiwan will
drive the future growth of the industry.

Government support programmes to generate end-user demand for PV can


be generalised into the following:

22
„ Mandated power buy back schemes from the utility companies
above the normal utility rates.

„ Direct government subsidies to the end-users to offset the costs of


purchase and installing the PV system.

„ Financing at low interest and tax incentives for purchase and


installing the PV systems.

„ Government mandate setting the minimum usage level for


renewable energy.

Government programmes directly supporting the PV industry typically


involves financial support for industries and research institutions to conduct
R&D in PV technologies. Typically in the developing economies especially in
Asia government support includes:

„ Tax holidays to attract companies to invest and establish new


manufacturing facilities.

„ Overseas trade missions and networking between foreign and the


local industries to attract investments.

„ Encouraging companies to establish their manufacturing and R&D


operations in science or technology parks.

Cost to produce electricity from PV will continue to remain higher than


conventional electricity for some time. Thus government support will
continue to be the key catalyst driving the market and industry at least for
another decade.

23
4
4.. IIN
NDDU
USST
TRRY
YTTR
REEN
NDDS
SAAN
NDDO
OUUT
TLLO
OOOK
K

4.1 Photovoltaic Modules


Demand and supply growth. The market for PV modules has been
booming in the last five years growing at an average rate of nearly 43%
annually from 2001 to 2006. The market increased from 1,727 MWp in 2005
to an estimated 2,400 MWp in 2006. Driving the market worldwide are the
government supported renewable energy programmes namely in Western
Europe (particularly in Germany and Spain), Japan and the US.

Projected market for PV modules by 2010, from various sources, range from
a conservative 5,000 MWp to an optimistic forecast of 11,000 MWp. Growth
in the global market would remain strong from 2007 to 2010 but expected
to cool as the market in Germany levels off or begins to decline. Thus, the
assumption is the market would grow at a slower pace in 2007-2010
compared to 2001-2006. Based on 20% annual growth in 2007-2010, the
global market would reach 5,000 MWp by 2010.

Figure
Figure 4.1a.
4.1a.PV
PV Module
Module Production
Production and
and Projections
Projections (MWp)
(MWp)

10,000
10,000
9,220
9,220
8,000
8,000
6,855
6,855
MWp
ProductionininMWp

6,000
6,000 4,977
4,977
Production

4,000
4,000
2,400
2,400
1,727
1,727
1,195
1,195
2,000
2,000
560 759
759
78 89
78 126 155
89 126 201 288
155 201 399 560
288 399
00
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010
1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Historical
Historical 40%
40% Annual
AnnualGrw
Grwth
th 30%
30% Annual
AnnualGrw
Grwth
th 20%
20% Annual
AnnualGrw
Grwth
th

Source: 1995-2005 from PV News: 2006 from Pegasus estimates

New silicon plants from existing and new players would come into
production in 2008 and beyond, relieving the constraint and gradual
reduction in module prices by 5%-7% annually in 2008-2010. Excesses in
silicon production beyond 20% annual growth for PV in 2008-2010 would
create an oversupply of silicon. Furthermore, aggressive build-up in

24
production capacity for PV modules especially in China would increase the
potential to supply beyond the 20% annual growth for PV. A combination of
these two factors would cause prices of modules to decline faster than the
expected 5%-7% annually in 2008-2010 and increase demand beyond the
projected 20% annual growth for PV.

The largest market for PV in 2005 was Germany with demand increasing
from 363 MWp in 2004 to 635 MWp in 2005. Japan was the second largest
market growing from 272 MWp in 2004 to 290 MWp by 2005. The US was
the third largest market with 103 MWp installed in 2005 and Spain
contributed significantly to 20 MWp. Other significant markets in Europe
during the period included Austria (8 MWp), France (7 MWp), Italy (7 MWp)
and Switzerland (4 MWp) and Britain (3 MWp). In Asia, Korea installed 6.5
MWp and China installed 27 MWp in 2005.

Industry players. Japanese companies dominate the PV module industry


accounting for 48% of the world’s production or 833 MWp in 2005. Japan’s
Sharp, Kyocera, Sanyo, Mitsubishi and MSK together accounted for 710
MWp or 41% of the world’s production during the period. China is
increasingly making headways into the global PV module market with
production from China reaching 443 MWp or 26% of the world’s production
in 2005.

Figure
Figure 4.1b.
4.1b.Share
Share of
of World
World PV
PV Module
Module Production
Production in
in 2005
2005(MWp)
(MWp)

Sharp
Sharp
Others
Others 23.0%
23.0%
32.0%
32.0%

Isofoton
Isofoton Sanyo
Sanyo
2.3%
2.3% MSK
MSK Mitsubishi 7.2%
Solon Mitsubishi
Solon 7.2%
3.5%
3.5% 3.5% 6.5%
6.5% Kyocera
Kyocera
3.5%
Solarw
Solarwatt
att 8.2%
8.2%
2.1%
2.1%
Schott
Schott
BP
BPSolar
Solar Suntech Solar
Suntech Solar
2.7%
2.7% Shell 2.9%
ShellSolar
Solar 2.9% 3%
3%
3%
3%

Note: Estimates from companies’ production

The industry scenario in the last five years has been a period of
acquisitions, joint ventures, expanding operations and players entering and
exiting the market. Shell Solar exited from manufacturing c-Si modules in

25
2006 to focus on thin films. During the period, Germany’s SolarWorld
acquired Shell Solar’s facilities for c-Si modules and China’s Suntech
acquired a majority stake in Japan’s MSK. Isofoton established an office in
the US in 2004 to penetrate the country’s market. Sharp and Kyocera
expanded their manufacturing operations from Japan to Britain, Czech
Republic and Mexico.

China has been significantly increasing production and production capacity


in recent years. Manufacturing modules require more labour while PV cells
and wafers require more automation. China’s advantage is its low labour
cost compared to the United States, Japan and Europe. Thus, China is able
to produce modules at a lower manufacturing cost to compete in the global
market. Chinese manufacturers have been increasing their production
capacity for c-Si modules from 1,500 MWp in 2005 to 2,800 MWp in 2006.
By 2007, China’s production capacity would increase to nearly 4,000 MWp
and further increases expected by 2010.

Product. In 2005, c-Si modules accounted for 94% of the world’s module
production - mc-Si cell modules accounted for 57%, sc-Si cell modules 33%
and c-Si ribbons/sheets 4%. Modules using mc-Si cells have lower
conversion efficiency than sc-Si modules but its market share has been
increasing over sc-Si modules with improvements in efficiency. Shortages of
silicon in recent years have created opportunities for thin films with its lower
manufacturing costs and not constrained by supplies of silicon. By 2005,
thin films using a-Si, CI(G)S and CdTe increased to 6% of the world’s
module production.

Figure
Figure 4.1c.
4.1c.PV
PV Modules
Modules by
byType
Type in
in 2005
2005

c-Si
c-Siribbon/sheets,
ribbon/sheets,
4%
4% Others,
Others,1%
1%
a-Si
a-Sithin
thinfilm,
film,5%
5%

sc-Si, mc-Si,
mc-Si,57%
57%
sc-Si,33%
33%

Note: Derived from various estimates

26
Though c-Si modules would continue to dominate the world market by
2010, projections are thin film’s share of the market would increase from
6% in 2005 to 20% by 2010. The appeal for thin film modules is it requires
little or no silicon and production costs are lower than c-Si modules.
However, thin films are hard to mass-produce cost-effectively and
efficiencies are generally lower than c-Si modules under current
technologies.

FIgure
FIgure 4.1d.
4.1d.Share
Share of
of the
the Module
Module Production
Production by
byType
Type

4%
4% 4%
4% 6%
6% 6%
6% 7%
7% 14%
14% 17%
17% 20%
20%
100%
100%

80%
80%

60%
60%
96%
96% 96%
96% 94%
94% 94%
94% 93%
93%
40% 86%
86% 83%
83% 80%
40% 80%

20%
20%

0%
0%
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Crystalline
Crystallinesilicon
siliconmodules
modules Thin
Thinfilms
films

Note: Assumption of projection – Total module demand increasing from 759 MWp in
2003 to 4,977 MWp by 2010; Thin films increasing from 30 MWp in 2003 to 1,000
MWp by 2010 according European Photovoltaic Industry Association.

Price trend. Prices of modules across the world increased from 2004 to
2006. In Germany, prices rose sharply from 2004 to 2005 as demand for PV
in the country increased by 85% annually. The exception was Japan with
the strength of the Yen, low inflation and economies of scale in Japanese
production. Furthermore, most of the major Japanese manufacturers have
integrated across the value chain beginning from manufacturing of wafers
and ingots to modules ensuring supplies of silicon materials.

Two key factors contributed towards increasing modules prices from 2004 to
2006:

„ A demand exceeding supply situation for PV contributed towards


increasing prices of modules as shortages of silicon limited module
production.

„ Silicon accounts for 40%-50% of a module’s production cost and


with increasing demand for silicon but silicon production limited by

27
capacity, contract prices of silicon reached US$55 per kg by 2006
from US$25 per kg and spot prices to US$300 per kg.

Figure
Figure 4.1e.
4.1e. Average
Average Module
Module Prices
Prices (per
(per Wp)
Wp)

4.50
4.50 600
600

500
500
4.00
4.00

400
400
3.50
3.50
300
300
3.00
3.00
200
200

2.50
2.50 100
100

2.00
2.00 00
2000
2000 2001
2001 2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Germany
Germany (€)
(€) US
US(US$)
(US$) Japan
Japan(Yen)
(Yen)

Source: 2000-2005 from IEA; 2006-2010 forecasts by Pegasus

Projections are world prices of modules would stabilise by 2006-2007 and


then decline 5%-7% annually from 2008 onwards as new silicon plants
begin production relieving the supply constraint. Another factor (though not
as significant) would be the gradual use of thinner silicon wafers, which
would partially reduce the manufacturing costs of modules.

Business potential and opportunities. Projected demand for PV would


grow at average of 20% annually in 2007-2010. Thus, module production
would double from 2,400 MWp in 2006 to 5,000 MWp by 2010. Based on
this projection, new PV systems installed during the period would total
15,500 MWp (see Table 4.1a). Assuming the average price of PV modules at
US$3.50 per Wp and 15,500 MWp produced ands installed in 2007-2010,
the value of the market for PV modules would total US$54.3 billion.

Acquiring even a 5% share of the market value represents a significant


business potential for many PV module manufacturers. Of significance, is
the European Union and the US are net importers of c-Si modules produced
mainly in the developing economies with their cost of production (mainly in
labour cost) such as China, the Czech Republic and Mexico.

28
Table 4.1a. Forecast of PV Demand (MWp) Based on Annual Growth Rates
Forecast Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
At 20% 2,400 2,880 3,456 4,147 4,977 15,460
At 30% 2,400 3,120 4,056 5,273 6,855 19,303
At 40% 2,400 3,360 4,704 6,586 9,220 23,869

Western Europe (namely Germany and Spain), Japan and the US would
continue to be significant markets for PV in 2007-2010 driven mainly by
government supported renewable energy programmes.

„ The European Union initially targeted 3,000 MWp of PV by 2010 but


at current rate of installation 4,500-5,000 MWp is possible
according to various estimates. The European Renewable Energy
Council projects 41 GWp of installations by 2020 and 200 GWp by
2030.

„ Japan plans to install 4,800 MWp of PV by 2010 and the country’s


PV roadmap projects 30 GWp installed by 2020 and 205 GWp by
2030.

„ In the US, PV installations would reach 2,100 MWp by 2010 under


the various federal and state programmes for PV. The US industry
roadmap for PV projects installations to reach 36 GWp by 2020 and
200 GWp by 2030.

Significant markets in Asia that would drive demand for PV include China
and Korea. Through the countries renewable energy programme, China
plans to install 450 MWp by 2010 and Korea 1,300 MWp MWp by 2012.

The industry also represents a market potential for suppliers of materials


and components for manufacturing modules. Besides the PV cells, other key
materials and components include the frame, glass, ethyl vinyl acetate
(EVA) film, tedlar layer, interconnect, adhesive and junction box. Excluding
the PV cells, the total cost of these materials is about US$0.40 per Wp (see
table 4.1b). Thus, the market value of these materials produced for
manufacturing 15,500 MWp of modules in 2007-2010 period would amount
to US$6.2 billion.

29
Table 4.1b. Market Value of Materials for PV Modules in 2007-2010
Materials/ Proportion of Material Cost Market Value
Components Material Cost US$ per Wp (US$ million)
Glass 22% 0.09 1,364
EVA 19% 0.07 1,153
Frame 17% 0.07 1,073
Junction box 16% 0.06 998
Tedlar 15% 0.06 918
Interconnect 8% 0.03 477
Adhesive 4% 0.01 217
Total 100% 0.40 6,200
Note: Cost breakdown and total material cost sourced from GT Solar. Market valued
based on market of 15,500 MWp in 2007-2010.

Market challenges. The market for PV will continue to grow and prices
reduced over time. However, PV will continue to depend on government
support in 2007-2010 as cost electricity from PV remains 5-10 times above
conventional electricity produced by the utility companies. Possibilities of
reduced government support and changes in government policies not in
favour towards PV would dampen demand. Furthermore, delays in
implementing renewable energy programmes for PV would stall demand for
PV.

Aggressive build-up in module production capacity in China could displace


many players across the world with its lower labour cost. Manufacturing PV
modules requires more labour while cells and wafers is more of an
automated process. China’s production capacity for PV modules would
increase to nearly 4,000 MWp by 2007 and further increases expected by
2010. Suntech and Tianwei Yingli New Energy Resources (Yingli Solar) in
China have already announced possibilities of increasing their plants’
production capacity to 1,000 MWp.

Many silicon manufacturers have announced plans to increase production by


2008 and beyond but the possibility of silicon shortages remains
subsequently affecting production of c-Si modules. Silicon manufacturers
remain cautious about expanding too rapidly because of the high cost of
investment in a new silicon plant. Thus, there is still the possibility of limited
silicon supply beyond 2008, which would constrain production of c-Si
modules.

30
Most of the financing for PV installations are through loans including pre-
installation in newly constructed homes in an overall home mortgage. End-
users would expect the monthly payment for their PV system to be
comparable to the amount received from the utility companies’ power
buyback schemes and savings in the electricity bill. A rise in interest rates
would increase the monthly loan payment and dampen demand for PV.
Furthermore, rise in interest rates for mortgages would dampen demand for
newly built homes with pre-installed PV.

Any external impact that would increase or decrease demand for PV


modules would have a subsequent impact across the value chain and the
overall PV industry. Production capacity from manufacturing of wafers to
modules increased tremendously from 2003 to 2006 with further increases
expected. A slowdown in demand for modules due to government policies or
action towards PV would create excess capacity across the value chain.

4.2 Crystalline Silicon Cells


Demand and supply growth. Demand for c-Si cells increases with
increasing demand for PV modules. Production of c-Si cells increased from
1,627 MWp in 2005 to an estimated 2,250 MWp in 2006. While projections
for demand and supply of modules would increase by 107% from 2006 to
2010, projections for c-Si cells would increase at slower rate by 77% during
the period. Main reason is c-Si cells compete with thin films and that
demand for thin films would increase at a faster rate than c-Si cells in 2007-
2010.

Figure
Figure 4.2a.
4.2a.Crystalline
Crystalline Silicon
Silicon Cell
CellProduction
Production and
and Projection
Projection

5,000
5,000

3,977
3,977
4,000
4,000
3,447
3,447
2,956
2,956
3,000
MWp

3,000
MWp

2,680
2,680
2,250
2,250
2,000
2,000 1,627
1,627
1,145
1,145
729
729
1,000
1,000

--
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Note: Estimates derived from various sources

31
The market for ci-Si cells grew at an average of 46% annually from 729
MWp in 2003 to an estimated 2,250 MWp in 2006. Nevertless, demand for
c-Si cells exceeded supply but production constrained by the silicon
shortage. Though ci-Si cells would continue to dominate the market for PV
modules, its growth would slow to an average of 15% annually increasing
from 2,680 MWp in 2007 to nearly 4,000 MWp by 2010. Furthermore, its
share for the module market would decline from 94% in 2006 to 80% by
2010 overtaken by thin films.

Japan and Germany would continue to be a net exporter of c-Si cells while
the US and China a net importer in 2007-2010. Japan exports much of the
c-Si cells to supply Japanese module plants in Europe, Mexico and the US.
Germany exports its c-Si cells to supply module plants in other parts of
Europe, the US and China. China will continue to be a net importer of c-Si
cells in 2007-2010 as production capacity for PV modules would exceed c-Si
cells. In 2006, China’s total production capacity for c-Si modules was nearly
4,000 MWp while production capacity for cells was 2,000 MWp.

Industry players. Japanese and European cell manufacturers dominate


the global market. In recent years, major Chinese manufacturers have been
increasing their cell production capacity and many announced plans to
increase capacity beyond 2006. In 2005, China accounted for 9% of the
world’s production producing nearly 160 MWp. By 2006, China (excluding
Taiwan) produced an estimated 690 MWp accounting for nearly 29% of the
world’s production. However, China’s production of c-Si cells is for the
country’s domestic market.

Figure
Figure 4.2b.
4.2b.Share
Share of
of World
World Silicon
Silicon Cell
CellProduction
Production in
in 2005
2005(MWp)
(MWp)

Sharp Q-Cells
Q-Cells
Sharp
24.3% 9.4%
9.4%
Others
Others 24.3%
20.2%
20.2%
Kyocera
Kyocera
8.1%
8.1%
Shell
Shell
Solar
SolarSuntech Sanyo
Sanyo
Suntech BP
BPSolar
Solar Schott
Schott Mitsubishi
Mitsubishi
3%
3% 4.6% 7.0%
7.0%
4.6% 4.8%
4.8% Solar
Solar 6.4%
6.4%
5%
5%
Isofoton
Isofoton
3.2%
3.2% Motech
Motech
3.4%
3.4%

Note: Estimates from companies’ production

32
Japanese companies dominate the market for c-Si cells accounting for
nearly half of the world’s production. Together Japanese companies Sharp,
Kyocera, Sanyo and Mitsubishi accounted for 46% of the world’s production
or 790 MWp in 2005. Major European companies include Q-Cells, Schott
Solar, BP Solar and Isofoton accounting for 22% of the world’s production or
nearly 390 MWp. Suntech is China leading producer of c-Si cells accounting
for nearly 5% of the world production and 44% of China’s production at 68
MWp in 2005.

Product. The three major categories of c-Si cells in production are mc-Si
(multi-crystalline), sc-Si (mono-crystalline) and c-Si ribbon/sheets. Until
recent years, sc-Si cells dominated the market but now overtaken by mc-Si
cells because of its lower costs. Though mc-Si cells have lower conversion
efficiency than sc-Si cells, its efficiency has been improving with
developments in technology. The process to saw ingots into wafers for mc-
Si and sc-Si produces silicon wastage. Technologies developed by Evergreen
Solar and Schott Solar produce mc-Si ribbons and sheets, which can be cut
rather than sawed to produce wafers and reduces wastage.

FIgure
FIgure 4.2c.
4.2c.Type
Type of
of c-Si
c-SiCells
Cells by
byProduction
Production in
in 2005
2005

c-Si
c-Siribbon/sheets
ribbon/sheets
4%
4%

sc-Si
sc-Si
35%
35%

mc-Si
mc-Si
61%
61%

Note: Derived from various estimates

Price trends. C-Si cells account between 60% and 70% of the production
cost of a PV module. Prices of c-Si cells increased from 2003 to 2006
brought about by increasing market for PV modules subsequently creating
demand for c-Si cells but wafer production constrained by shortages of
silicon. Prices of c-Si cells would stabilise by 2006-2007 and decline from
2008 onwards with production from new silicon plants relieving the supply
constraint.

33
Figure
Figure 4.2d.
4.2d.Estim
Estimated
ated and
and Projected
Projected Cell
CellCosts
Costs (per
(per Wp)
Wp)

2.50
2.50

2.45
2.45 2.43
2.43
2.30
2.30
2.34
2.34 2.30
2.28 2.30
2.28
Wp
per Wp

2.10
2.10
2.14
2.14
US$per

1.95
1.95 1.99
1.99
US$

1.90
1.90

1.70
1.70

1.50
1.50
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Note: Rough estimate based on assumption cells account for 65% of the module cost

Average prices of c-Si cells would decline by 5%-7% annually from 2008 to
2010 as demand for PV cell grows by an average of 15% annually. If build-
up in c-Si cell and silicon production capacity were to continue unabated, an
oversupply situation would exist. If this were to happen, prices of c-Si cells
would decline faster than 5%-7% anticipated. On the other hand, if silicon
manufacturers were to take a more cautious approach in expanding their
production capacity and/or demand for c-Si cells were to increase beyond
15% annually, prices of c-Si cells may go on an uptrend.

Business potential and opportunities. Based on projections that demand


for c-Si cells would grow at an average of 15% annually in 2007-2010,
demand for c-Si cells would total 13,000 MWp during the four-year period.
Assuming an average cost of c-Si cells at US$2.70 per Wp, equates to a
market value of US$35.1 billion during the period.

Table 4.2. Forecast for c-Si Cell Demand (MWp)


Average Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
At 15% 2,250 2,680 2,956 3,447 3,977 13,060

China would continue to be a net importer of c-Si cells in 2007-2010.


China’s production capacity for PV modules exceeds its production capacity
for c-Si cells. Estimated that China’s production capacity for c-Si cells would
increase from 1,400 MWp in 2006 to 2,500 MWp by 2007 but capacity for

34
modules would increase from 2,800 MWp to 4,000 MWp. Even with the
increase in China’s silicon production capacity, production would not be able
to meet China’s demand.

The US would also continue to be a net importer of c-Si cells as US


companies focuses technologies on thin films. The federal and various state
renewable energy programmes for PV is creating demand PV installations.
Though the US focuses on development of thin films, module-manufacturing
plants in the US would depend on substantial quantities of imported c-Si
cells for their modules.

In the technology front, successful companies are those that possess the
technology to reduce the cost c-Si cells per Wp. Cells account for 60%-70%
of the manufacturing cost of PV modules. Though cell manufacturers do not
have control on the cost of silicon, cost per Wp can be reduced through
improving the cell’s conversion efficiency, producing thinner wafers and
developing technologies that reduce silicon wastage in manufacturing
wafers.

Market challenges. The affect of a reduction in demand for PV would have


adverse consequences on c-Si cell manufacturing with the current build-up
in production capacity. Another threat is if silicon manufacturers remain
cautious in expanding silicon production while demand for PV continues to
increase. Under both scenarios, cell manufacturers would be left with idle
plant capacity and in cases of silicon shortages would be forced to obtain
their silicon at higher prices.

Silicon manufacturers are insisting on multiyear supply contracts with some


form of initial payments before delivery of their silicon and silicon wafers.
Smaller cell manufacturers or companies without sufficient financial
resources would be unable to enter into such multiyear supply agreements
and would face difficulties in obtaining the silicon material. Purchasing in the
spot market can be four to six times higher than the contract prices.

Thin films compete with c-Si and manufacturers are currently developing
technologies to improve efficiency and lower cost of manufacturing thin
films. Furthermore, thin films are not constrained by shortages of silicon
and have the potential to displace c-Si cells with its lower end-user price.

4.3 Polysilicon
Demand and supply growth. The electronics and PV industry both use
silicon wafers for their components. Until recently, c-Si cell manufacturers
could depend on recycled off spec and waste silicon wafers from the

35
electronics industry. Prior to the burst of the technology bubble in 2001,
silicon manufacturers increased their production capacity in anticipation for
increased silicon demand from the electronics industry. During the burst of
the technology bubble, silicon manufacturers experienced excess capacity
and therefore reluctant to increase capacity. With the excess capacity,
silicon manufacturers were in a position to supply their silicon to the wafer
and cell manufacturers as demand for PV grew. Silicon manufacturers were
reluctant to increase their capacity and with the electronics industry
recovering, c-Si cell manufacturers eventually faced shortages for the silicon
materials.

Driven by growing demand for PV most of the existing silicon manufacturers


are only beginning to respond by adding capacity and new industry players
entering the industry. It takes 2-3 years to construct a polysilicon plant and
most new constructions began in 2006. Thus, production from new plants
would only begin in 2008-2009 to relieve the silicon shortage. Short-term
measures undertaken by existing silicon manufacturers in 2006-2007 to
partially relieve the shortage are de-bottlenecking and expanding their
existing production lines but would not totally relieve the shortages.

Figure
Figure 4.3a.
4.3a.Silicon
Silicon Production
Production for
for the
the PV
PV Industry
Industry(tons)
(tons)

60
60
Thousands
Thousands

49.3
49.3
50
50
Tons

44.1
ProductionininTons

44.1

40
40
SiliconProduction

30.5
30.5
30
30
20.7
20.7 21.2
21.2 17.6
17.6
Silicon

20
20
13.5
13.5
15.9
15.9
10
10

00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Source: Piper Jaffray

Estimates indicate increases in polysilicon production for the PV industry


would begin in 2008 after a period of shortages. Production would double
from 15,900 tons in 2007 to 30,500 tons in 2008 with new plants coming
onto production. Further increases are expected with production increasing
45% to 44,100 tons in 2009 but increasing at a slower rate of 12% to
49,300 tons by 2010.

36
Industry players. The US accounts for more than 50% of the world’s
production of polysilicon followed by Japan at 24% and Germany at 18%. In
the next few years, production from other countries such as Norway, China,
Spain and Korea will increase their share of the world’s polysilicon
production. Major polysilicon manufacturers supplying to both the
electronics and PV industry are Hemlock (US), Wacker (Germany), REC
(Norway/US), Tokuyama (Japan) and MEMC (US).

Figure
Figure 4.3b.
4.3b.Share
Share of
of World
World Silicon
Silicon Production
Production in
in 2005
2005(by
(bytons)
tons)

Sumitomo
Sumitomo
MEMC
MEMC Mitsubishi
Mitsubishi 2.6%
2.6%
12.1%
12.1% 9.1%
Tokuyama
Tokuyama 9.1% Others
Others
16.6%
16.6% >1%
>1%

REC
REC Hemlock
Hemlock
16.9%
16.9% 24.6%
24.6%
Wacker
Wacker
17.6%
17.6%

Source: Prometheus Institute

Most of the major players are insisting on multiyear supply agreements


from buyers and requiring some form of initial payments before delivery.
This is to prevent a situation experienced by the silicon manufacturers in
2001. During the period, the electronics industry forecasted strong growth
for silicon and silicon manufacturers subsequently expanded their capacity.
During the burst of the technology bubble, silicon manufacturers
experienced declining orders resulting in excess capacity and financial
losses. Interestingly, Japanese manufacturers are more cautious in
expanding their capacity compared to European and US manufacturers.

Driven by growing demand for PV, global shortage and rising prices of
polysilicon new players are beginning to enter to supply the PV industry. The
following is an overview of some of the new industry players.

37
Table 4.3. Snapshot of New Players Entering the Silicon Industry
Company Overview
DC Chemical Korea’s DC Chemical (DCC) will construct a new 3,000 tons
polysilicon plant marking its first venture into the business.
DCC will employ Siemens reactor technology and use
Trichlorosilane (TCS) as the feedstock gas. Cell manufacturer
SunPower will pay DCC US$250 million in a multi-year supply
agreement to finance construction of the silicon plant.
Hoku Scientific Hoku Scientific, a fuel cell company in Hawaii, announced it
in May 2006 it would construct a 1,500 tons polysilicon plant
at a cost of US$250 million in the state of Idaho.
Isofoton Spain’s Isofoton (cell and module manufacturer), an
Andalusian government agency and Endesa (Spanish utility
company) will build a 2,500 tons plant in Los Barrios, Spain.
Econcern Econcern announced in 2006 that it would form a joint
venture to build a polysilicon plant with a production capacity
of 2,000-3,000 tons. The new plant would be located in Saint
Auban, France, and begin production in 2008.
M.Setek M.Setek, a Japanese polysilicon wafer manufacturer will add
a silicon line to its business operations. The plant begins
production in 2007 with an initial capacity of 1,000 tons.
China Southern China Southern Glass (CSG) announced it would invest in a
Glass US$150 million polysilicon plant in Hubei Province. The plant
would begin production in 2008-2009 and eventually have a
production capacity of 4,000-5,000 tons.

Product. Silicon accounts for 40%-50% of the production costs of PV


modules. Growing demand for PV and shortages of silicon resulted in the
contracted selling price of the material increasing from US$25 per kg in
2003 to US$50 per kg by 2006. Thus, silicon wafer manufacturers are
developing technologies to reduce the wafer thickness. The European
Photovoltaic Industry Association predicts the average wafer thickness
would gradually reduce from 240 microns in 2005 to 150 microns by 2010.

38
Figure
Figure 4.3c.
4.3c. Projection
Projection in
in Silicon
Silicon Usage
Usage for
for Wafers
Wafers

16
16 350
350
320
320 300
300
14
14 300
300

(microns)
thickness (microns)
14.0
14.0
12
12 11.0
11.0 250
250
Wp

10.0
per Wp

12.0
12.0 10.0
10
10 9.0
silconper

240 9.0 8.5 200

Wafer thickness
240 8.5 8.0
8.0 7.5 200
200
200 7.5
88
gmsilcon

180
180 170
170 160 150
150
66 160
gm

Wafer
150
150
100
100
44

22 50
50

00 00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Source: European Photovoltaic Industry Association

Price trend. Prices of polysilicon would reach its peak by 2007 and then
decline in 2008 onwards as new polysilicon plants begin production.
However, silicon manufacturers would expand their production cautiously
and new players may abort their plans to build new plants if demand for PV
is unable to accommodate new silicon production. Furthermore, with
technologies being developed to use less silicon per Wp through thinner
wafers, silicon manufacturers would be extremely cautious in expanding
their production capacity too aggressively.

Figure
Figure 4.3d.
4.3d.Estim
Estimated
ated and
and Projected
Projected Contracted
Contracted Silicon
Silicon Cost
Cost
(US$
(US$per
per kg)
kg)
70
70

60
60
50
50 53
53 50
50
50
50
45
45 45
45 41
41
kg
per kg

40
40
US$per

32
32
US$

30
30 24
24
20
20

10
10

00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Note: 2003-2006 from Prometheus Institute; 2007-2010 rough estimates derived from
various sources

39
Projections are contracted prices of polysilicon would increase from US$50
per kg in 2006 and reach its peak at US$53 per kg by 2007. With new
plants coming into production in 2008, prices would begin to decline from
US$50 per to US$41 per kg by 2010. However, prices could decline more
aggressively if annual growth for PV is less than 20% anticipated in 2007-
2010. Another factor that would cause polysilicon prices to decline at faster
rate are if new polysilicon plants were to come into production too
aggressively.

Business potential and opportunities. Based on projections that demand


for polysilicon would grow at an average of 41% annually in 2007-2010,
demand for polysilicon would total 140,000 tons during the four-year
period. Assuming an average cost of polysilicon at US$47 per kg, equates to
a market value of US$6.6 billion during the period.

Table 4.3. Forecast for Polysilicon Demand (tons)


Average Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
At 41% 13,523 15,928 30,510 44,125 49,308 139,871

Demand for PV will continue to grow in 2007-2010, though at slower pace


of 20% annually. Growth for PV subsequently creates demand for polysilicon
and therefore presents market and business opportunities for polysilicon
manufacturers to increase their production capacity.

The investment cost per MWp for a silicon production plant is higher than
wafer, cell and module manufacturing. The Siemens process to manufacture
silicon is used in 90% of silicon production worldwide. The advantage of the
Siemens process is it is a well-established process and therefore represents
low technology risk to the investors. The facility is easier to build compared
to the newer technologies and suitable for manufacturing silicon for the PV
and electronics industry. Being an established technology, there is little risk
of patent infringement.

Market challenges. New players have announced their entry into silicon
production but yet to begin construction. Furthermore, there are also
unconfirmed reports about new players intending to enter the business.
There is the possibility that some of the new players may eventually abort
their plans if there is a silicon overcapacity in 2008 and beyond. If new
plants were to come into production too aggressively beginning in 2008
creating overcapacity, silicon manufacturers could face a similar scenario
experienced during the burst of the bubble technology in 2001.

40
There are about 50 companies involved in thin films and currently many are
start-ups. Thin films are gaining popularity, increasing at a faster rate of
growth and its share of the module market. Thus, there is a potential threat
with developments in technologies to mass-produce thin films at lower costs
and improve conversion efficiency displacing c-Si modules in 2007-2010.

4.4 Thin Films


Demand and supply growth. Shortages of silicon in recent years have
driven demand for thin film technologies. The appeal for thin film is it
requires little or no silicon and production at costs lower than c-Si modules.
Thin films accounted for about 6% of the PV modules in 2005 but expected
to increase its share to 15% of the market by 2010. The European
Photovoltaic Industry Association predicts demand for thin films to increase
10-fold from 100 MWp in 2005 to 1,000 MWp by 2010. Production would
increase by more than two-fold from 200 MWp in 2007 to 500 MWp in 2008
as existing players expand production capacity and start-up companies
begin production.

Figure
Figure 4.4a.
4.4a. Thin
Thin Film
Film Production
Production and
and Projection
Projection (MWp)
(MWp)

1,200
1,200

1,000
1,000
1,000
1,000

800
800
700
700
MWp
MWp

600
600 500
500

400
400
200
200
200 150
150
200 100
30 50
50 100
30
00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010

Source: European Photovoltaic Industry Association

From 2003 to 2006, shortages of silicon materials combined with rising


prices of c-Si modules drove the market for thin films. However, the market
driver for thin films in 2007-2010 would be its lower costs and shorter
energy payback period. Advancement in conversion efficiency, longer
lifespan of thin films and its potential in building integrated PV are other
factors that would drive demand for thin films.

41
Industry players. There are more than 50 companies mainly in Europe,
United States and Japan involved in developing thin film technologies.
These companies sector are generally small privately owned companies or
start-ups. Many of the leaders involved in manufacturing c-Si modules have
entered into thin films including Sharp, Mitsubishi Heavy Industries (MHI),
Schott Solar and Sanyo. In 2005, four companies dominated the market for
thin films which included United Solar Ovonics (US), Kaneka (Japan), First
Solar (US) and MHI (Japan) accounting for 75% of the thin film market.
Production capacity for thin films generally ranges from 25 MWp to 50 MWp
but there are already plans by United Solar and First Solar to increase
capacity by more than 200 MWp by 2010.

Figure
Figure 4.4b.
4.4b.Share
Share of
of the
the World
World Thin
Thin Film
Film Production
Production in
in 2005
2005(MWp)
(MWp)

Mitsubishi,
Mitsubishi,12.0%
12.0%
First
FirstSolar,
Solar,20.0%
20.0% Others,
Others,25.0%
25.0%

United
UnitedSolar,
Solar,
Kaneka, 22.0%
22.0%
Kaneka,21.0%
21.0%

Note: Estimates from companies’ production

Venture capitalists are investing millions of dollars in thin-film start-ups


such as United Solar, Nanosolar, Miasole, Konarka and DayStar
Technologies. However, only a few companies have actually brought thin
film technology into large-scale production. While prices of silicon cell
modules have been increasing, prices of thin film modules have been
declining. First Solar claims that it had reduced the production cost of its
thin films to US$1.50 per Wp about 40%-45% less than the industry
average for c-Si modules manufactured in the US.

Product. Thin films are less subjected to cell temperatures while c-Si cells
decrease in conversion efficiency as the temperature rises. The advantage
of manufacturing thin films is it uses greater automation than
manufacturing c-Si modules. However, thin films are hard to mass-produce
cost effectively because of the difficulty of coating large surface areas.

42
Nanosolar, Honda Engineering and Sharp announced they have developed
technologies to mass produce thin films. Another disadvantage of thin films
is their lower efficiency (generally less than c-Si modules) but there are
already developments to improve efficiency.

The leader among thin films is a-Si accounting for nearly 75% of the thin
film market. These thin films use small quantities of silicon in amorphous
form deposited as thin layers. Other thin films include copper indium
selenide (CIS), copper indium gallium selenide (CIGS) and cadmium
telluride (CdTe). Among the thin films, a-Si has the lowest efficiency (6%-
9%) compared to CI(G)S (9%-11%) and CdTe (8%-10%). Main reason for
the dominance a-Si thin films is it is among the earliest thin film
technologies researched and developed. Over the medium term, CIGS thin
films are generating interest with improvements in efficiency on par with
mc-Si modules under laboratory conditions and their potential for mass
production.

Price trend. The direction on prices of thin films in 2007-2010 is


possession of technologies to mass-produce thin films cost effectively.
Nanosolar, Honda Engineering and Sharp announced they have developed
technologies to mass-produce thin films. United Solar and First Solar have
already established plans to increase their production capacity to more than
200 MWp by 2010.

Solarbuzz’s monthly survey of module prices indicates that the lowest price
of a-Si thin film module in March 2007 was 30% less than the lowest price
of a mc-Si module. This is a significant reduction from US$4.00 per Wp in
September 2006 to US$3.00 per Wp in March 2007.

Table 4.4. Lowest Module Prices (US$ per Wp) Comparison

Lowest Price September March


Modules 2006 2007

sc-Si module 4.15 4.24


mc-Si modules 4.05 4.32
a-Si thin film modules 4.00 3.00

Source: Solarbuzz

Business potential and opportunities. Based on projections that demand


for thin films would grow at an average of 67% annually in 2007-2010,
demand for thin films would total 2,400 MWp during the four-year period.
Assuming an average cost of thin films at US$2.00 per Wp, equates to a
market value of US$4.8 billion during the period.

43
Table 4.4. Forecast for Thin Film Demand (MWp)
Average Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
67% 150 200 500 700 1,000 2,400

Thin films’ lower manufacturing cost, potential for mass production to lower
cost further and improvements in conversion efficiency (especially CIGS thin
films) offers opportunities for manufacturers to market lower cost PV
systems. Price has been and will continue to be an important determinant
for end-user acceptance of PV. Thin films’ lower prices to the end-users
represent a market potential for manufacturers and will be an important
determinant to propel its marketing.

Another potential of thin films is manufacturers are not constrained by


supply for materials used in manufacturing thin film as experienced with c-
Si modules. This provides manufacturers the flexibility to manufacture and
market thin films according to market demand.

Thin films offer applications that are not possible with flat panel c-Si
modules. Thin films provide opportunities for applications in building
integrated modules including roof tiles, windows and facades. Thin films can
be deposited on many types of surfaces such as flexible plastics, glass and
coatings on building materials to generate electricity. Thus, thin films offer
vast opportunities in various applications.

Market challenges. Shortages and rising prices of silicon materials in


recent years provided opportunities for the development thin films. New
silicon plants would come into production beginning in 2008 relieving the
silicon shortage and prices of c-Si modules would begin to decline narrowing
the gap between prices of thin film and c-Si modules. Excess capacity in the
c-Si value chain would cause prices of c-Si modules to decline faster and
retard the market potential for thin films.

Key challenges currently faced for thin films are improvements in conversion
efficiency and lowering manufacturing cost through mass production.
Current costs of thin film modules are still too high and electricity generated
more than five times the electricity rates from the utility companies. To gain
wide acceptance among end-users, the challenge is to improve thin films’
efficiency and lower manufacturing cost further.

44
A potential risk for thin films is the toxicity of some of the chemicals used.
For example, cadmium used in CdTe thin films is toxic with adverse effects
on human and animal health. Thus, it is important for manufacturers to
establish programmes to discard thin films appropriately once they passed
their lifespan.

4.5 Photovoltaic Inverters


Demand and supply growth. The market for PV inverters is dependent on
new demand for PV and replacement of old inverters that have passed their
lifespan in existing installations.3 By capacity (Wp), the market for PV
inverters grew at an average of 45% annually from 400 MWp in 2001 to
2,600 MWp in 2006. Driven by strong demand for PV, about 90% of the
inverter capacity installed was for new installations and remaining 10%
were for replacements of old inverters. Strong demand for PV in Germany
and Spain is the main driver of growth for inverters in the European market.

Figure
Figure 4.5a.
4.5a.PV
PV Inverter
Inverter Production
Production and
and Projection
Projection (GWp)
(GWp)

77

66
5.7
5.7
55
4.7
4.7
3.9
3.9
44
GWp
GWp

3.2
3.2
33
2.6
2.6
1.9
1.9
22
1.3
1.3
0.8
0.8
0.6
0.6
11
0.3 0.4
0.4
0.2
0.2 0.2
0.2 0.3
--
1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010
1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Note: Rough estimates based on market for PV for the year and product lifecycle of
seven years.

Projections are the market for inverters would grow by an average of 22%
annually from 3,200 MWp in 2007 to 5,700 MWp by 2010, based on the
projection that the market for PV would grow 20% annually reaching 5,000
MWp by 2010. Demand for PV in 2007-2010 would continue to drive the
market for inverters accounting for about 90% of the installations by
capacity with remaining for replacements of old inverters.

3
Typical PV inverter has a lifespan of 5-10 years.

45
Industry players. In Japan, there are nearly 20 companies involved in
manufacturing PV inverters and similar numbers in North America. While in
Europe, there are about 30 companies involved in manufacturing inverters.
The industry is characterised by a few players dominating the market.
Sharp leads the market in Japan while in North America SMA and Xantrex
leads the market. SMA, Xantrex and Fronius lead the market in Europe.
Most of the European companies involved in inverters are German, Dutch,
Austrian and Swiss companies.

Figure
Figure 4.5b.
4.5b.Share
Share of
of World
World Inverter
Inverter Production
Production in
in 2005
2005(MW)
(MW)

Mastervolt,
Mastervolt,3.2%
3.2%
Xantrex, Kyocera,
Kyocera,4.6%
4.6%
Xantrex,5.0%
5.0% Sputnik,
Sputnik,1.9%
1.9%
Fronius,
Fronius,10.7%
10.7%
Others,
Others,25.2%
25.2%

Sharp,
Sharp,18.9%
18.9%
SMA,
SMA,30.5%
30.5%

Note: Estimates derived from various sources

SMA Technologies is a German company and leads the industry with nearly
31% share of the market with major markets in Europe and the US. Sharp
is the second largest player with its market mainly in Japan and its inverters
marketed along with its PV system. Austria’s Fronius accounts for 11% of
the market with markets mainly in Europe and the US but also has a
distribution network in Asia-Pacific. Other market leaders include Xantrex
(Canada), Kyocera (Japan), Mastervolt (Netherlands) and Sputnik
(Switzerland). These seven companies together accounted for three-
quarters of the world market in 2005.

Product. Most of the inverters currently produced and marketed are string
inverters for home PV installations ranging from 2 kWp to 10 kWp. With
increasing number of PV installations in the megawatts, several
manufacturers have developed central inverters for large installations. The
technology of the inverters varies from manufacturer to manufacturer such
as differences in size, efficiency, weight and reliability.

46
There is a growing trend among major manufacturers to provide additional
features in their inverters. These include remote monitoring,
communications capabilities, plug and play with the controllers and
manufacturing lighter inverters. Sharp has developed inverters for homes to
a new level with gadgetry including colour LCD screens with interactive
functions. These interactive functions include energy savings tracker, real-
time status display of energy generated, home power consumption, power
purchased and sold back to the utility company.

Price trend. Prices of inverters very much depend on the brand, technology
and features which influences the cost of manufacturing the inverters and
the price end-users are willing to pay. Inverter size also affects the end-user
price of the inverter per Wp. For example, inverters with similar features, a
3 kWp inverter is likely to cost 50% less than a 1 kWp inverter on a per Wp
basis. Another example, in the US, the price for inverters for installations
above 70 kWp is US$0.40-0.80 per Wp while for installations of less than 10
kWp the price is US$0.50-2.40.

As a guide, prices of inverters declined by 5%-7% annually from 2001 to


2006 due to increases in production volume resulting in economies of scale
in manufacturing. Increasing integration of components, reduction in
mechanical parts, increasing use of electronics and reducing the assembly
time in the manufacturing process have also reduced the production cost in
recent years. Prices of inverters will continue to decline by 5%-7% annually
in 2007-2010.

Business potential and opportunities. Based on projections that demand


for inverters would grow at an average of 22% annually in 2007-2010,
demand for inverters would total 17,500 MWp during the four-year period.
Assuming an average cost of inverters at US$0.50 per Wp, equates to a
market value of US$8.8 billion during the period.

Table 4.5. Forecast for Thin Film Demand (MWp)


Average Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
22% 2,601 3,168 3,855 4,707 5,736 17,466

Inverters have a lifespan of 5-10 years while PV modules have a lifespan of


25-30 years. Thus, inverters can be replaced 3-5 during the lifespan of a PV
system and over the longer-term, the replacement market for inverters
would be just as important as the market for new PV installations. The
proportion of inverters sold by capacity currently accounts for 10% of the
production. The proportion will gradually increase over the longer term as

47
old inverters come to the end of their lifespan and an opportunity for
manufacturers in the replacement market.

Inverters especially string inverters have gone beyond its basic function of
converting current from DC to AC. Increasing use of electronic gadgetry and
stylish designs are current trends for newer models of inverters attracting
interest and purchase from the end-users. Further interest is generated as
inverter prices decline and becomes more affordable. In general, inverters
are becoming more like consumer electronic items and market opportunities
exist for such inverters.

Market challenges. Different countries have different regulations and


standards for PV inverters.

„ Currently there are no European standards or regulations for


inverters. For example, in Europe, Germany permits use of
inverters without transformers but required in Spain and the United
Kingdom.4 This represents a significant barrier for manufacturers to
develop inverters specifically for each country.

„ Regulations for inverters in the US are more stringent than Europe.


There is a lack of uniform regulations for inverters and each state
in the US has its own regulations with different safety,
interconnection and testing requirements. Furthermore, utility
companies may also have their own regulations for inverters.

Lack of uniform standards across markets makes it difficult for


manufacturers to produce inverters with global acceptance. Thus
manufacturers prefer to focus on regional markets preventing any
economies of scale in production. Different regulations require product
modification and specification and thus manufacturers (especially smaller
companies) tend to focus on regional markets.

Reliability problems in inverters are often associated with capacitors since


they are sensitive to temperatures. R&D on capacitors for inverters is
limited and capacitors developed focuses on other segments of the
electronic industry such as consumer electronics, which accounts for a
greater proportion of the capacitors sold. Thus, inverter manufacturers
unable to do much to improve the reliability of the capacitors other than
design around the problem which increases costs.

4
The Netherlands and Switzerland have similar standards for inverters as Germany

48
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5.1 Germany
Germany leads the world with the highest installation capacity for PV. The
rise in installation began when Germany’s federal government introduced
the “100,000 Roofs” programme in January 1999 to stimulate demand for
PV by offering low-interest loans. The loans were initially interest free but
charged 1.9% interest from 2000 to 2003. Currently soft loans are available
through other programmes by KfW Promotional Bank. However, installations
accelerated when Germany’s introduced high buyback rates (guaranteed for
20 years) from the utility companies under the Renewable Energy Sources
Act in 2000. The Act provided preferential feed-in tariffs with a 5.0%-6.5%
annual decrease from 2005 onwards. In 2006, feed-in tariffs were €0.406
per kWh for freestanding systems while for buildings and sound barriers,
€0.4874-0.518 per kWh. Germany’s experience has convinced many
governments in Europe to adopt similar programmes to stimulate demand
for PV.

Table 5.1a. PV Installation and Production in Germany

2003 2004 2005

Cumulative installation (MWp) 431 794 1,429

Source: IEA

Germany held its national election in 2005 and there are concerns that
Germany would shift support for PV from a new government. This is unlikely
to happen:

„ Implementation of the Renewable Energy Sources Act took many


years of political debates before voted by Germany’s Bundestag
(parliament) and changing the law would require further and
lengthy political debates.

„ Environmental awareness, economic benefits and job creation from


the PV industry creates strong political support from German
constituencies.

„ The German PV industry is one of the fastest growing industries in


the country and has already invested €5 billion from 1998 to 2005
with additional investments since 2006.

49
„ Any efforts by Germany’s utility companies to persuade the
government to reduce support for PV would have negative
implications from the German public and political parties supporting
PV.

However, Germany would review its feed-in tariff in 2007, which could have
an impact on demand for PV in Germany. If new feed-in tariffs were to be
less favourable than previous feed-in tariffs, demand would soften and
reduce module prices. This would make modules become more attractive to
the end-users after experiencing years of increasing prices. According to
Photon International, demand was already softening in late 2006 when the
government-guaranteed price for PV electricity dropped 5% but prices of
modules kept on rising, reducing returns on investments to home and
business owners.

Germany accounted for 19% of the world’s production of PV cells and 16%
of the world’s production of modules in 2005. The German PV industry has
become a significant sector of the country’s economy generating about
30,000 job opportunities according to the German Solar Industry
Association (BSW). Furthermore, the industry invested about €5 billion
between 1998 and 2005 in new production capacity and R&D. Consequently,
revenue from the industry increased from €350 million in 1999 to €3.7
billion by 2005.

Table 5.1b. Production in Germany

2003 2004 2005

PV cell production (MWp) 100 190 332


PV module production (MWp) 80 205 276

Source: IEA

Considering investments made by the German industry, jobs created and


industry revenue, it is more likely that the German government will
continue with incentive schemes to stimulate demand and growth of the
industry. There are about 50 manufacturers involved across the PV value
chain in Germany from manufacturing silicon, wafers, PV cells, modules to
inverters. Besides manufacturing, the PV industry has created business
opportunities for installers of PV systems, turnkey manufacturers, wholesale
and retail distributors, architectural and engineering companies in Germany.

50
Table 5.2c. Snapshot of German Companies involved in PV
Company Overview
CSG Solar CSG Solar began manufacturing crystalline silicon on glass
(CSG) in 2006 at its plant in Thalheim and current
production capacity is 25 MWp. CSG acquired the
technology from Pacific Solar, Australia.
Solon Solon’s plants in Germany and Sweden produce only mc-Si
and sc-Si modules. Combined production capacity
increased from 90 MWp in 2005 to 110 MWp in 2006. To
ensure a reliable supply of PV cells for its modules, Solon
signed a 10-year contract with Ersol and 5-year contracts
with Q-Cells and SunPower beginning in 2006.
SolarWorld SolarWorld’s business activities in PV, including activities of
its subsidiaries and joint venture companies, range from
production of silicon to installation of modules. In 2006,
SolarWorld acquired from Shell Solar its silicon, cell and
module production facilities in the United States. As a
result, SolarWorld’s cell production capacity increased from
158 MWp in 2005 to 230 MWp in 2006 and module
capacity increased from 175 MWp to 210 MWp during the
period. Solar World manufactures mc-Si, sc-Si as well as
CIS thin film modules.
Deutsche Solar Deutsche Solar is part of the SolarWorld group and is one
of the largest producers of mc-Si and sc-Si wafers in
Europe. In 2005, the company produced 102 MWp of
silicon wafer accounting for 6% of the world’s production.
Q-Cells Q-Cells is principally involved in manufacture and
marketing of mc-Si and sc-Si cells. The company’s cell
capacity increased from 290 MWp in 2005 to 350 MWp in
2006 with further expansion to 510 MWp by 2007. The
company also has investments in CSG Solar in Germany to
produce crystalline silicon on glass modules and in EverQ
in the United States to produce cells using ribbon
technology.
Schott Solar Schott Solar manufactures mc-Si cells as well as a-Si thin
film modules. Outside of Germany, the company has
plants in the Czech Republic and the United States. From
2006 to 2007, cell production capacity would increase from
130 MWp to 170 MWp while module capacity from 80 MWp
to an estimated 110 MWp. Schott Solar will operate a new
30 MWp plant in Germany in 2007 to manufacture a-Si
thin film modules.
Solar Watt Solar Watt produces both mc-Si and s-Si cells but its plant
production capacity is relatively small, increasing from 5-6
MWp in 2005 to 11 MWp in 2006. Its module capacity is
sizable with a production capacity increasing from 60 MWp
to 100 MWp during the same period.

51
Table 5.2c. Snapshot of German Companies involved in PV
Company Overview
ErSol Solar Energy ErSol manufactures and markets mc-Si and sc-Si cells and
modules. The company plans to increase production
capacity from 45 MWp in 2005 to 220 MWp by 2009. ErSol
entered into a joint venture with China’s Shanghai Electric
Solar Energy to manufacture modules in China using cells
produced by ErSol in Germany. The company is also
diversifying into thin films.
Wacker Polysilicon Wacker is one of the largest producer and supplier of
polycrystalline silicon for the semiconductor industry and
cell manufacturing. Due to increasing demand for
polycrystalline silicon for cell manufacturing, Wacker will
increase the production capacity of its plant in Burghausen
from 5,500 tons in 2005 to 6,500 tons by 2007. Capacity
will increase further to 9,000 tons by 2009.

Production of modules requires higher use of labour compared to other


sectors of the PV value chain. Germany imports nearly 60% of the PV
modules installed in the country due to Germany’s high cost of labour. Main
imports are for modules from OEM outside Germany, produced by German
companies in lower cost producing countries such as the Czech Republic and
foreign brands. Exports account for about 10% of Germany PV production
according to the Joint Global Change Research Institute (JGCRI). However,
Germany exports about 40% of the silicon feedstock produced in the
country.

Diagram 5.2. Main Channel in Germany’s PV Value Chain

52
In reality, many German companies have invested in overseas production
facilities through their subsidiaries or joint ventures. SolarWorld has plants
in Sweden and the United States to produce PV modules. SOLON entered
into a joint venture to operate a solar grade silicon plant in France and
invested in a plant in Austria to manufacture crystalline silicon cells. Besides
Germany, Schott Solar has a plant in the United States to produce silicon
cells.

Shortage of silicon in recent years has been a major challenge and limiting
factor in the growth of the German PV industry. Nevertheless, many
German companies are already investing in new plants, expanding capacity,
developing new technologies and increasing investments outside Germany.
In addition to crystalline technologies, German companies have invested in
thin film technologies and new players CSG and Sulfurcell entered into
production in 2006.

Inverter technology has shown impressive growth in recent years and


Germany is the world’s leading producer of inverters and includes major
companies such as SMA, Fronius, Studier and Siemens. German production
of inverters grew from an estimated 590 MWp in 2005 to 910 MWp in 2005
accounting for nearly half or the world’s inverter production in 2006.

5.2 Japan
The principles of Japan’s New Energy Policy are to ensure security in energy
supply, develop a market mechanism for renewable energy and to reduce
CO2 emission. Previous programmes to promote PV in the country involved
subsidies targeting homeowners, private companies and public
organisations. Programmes targeting homeowners began with the
“Monitoring Programme for Residential PV Systems” from 1994 to 1996
followed by the “PV Systems Dissemination Programme” from 1997 to 2005.
The “Photovoltaic Power Generations Systems for Industrial and Other
Applications” programme targeted private companies and public
organisations from 1998 to 2002. PV programmes for homeowners ended
after 2005 but the government continues to provide subsidies to private
companies and public buildings for PV. Because of the various programmes,
PV installations increased to 1,422 MWp by 2005 of which nearly 80% of the
installations were in homes. The Japanese government targets to increase
PV installations in the country to 4.8 GWp by 2010.

53
Table 5.2a. PV Installation and Production in Japan

2003 2004 2005

Cumulative installation (MWp) 860 1,132 1,422

Source: IEA

Besides subsidy programmes, Japan’s Ministry for Economy, Trade and


Industry (METI) supports Japanese companies in areas of R&D, establishing
standards and accreditation systems, awareness creation and promoting
international cooperation. The New Energy Development Organisation
(NEDO) is a government body responsible for supporting the industry
through research in cell technology, advanced manufacturing technology
and developing innovative PV technologies. An important priority of NEDO is
to reduce the cost of PV cells and systems to create a mass market for PV.
Over the long term, the government anticipates the industry in Japan would
be able to sustain itself without subsidies and minimal government support.
However, the industry is in the opinion that the government would intervene
if there were any considerable slowdown in growth as the industry develops.

Japan is the world’s largest producer of PV cells and modules accounting for
46% and 44% respectively of the world’s production in 2005. PV has
become an important industry in Japan and many major PV companies such
as Sharp, Kyocera and Sanyo have vertically integrated much of their
processes across the value chain. An important element of the Japanese
industry is to develop export markets and exports currently account for
about 30% of the PV production. Japanese PV companies initially
concentrated on the domestic market but since 2002, many have expanded
or established new manufacturing operations outside Japan besides
increasing exports. Japanese manufacturing operations and exports focuses
on Europe and the United States.

Table 5.2b. PV Installation and Production in Japan

2003 2004 2005

PV cell production (MWp) 365 604 824


PV module production (MWp) 402 590 773

Source: IEA

Sharp, Kyocera, Sanyo and Mitsubishi are leaders in the Japanese markets.
According to Greenpeace, the industry in Japan generated more than €1.5
billion in revenue in 2005, which excludes revenue generated from
manufacturing operations outside Japan. Furthermore, the Japanese PV

54
industry directly provides employment opportunities for nearly 9,000 people
in the country.

Table 5.2c. Snapshot of Japanese Companies involved in PV


Company Overview
Sharp Solar The company manufactures a range of mc-Si, sc-Si and a-Si
cells. Sharp Solar is the world leader in the manufacture of PV
cells and modules. Its share accounts for a quarter of the
world’s market and half of Japan’s market. Besides Japan,
Sharp also has plants manufacturing modules in the United
States and United Kingdom. Sharp intends to increase its cell
and module production capacity from 428 MWp in 2006 to
800-900 MWp by 2010.
Kyocera The Solar Energy Division of Kyocera manufactures mc-Si
cells and PV modules. Kyocera is the second largest
manufacturer of PV cells and modules in Japan. The company
has module plants in Mexico and the Czech Republic and a
partnership with China’s Tianjin Yiqing Group to manufacture
modules in Tianjin China. Cell production capacity is expected
to increase from 240 MWp in 2005 to 500 MWp by 2007.
Sanyo Sanyo manufactures a-Si and a-Si/sc-Si hybrid cells for its
modules. Besides Japan, the company has plants in Mexico
and Hungary producing modules, receiving supplies of PV
cells from its plant in Japan. Sanyo expects to increase cell
production capacity from 260 MWp in 2006 to 600 MWp by
2010.
Mitsubishi Two subsidiaries under Mitsubishi Corporation are involved in
production of PV cells and modules. Mitsubishi Electric
manufactures mc-Si cells for its modules and cell production
capacity increased from 135 MWp in 2005 to 230 MWp in
2006. Mitsubishi Heavy Industries manufactures a-Si and a-
Si/micro-Si cells for its modules and cell capacity increased
from 10 MWp in 2005 to 50 MWp in 2006. Another subsidiary,
Mitsubishi Materials manufactures mc-Si at its plant in Japan
and the United States with a combined production capacity of
2,850 tons in 2006. Mitsubishi Materials confirmed plans to
increase capacity by 300 tons at its plant in the United States.
Kaneka Kaneka manufactures a-Si/mc-Si thin film cells and modules.
The company plans to increase production capacity from 30
MWp in 2006 to 70 MWp in 2008. Kaneka also operates a PV
module plant in the Czech Republic.

55
Table 5.2c. Snapshot of Japanese Companies involved in PV
Company Overview
MSK MSK became a subsidiary company of Suntech, China, when
it acquired a majority stake in MSK in 2006. MSK focuses on
mc-Si modules and specialises in systems integration and
production of building integrated modules. Acquisition by
Suntech provides an opportunity for MSK to reduce its
production and operating costs by transferring some of its
production and back-end operations to China.
Kobe Steel Kobe Steel’s in-house production capacity is less than 5 MWp
(Kobelco) but has partnership with Schott Solar to import modules.
Current focus is systems integration for installations in public
and industrial buildings in Japan.
Honda Honda is a new market player in the Japanese PV industry
entering the market in 2006. The company will begin full
production from its 27.5 MWp capacity plant producing CIGS
thin films.
Tokuyama The fastest growing business of the Electronic Materials
Business of Tokuyama Corporation is manufacturing and
marketing of mc-Si to PV cell manufacturers. Due to growth
of the PV market, Tokuyama announced plans to increase
production of mc-Si at its plant in Higashi from 4,800 tons to
5,200 tons. Tokuyama also has plans to construct and
operate a 200 tons verification plant to produce mc-Si using
vapour-to-liquid deposition technology.
Sumitomo Sumitomo Titanium’s mc-Si was initially targeted for the
semiconductor industry. With growing demand for silicon from
the PV industry, Sumitomo announced its production capacity
would increase from 900 tons in 2006 to 1,300-1,400 tons by
2007.
JFE Steel (formerly JFE Steel manufactures mc-Si ingots for PV cell
Kawasaki Steel) manufacturers in Japan. Annual production increased from
920 tons in 2004 to 1,200 tons in 2005 equivalent to 120
MWp of PV cells. Currently pursuing technologies to develop
and produce wafers.

Sharp, Kyocera, Sanyo and Mitsubishi have vertically integrated most of


their production across the value chain. Other smaller players producing
crystalline cells and modules in Japan purchase their wafers and cells from
the major players. Nevertheless, Japan is dependent on imported silicon for
their ingots and wafers since domestic production is insufficient to meet
demand from the industry. Domestic silicon manufacturers supplying to the
PV industry include Tokuyama, Mitsubishi Materials Corporation and JFE
Steel. Sumitomo Titanium also supplies to the PV industry but supplies are
limited since the focus of its production is for the electronic industry.

56
Diagram 5.2. Main Channel in the Japanese PV Value Chain

Some smaller players in the industry import their modules. Kobe Steel has a
partnership and imports modules from Germany’s Schott Solar. Kawasaki
Heavy Industries has investments in Evergreen Solar (based in the United
States) gaining the exclusive right to sell Evergreen Solar’s modules in
Japan. Japan imports relatively small volumes of silicon wafers from
Ningjing Songgong Semiconductor in China amounting to 50-60 MWp in
2005.

In 2005, nearly 80% of the PV installations in Japan were in homes. A


unique characteristic of the Japanese market is that many Japanese PV
manufactures are also involved in PV installation or systems integration.
According to industry estimates, the value added to a PV system increases
by about 20%-30% with installation. Furthermore, Japanese module
manufacturers involved in installation also provide maintenance services.
Another unique characteristic is the strategic alliance developed between
the module manufacturers and companies involved in constructing houses.
New homes in Japan are mostly prefabricated and mass-produced. This
provides an opportunity for module manufacturers to incorporate building
integrated modules during prefabrication, significantly reducing the cost of a
PV system.

Homes account for about 80% of the PV installations in Japan and central
government PV subsidies for homes ended in October 2005. The industry is
in the opinion that demand for PV among Japanese homeowners would
continue without subsidies from the central government. However, a
number of municipal governments are offering subsidies and soft loans for

57
PV to homeowners. Many residential property developers are promoting
“zero-energy” homes integrating energy efficiency with PV. Furthermore,
modules manufacturers and property developer are actively advertising
“zero-energy” homes with PV on television. Because of increasing consumer
awareness, many homeowners associate PV with personal economic and
environmental benefits. The government has set targets to increase PV
installations by nearly 3.4 GWp from 2006 to 2010 targeting public buildings
and private companies with subsidies. The anticipated effect is reduction in
prices of PV, which would make PV more affordable to Japanese
homeowners.

5.3 United States


The PV market in the United States received a boost when President Bush
signed The Energy Policy Act in August 2005 to increase renewable energy
usage including PV in the country. The Act provided federal incentives for
residential users and businesses with a 30% tax credit for PV systems
installed during 2006-2007. The Act caps tax credits at US$2,000 for
residential users. The PV industry in the United States is seeking extension
of the tax credit after 2007.

California is currently the dominant market for PV in the United States


accounting for 73% of the grid-connected installations in the country in
2005. This has been largely due to strong programmes from California’s
state government towards renewable energy including PV. The state of New
Jersey is the second largest market accounting for 17% of the grid-
connected installations in the United States. Like California, New Jersey
provides state level programmes supporting PV but demand during the
second half of 2006 slowed due to problems in state budget and uncertainty
about the payment mechanisms.

Currently, 20 states in the United States have rebate programmes


sponsored by the state governments or utility companies. Another 17
states, including California, have set goals to increase usage of renewable
energy including PV. Projections from the US PV Industry Roadmap
anticipate installed capacity for PV would reach 200 GWp by 2030.

Table 5.3a. PV Installations in the United States

2003 2004 2005

Cumulative installation (MWp) 275 376 479

Source: IEA

58
California’s renewable energy initiative including PV began in 1996 with a
$540 million fund. In August 2006, California’s Governor Schwarzenegger
signed the “Million Solar Roofs Plan” to install one million homes in
California with at least 3 GWp of PV by 2017. Under the initiative,
California’s government would budget US$2.9 billion (€2.3 billion) in rebates
on PV installed in homes. The initiative extended the budget to as much as
US$3.4 billion (€2.7 billion) for installations in utilities owned by the
California’s municipalities. Other states such as New Jersey, New York State,
Florida, New Mexico, and Washington State are following California’s rebate
programmes as well as experimenting with new programs.

According to Solar Energy Industries Association (SEIA) of the United


States, manufacturers in the country accounted for 40% of the world’s PV
market and 100% of the domestic PV market in 1997. Since then, the
United States has lost its leading position, experiencing growing imports
from Europe, Japan and more recently China. The close proximity of Mexico
to the United States, especially California, and Mexico’s lower labour cost
has seen companies such as Kyocera and Sanyo operate plants near
Mexico’s border supplying PV to the United States. However, the US is the
world’s largest producer of crystalline silicon and will continue to be the
largest producer through 2010.

By 2005, the United States accounted for nearly 9% of the world’s


production of PV cells and 11% of the world’s production of modules.
Production of PV cells grew by 35% from 2003 to 2004 but at a slower pace
of 13% from 2004 to 2005. However, production of modules increased by
96% from 2003 to 2004 and 42% from 2004 to 2005. The US Energy
Information Administration reports there were 29 manufacturing companies
involved in PV, directly providing job opportunities for nearly 3,100 people in
2005. This excludes those involved in installation, wholesale and retail
distribution, architectural and engineering companies.

Table 5.3b. PV Production in the United States


2003 2004 2005

PV cell production (MWp) 102 138 156


PV module production (MWp) 71 139 198

Source: IEA

The largest manufacturer of PV cells in the US is Germany’s SolarWorld


when it bought over Shell Solar’s mc-Si cell plant in 2005. Many major
silicon based PV manufacturing companies in the US are subsidiaries of
foreign companies such as Japan’s Sharp, Kyocera, Sanyo and Mitsubishi
Materials Corporation, SolarWorld and Schott Solar from Germany and REC
from Norway.

59
Other foreign companies have established sales offices, such as Mitsubishi
Electric from Japan, Isofoton from Spain and Suntech from China. Q-Cells, a
German company, is negotiating with potential partners in the US to
establish its markets in the country. SOLON of Germany acquired Global
Solar Energy from UniSource Energy to enter markets in south western US.

Foreign companies have also formed joint ventures or have significant stake
in US PV companies. Q-Cells invested in Soloria Corporation based in
California to develop PV using low concentration of silicon. Hemlock
Semiconductor, the world’s largest producer of crystalline silicon is a joint
venture between Dow Corning and Japanese companies Shin-Etsu Handotai
and Mitsubishi Materials Corporation.

Table 5.3c. Snapshot of US Companies involved in PV


Company and Overview
Location
Evergreen Solar Evergreen Solar manufactures PV modules at its plant in
Marlboro, Massachusetts, and production capacity will reach
140 MWp by 2007. The company is the majority shareholder
of joint venture company EverQ (with Q-Cells and REC) to
produce silicon ribbon solar wafers in Thalheim, Germany.
First Solar First Solar manufactures CdTe thin film modules at its plant
in Perrysburg, Ohio, and increased production capacity from
25 MWp in 2004 to 75 MWp in 2006. A new plant located in
Oder, Germany, with an initial capacity of 100 MWp begins
operation in 2007. First Solar announced in January 2007
that it would begin construction of a module plant with a
capacity of 100 MWp in Kulim High Technology Park,
Malaysia. The plant’s operation is expected to begin in 2008.
Nanosolar Nanosolar, a company founded in 2001 began developing
technologies on CIGS thin film. The company based in Palo
Alto, California, received its first seed money from Google’s
Larry Page and Sergey Brin in 2003 and funds worth more
than US$100 million from various venture capital firms and
government grants. The company begins production in 2007
and aims to eventually increase production capacity to 430
MWp.
SunPower SunPower, based in Sunnyvale, California, is listed on
NASDAQ. The company manufactures modules and has a
silicon plant manufacturing cells with a capacity of 100 MWp.
SunPower’s A-300 cells are unique because the metal
contacts for collecting and conducting electricity are on the
cell’s back surface.

60
Table 5.3c. Snapshot of US Companies involved in PV
Company and Overview
Location
Miasole Miasole manufactures CIGS thin film cells at its plant in
California. The company is a pre-IPO company funded by
venture capitalists and expects to list on the stock market in
2007 or 2008. Miasole began producing thin films in 2006
with an initial production capacity of 50 MWp. The company
hopes to increase capacity to 200 MWp by end of 2007.
United Solar Ovonics United Solar Ovonics manufactures a-Si thin film solar cells
in Auburn, Michigan. Production capacity increased from 25
MWp in 2005 to 50 MWp in 2006. In 2005, the company
signed an MOU with China’s Tianjin Jinneng Investment
Company to form a joint venture to operate a 25 MWp a-Si
plant in Tianjin, China. In 2007, the company begins
operating a 50 MWp plant in Greenville, Michigan.
Hemlock Formed a joint venture with Dow Corning, Shin-Etsu
Semiconductor Handotai and Mitsubishi Materials to produce mc-Si in
Hemlock, Michigan. Capacity will increase from 10,000 tons
in 2006 to 14,500 tons in 2008 and further to 19,000 tons
by 2009.
MEMC Electronic MEMC manufactures mc-Si wafers and granules at is plant in
Materials St. Peters, Missouri. MEMC plans to increase its capacity of
mc-Si production from 4,000 tons to 8,000 tons by 2008.
MEMC signed a 10-year agreement to supply mc-Si to
Suntech’s plant in China beginning in 2007.
Hoku Scientific Based in Hawaii, Hoku is a new player in the PV industry.
The company will operate a module plant in the state of
Idaho beginning in 2007. The company also plans to operate
a plant manufacturing mc-Si in 2008 with an initial capacity
of 1,500 tons

The US is self sufficient in crystalline silicon with three of the world’s major
producers (Hemlock, REC and MEMC) located in the country. According to
the US Energy and Information Administration (EIA), imports into the
United States include PV cells mainly from Japan for US subsidiaries of
Japanese companies. The US imports modules mainly from China and from
Mexico, where two Japanese companies have manufacturing operations
near the US border. Imports of modules from Europe are likely to increase
in the near future as European PV manufacturers establish distribution
networks and regional offices in the US. In 2005, 78% of US exports of PV
were modules of which nearly 90% of the modules were exported were to
Europe mainly Germany. Other markets for US PV exports were Canada,
Mexico and re-export trade through Hong Kong and Singapore. According to
the EIA, 40% of the modules exported were thin film modules.

61
Diagram 5.3. Main Channel in the US PV Value Chain

Many US PV manufacturers have expanded production but growth has been


most aggressive outside the US. SunPower based in California tripled its
production capacity in the Philippines while First Solar will invest in a new
PV module plant at Kulim High Technology Park in Malaysia. Evergreen
entered into a joint venture with Q-Cells and REC to manufacture wafers,
cells and modules in Thalheim, Germany.

While US companies lag behind in crystalline cells and modules, it is


becoming a leader in thin film technology. Thin films accounted for one-fifth
of the PV production in the US in 2005. New players are entering the market
for thin films supported by the capital markets and venture capitalists.
Evergreen, SunPower and United Solar Ovonics raised funds for expansion
through the capital market. Nanosolar, Konarka, HelioVolt and Miasole
received significant funds from venture capitals. Furthermore, companies
such as First Solar have expanded production of thin films into Germany to
be close to their customers.

The United States faces a major challenge to successfully implement PV in


the country. The United States does not have a national standard to allow
PV to connect to the grid. Different states have different technical and legal
requirements making it difficult for manufacturers to market a standard PV
system for the United States. The PV industry in the United States is
currently proposing an interconnection standard.

62
5.4 China
In 2005, about 50% of the PV installations in China have been mostly for
government electrification programmes in remote villages where nearly 30
million households have no access to the electricity grid. About 50% of the
PV installations are small off-grid installations in homes, community centres,
in PV-wind hybrid systems and water pumps. About 35% are for industrial
applications such as communication systems, 10% in consumer products
and only 5% are grid-connected installations.

Table 5.4a PV Installations in China


2003 2004 2005

Cumulative installation (MWp) 55 65 92


Source: Research China

China plans to increase PV installations to 450 MWp by 2010 and 4-8 GWp
by 2020. From 2006 to 2011, China’s government aims to install 265 MWp
to nearly 2 million households in the remote villages and further 1,700 MWp
by 2020. In addition, the government would support 50 MWp in rooftop
installations, 8 MWp installation in the Gansu desert and a 20 MWp power
plant in the Gobi Desert. These “Rooftop” programmes involved government
subsidies for purchase of PV systems. In 2006, the Shenzhen municipal
government implemented laws requiring PV installations in newly
constructed buildings. Shanghai’s municipal government initially proposed
the “100,000 Rooftop” in 2005 to install 300 MWp by 2015. However, the
plan is under review and instead the municipal government targets to install
7 to 10 MW of PV by 2010, partly through installations on 10 buildings
yearly.

China’s Renewable Energy Law came into effect in January 2006 as the
country’s framework to increase renewable energy to 15% of the energy
consumed by 2020. However, the Law lacks clear regulations to implement
and enforce renewable energy programmes in China including PV. The Law
mentions power buyback or feed-in tariffs for PV but deemed too costly
according to China’s Director of Renewable Energy.

Development of China’s PV industry since 2004 has less to do from


demands from the domestic market but more from its export markets.
China exports more than 90% of the modules produced in the country. Main
export markets are Germany, United States, Japan and recently Spain.
From 2003 to 2005, production of PV cells increased 10-fold from 14 MWp
to 156 MWp and similarly for modules from 45 MWp to 443 MWp. Thus,

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China accounted for 9% of the world’s production of PV cells and 25% of the
world’s production of PV modules during the period. Production of PV cells is
estimated to have increased to 690 MWp and modules to 1,200 MWp by
2006.

Table 5.4b. PV Production in China


2003 2004 2005

PV cell production (MWp) 14 50 156


PV module production (MWp) 45 180 443
Source: CNF

During the supply bottleneck of 2004-2005, German companies turned to


China for supplies of PV products but many factories and the products
produced failed to meet international quality standards and certifications.
However, the scenario has since changed and many larger Chinese PV
manufacturers have become more professional and their products
internationally certified. There are nearly 25 cell manufacturers and 130
panel manufacturers in China. However, most of the manufacturers are
small companies with relatively small production capacities.

„ Suntech Power, Baoding Tianwei Yingli New Energy Resources,


Nanjing PV-Tech, JinAo Solar and Jiangsu Shunfeng Photovoltaic
Technology together account for 61% of China’s total cell
production capacity and 60% or the production volume in 2006.

„ Suntech Power, Kyocera (Tianjin), Ningbao Solar, Yingli New Energy


Resources and Yunnan Tianda Photovoltaic together accounted for
29% of China’s module production capacity and 27% of the
production volume in 2006.

Table 5.4c. Snapshot of Chinese Companies involved in PV


Company Overview
Baoding Tian Yingli is another market leader in China and involved in
Wei Yingli New manufacturing mc-Si wafers, cells and modules. The
Energy company’s plant is located in Baoding National High-New
Resources Tech Industrial Development Zone in Baoding, Heibei
province. From 2006 to 2007, Yingli’s cell production
capacity is expected to increase from 90 MWp to 400
MWp while module capacity is expected to increase from
100 MWp to 200 MWp.

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Table 5.4c. Snapshot of Chinese Companies involved in PV
Company Overview
Suntech Power Suntech is China’s leading manufacturer of PV cells and
modules and among the world leaders. The company
manufactures both mc-Si and sc-Si cells. In 2006,
Suntech acquired a 66.6% stake in Japan’s MSK (a
leading Japanese module manufacturer) and the
remaining stake acquired by the end of 2007. Listed on
the New York Stock Exchange (NYSE), Suntech exports
nearly 80% of its production manly to Western Europe
and the United States. From 2006 to 2007, cell
production capacity will increase from 270 MWp to 300-
390 MWp and module capacity from 470 MWp to 600
MWp.
Nanjing PV Nanjing PV Tech only began production in 2005 and
Tech currently manufactures only mc-Si and sc-Si cells. The
company is a joint venture between the Chinese
Electrical Equipment Group and the Australian
Photovoltaic Research Centre. Cell production capacity
increased from 32 MWp in 2005 to 180 MWp in 2006
and expected to increase further to 300 MWp by 2007.
Nanjing PV Tech supplies most of its cells to the
domestic market.
Kyocera Kyocera (Tianjin) Solar Energy is a joint venture
(Tianjin) Solar between Kyocera of Japan and the Tianjin Yiqing Group
Energy of China. Its plant, located in Tianjin, only manufactures
mc-Si and sc-Si PV modules mainly for the domestic
market. Production capacity increased from 120 MWp in
2004 to 240 MWp in 2005. Kyocera (Tianjin) has yet to
announce any plans to increase production capacity.
Jiangsu The company currently manufactures mc-Si and sc-Si PV
Linyang cells and modules at its plant in Qidong, Jiangsu
Solarfun Province, and also developing technologies to develop
film cells. Cell production capacity will increase from 20
MWp in 2005 to 120 MWp by 2007 while module
capacity will increase from 50 MWp to 80 MWp during
the period. Solarfun’s products are mostly exported to
Europe, namely Germany followed by Spain and Italy.
Its parent company Solarfun Power Holdings listed on
NASDAQ in 2006.
Jiannxi LDK LDK Solar is a new company under the Liouxin Group,
Solar Hi-Tech which manufactures protective and electrical
equipments. GT Equipment signed an agreement with
LDK Solar in 2005 for a turnkey project producing silicon
wafers. The agreement also includes increasing the
production capacity to 1,000 MWp by 2010.

65
Table 5.4c. Snapshot of Chinese Companies involved in PV
Company Overview
Ningbo Solar Ningbo Solar Energy Power manufactures both mc-Si
Electric Power and sc-Si PV cells and modules at its plant. From 2005
to 2006, cell production capacity increased from 20 MWp
to 35 MWp while module capacity increased from 60
MWp to 70 MWp.
ReneSola The company, listed on London’s AIM stock market in
2006, is principally involved in recycling waste silicon to
producer wafers. ReneSola increased production of
silicon wafers to 400 tons in 2006 and expects to
increase production to 800 tons by 2007. ReneSola has
a three-year supply contract with Taiwan’s Motech and a
two-year contract with China’s Jiangsu Linyang Solarfun
beginning in 2007.

Lower investment and production cost is China’s competitive edge driven by


growing global demand as well as the entrepreneurial spirit of Chinese
businesses. China’s government supports funding in R&D for PV (estimated
at €12-13 million from 2006 to 2010) through the National Development
and Reform Commission and the Ministry of Science and Technology.
However, most of the current key production lines are from Germany and
the United States.

Production of modules uses more labour and does not require the same
level of technical expertise compared to other manufacturing processes in
the value chain. Thus, China’s low labour cost has led the country to
become a leading producer and exporter of modules. China’s production of
silicon is limited and depends almost entirely on imports. The global
shortage of silicon in recent years has been the main obstacle to the
industry’s growth in recent years. Thus, China also has to rely on imported
wafers and cells to complement local production.

66
Diagram 5.4. Main Channel in China’s PV Value Chain

China’s silicon industry is limited in production capacity. The local industry


supplies electronic grade silicon mainly to the semiconductor industry and
only 30-40 tons (equivalent to about 3 MWp) is available for the PV
industry. Plans are underway in Leshan, Sichaun province, and Luoyang,
Henan province, to increase capacity to 1,500 tons by 2009-2010. Despite
efforts to increase local production, China will continue to be dependent on
imported silicon since the silicon industry requires a high level of technology
and capital investment. Furthermore, the high technology used to produce
silicon is proprietary-owned by major multinationals.

From 2005 to 2006, the production capacity for PV cells increased from 360
MWp to an estimated 1,350 MWp but wafer capacity increased from 72
MWp to an estimated 250. Thus, China’s production of wafers would be
unable to meet domestic demand and would continue to rely on imports. To
ensure security in supplies for silicon and wafers, most major manufacturers
in China have signed medium to long-term supply agreements with
multinational companies.

5.5 Taiwan
In 2000, Taiwan’s Industrial Technology Research Institute (ITRI)
implemented a five-year programme sponsored by the Energy Commission
(now known as the Energy Bureau under the Ministry of Economic Affairs).
The programme involved conducting research on thin film PV technology
and demonstration projects on commercial, industrial and educational
facilities. The grid-connected PV installations are less than 10 kWp and

67
subsidised at about US$5,000 per kWp. Total installations in Taiwan, being
mainly small-scale demonstrations projects, reached only 1.0 MWp in 2005.

Table 5.5a. PV Installations in Taiwan


2003 2004 2005

Cumulative installation (MWp) 0.3 0.5 1.0


Source: Energy Bureau, Ministry of Economic Affairs (Taiwan)

In 2005, Taiwan adopted an energy policy to meet the conditions of the


Kyoto Protocol. Taiwan has set a goal for renewable energy including PV to
account for 10% of the island’s power generation capacity by 2020. The
Bureau of Energy is encouraging municipalities to install PV systems,
provide subsidies for home installations and construction PV power
generating facilities in remote areas such as mountain villages and islands
off Taiwan. The Kaohsiung City Stadium will install a 1 MWp PV system to be
ready for the Eighth World Games in 2009.

The Ministry of Economic Affairs has identified PV as a potential industry for


the island and strong growth potential in the global markets. Taiwan
prevails in high technology industries especially in semiconductors and flat
panel LCD. However, in recent years development in these industries have
slowed and subjected to global economic cycles. The Ministry is in the
opinion renewable energy is less affected by economic cycles as countries
adopt strategies to reduce their carbon emission and seek greater access to
renewable energy.

The PV industry in Taiwan is relatively new and at an infancy stage


compared to Japan, Germany and the United States. The most prominent
Taiwanese industry player is Motech and was the world’s ninth largest
producer of PV cells in 2005. Motech produced 60 MWp of PV cells
accounting for 3% of the world’s PV cell production during the period. With
a current small market for PV and no significant manufacturer for PV
modules in Taiwan, Motech exports most of Taiwan’s production.

Table 5.5b. PV Production in Taiwan


2003 2004 2005

PV cell production (MWp) 30 45 80


PV module production (MWp) <1 <1 <1

Source: Energy Bureau (Taiwan), Motech and E-Ton Solar production estimates

Taiwan has nearly 30 industry players involved in PV but many are new
entrants into the industry. However, a few players currently dominate the
industry and mostly concentrated in cell and wafer manufacturing. In cell

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manufacturing Motech is the industry leader followed by E-Ton Solar Tech
and new players include DelSolar, Gintech Corporation and Mosel Vitelic.
Among the industry players for silicon ingots and wafers are Tatung and
Sino American Silicon Products.

Table 5.5c. Snapshot of Taiwanese Companies involved in PV


Company Overview
Motech Solar Motech manufactures poly-crystalline silicon cells at its plant
located in Tainan Science Industrial Park. Production capacity
increased from 60 MWp in 2005 to 200 MWp in 2006. Motech
signed a three-year contract with China’s Renesolar and a
five-year contract with Renewable Energy Corporation to
supply its cells beginning in 2007.
E-Ton Solar Tech E-Ton Solar Tech, established in 2001, manufactures mc-Si
and sc-Si cells at its plant located in Tainan. The company
increased its production capacity from 60 MWp in 2005, 100
MWp in 2006 and to 200 MWp by 2007. The company
announced in February 2007 that it had signed a technical
cooperation agreement with the University of New South
Wales, Australia, to develop high-efficiency cells.
DelSolar DelSolar is part of Taiwan’s Delta Group, which produces a
wide range of electronic products including electronic devices,
optoelectronics and networking. DelSolar entered into the PV
industry in 2005 producing mc-Si and sc-Si cells at its plant
located in Hsin Chu Science Park with an initial production
capacity of 25 MWp in 2005. The company expanded
production capacity to 50 MWp in 2006 and will expand
further to 100 MWp by 2007.
Sino American Established in 1998, Sino American Silicon Products
Silicon Products specialises in manufacturing silicon ingots and wafers in
Taiwan. The company has an alliance with Topsil
Semiconductor Materials based in Denmark. The company
supplies its products both in the domestic and international
markets including China, Japan, Europe and the US.
Green Energy Green Energy Technology is a new subsidiary company of
Technology and San Tatung Company, a major manufacturer of consumer
Chih Semiconductor electrical and electronic products in Taiwan. Green Energy
began operations in 2005 producing silicon wafers. Another
subsidiary of Tatung is San Chih Semiconductor which began
operations in 1975 producing silicon wafers for the
electronics industry but has diversified silicon wafer
production for the PV industry. Production is for both
domestic and export markets.

69
Table 5.5c. Snapshot of Taiwanese Companies involved in PV
Company Overview
Gintech Corporation Gintech is a new entrant into Taiwan’s PV industry and
established in 2005. The company manufactures mc-Si and
sc-Si cells and has production capacity of 48 MWp. The
company will shift production to a new plant at Hsin Chu
Science Park and capacity will reach 300 MWp by 2009.
Mosel Vitelic Mosel Vitelic is a manufacturer of DRAM (dynamic random
access memory) used in integrated circuits. In 2006, Mosel
Vitelic announced it would enter into manufacturing silicon
wafers in 2007 and RFID (radio frequency identification
devices) in 2008. The company would eventually cease
manufacturing DRAM because of the competitiveness of the
market and shift production to wafers and RFID, which the
company believes has greater growth potential.

The Ministry of Economic Affairs recognises that Taiwan’s industry weakness


in PV is the lack of integration in the value chain. Taiwan does not have an
established industry for silicon production, ingot and wafer fabrication,
manufacturing modules and even thin film technology. However, the
Ministry recognises that Taiwan’s strength and experience in the
semiconductor industry puts it at an advantage to develop the island’s PV
industry. Known as the “Motech Effect”, many Taiwanese companies have
therefore shown interest to enter the industry.

Diagram 5.5. Main Channel in Taiwan’s PV Value Chain

70
Taiwan’s government has proposed to inject nearly US$200 million in the
next 10 years to develop the PV industry. The Bureau of Energy has planned
the following strategies to develop the industry:

„ Assist Taiwanese PV companies to gain access to supplies of silicon


and encourage foreign silicon suppliers to set up factories on the
island.

„ Provide subsidies to companies developing high-efficiency and low-


cost silicon cells and support development of next-generation PV
cells.

„ Assist the industry to develop test and inspection techniques for


photovoltaic modules, photovoltaic area networks and photovoltaic
production equipments.

Besides these, the government has sent trade missions outside Taiwan to
attract foreign companies to invest and set up manufacturing plants on the
island.

The Industrial Development Bureau (IDB) under the Ministry of Economic


Affairs is responsible for developing the PV industry in Taiwan. Realising the
infancy of the industry, the “Solar Photovoltaic Materials Industry Promotion
Plan" takes effect in 2007 to assist Taiwanese companies to learn about key
materials used in PV. Under the Plan, IDB will assist in attracting foreign
companies to Taiwan and companies such as Tokuyama and REC have
expressed interest to work with Taiwanese companies. Other areas under
the plan include assisting in import of key materials such as silicon, liquid
silver, aluminium, low-iron glass and module packaging materials. Other
areas include assisting in product development with potential Taiwanese
companies such as Formosa Plastics, Tatung and Taipower.

In March 2006, ITRI signed a contract with TÜV Rheinland Group, Germany,
to install Taiwan's first photovoltaic module testing laboratory. The testing
laboratory would provide the necessary certification for Taiwanese
companies to export their modules. In July 2006, the Ministry of Economic
Affairs announced that it would build a silicon plant to supply much needed
silicon to develop the PV industry. The plant would begin operation in 2008
with an initial capacity of 300 tons, increasing to 1,000 tons by 2010.

5.6 Spain
The development of the PV market and industry in Spain from 2000 to 2005
was a result of the Renewable Energy Promotion Plan. Under the plan, Spain

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targeted to install 150 MWp of PV from 2000 to 2010 through various
incentives and funding. These included funding for R&D to improve
technologies in PV, public subsidies and tax incentives for installing PV
systems, and feed-in tariffs at €0.40 for installation below 5 kWp and €0.20
for installations above 5 kWp. PV installations in homes reached nearly
2,000 by 2005 and mostly less than 5 kWp.

Table 5.6a. PV Installations in Spain


2003 2004 2005

Cumulative installation (MWp) 27.0 37.0 57.4


Source: IEA

In August 2005, the Spanish government implemented the Renewable


Energy Plan (2005-2010) which superseded the Renewable Energy
Promotion Plan. The new plan revised total PV installations from 150 MWp
to 400 MWp by 2010. The Renewable Energy Plan eliminated subsidies and
focussed on encouraging PV installations through attractive feed-in tariffs.
Spain’s experience with subsidies created much time-consuming
bureaucracy and complications. The Spanish government was in the opinion
that feed-in tariffs was sufficient to support demand for grid-connected PV
in the country. However, subsidies would continue for non grid-connected
installations in remote places too far away from the grid.

From 1999 to 2005, Spain received nearly €290 million in investments for
the PV industry. Spain has relatively fewer manufacturing companies
involved in PV unlike Germany, Japan, US and China. The only cell and
module manufacturers are Isofoton and BP Solar España, while smaller but
significant players include Artersa and Siliken which only manufactures PV
modules.

Table 5.6b. PV Production in Spain


2003 2004 2005

PV cell production (MWp) 40 72 70


PV module production (MWp) 50 67 69

Source: IEA

Due to Spain’s small market in 2000-2005, the industry depended on


exports mainly to Germany. Isofoton mentioned in its 2005 annual report
that it exported nearly 80% of its production. However, with the
implementation of Spain’s Renewable Energy Plan, exports now account for
65% of its production. By 2005, the PV industry in Spain provided 4,900 job
opportunities in manufacturing, installation, wholesale and retail
distribution, and turnkey manufacturing. Job creation in the Spanish PV

72
industry will increase further by 6,000-7,000 by 2010 from various sources.
With the revised PV installations from 150 MWP to 400 MWP by 2010, PV
cell and module manufacturers are already doubling their production
capacity. Furthermore, Spain will have its own silicon plant by 2009 with a
production capacity of 2,500 tons.

Spain’s PV industry began when Isofoton became a commercial spin off


from technologies developed by the Madrid University of Polytechnic’s
production of bifocal PV cells from silicon wafer. The University fabricated PV
panels including cells in-house, proving Spanish technological and
engineering capabilities in PV. The university continues to conduct research
on PV technologies in collaboration with Spanish PV companies. Areas of
research include production technologies on thinner PV cells’ improvements
in cell conversion efficiency and testing new materials for PV cells; and
substrate production technologies for PV cells.

Currently Isofoton is the leading Spanish player in the local industry. The
number of local manufacturers in Spain is few but the PV industry in the
country is near vertical integration from wafer to module manufacturing and
installation. By 2009, Spain will have its own silicon plant with an initial
production capacity of 2,500 tons completing the vertical integration across
the value chain. The vertical integration is largely due to Isofoton’s position
in the country, which includes a silicon plant by 2009.

Table 5.6c. Snapshot of Spanish Companies involved in PV


Company Overview
Isofoton Isofoton is Spain’s largest manufacturer of silicon cells and PV
modules. The company manufactures sc-Si cells and modules
at its plant in Malaga. Isofoton plans to increase cell and
module production capacity from 90 MWp in 2005 to 160
MWp by 2007. Isofoton will operate a silicon plant (Silicio
Energia) by 2009 with an initial capacity of 2,500 tons.
BP Solar España Part of the BP Solar Group based in the United Kingdom. BP
Solar España manufactures mc-Si cells and modules.
Depending on the availability of silicon, BP Solar España
intends to increase its cell production capacity from 70 MWp
in 2006 to 200 MWp by 2008.
Atersa Atersa began its business in 1979 and manufactures both mc-
Si and sc-Si modules. It is also involved in turnkey
installations and production of machineries for modules. The
company increased capacity from 6 MWp in 2005 to 18 MWp
in 2006 and will increase further to 25 MWp by 2007.

73
Table 5.6c. Snapshot of Spanish Companies involved in PV
Company Overview
Siliken Siliken manufactures mc-Si and sc-Si PV modules besides
manufacturing equipments for module manufacturing plants.
Besides flat panel modules, Siliken also manufactures custom
made building integrated modules. The company increased
capacity from 10MWp in 2005 to 25 MWp in 2006 and will
increase further to 40 MWp by 2007.

Isofoton and BP Solar España currently manufacture only sc-Si cells.


Production from BP Solar España is for its module manufacturing while
Isofoton supplies some of its sc-Si cells to module manufacturers in Spain.
Artesa and Siliken, which only manufactures modules, manufactures both
mc-Si and sc-Si modules and therefore have to import mc-Si cells. Imports
are generally multi-year supply agreements. For example, Q-Cells entered
into a supply agreement with Atersa to supply 73 MWp of PV cells from
2006 to 2009.

Diagram 5.6. Main Channel in Spain’s PV Value Chain

Among the Spanish PV manufacturers, Isofoton has aggressively ventured


into the international markets. Isofoton’s main export is Germany but
beginning to enter into new markets and establish regional offices. The
company entered the Italian market in 2003, the US in 2005 and China in
2006. Isofoton is also involved in rural electrification projects in the
developing countries with offices in Ecuador (South American market),
Senegal (West African market) and in Morocco.

74
Current feed-in tariffs for PV in Spain are more attractive than Germany’s
tariffs and are the driver of growth for the PV market and industry in Spain
since 2006. For PV systems less than 100 kWp, the tariff is 575% above the
average electricity tariffs (determined by the energy authorities) for 25
years after commissioning and 460% thereafter. For PV systems above 100
kWp, the tariff is 300% above the average electricity tariffs for 25 years and
240% thereafter. Current tariffs have created attention and strong interest
among private investors for large-scale installations.

The government periodically reviews and revise feed-in tariffs. Though the
industry is in the opinion that tariffs would reduce in the next review, they
believe it would remain attractive to investors. The incentives have also
attracted foreign module manufacturers and system integrators to enter the
Spanish market and bid for large scale PV installation projects.

„ China’s Suntech will supply 23.2 MWp of modules to Atersa for the
Photovoltaic Grid Connection Park in the Extremadura region of
Spain beginning in the middle of 2007.

„ Globalia Corporacion Empresarial, an energy company based in


Madird, has invested in a 60 MWp solar farm that will begin
operations in the second quarter of 2007.

„ Germany’s City Solar won a contract to construct a 2 MWp solar


farm in the Spanish province of Alicante for a group of 200
individual investors.

„ Acciona Solar won a contract to construct a 2.4 MWp solar farm


belonging to a group of 280 individual investors in Castejon,
Navarre, at a cost of US$23 million.

The industry in Spain is in the opinion that the country would reach its
target of 400 MWp before 2010. However, the government may revise and
increase its target for PV installation by 2010 and could reach as high as
1,100 MWp according to Spain’s photovoltaic association. However,
application for permits for installing PV systems is bureaucratic and done
only by Spanish companies. If too slow, it may remain an obstacle for Spain
to achieve its target of 400 MWp by 2010.

5.7 South Korea


Korea’s revised 10-year “National Plan for Energy Technology Development”
targets renewable energy to account for 3% of the total electricity
generation capacity by 2006 and 5 % by 2012. The Ministry of Commerce,

75
Industry and Energy (MOCIE) through Korea Energy Management
Corporation (KEMCO) manages Korea’s renewable energy plan including PV,
hydrogen fuel cells and wind power for development and promotion. US$2.4
billion has been budgeted under the 10-year plan to develop and promote
the local PV industry. The Ministry is in the opinion the local PV industry has
strong export potential and aims for Korea to achieve 10% of the global
market for PV by 2012 employing nearly 50,000 people.

The Ministry targets for the country to achieve 1.3 GWp in PV installation
capacity by 2012. The plan targets to install 100,000 homes through a
“Rooftop” programme and 70,000 commercial and public buildings with PV
systems by 2012. Support programmes from the Ministry include
demonstration projects to raise public awareness on PV; feed-in tariff
guaranteed for 15 years, and requirement for new public buildings over
3,000 square metres be installed with renewable energy facilities
representing 5% of the building’s construction budget.

There are doubts among some industry members whether Korea would
achieve its target of 1.3 GWp by 2012 with PV installations in country
totalling only 15 MWp in 2005. Some industry players mentioned there is a
lack of promotion to generate interest from consumers and private
companies to drive demand for PV. Another obstacle to drive demand is the
bureaucracy causing delays or long waiting period for approvals to install PV.
Estimates from industry sources indicate total PV installations in Korea may
have reached only 25-35 MWp in 2006. An estimated 3,000 homes and 300
buildings were installed with PV in 2006 ranging from 3 kWp to 400 kWp
installations. However, some industry players mentioned the government is
taking efforts to improve the bureaucratic process to quicken application.

Table 5.7a. PV Installations in South Korea


2003 2004 2005

Cumulative installation (MWp) 6.0 8.5 15.0


Source: IEA

MOCIE and the Ministry of Science and Technology (MOST) support R&D
programmes on PV in Korea. KEMCO and MOCIE have contracted the Korean
Photovoltaic Development Organisation (KPDO) and Korea University to
manage R&D projects on PV including demonstration projects with the
industry, with other Korean universities and national research institutes.
Current R&D objectives are on developing technologies to commercially
mass produce PV products and reduce production costs. The government
targets to reduce cost of producing PV modules from US$3.3 per Wp in

76
2006 to US$1.9 per Wp by 2010. R&D on cell materials focuses on
crystalline silicon targeting to improve cell efficiency from 15% in 2006 to
18% by 2010.

Korea is a new player in the global PV industry with few manufacturers


involved in PV, lagging behind China and Taiwan. Furthermore, most
manufacturers entered the industry between 2003 and 2005 and
characterised with small production capacities or running pilot plants. Many
manufacturers entered the industry at a time of increasing shortages of
silicon and foreign silicon suppliers requiring multiyear supply agreements.
Additionally, the industry has not yet vertically integrated with
manufacturing concentrated on PV cells and modules. Unlike Korea’s
electronic and electrical industry, Korean PV manufacturers have yet to
establish an international network for exports.

Table 5.7b. PV Installations and production in South Korea


2003 2004 2005

PV cell production (MWp) 0.5 1 3


PV module production (MWp) 3 3 9
Source: IEA and industry estimates

The most prominent players in the Korean PV industry are Kyungdong


Photovoltaic Energy and Hyundai Heavy Industries with significant
production capacities. DC Chemical will operate a plant producing silicon to
supply the domestic and export markets when it begins operation in 2008.
LG Group intends to enter the PV industry and there are possibilities that
Samsung may follow suit in the near future.

Table 5.7c. Snapshot of South Korean Companies involved in PV


Company Overview
Neskor Solar Neskor Solar manufactures sc-Si cells at its plant in Incheon.
Company Cell production is for the domestic market. The company
began production in 2003 and has a production capacity of
less than 1 MWp.
Photon Photon Semiconductor & Energy manufactures sc-Si cells and
Semiconductor & modules. The company began manufacturing in 2003 with an
Energy initial production capacity of 0.3 MWp and increased to 31
MWp in 2005.
Hae Sung Solar Hae Sung Solar is a manufacturer of small size PV modules
including lighting modules. The company’s plant is located in
Yong Tang Dong which has a production capacity of less than
5 MWp.

77
Table 5.7c. Snapshot of South Korean Companies involved in PV
Company Overview
Symphony Energy Symphony Energy began operations in 2004 and has its plant
at Gwangsan and a sales office in Seoul. The company
manufactures mc-Si and sc-Si modules mainly for the
domestic market. The plant’s production capacity is 10 MWp.
Unison Unison is one of Korea's largest suppliers of wind energy
systems. Unison entered into the PV business in 2005 and
operates a 15 MWp module plant.
Hyundai Heavy The Electro Electric Systems Division of Hyundai Heavy
Industries Industries is involved in a diverse range of heavy industries
including shipbuilding, high-speed railway systems and
energy. The company initial operated a pilot mc-Si module
plant with a production capacity of 10 MWp. By late 2005,
Hyundai increased its production capacity to 200 MWp.
Kyungdong Kyungdong Photovoltaic Energy (KPE) is part of the Kyung
Photovoltaic Energy Dong group involved in a wide range of manufacturing
activities. KPE manufactures mc-Si cells and modules
including standalone systems such as for telecommunication
systems. The company’s plant is located at Science-Based
Industrial Park in Changwon and has a production capacity of
40 MWp.
DC Chemicals DC Chemicals produces a wide range of chemicals including
basic chemicals, fine chemicals and petrochemicals. The
company will begin operating a silicon plant in 2008 with a
production capacity of 4,000 tons. The company already has
a multi-year supply contract with companies in the US and
China.

Until 2008 when DC chemical operates its silicon plant, the Korean industry
would have to depend on imports. Consequently, Korean module
manufacturers have to depend on imported cells for their modules. Due to
limited production of modules in Korea, nearly all of the modules
manufactured in Korea are for the domestic market. Most of the large-scale
installations in Korea are imported modules.

78
Diagram 5.7. Main Channel in Korea’s PV Value Chain

Hyundai Heavy Industries is making inroads into the Korean PV industry. Its
entry into the industry in Korea began with a 10 MWp mc-Si pilot module
plant. Hyundai’s strategy is to integrate across the value chain including
manufacturing of silicon, wafers, cells, module and system integration.
Initial focus of Hyundai’s development was on manufacturing modules and
system integration and Hyundai may enter into cell manufacturing by 2009.
Other areas of developments include manufacturing of inverters.

LG Chem and Samsung are potentials for the Korean PV industry given their
expertise in OLED display screens. LG Chem installed a pilot 5 MWp module
plant in 2005 and plans to increase capacity to 50 MWp by 2007 and 100
MWp by 2010. LG Silitron is involved in wafer manufacturing for the
electronic industry and may enter into wafer manufacturing for the PV
industry.

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6
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6.1 PV Modules Assemblers

6.1.1 Sharp

Company : Sharp Corporation


Division : Sharp Solar Systems Group
Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara
Prefecture 639-2198, Japan
Tel : +81 74563 3579
Fax : +81 74562 8253
Website : http://sharp-world.com/solar/index.html

Sharp Solar is the world’s leading manufacturer of PV modules accounting


for nearly 23% of the world’s market in 2005. During the year, Sharp
shipped 428 MWp of modules from its plants in Japan, United States and
the United Kingdom. Sharp manufactures a range of mc-Si, sc-Si and a-Si
thin film modules. Currently, mc-Si and sc-Si modules account for about
99% of its shipments.

Three of Sharp’s module assembly plants are in Japan at Katsuragi City in


Nara Prefecture, Yaita City in Tochigi Prefecture and Yao City in Osaka
Prefecture. Realising the growing potential for PV outside of Japan namely in
Western Europe and the United States, Sharp expanded its manufacturing
operation into the region beginning in 2003. Sharp operated its first
overseas plant in Memphis, Tennessee, in the United States in 2003. Its
second overseas plants in Wrexham, United Kingdom began operations in
2004.

The combined production capacity from Sharp’s five plants was 500 MWp in
2005 increasing to 600 MWp by 2006. Over the longer-term, Sharp intends
to increase its capacity to 1,000 MWp by 2010.

Besides the conventional flat panel modules, Sharp manufactures building


integrated modules including roof tile, steel roof and hipped roof integrated
modules. Other modules produced include for space applications, LED-glass
integrated a-Si modules and for large industrial installations. Sharp
introduced its a-Si/micro-Si thin film modules in November 2006 intended
for industrial and commercial installations.

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The Japanese housing market has been the main driver for Sharp’s business
growth in Japan. Thus, Sharp works closely with leading residential property
developers to provide system integration services. With the Japanese
government’s policy to increase PV installations in industrial and commercial
buildings, Sharp is increasing its market focus in these sectors. Sharp views
government subsidies and mandatory power buy-back programmes by
utility companies in Western Europe and the United States as potential
opportunities for growth.

6.1.2 Kyocera

Company : Kyocera Corporation


Division : Solar Energy Division
Address : 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161,
Japan
Tel : +81 75604 3476
Fax : +81 75604 3475
Website : http://global.kyocera.com/prdct/solar/index.html
: http://www.kyocerasolar.com

Kyocera ranked second after Sharp accounting for 8% of the world’s


shipment of PV modules and 17% of the Japanese market in 2005.
Shipment of its modules increased from 105 MWp in 2004 to 142 MWp in
2005. Kyocera markets both mc-Si and sc-Si modules.

Kyocera has two module assembly plants in Japan located at Yukaichi City in
Shiga Prefecture and Ise City in Mie Prefecture focussing supply on the
Japanese market. Taking opportunities on the growing markets outside
Japan, Kyocera expanded its manufacturing operations outside the country.

„ The company formed a partnership with China’s Tianjin Yiqing


Group to operate a plant in Tianjin, China, focussing supply on
China’s domestic market. The plant began its operation in 2003
with an initial capacity of 30 MWp and later increased to 40 MWp in
2004.

„ Kyocera’s second overseas plant began operations in Tijuana,


Mexico, in 2004, with an initial of 36 MWp. Production from Tijuana
are mainly to markets in the US namely California taking advantage
of the lower manufacturing cost in Mexico and its close proximity to
California.

„ The third overseas plant located at Kazan in the Czech Republic


opened in 2005 with an initial capacity of 24 MWp. The plant in

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Kazan supplies to the West European markets and takes advantage
of the lower manufacturing cost in the Czech Republic.

Kyocera’s combined production capacity from its plants increased from 240
MWp in 2005 and expects to increase further to 500 MWp by 2007.

Besides the conventional flat panel, Kyocera also manufactures building


integrated modules including roofs, hipped roof, balconies and walls. Other
modules marketed include for industrial and commercial buildings. Kyocera
also manufactures see-through modules and frameless edge covered
modules. In 2005, Kyocera introduced “off the shelf” or standard packages
for medium size installations ranging from 10 kWp to 13 kWp. The company
introduced six types of systems for installations on tilted and flat roofs.
During the year, Kyocera also introduced its stain proof PV modules
designed to remove dust on the glass panels with rainwater.

Kyocera markets its modules through its authorised dealers, contractors,


industrial users and OEM. Besides more efficient delivery of supply, Kyocera
is in the opinion that operating plants outside of Japan optimises the
company’s effort to develop modules customised to the needs of its
markets.

6.1.3 Sanyo

Company : Sanyo Solar Industries Co. Ltd


Address : 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570,
Japan
Tel : +81 6900 1246
Fax : +81 6900 9305
Website : http://www.sanyo.com/industrial/solar/

Sanyo accounted for 7% of the world’s PV module production in 2005 and


shipment doubled from 65 MWp in 2004 to 125 MWp in 2005. Its modules
range from sc-Si, a-Si and modules using a hybrid of a-Si and sc-Si (hetero-
junction with intrinsic thin layer or HIT) cells. Sanyo is one of the world’s
largest manufacturers of modules using a-Si thin films.

Sanyo has four module assembly plants in Japan at Sumoto City in Hyogo
Prefecture, Kaizuka City in Osaka Prefecture, Oizumi City in Gunma
Prefecture and Kitakata City in Fukushima Prefecture. The plant at Kitakata
City produces modules using a-Si thin film cells. In January 2007, Sanyo
announced that it would construct a new assembly plant for modules in
Shiga Prefecture at a cost of US$16.6 million.

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Sanyo’s overseas plants are in Monterrey, Mexico, and Dorog, Hungary,
leveraging on the lower manufacturing cost in these countries. The two
plants in Mexico and Hungary use a-Si/sc-Si hybrid HIT cells for their
modules. Production from the plant in Monterrey focuses supplies to
markets in the United States namely California due to its close proximity.
Production from Sanyo’s plant in Dorog supplies markets in Western Europe.
Sanyo’s production capacity from its plants totalled 160 MWp in 2005.
Sanyo will increase capacity to 250 MWp in 2007 and further to 600 MWp by
2010.

Besides flat panels, Sanyo manufactures building integrated modules


including roof tiles and see-through but are mainly for the Japanese
markets. Sanyo’s modules using the hybrid a-Si/sc-Si (HIT) cells use less
space per kWp and therefore suitable for installations in small areas.
Furthermore, the modules are lighter and therefore suitable for large-scale
horizontal installations and as roofing tiles.

Sanyo is working closely with residential property developers in Japan such


as Daiwa House, Mitsui Homes, Sanyo Homes and local builders to promote
its HIT roofing tiles. In the United States, Sanyo is increasing marketing
focus on California with the introduction of the “One Million Roofs Plan” to
install 3 GWp of PV modules in California by 2018. In Western Europe, focus
is on countries that have introduced incentives for installing PV and
implemented mandatory power buy-back schemes from the utility
companies.

6.1.4 Suntech

Company : Suntech Power Holdings Co., Ltd.


Address : 17-6 ChangJiang South Road, New District, Wuxi,
Jiangsu 214028, China
Tel : +86 (510) 8531 5000
Fax : +86 (510) 8534 5049
Website : http://www.suntech-power.com

Suntech is a relative newcomer in the PV business but has acquired a


significant market share in the global market within a relatively short
period. Suntech has its beginnings in China when it began to manufacture
PV modules in September 2002 and currently the largest module
manufacturer in China. In December 2005, Suntech listed on the New York
Stock Exchange (NYSE).

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In 2005, Suntech accounted for only 3% of the world’s module shipment at
50 MWp and shipment doubled to 114 MWp by 2006. Suntech acquired a
66.6% stake in MSK of Japan in 2006 and would acquire the remaining
shares by late 2007. In February 2007, Suntech announced shipments from
these two plants totalled 158-159 MWp in 2006. At an estimated world
production of modules at 2,400 MWp in 2006, combined shipment from
Suntech and MSK would account for nearly 7% of the global share during
the period.

Some of the production from MSK’s plants would shift to Suntech’s plant in
China beginning in 2007 to leverage on the lower manufacturing cost in the
country. Consequently, MSK would focus on developing, manufacturing and
marketing higher-valued building integrated modules and Suntech would
tap on MSK’s expertise in systems integration.

„ Suntech’s plant in China located in Wuxi in Jiangsu Province


produces both mc-Si and sc-Si modules. Production capacity began
with 15 MWp in 2002 and increased 10-fold to 150 MWp in 2005
and further to 270 MWp by 2006.

„ MSK’s plants in Japan are in Saku City in Nagano Prefecture,


Ohmuta City in Fukouka Prefecture and in Sihikari City on the
island of Hokkaido. The Japanese plants also produce mc-Si and sc-
Si modules and their combined capacity increased from 100 MWp in
2003 to 200 MWp in 2004.

Suntech will increase its combined production capacity from 470 MWp in
2006 to 600 MWp by 2007 and plans further increase to reach 1,000 MWp
by 2010.

Currently Suntech exports nearly 80% of its production in China mainly to


Western Europe and the United States. Over the longer term, Suntech
expects to ship 50% of its production in China to the domestic market.
Acquisition of MSK provides Suntech an opportunity to enter the Japanese
market, which it considers a difficult market to penetrate for non-Japanese
module manufacturers. Besides Suntech’s own offices in Western Europe
and the United States, the company would leverage on MSK’s network in
Western Europe through its office in London and agencies across Europe.

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6.1.5 Mitsubishi

Company : Mitsubishi Electric Corporation


Division : Mitsubishi Electric Nakatsugawa Works
Address : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan
Tel : +81 57366 2125
Fax : +81 57362 0038
Website : http://global.mitsubishielectric.com/bu/solar/index.html

Mitsubishi Electric Corporation (MEC) manufactures mc-Si PV modules with


shipment amounting to 100 MWp in 2005. MEC currently assembles all its
modules at its two plants in Japan at Iida City in Nagano Prefecture and at
Nagaokakyo City in Kyoto Prefecture. MEC has no immediate plans to
expand production outside Japan. Production capacity from MEC’s two
plants increased from 135 MWp in 2005 to 230 MWp in 2006.

MEC initially focussed on the Japanese market namely on residential


buildings and expanded into the overseas markets in 2002. In Western
Europe, MEC initially focussed on the German market and currently
expanding its markets in Spain and Italy. In the United States, MEC targets
markets, which have introduced incentives and power buy-back schemes
from the utility companies. MEC introduced its lead-free solder modules in
2006 for markets in Western Europe and the United States. In China, MEC is
involved in rural electrification projects but views growth potential once
China successfully implements its policies and schemes to increase PV
usage in the urban areas such as Shanghai. Over the longer term, MEC
intends to increase its shipment of modules from 100 MWp in 2005 to 300
MWp by 2010.

6.1.6 SolarWorld

Company : SolarWorld AG
Address : Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany
Tel : +49 22855 9200
Fax : +49 228559 2099
Website : http://www.solarworld.de

SolarWorld had its beginnings in 1998 as a dealer of components for PV


systems to company covering the whole value chain. Prior to 2006,
SolarWorld was a small player in the world module market compared to
giants such as Sharp, Kyocera and Sanyo. Production increased from 30

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MWp in 2004 to 44 MWp in 2005 accounting for only 3.5% of the world’s
shipment in 2005.

In early 2006, Shell Solar sold its facilities including R&D centres in the
United States and Germany to SolarWorld. With the acquisition, the
estimated total shipment of PV modules from the plants owned by
SolarWorld and those previously owned by Shell Solar was 128 MWp in
2006. With an estimated world production of PV modules at 2,400 MWp in
2006, shipments from the plants would account for 5% of the world’s
module shipment during the period.

SolarWorld assembles both mc-Si and Sc-Si modules. An estimated 63% of


its module production is in Germany and 37% in the United States.

„ Its modules plants in Europe are in Freiberg, Germany, and


Gällivare, Sweden. The combined capacity of these two plants
reached 52 MWp by 2005.

„ In the United States, its plant in Camarillo, California, produces


both sc-Si and CIS thin film modules.

Total capacity increased to an estimated 175 MWp in 2006 mainly due to


SolarWorld’s acquisition of Shell Solar’s module plant in the United States.
Capacity would increase further to an estimated 225 MWp by 2007 with
doubling of the production capacity of its plant in Camarillo to 100 MWp.

SolarWorld’s traditional market in Europe is Germany. Spain and Italy


represents its other core markets in Europe with incentives and power buy-
back schemes implemented by the country’s governments. Its plant in
Sweden focuses on supplies to the Scandinavian countries but also supplies
to other markets. The United States is a new and potential market for
SolarWorld thus the reason for increasing its Camirillo plant capacity to 100
MWp by 2007. By then, the Camarillo plant would be one of the largest if
not the largest module plant in the United States.

6.1.7 SOLON

Company : SOLON AG
Address : Ederstraße 16, D-12059 Berlin, Germany
Tel : +49 308187 9100
Fax : +49 308187 9110
Website : http://www.solon-pv.com/english/index.html

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SOLON’s is the world’s tenth largest manufacturer of PV modules but unlike
its competitors previously focussed on manufacturing modules in the value
chain. This put SOLON at risk in security of supplies for silicon cells for its
PV modules. Thus, SOLON is diversifying is business activities across the
value chain to ensure security of its supplies.

„ SOLON entered into a joint venture with Dutch company Econcern


to operate a solar grade silicon plant in France. The plant would be
operational by the end of 2008 with an initial capacity to produce
more than 3,000 tons.

„ Solon has also invested in a plant to manufacture crystalline silicon


cells in Austria. The plant would begin operations in early 2008 with
an initial capacity of 20 MWp.

In the immediate term, Solon signed three long-term supply contracts for
PV cells in 2005 with Ersol for 10 years, Q-Cells and SunPower for five
years.

SOLON’s module assembly plants in Germany are located in Berlin and


Griefswald producing mc-Si and sc-Si modules. In 2006, SOLON acquired
S.E. Project Srl, an Italian manufacturer and distributor of PV modules. S.E.
Project is significant player in the Italian market for PV and the acquisition
included a module plant with a capacity of 10 MWp.

Combined production capacity from SOLON’s plants increased from 40 MWp


in 2004 to an estimated 110 MWp in 2006. Consequently, production
increased from 34 MWp to an estimated 90 MWp during the period. At an
estimated world production of 2,400 MWp, SOLON would account for nearly
4% of the world’s shipment of PV modules in 2006.

SOLON traditional market is Germany and main market outside the country
is Spain where it has several supply contracts. SOLON is increasing its
market presence in Italy, United States and Australia.

„ SOLON’s acquisition of S.E. Project is to increase its stake in the


Italian market at an early stage to tap on the opportunity when
Italy introduces its power buy-back scheme for solar generated
electricity.

„ In early 2006, SOLON acquired Global Solar Energy based in the


United States from UniSource Energy. The acquisition provided an
opportunity for SOLON to tap on Global Solar Energy’s network in
southwestern United States to market its modules.

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„ In January 2007, SOLON announced its planned investment and
strategic partnership with Australia’s CBD Energy, a turnkey
contractor for CO2-free power plant projects in Australia.

6.1.8 Schott Solar

Company : Schott Solar GmbH


Address : Carl-Zeiss-Str. 4, 63755 Alzenau, Germany
Tel : +49 (0) 6023 9105
Fax : +49 (0) 60239 11700
Website : http://www.schott.com/photovoltaic/english/index.html

Schott Solar, based in Alzenau in Germany, is a subsidiary company of


Schott AG. Schott Solar produces mc-Si and a-Si thin film modules.
Production from Schott Solar’s plants increased from 32 MWp in 2004 to 57
MWp in 2005 accounting for slightly more than 3% of the world’s shipment
during the period. In addition to the 57 MWp produced, Schott Solar also
outsourced 28 MWp of production to OEM. Estimates are that production
from its plants have increased by 44% from 2005 to 82 MWp in 2006.

Schott Solar currently has four plants assembling PV modules. Two plants
are located in Germany at Alzenau and Putzbrunn, another in the Czech
Republic at Valasskenezirici and another in the United States at Billerica in
the state of Massachusetts. Besides, its in Putzbrunn has 3 MWp facility to
produce a-Si thin film modules. Furthermore, Schott Solar will operate a
new a-Si 30 MWp plant in Jena, Germany, by late 2007.

Total production capacity increased from 32 MWp in 2004 to 82 MWp in


2005 and remained at that level in 2006. The new plant in Jena would
increase production capacity to 112 MWp by late 2007.

Schott Solar’s module plant in the Czech Republic leverages on the country’s
lower cost of production and modules from the plant are destined mainly to
the West European markets. The plant in Alzenau supplies not only markets
in Europe but also markets in Asia and Africa. The plant in Billerica supplies
the South American markets besides North America.

In November 2006, Schott Solar announced the possibility of closing its


plant in Billerica. The main reason was its inability to obtain sufficient supply
of silicon for its silicon cells rather than changes in demand for PV in the
United States. If the plant closes, Schott Solar would make efforts to sell
the plant to another company with sufficient supply of silicon. In such as

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scenario, Schott Solar would then import modules from its plants in Europe
into the United States.

6.1.9 BP Solar

Company : BP PLC
Division : BP Alternative Energy (BP Solar)
Address : Building B Chertsey Road, Sunbury on Thames,
Middlesex, TW16 7LN, United Kingdom
Tel : +44 (0) 19 3276 2000
Fax : +44 (0) 19 3277 4372
Website : http://www.bpsolar.com

BP Solar shipped 46 MWp from its plants in 2005 accounting for slightly less
than 3% of the world’s shipment during the period. BP Solar produces mc-Si
and sc-Si modules. BP Solar also outsourced an estimated 44 MWp to OEM
in 2005.

BP Solar has module assembly plants across four continents. These include
plants in Madrid (Spain), Sydney (Australia), Fredericks in the state of
Maryland (United States) and a joint venture plant with the Tata Group in
Bangalore (India). The plant in Australia with a capacity of 40 MWp in 2006
is the largest module assembly plant in the southern hemisphere. BP Solar
plans to increase the combined production capacity of its plants to 200 MWp
by the end of 2008. BP also has ventures with local partners in Saudi
Arabia, South Africa, Thailand and Indonesia.

BP Solar exited from the thin film business to concentrate on silicon-based


cells for its modules. Nevertheless, R&D in thin film technologies would
continue to be a long-term strategy for future possibilities.

6.1.10 Isofoton

Company : Isofoton SA
Address : Calle Montalbán, No. 9, 28014 – Madrid, Spain
Tel : +34 91 414 7800
Fax : +34 91 414 7900
Website : http://www.isofoton.com

Isofoton began as a commercial spin-off from R&D activities by Spain’s


Madrid University of Polytechnic in developing technologies for production of
bifocal PV cells from silicon wafer. In 1997, Grupo Bergé became Isofoton’s
new owner and began strengthening Isofoton’s commercial activities

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including developing new technologies, increasing production capacity and
expanding markets. Isofoton is among the leading manufacturer of PV
modules in Europe and the leader in Spain. The company shipped 40 MWp
sc-Si cell modules in 2005 and accounted for slightly more than 2% of the
world’s module shipment during the period. Estimates shipment increased
to 56-60 MWp in 2006.

Current production of modules is at its new plant located in the Andalucia


Technology Park in Malaga, Spain, which began operations in 2005. It is also
the site for its R&D activities and production of sc-Si cells. With the shift to
the new plant, production capacity increased from 60 MWp in 2004 to 90
MWp in 2005. Capacity further increased to an estimated 130 MWp in 2006
and plans to increase capacity to 200 MWp by 2008.

Exports traditionally accounted for about 80% of Isofoton’s production of


modules but now account for about 65% since the introduction of Spain’s
Renewable Energy Plan in 2005. Current main export market in Europe is
Germany and establishing new markets. Isofoton formally entered the
Italian market in 2003 and established subsidiary company Isofoton Italy.
The following year, Isofoton entered the market in the United States and
established Isofoton North America. China is a new and strategic market for
Isofoton and established Isofoton China in 2006 with its new office located
in Beijing.

Isofoton also has subsidiary companies in the developing countries involved


in rural electrification projects. Isoequinnocial based in Quito, Ecuador,
represents Isofoton’s business in Latin America namely Ecuador, Columbia,
Panama, Peru and Venzuela. Isofoton established Isofoton Maroc in 2005 in
Morocco after it won an international bid for a rural electrification project in
the country. Another subsidiary Isofoton West Africa established in Senegal
in 2005 serves the West Africa market.

6.2 PV Cells Manufacturers

6.2.1 Sharp

Company : Sharp Corporation


Division : Sharp Solar Solar Systems Group
Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara
Prefecture 639-2198, Japanu
Tel : +81 74563 3579
Fax : +81 74562 8253
Website : http://sharp-world.com/solar/index.html

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Sharp leads the world in production of PV cells accounting for 24% of the
world’s shipment in 2005. Cell production increased from 324 MWp in 2004
to 428 MWp in 2005. Types of PV cells currently manufactured include mc-
Si, sc-Si and a-Si cells. Sharp sources the wafers to produce the cells from
its own wafer plant and purchases from external wafer manufacturers.

Sharp’s mc-Si and sc-Si cell plant is located in Japan at Katsuragi City in
Nara Prefecture. In 2005, Sharp expanded production of its plant to include
a 15 MWp thin film production facility. All the production from the plant in
Katsuragi City is for its module assembly plants located in Japan, United
States and the United Kingdom.

Production capacity reached 500 MWp in 2006. In February 2007, Sharp


announced that is would increase the cell production capacity of its plant in
Katsuragi City to 710 MWp by 2007. It had earlier announced in October
2006 that capacity would increase to 600 MWp by 2007. New subsidies and
power buy-back schemes from utility companies for PV in Europe and the
United States led Sharp to increase its production capacity. By 2010, Sharp
plans to increase its cell production capacity further to 800-900 MWp.

Sharp announced that it would enter into the upstream activities of the
value chain and invest in a silicon plant to boost its cell capacity. The silicon
plant would have an initial annual capacity of 1,000 tons, equivalent to 110
MWp of cell capacity. The plant would recycle semiconductor silicon scrap
into solar grade polysilicon.

In the technology front, Sharp is developing technologies to reduce cell


thickness from 200 microns to 180 microns as well as improving the
efficiency. Sharp is also developing super efficient thin-film multi-junction
solar cells. In November 2006, Sharp announced it would introduce a new
thin film consisting of an upper amorphous layer and a lower
microcrystalline silicon layer with a conversion efficiency of 8.5% and
targeted for modules in industrial and commercial installations.

6.2.2 Q-Cells

Company : Q-Cells AG
Address : Guardianstrasse 16, 06766 Thalheim, Germany
Tel : +49 (0) 34946 6860
Fax : +49 (0) 349466 8610
Website : http://www.q-cells.com

Q-Cells is principally involved in production of mc-Si and sc-Si cells and


supplying to the module manufacturers. Production of PV cells from Q-Cells

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increased by two-folds from 76 MWp in 2004 to 166 MWp in 2005
accounting for 9% of the world’s shipment in 2005. Estimated production in
2006 was 240 MWp. Q-Cell produces both mc-Si and sc-Si for its customers.

Q-Cells cell production plant is located in Thalheim, Germany. The plant’s


production capacity increased from 170 MWp in 2004 to 290 MWP in 2005.
Capacity increased to 350 MWp by 2006 and estimates capacity would
increase to 510-530 MWp by end of 2007.

Besides developing technologies to produce thinner wafers, Q-Cells has


several investments to tap on new technologies to reduce cost and improve
cell efficiency.

„ The company formed a joint venture with Evergreen Solar (United


States) and REC (Norway) to operate a plant producing wafers,
cells and assembling modules. The venture named EverQ has its
plant in Thalheim, which began operations in April 2006 with an
initial capacity of 30 MWp. EverQ uses string ribbon technology for
wafer production and reduces wastage compared to the
conventional method of slicing silicon into wafers.

„ Q-Cells also has a stake in CSG Solar to develop and commercialise


crystalline silicon on glass technology developed by Australia’s
Pacific Solar. The technology involves a silicon layer of only 1.5
micron deposited on a glass substrate and provides considerable
potential in reducing cost. CSG Solar’s 25 MWp plant based in
Thalheim began operations in early 2006.

„ Another investment is in Swiss-based VHF Technologies which Q-


Cells has a 23.4% stake. VHF Technologies is commercialising a
technology for applying a-Si on flexible plastic to produce flexible
PV modules. Q-Cells sees potential for such modules in building
integrated PV.

„ Soloria Corporation based in Freemont in California has developed a


new form of low-concentration solar PV technology that uses less
silicon material thereby reducing the cost of production. Soloria
intends to go into full-scale production by 2008.

In 2005, exports accounted for 37% and markets to module assemblers in


Germany accounted for 63% of the shipment from Q-Cells’ plant in
Thalheim. Q-Cells current marketing strategy is to increase exports to 50%
of its production by 2008. In the immediate term, targeted markets are
Southern Europe namely Spain; East Asia namely China, Japan and South
Korea; and North America namely California. Q-Cells established Q-Cells

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Asia Limited in Hong Kong to handle its business across East Asia and India.
In the United States, Q-Cells is negotiating with potential North American
partners and through its relationship with its US based joint venture partner
Evergreen Solar in EverQ.

6.2.3 Kyocera

Company : Kyocera Corporation


Division : Solar Energy Division
Address : 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161,
Japan
Tel : +81 75604 3476
Fax : +81 75604 3475
Website : http://global.kyocera.com/prdct/solar/index.html
: http://www.kyocerasolar.com

Kyocera ranked third in production of PV cells in 2005, accounting for nearly


8% of the world’s shipment in 2005. Cell production increased from 105
MWp in 2004 to 142 MWp in 2005. Current PV cells manufactured by
Kyocera are mc-Si cells and sources wafers for its cells from its own wafer
plant.

Kyocera’s cell plant is located in Yukaichi City in Shiga Prefecture, Japan.


Kyocera will increase capacity at the plant from 240 MWp in 2005 to 500
MWp by 2007 to meet the growing demand for cells from its module
assembly plants in Japan, China, Mexico and the Czech Republic.

R&D on its mc-Si cells currently focuses on increasing cell efficiency and
developing technologies to lower the production cost by reducing the cell
thickness and developing cells with large a surface area. Kyocera achieved
significant success in improving the conversion efficiency of its cells in the
last 20 years. For 15cm x 15cm mc-Si cells, efficiency improved from 14.5%
in 1989 to 17.7% by 2005. By October 2006, Kyocera introduced it new
15cm x 15cm cells with an efficiency of 18.5% developed using the
company’s proprietary “d.Blue” process, which maximises sunlight collection
by reducing reflectivity.

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6.2.4 Sanyo

Company : Sanyo Solar Industries Co. Ltd


Address : 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570,
Japan
Tel : +81 6900 1246
Fax : +81 6900 9305
Website : http://www.sanyo.com/industrial/solar/

Production of cells from Sanyo’s plants accounted for 7% of the world’s


shipment in 2005. Cell production from Sanyo’s plants doubled from 65
MWp in 2004 to 125 MWp in 2005. Current cells produced are sc-Si, a-Si
and a-Si/sc-Si hybrid HIT (hetro-junction with intrinsic thin layer) cells.
Sanyo sources the wafers for sc-Si from its wafer plant in the United States
(Sanyo Solar USA) and other wafer manufacturers. Monosilane and TCO
(transparent conducting oxide) substrate used to produce a-Si are
externally sourced.

Production of Sanyo’s a-Si/sc-Si hybrid HIT cells are its plant in Kisuki-Cho
in Shimane Prefecture and Kaizuka City in Osaka Prefecture. Sanyo
produces its a-Si cells at its semi-conductor division at Kaitaka City in
Fukushima.

Sanyo’s production strategy is to the production of its hybrid cells. Sanyo


announced in October 2006 that it would invest more than US$350 to
increase the production capacity of its plants over the next five years.
Production capacity would increase from 160 MWp in 2005, 260 MWp in
2007 and 350 MWp by 2008. Capacity may reach 600 MWp by 2010
depending on the global demand for its PV modules.

Sanyo’s strategy in the technology front is to increase the efficiency of its a-


Si/sc-Si hybrid HIT cells to 22% by 2010. The hybrid cell is a combination of
sc-Si cells surrounded by a-Si cells and the process to produce the cells
makes it possible to produce thin cells with a thickness of 200 microns. The
hybrid cells are sensitive to low levels of light and have a higher level of
efficiency at high temperatures than conventional silicon cells.

Sanyo entered a seven-year contract beginning in January 2009 with Hoku


Scientific in the United States to ensure security of supply of polysilicon for
its wafers. The contract provides for delivery of polysilicon to Sanyo at
predetermined volume and price each year. Without a polysilicon plant,
Hoku would seek financing to build a 2,000 tons plant (equivalent to 220
MWp of cell capacity). Under the contract, both parties have the right to

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terminate the agreement if Hoku were unsuccessful in raising capital to
build the plant within six months of the contract.

6.2.5 Mitsubishi

Company : Mitsubishi Electric Corporation


Division : Mitsubishi Electric Nakatsugawa Works
Address : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan
Tel : +81 57366 2125
Fax : +81 57362 0038
Website : http://global.mitsubishielectric.com/bu/solar/index.html

Mitsubishi Electrical Corporation (MEC) produces mc-Si cells. From 2004 to


2005, shipment from MEC increased from 75 MWp to 100 MWp 2005
accounting for 6% of the world’s cell production during the period. MEC
sources its wafer for its cells from wafer manufacturers.

MEC manufactures its mc-Si cells at its plant in Iida City in Nagano
Prefecture. Production capacity increased from 90 MWp in 2004 to 135 MWp
in 2005. Capacity increased further to 230 MWp in 2006 and plans to
increase capacity to 300 MWp by 2010. MEC began to supply part its cell
production as an OEM to Ebara Corporation in 2005.

In September 2006, MEC announced it had successfully increased the size


of its mc-Si cells from 15 cm to 15.6 cm improving the efficiency of its mc-
Si 185 kWp modules by 9% compared to previous similar models. Output
improved further by increasing the distance between cells and placing a film
in the spaces to reflect light to the cells.

6.2.6 Schott Solar

Company : Schott Solar GmbH


Address : Carl-Zeiss-Str. 4, 63755 Alzenau, Germany
Tel : +49 (0) 6023 9105
Fax : +49 (0) 60239 11700
Website : http://www.schott.com/photovoltaic/english/index.html

Schott Solar produces mc-Si cells for PV modules and to a lesser a-Si thin
film cells. Production increased from 70 MWp in 2004 to 90 MWp in 2005
accounting for 5% of the world’s shipment of PV cells in 2005. Schott
Solar’s module plants consume 60% of the production while the remaining
40% supplied to other module assemblers. Estimated production in 2006

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was about 110 MWp. Schott Solar’s sources its supply of wafers from its
own internal production (produced 39 MWp in 2005) and from other wafer
manufacturers.

Schott Solar’s plants in Alzenau (Germany) and in Billerica (United States)


produces silicon cells while its plant in Putzbrunn (Germany) produces a-Si
thin films cells. The plants in Germany accounts for about 85% of Schott
Solar’s total cell production while the plant in the United States accounts for
15%. Schott Solar announced in November 2006, its Billerica plant faced
difficulties in obtaining supply of silicon for its cell production. Thus, the
plant may close if it is unable to obtain sufficient supply to run its
production through 2007.

Cell production capacity increased from 60 MWp in 2004 to 130 MWp in


2005 and remained at the level in 2006. Like many manufacturers in the PV
industry, Schott Solar faces difficulties in identifying adequate sources of
silicon for its cell production. Depending on the supply situation for silicon,
production capacity may increase to 160-180 MWp by 2007. Schott Solar
has the ability to increase production capacity by up to 50 MWp with six
months.

6.2.7 BP Solar

Company : BP PLC
Division : BP Alternative Energy (BP Solar)
Address : Building B Chertsey Road, Sunbury on Thames,
Middlesex, TW16 7LN, United Kingdom
Tel : +44 (0) 19 3276 2000
Fax : +44 (0) 19 3277 4372
Website : http://www.bpsolar.com

Production of silicon cells from BP Solar’s five plants across the world
accounted for 5% of the world’s shipment in 2005 increasing from 85 MWp
in 2004 to 90 MWp in 2005. BP Solar exited from production of thin films in
2003 to focus R&D and production on mc-Si and sc-Si cells.

BP Solar has four PV cell plants across the world including Madrid (Spain),
Sydney (Australia), Fredericks (United States) and a joint venture plant in
Bangalore (India). The combined production capacity of the plants increased
from nearly 140 MWp in 2005 to 200 MWp by 2006. In November 2006, BP
Solar announced it would increase the production of its plant in Fredericks
to 150 MWp by the end of 2008. Depending on the availability of silicon BP
Solar in Spain intends to increase its cell production capacity from 70 MWp
in 2006 to 200 MWp by 2008. The plant would also increase its wafer

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manufacturing capacity and integrate its warehousing and shipping facilities
to a single site at Fredericks. The plant would continue to supply
polycrystalline wafers to its plant in Australia and joint venture plant in
India for cell production.

BP Solar’s strategy in the technology front is to improve the conversion


efficiency of its mc-Si cells to close the efficiency gap between mc-Si and
sc-Si cells. The objective is to offer mc-Si cells with the efficiency of sc-Si
cells at a lower cost than sc-Si cells. As a result, BP Solar unveiled its
Mono2 prototype mc-Si modules in October 2006. The process developed by
BP Solar to produce the cells involves a printing process whereby the cells
produce 2% more energy than the conventional printing process.

BP Solar claims to have secured sufficient supplies of silicon feedstock to


cover its growth in the next few years. This involved negotiating with its
feedstock suppliers with long-term supply agreements. In October 2006, BP
Solar signed a six-year agreement with REC to deliver polycrystalline
wafers.

6.2.8 Suntech

Company : Suntech Power Holdings Co., Ltd.


Address : 17-6 ChangJiang South Road, New District, Wuxi,
Jiangsu 214028, China
Tel : +86 (510) 8531 5000
Fax : +86 (510) 8534 5049
Website : http://www.suntech-power.com

Suntech has risen within a relatively short period to become an industry


leader in production of PV cells in China. Cell production from Suntech’s
plant increased from 30 MWp in 2004 to 68 MWp in 2005 accounting for 4%
of the world’s shipment in 2005. During the year, nearly 75% of the cell
production from Suntech’s plant was for its own modules and 25% to other
module assemblers. Estimated production of PV cells in 2006 was 135 MWp
and Suntech expects production to increase to 280 MWp by 2007. The
company’s production includes mc-Si and sc-Si cells and undertaking
research to develop thin film cells.

The production plant for silicon cells is in Wuxi in Jiangsu Province, China.
Production capacity at the plant increased from 60 MWp in 2004 to 270
MWp in 2005. Suntech expects to increase capacity to 420 MWp by the end
of 2007 and may increase capacity by as much as 1,000 MWp by 2010. The
company entered into an agreement with China’s Louyang Silicon Company
in 2006 to establish a joint venture company (Louyang Silicon) operating a

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PV cell and module plant in Louyang, China, with an initial capacity of 30
MWp.

To ensure sufficient supply of silicon wafer, Suntech entered short to long-


term supply agreement with Chinese and foreign wafer manufacturers.
These include supply agreements with SolarWorld and its subsidiary
Deutsche Solar (Germany), MEMC Electronic Materials (Germany/United
States), Renewable Energy Corporation (Norway), Sunlight Group (United
States), LDK Hi-tech (China), Baoding Yingli New Energy Company (China)
and Shanghai Cotonsech Solar Technology (China). These supply
agreements ensures Suntech’s growth in the next five years.

Suntech’s strategy in technology development is to reduce the cost of


manufacturing and improve the conversion efficiency of its PV cells. It has
achieved in reducing cell thickness to 210 microns and developing
technologies to reduce cell thickness further to 180 microns and
subsequently to 150 microns. Suntech claims to have increased the
conversion efficiency of its mc-Si cells to 15.4% and sc-Si cells to 18.0% for
its pilot production and targets 20.0 efficiency by 2008.

6.2.9 Motech

Company : Motech Industries, Inc.


Division : Motech Solar
Address : Tainan Science-Base Industrial Park No. 3, Da-Shun 9th
Road, Hsin-Shi, Tainan 74145, Taiwan
Tel : +886 6 505 0789
Fax : +886 6 505 1789
Website : http://www.motech.com.tw

Motech is Taiwan’s largest PV cell manufacturer and entered into the PV cell
business in 2000. Production of PV cells from its plant in Taiwan was just 3.5
MWp in 2001. Since then, production has increased from 35 MWp in 2004 to
60 MWp in 2005 accounting for 3% of the world’s shipment of PV cells in
2005. Motech manufactures both mc-Si and sc-Si PV cells which it supplies
to modules assemblers. The company trades publicly on Taiwan’s Over-the-
Counter (OTC) market of the Taiwan Stock Exchange.

Motech’s PV cell plant in Taiwan is located at the Tainan Science-Base


Industrial Park in Tainan. Production began in 2001 initially producing mc-Si
cells and later in 2003 to include sc-Si cells. Production capacity increased
from 35 MWp in 2004 to 60 MWp in 2005. Capacity increased to 200 MWp
by 2006 but could have increased to 240 MWp if not for the global
constraint for silicon wafers. Motech intends to increase production capacity

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to 1,000 MWp by 2010. The company would achieve this by operating its
own silicon wafer plant.

Motech and MEMC Electronics Materials negotiated in mid-2006 to jointly


build and operate a silicon wafer plant in Taiwan but did not materialise into
any agreement. In February 2007, Motech announced it would build a plant
producing silicon wafer in Kunshan, China. The capacity had yet to be
determined (in February 2007) but Moetch expects the new plant to begin
operating in 2008. Silicon wafer produced from the plant would be shipped
to other cell manufacturers included Motech’s plant in Taiwan. To ensure
delivery of silicon wafers in the immediate term, Motech has signed supply
agreements with wafer manufacturers. Motech signed a supply agreement
with ReneSola in late 2006 supplying most of Motech’s requirement in 2007.

Motech has achieved considerable success in improving the efficiency of its


PV cells. The conversion efficiency of its mc-Si cells improved from 14.5% in
2003 to 15.5% by 2005. Consequently, the efficiency of its sc-Si cells
improved from 15.5% from 2003 to 16.5% by 2005.

6.2.10 SolarWorld

Company : Solar World AG


Address : Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany
Tel : +49 22855 9200
Fax : +49 228559 2099
Website : http://www.solarworld.de

SolarWorld accounted for only 2% of the world’s shipment of PV cells in


2005 at 38 MWp. SolarWorld acquired Shell Solar’s cell production plants in
2006. Combined cell production from SolarWorld’s plant and those
previously owned by Shell Solar resulted in shipment estimated at 110 MWp
in 2006. This would account for nearly 5% of the world’s shipment of PV
cells in 2006 estimated at 2,400 MWp. SolarWorld’s main product line is mc-
Si and sc-Si cells but also produces CIS thin film cells.

The company’s cell plants are located in Freiberg (Germany), Gelsenkirchen


(Germany) and Camarillo (United States). The plant in Gelsenkirchen
produces mc-Si cells while the plant in Camarillo produces sc-Si and CIS
thin film cells. SolarWorld’s combined plant capacity increased from 30 MWp
in 2004 to 60 MWp in 2005. With the acquisition, capacity increased to 160
MWp in 2006. SolarWorld announced that it would increase the combined
production capacity of its plants exceeding 1,000 MWp by 2010. This
included a new plant in Hillsboro in the state Oregon, United States. The

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plant in Hillsboro would begin operation in 2007 and eventually have a
production capacity of 500 MWp by 2009.

To ensure security of supply of silicon wafers, SolarWorld operates a silicon


wafer plant in Freiberg and a new plant in Hillsboro. Each of the wafer
plants would have the capacity to produce silicon wafers equivalent to 500
MWp of PV cells by 2009. SolarWorld has formed a joint venture with Dutch
company Scheuten Solarholding to operate a plant in Saxony, Germany,
with a capacity of 1,000 tons producing solar grade polysilicon. SolarWorld
together with chemical group Degussa will operate a joint venture plant
(Joint Solar Silicon) in Rhienfelden, Germany, to produce solar grade
polysilicon.

Besides markets in Europe and the United States, SolarWorld has also set
its sights in China’s market, which it views as a potential high growth
market for PV. SolarWorld and its subsidiary Deutsch Solar has entered into
an agreement to supply silicon wafers to Suntech for manufacturing of its
PV cells.

6.3 Polysilicon Manufacturers

6.3.1 Hemlock

Company : Hemlock Semiconductor Corporation


Address : 12334 Geddes Rd., Hemlock, Michigan 48626, United
States of America
Tel : +1 (989) 642 5201
Fax : -
Website : http://www.hscpoly.com/

Hemlock Semiconductor is a joint venture between Dow Corning (63%),


Shin-Etsu Handotai (25%) and Mitsubishi Materials Corporation (12%).
Hemlock’s plant is located in the state of Michigan, United States, is the
world’s largest producer of polysilicon accounting for nearly 25% of the
world’s production capacity in 2005. About 40% of Hemlock customers are
from the PV industry and 60% from the semiconductor industry.

Hemlock’s main raw material (silicon) comes from Dow Corning’s mining
operations in South America and the United States. Hemlock uses the
Siemens reactors and trichlorosilane gas to produce polysilicon.

Current production of polysilicon is exclusively from Hemlock’s plant in the


United States. In 2006, Hemlock began on a US$400-US$500 million

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expansion plan to increase the production capacity of its plant. Capacity
increased from 7,700 tons in 2005 to 10,000 tons in 2006. By 2008,
Hemlock intends to increase its production capacity to 14,500 tons and
finally reach 19,000 tons by 2009. However, expansion in 2008 and 2009
would depend on buyers agreeing to sign long-term supply contracts with
Hemlock. Such contracts would involve fixed prices for polysilicon and
upfront payments to finance the expansion of the plant’s production
capacity.

Besides expansion of its plant in Hemlock, the company is also searching


and evaluating for a second production site outside the United States. The
second production site would begin operations with the next five years. Key
considerations for the location are costs of energy, tax incentives, incentive
schemes to attract production, cost of labour, cost of land and physical
infrastructure. Possible location could be within Asia according to some
industry sources considering the growing potential for PV in the region
especially China.

6.3.2 Wacker

Company : Wacker Chemie AG


Division : Wacker Polysilicon
Address : Hanna-Seidel-Platz 4, 81737 Munich, Germany
Tel : +49 896 2790
Fax : +49 896 27979 1770
Website : http://www.wacker.com/cms/en/home/index.jsp

Wacker Polysilicon is a division of Germany’s Wacker Chemie a diversified


chemical company with polysilicon as one of its key business areas. Its
polysilicon plant is located in Burhausen, Germany, and polysilicon
production experienced growth of 12% from 2004 to 2005 and sales
reaching nearly €290 million in 2005. The plant is the world’s second largest
polysilicon plant with a production capacity of 5,500 tons in 2005. The plant
shipped nearly 40% of the production to the PV industry during the year.

Wacker’s plant in Bughausen and obtains key raw material to produce the
silicon from its mine located in Stetten, Germany. The plant currently uses
the Siemens reactor to produce the polysilicon. Wacker currently has two
pilot reactors using the fluidised bed reactor (FBR) to produce solar silicon.

With strong demand growth for PV and its plant running at full capacity in
2005 and 2006, Wacker will increase capacity by 4,500 tons from 5,500
tons in 2006 to 9,000 tons by 2007. Much of the polysilicon scheduled

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coming into production from the 4,500 tons expansion have been already
assigned to Wacker’s customers under a multi-year supply agreement
involving prepayments. Plans are to increase capacity further in stages to
reach 14,500 tons by the end of 2009. According to the company, its
expansion plans are progressing as scheduled.

6.3.3 REC

Company : REC Silicon AS (Norway)/REC Silicon Inc. (US)


Address : 3322 Road "N" N.E., Moses Lake, WA 98837, United
States of America
Tel : +1 509 765 2106
Fax : +1 509 766 9325
Website : http://www.recgroup.com

The head office of REC Silicon AS is in Norway and the parent company of
REC Silicon Inc. based in the United States. REC has two plants producing
polysilicon and both plants are located in the United States. REC was the
third largest producer of polysilicon in 2005 with a production capacity of
5,300 tons. REC operates a plant in Moses Lake in the state of Washington
and in 2005 acquired a polysilicon plant in Butte in the state of Montana
from Advanced Silicon Materials.

REC has expanded its business vertically in the value chain from production
of polysilicon to wafer manufacturing, cell production, module assembly to
system integration. REC also has a shareholding in CSG Solar (production of
crystalline silicon on glass modules) based in Germany and EverQ
(production of cells using ribbon technology) based in the United States.

REC’s key strategic objective is to reduce production cost and increase


production capacity. This strategy involves gradually phasing out production
of electronic grade polysilicon (as its contracts with manufacturers in
semiconductor industry ends) and freeing production towards solar grade
polysilicon. This simplifies production, creates economies of scale and
subsequently reduces costs. Besides the Siemens reactors already installed
in existing facilities, REC will use fluidised bed reactors (FBR), which
produces polysilicon at lower production costs, at its new facilities.

Besides additional capacity and de-bottlenecking in existing plants, a new


6,500 TONS polysilicon plant in Moses Lake is currently under construction
at a cost of US$600 million. The new plant adjacent to its existing plant in
Moses Lake will use the FBR process to produce polysilicon. Production will
begin in 2008 and become fully operational by 2009. By 2010, capacity
would double to more than 13,000 tons from 5,300 tons in 2005.

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6.3.4 Tokuyama

Company : Tokuyama Corporation


Division : Electronic Materials Business, Silicon Business Division
Address : Shibuya Konno Bldg., 3-1, Shibuya 3-chome, Shibuya-
ku, Tokyo 150-8383, Japan
Tel : +81 3 3499 8937
Fax : +81 3 3499 8967
Website : http://www.tokuyama.co.jp/eng/

The main product of the Electronic Materials Business of Tokuyama is


polycrystalline silicon. Tokuyama’s plant is located in Shunan City in
Yamaguchi Prefecture, Japan, and the largest manufacturer of polysilicon in
Japan. The plant uses the Siemens reactor and production capacity in 2005
was 5,200 tons. During the year, Tokuyama supplied 25% of the production
to the cell manufacturers and 75% to the semi-conductor industry.

In February 2005, Tokuyama began construction of a pilot 200 tons plant to


produce polysilicon specifically for the PV industry. The process uses the
vapour liquid deposition (VLD) technology and has a higher efficiency over
technologies using the Siemens reactor. The process under evaluation and if
successful would come into commercial production in 2008.

A new polysilicon plant is currently under production at a cost of US$385


million. The new plant located in Shunan City would have a production
capacity of 3,000 tons when it begins operation in 2009. This would
increase capacity to 8,200 tons by 2009. However, Tokuyama would
continue to supply the main share of the additional production to the semi-
conductor industry and supply only 500 tons for the PV industry.

6.3.5 MEMC

Company : MEMC Electronic Materials, Inc.


Address : 501 Pearl Drive (City of O'Fallon), St.Peters, Missouri,
63376, United States of America
Tel : +1 636 474 5000
Fax : +1 636-474-5158
Website : http://www.memc.com

Monsanto Electronic Materials Company (MEMC) is a subsidiary of Monsanto


Chemical Company and headquartered in St. Peters in the state of Missouri,
United States. MEMC has a polysilicon plant located in Pasedena in the state
of Texas, United States, and another in Merano, Italy. Production capacity at

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its two plants totalled 3,800 tons in 2005 accounting for 12% of the world’s
production capacity for polysilicon. MEMC uses both the Siemens and FBR
technologies to produce polysilicon. Besides the silicon feedstock, MEMC
also produces and supplies silicon wafers for PV cell manufacturers.

Capacity of its Pasadena plant was 2,700 tons and its Merano plant 1,100
tons in 2005. Its Pasedena plant mainly supplies to markets in the United
States while its Merano plant supplies mainly to markets in Western Europe.
Besides the traditional “chunk” silicon, MEMC is the only company producing
granular polysilicon on an industrial scale. Granular polysilicon has cost and
productivity advantages over the traditional “chunk” polysilicon. Some cell
manufacturers prefer granular polysilicon over “chunk silicon” since it allows
production of PV cells using the string Ribbon technology. Currently REC and
Wacker have pilot plants for producing granular silicon.

MEMC plans to increase the production capacity of its Merano plant from
1,100 tons in 2005 to 1,600 tons by 2007. Its Pasadena plant would double
in capacity from 2,700 tons in 2005 to 6,400 tons by 2008. Thus, total
capacity would reach 8,000 tons by 2008 from 3,800 tons in 2005. MEMC
also plans to build a third plant but has yet to announce the location of the
plant, start of construction and the plant capacity. If the third plant were to
operate before the decade, then capacity would reach beyond the 8,000
tons.

6.3.6 Mitsubishi Materials Corporation

Company : Mitsubishi Materials Corporation


Division : Electronic Materials and Components Business
Address : 5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8117
Japan
Tel : +81 3 5252 5206
Fax : +81 3 5252 5272
Website : http://www.mmc.co.jp/english/index.html
http://www.mpsac.com/

Mitsubishi Materials Corporation (MMC) is part of Japan’s Mitsubishi group.


MMC has a polysilicon plant in Japan and another in the United States. The
production capacity at these two plants totalled 2,850 tons in 2005
accounting for 9% of the world’s production capacity of polysilicon. MMC
uses the Siemens reactor to produce polysilicon. Currently MMC supplies
about 90% of the production to semiconductor manufacturers and only 10%
to PV cell manufacturers.

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Its plant in Japan is in Yokkaichi and the United States in Mobile in the state
of Alabama and the combined plant capacity was 2,850 tons in 2005.
Capacity at the Yokkaichi plant was 1,600 tons and Mobile plant was 1,250
tons during the period. Sumitomo Mitsubishi Silicon Corporation (SUMCO)
manufactures mc-Si and sc-Si solar cells. Due to strong demand for
polysilicon from one of MMC’s major customers, SUMCO, capacity at the two
plants will increase from 2,850 tons in 2005 to 3,200 by 2008. The capacity
at the Yokkaichi plant will increase from 1,600 tons to 1,800 tons while the
Mobile plant will increase from 1,250 tons to 1,500 tons during the period.

6.4 Thin Film Manufacturers

6.4.1 United Solar Ovonic

Company : United Solar Ovonic LLC


Address : 3800 Lapeer Road, Auburn Hills, Michigan 48326, United
States of America
Tel : +1 248 475 0100
Fax : +1 248 364 0510
Website : http://www.uni-solar.com

United Solar Ovonic accounted for 22% of the world’s production of thin
films in 2005 establishing it as the world’s largest producer. The company
based in the US has it’s headquarter in Auburn Hills, Michigan, is a wholly
owned subsidiary of Energy Conversion Devices (ECD Ovonics) with over
500 employees. United Solar Ovonic manufactures triple junction a-Si thin
films with an annual production capacity of 28 MWp in 2005. The company
manufactures and markets flexible thin film, peel-and-stick solar laminates
that can be integrated with roofs and also supplies OEM laminates to major
roofing manufacturers worldwide.

United Solar plans to increase its annual production capacity to 300 MWp by
2010. Its second plant located in Auburn Hills with a production capacity of
30 MWp became operational in December 2006. The third plant located in
Greenville, Michigan, with an annual capacity of 60 MWp will begin
operations in 2007. The company expects to operate its fourth plant in
Greenville with a capacity of 60 MWp in 2008.

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6.4.2 Kaneka

Company : Kaneka Corporation


Division : Kaneka Silicon PV
Address : 3-2-4, Nakanoshima, Kita-ku, Osaka 530-8288, Japan
Tel : +81 6 6226 5315
Fax : +81 6 6226 5144
Website : http://www.pv.kaneka.co.jp

Kaneka initially produced a-Si thin films cells for the electronic consumer
market, which it has since discontinued. In 1999, the company began
manufacturing thin films cells for power generation with the construction of
a new plant in Toyooka City, Hyogo Prefecture, and Otsu City, Shiga
Prefecture. Currently Kaneka manufactures thin films for rooftop
applications for the Japanese market and has close association with major
residential property developers such as PanaHome Corporation. Other
products produce using thin films include see through windows and heater
integrated PV modules for melting snow.

Production of Kaneka’s thin films increased from 20 MWp in 2004 to 21


MWp in 2005. Production capacity at its plant in Japan increased from 24
MWp in 2005 to 30 MWp by December 2006. The company will increase
capacity further to 55 MWp by July 2007 and 70 MWp by 2008. Kaneka
began to develop the European market in 2002 and has a 10 MWp module
manufacturing plant in Olumouc, Czech Republic. The European plant
currently supplies thin film modules to the European markets and plans to
increase its capacity as its markets in Europe develops.

6.4.3 First Solar

Company : First Solar inc.


Address : 4050 E. Cotton Centre #6-68, Phoenix, Arizona 85040,
United States of America
Tel : +1 602 414 9300
Fax : +1 602 414 9400
Website : http://www.firstsolar.com

First Solar accounted for 20% of the world’s production of thin films and the
third world’s largest producer in 2005. Shipment from First Solar increased
from 6 MWp in 2004 to nearly 20 MWp in 2005. The company is a US based
company with it’s headquarter in Phoenix, Arizona. First Solar is one of the
few companies in the world manufacturing CdTe thin films and currently the
world’s largest producer of the thin film. The company currently operates a

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75 MWp plant in Perrysburg, Ohio, and a second plant in Frankfurt,
Germany, would begin operations expectedly in the second half of 2007.

In January 2007, First Solar announced it would expand production with a


new plant located in Malaysia at Kulim High Technology Park. Construction
of the new plant begins in 2007 and production expected to begin in the
second half of 2008 at an estimated cost of US$150 million. Capacity would
be fully ramped to 100 MWp when it begins operations, employing nearly
500 people. Lower operating cost, infrastructure and 15-year corporate tax
holiday were the main reasons attracting First Solar to invest in Malaysia.

6.4.4 Mitsubishi Heavy Industries

Company : Mitsubishi Heavy Industries Ltd


Division : Solar Cell Power System Group
Address : 3-1, Minatomirai 3-chome, Nishi-ku, Yokohama 220-
8401, Japan
Tel : +81 45224 9595
Fax : +81 45224 9264
Website : http://www.mhi.co.jp/power/e_a-si/index.html

Mitsubishi Heavy Industries (MHI) accounted for 12% of the world’s


production of thin films in 2005 producing 12 MWp during the period. MHI
manufactures a-Si thin film cells at its plant in Isahaya City in Nagasaki
Prefecture. In February 2007, MHI announced that it would begin
construction of a new plant at its Nagasaki shipyard. Production capacity
increased from 10 MWp in 2005 to 50 MWp in 2006 and may increase to
300 MWp by 2016 depending on world demand for thin films.

Since 2000, MHI and New Energy and Industrial Technology Development
Organization (NEDO) have been jointly developing a tandem-type thin film
cell to improve film efficiency to 12%. The cell consists of a layer of a-Si and
a microcrystalline-Si layer developed using high-speed thin film deposition
technology. The technology allows the cells to absorb a broader range of
light (from ultraviolet to infrared) thus improving the efficiency. Another
area is film cells that provide stable efficiency throughout the 20-25 year
lifetime of a module.

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6.5 Inverter Manufacturers

6.5.1 SMA

Company : SMA Technologie AG


Division : Solar Technology
Address : Hannoversche Strasse 1-5, 34266 Niestetal, Germany
Tel : +49 561 9522 0
Fax : +49 561 9522 100
Website : http://www2.sma.de/en/home/index.html
http://www.sma-america.com

SMA Technologies established in 1981 is a commercial spin off R&D


activities in computer-based controlled systems from Kassel University,
Germany. SMA is the world’s leading manufacturer of PV inverters
accounting for nearly 31% of the world’s PV inverter shipment in 2005. Its
main market is Europe accounting for 42% of the market and the US
accounting for 41% of the market. Sales reached €172 million in 2005
according to a statement from SMA. The company has its headquarter in
Niestetal, Germany, employing more than 1,000 people in Germany and its
subsidiaries worldwide including US, China, Korea, Italy, Spain and France.

Product development and manufacturing are at SMA’s plant in Niestetal.


SMA focuses on developing a range of inverters for rooftop mounted PV
installations. Marketed under the Sunny Boy range, these inverters are
transformerless and have a high efficiency of 98%. SMA also markets a
range of central inverters for 100 kWp to 1 MWp installations for large open
space systems or PV power stations.

SMA’s target market in Asia is Korea and China and has offices in these
countries. In the fourth quarter of 2006, after inspection and auditing of
SMA’s plant in Germany, Korea’s KEMCO certified SMA’s products for use in
Korea. In Korea, SMA will market inverters for installations in homes from
2.5 kWp upwards and central inverters up to 1 MWp. SMA has no immediate
plans to enter the Japanese market since there are already established
players in the country.

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6.5.2 Sharp

Company : Sharp Corporation


Division : Sharp Solar Solar Systems Group
Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara
Prefecture 639-2198, Japanu
Tel : +81 74563 3579
Fax : +81 74562 8253
Website : http://sharp-world.com/solar/index.html

Sharp accounted for nearly 19% of the world’s inverter market in 2005. In
Japan, Sharp accounted for 65% of the market since installations of Sharp’s
PV modules are often with its inverters and other brands of modules. Except
the US, Sharp’ does not promote and market its inverters in Europe since
European players dominate the market and well established.

In Japan, inverters are a mature market and the Japanese government no


long supports or funds R&D for PV inverters. To increase its market share
for inverters in the Japanese market, Sharp introduced a new line of
gadgetry Sunvista inverters for the residential market featuring colour LCD
screens with interactive functions. These include an energy savings tracker
enabling users to set targeted power consumption, real-time status display
of energy generated by the PV modules, home power consumption, power
purchased from the utility and sold back to the utility company.

Sharp jointly developed with Daihen Corporation central inverters intended


for commercial users and utilities in large-scale PV power-generating
systems from 100 kWp to 1 MWp. Design and manufacture of these large
inverters are only on an order basis and have an efficiency of 95%.

6.5.3 Fronius

Company : Fronius International GmbH


Division : Solar Electronics Division
Address : Günter Fronius Straß1, 4600 Wels, Austria
Tel : + 43 (0) 7242/241 0
Fax : +43 (0) 7242/241 0
Website : http://www.fronius.com
: http://www.fronius-usa.com/

Fronius has been involved in solar electronic devices since 1992 an


accounted for nearly 11% of the world’s inverter market in 2005. The
company is Austrian based with its head office is in Wels, Austria, and a US

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subsidiary company based in Brighton, Michigan, established in 2002.
Fronius also has a network of distributors across Europe, US and Asia-
Pacific. Fronius has nearly 1,700 people employed worldwide including 40 in
the US.

Its main markets are Europe accounting for 16% of the market and the US
accounting for 6% of the market in 2005. In Europe, the main market is
Germany and Spain becoming an increasingly important market while Korea
has longer-term potential.

Production capacity tripled from 70 MWp in 2003 to 200 MWp in 2005.


Fronius has one of the lightest inverters in the US market making its easier
for installers to mount on the wall. The IG inverter, for the European market
has a plug-n-play function between the inverter and controller. Inverters
have a standard 5-year warranty and extendable to 10 years for a premium.
Fronius provides a 20-year service guarantee for its central inverters to its
service partners.

6.5.4 Xantrex

Company : Xantrex Technology Inc.


Address : 8999 Nelson Way, Burnaby, British Columbia, Canada
V5A 4B5
Tel : +6 04 422 8595
Fax : +6 04 420 1591
Website : http://www.xantrex.com

Xantrex is a Canadian company with a head office in Vancouver, British


Columbia. Xantrex accounted for 5% of the world’s PV inverter market in
2005 and main markets are the US followed by Europe. The company leads
after SMA in the US accounting for 16% of the market share and 5% in the
European inverter market. In 2005, Xantrex opened a sales office in Beijing,
China, to expand its market in the country. Besides inverters, Xantrex also
manufactures other power related electronic products.

Major clients for Xantrex’s inverters include Schott Solar, BP Solar and
Kyocera. More than 100 MW of Xantrex’s inverters have been sold in the US
market by May 2006 and nearly 30 MW were sold in 2005. Xantrex’s plants
in the US manufacturing power related electronic products include Arlington,
Livermore, Elkhart and in Spain in Barcelona.

In March 2007, Xantrex announced that it had entered into an agreement


with China’s Shanghai Power Transmission & Distribution to form a joint
venture with an initial investment of US$10 million. The joint venture would

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operate a plant manufacturing PV and wind power electronic products
exclusively for the renewable energy market in China.

6.5.5 Kyocera

Company : Kyocera Corporation


Division : Solar Energy Division
Address : 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161,
Japan
Tel : +81 75604 3476
Fax : +81 75604 3475
Website : http://global.kyocera.com/prdct/solar/index.html
: http://www.kyocerasolar.com

Like Sharp, Kyocera also manufactures inverters besides PV cells and


modules. In 2005, Kyocera accounted for 4.6% of the world’s market for
inverters. However, Kyocera’s inverters are exclusively for the Japanese
market for installations with Kyocera’s PV modules. Kyocera accounts for
17% of the Japanese market for inverters. Main market for Kyocera’s
inverters in Japan is the residential market for 3-5 kWp module
installations. Other inverters manufactured for the Japanese market are for
10-100 kWp module installations for public and industrial facilities.

Kyocera’s R&D centre for manufacturing inverters is in Sakura City, Chiba


Prefecture, a short distance from Tokyo. Current development is producing
more compact and lighter weight inverters. In the last three years, cost of
producing inverters has been declining by 3%-5% annually.

6.5.6 Mastervolt

Company : Mastervolt International BV


Address : Snijdersbergweg 93, 1105AN - Amsterdam, Noord
Holland, The Netherlands
Tel : +31 20 3422100
Fax : ++31 20 6971006
Website : http://www.mastervolt.com

Founded in 1991, Mastervolt is Dutch company and manufactures a range of


power related electronic equipments besides PV inverters. In 2005, PV
inverters from Mastervolt accounted for 3.2% of the world market and its
sales concentrated in Europe. In Europe, its main markets are in Germany
and Spain. Mastervolt has nearly 120 employees in six countries including

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Germany, US, Spain, France, Barcelona and China besides its head office in
Amsterdam.

Mastervolt increased the production capacity of its inverters from 45 MW in


2005 to 100 MW by the end of 2006. This would position Mastervolt to ship
over 40,000 inverters annually. The company currently outsource
manufacturing of inverters to Nedap Power Supplies in the Netherlands and
the increase in capacity was from another plant in Poland managed by an
unnamed associate of Nedap Power Supplies. In the future, all production of
inverters will relocate from the Netherlands to Poland.

The company’s Soladin inverter models for homes are plug and play to the
controllers and fitted with a communications port for remote monitoring.
Mastervolt claims its Sumaster model performs at full power at high
temperatures of 40 degrees Celsius, due to force cooling and therefore
suited for installations in hot temperatures.

6.5.7 Sputnik

Company : Sputnik Engineering AG


Address : Höheweg 85, CH-2502 Biel, Switzerland
Tel : +41 32 346 56 00
Fax : +41 32 346 56 09
Website : http://www.solarmax.com

Sputnik Engineering based in Biel, Switzerland, specialises in grid-connected


PV inverters including string inverters for homes and central inverters for PV
power stations. Established in 1991, Sputnik accounted for 1.9% of the
world’s market for PV inverters in 2005 with sales concentrated in Europe.
The company has nearly 90 full time employees in Switzerland and offices in
Germany and Spain.

Sputnik is expecting to increase its sales of inverters to 180 MW by the end


of 2007. Germany would continue to be Sputnik’s main market in the
immediate future and expect sales in Spain to increase from 20 MW in 2006
to 60 MW by the end of 2007. During the period, it expects sales to increase
sales in Italy from 1 MW to 6 MW and in France 1 to 6 MW. By 2008,
Sputnik is expecting to increase sales further to 250 MW.

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6.6 Others

6.6.1 Turnkey Providers

Company : Spire Corporation


Address : One Patriot Park Bedford, Massachusetts 01730, United
States of America
Tel : +361 411 3838
Fax : +361 411 3839
Website : http://www.spiresolar.com

Spire has been involved in the PV industry since 1980 and a leading supplier
of a wide range equipments and machineries for manufacturing in PV
products besides providing turnkey projects. Based in Massachusetts, US,
Spire claims more than 150 customers across the world using technologies
developed by the company. Spire’s equipments, machineries and services
range from manufacturing silicon wafers, PV cells to modules from a
production line of 5 MWp to 100 MWp. Spire also provides its clients the
technology to manufacture building integrated modules. Areas of services
include initial training at its facility in Massachusetts and then at the client’s
plant. The company can also source supply for its clients, materials for
manufacturing including PV cells and encapsulation materials. Spire
provides training for its clients’ engineers and operators at its facility in
Massachusetts and at the client’s plant.

Company : GT Solar Inc


Address : 243 Daniel Webster Highway, Merrimack, New
Hampshire 03054, United States of America
Tel : +1 603 883 5200
Fax : +1 603 595 6993
Website : http://www.gtsolar.com

Based in Merrimack, US, GT Solar began its business in 1994. GT Solar


supplies equipments and machineries as well as provide turnkey projects in
manufacturing PV. Its turnkey projects, equipments and machineries include
manufacturing in wafers, cells and modules. In 2006, GT Solar entered into
production of polysilicon, supplying Siemens-type reactors. Other areas of
services include consultation and engineering services.

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Company : Energo Solar SA
Address : Rue del la Criox d’Or 19/A, CH-1024 Geneva,
Switzerland
Tel : +361 411 3838
Fax : +361 411 3839
Website : http://www.energosolar.com

EnergoSolar based in Geneva, Switzerland, specialises in equipments,


machineries and turnkey projects for production of a-Si thin film modules.
Besides, the company offers maintenance, service and spare parts and
technological upgrades. The company claims its technology can mass-
produce thin films at a production cost of €1 per Wp. Production capacity
begins at 6 MWp and expandable in 6 MWp increments. Furthermore, the
technology to produce thin films does not require high purity clean rooms
and uses less energy than production of crystalline cells. The company also
provides consulting services to acquire the necessary raw materials, factory
layout, materials handling, technical support, maintenance and training of
for the clients’ engineers and operators.

6.6.2 Plastic Films

Company : Etimex Technical Components GmbH


Division : Vistasolar
Address : Industriestrasse 3, D-89165 Dietenheim, Germany
Tel : +49 (0) 7347 670
Fax : +49 (0) 7347 67209
Website : http://www.etimex.de

Etimex Technical Components is a company based in Dietenheim, Germany.


The company specialises in plastics for food and pharmaceutical packaging
as well as plastic films for the PV industry. The company produces films,
under the VISTASOLAR brand, for encapsulating PV cells for manufacturing
modules. Since 1980, Etimex has been producing standard and premium
EVA (ethyl vinyl acetate) films for encapsulating cells. In 2004, Etimex
introduced TPU (thermoplastic polyurethane) films for encapsulating cells,
which has better toughness, flexibility, chemical resistance, adhesive
characteristics and optical properties.

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Company : Bridgestone Corporation
Address : 10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340,
Japan
Tel : +81 03 3567 0111
Fax : +81 03 3567 4615
Website : http://www.bridgestone.co.jp/english

Bridgestone is a Japanese company with its head office in Tokyo. The


company manufactures rubber-based products, high purity fine ceramics,
silicon wafers for the semiconductor industry and EVA films for PV modules.
Bridgestone currently manufactures EVA films at its Iwata plant and in
2006, its production capacity was 400-500 tons a month. Due to increasing
demand from module manufacturers, Bridgestone will increase production
capacity to 800-1,000 tons a month with an additional calendar machine.
Bridgestone invested nearly Yen 1.2 billion (US$10.2 million) and expect the
expanded production to begin by the end of 2007.

Company : Coveme SPA


Address : Via Emilia, 288, 40068 San Lazzaro di Savena/Bologna,
Italy
Tel : +86 769 8828 8636
Fax : +86 769 88280962
Website : http://www.coveme.com

Coveme is an Italian company based in Bologna (northern Italy) with more


than 30 years in manufacturing high performance films and papers. For the
PV industry, the company manufactures high performance laminates for
back-end protection of PV modules. Its production plant is in Gorzia
(northern Italy) and has five production lines to produce 4,000 tons of film,
paper, and laminates annually. The plant has the ability to produce
laminates from 12 to 500 microns.

6.6.3 PV Testers

Company : Spire Corporation


Address : One Patriot Park Bedford, Boston, Massachusetts 01730,
United States of America
Tel : +361 411 3838
Fax : +361 411 3839
Website : http://www.spiresolar.com

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Spire also supplies PV testers to its clients besides machineries, equipments
and providing turnkey projects for manufacturing PV products. For PV
modules, the company supplies equipments to tests the electrical
performance of modules up to 200 cm x 137 cm and up to 162 cm x 102
cm. Another is to test performance high voltage isolation to ensure that the
cell circuit do not leak electrical currents onto the exposed module surfaces.
Spire also supplies a portable array tester to measure and record the
current and voltage characteristics of the PV modules.

Company : Energy Equipment Testing Services Ltd


Address : Unit 2, Glan-y-Llyn Industrial Estate, Taffs Well, CF15
7JD, Wales, United Kingdom
Tel : +44 (0) 29 2082 0910
Fax : +44 (0) 29 2082 0911
Website : http://www.eets.co.uk

Energy Equipment Testing Services (EETS) based in Wales, United Kingdom,


is a provider of equipments and services for companies involved in
renewable energy including PV. Its module testers measure the current-
voltage characteristics of PV modules up to 1.5x1.5 metres and a computer-
based system, which acquires the performance data of the modules. The
company also supplies cell testers to test the electrical performance of PV
cells under simulated sunlight. Another is a portable array tester to measure
and record the current and voltage characteristics of the PV modules.

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7
7.. C
CAAS
SEES
STTU
UDDIIE
ESS

7.1 Case Study on Suntech

7.1.1 Background

Company : Suntech Power Holdings Co., Ltd.


Address : 17-6 ChangJiang South Road, New District, Wuxi,
Jiangsu 214028, China
Tel : +86 (510) 8531 5000
Fax : +86 (510) 8534 5049
Website : www.suntech-power.com

Suntech Power Holdings Co., Ltd, is a company established in China with its
head office in Wuxi, Jiangsu. Suntech is primarily involved in the design,
development, manufacture and marketing of PV cells and modules. Suntech
was officially set-up in September 2001 and began manufacturing
operations in September 2002. The company is currently the leading PV cell
and module manufacturer in China and among the global leaders. Besides
China, major markets for Suntech include Japan, Europe and the United
States. Suntech acquired a two-third equity interest in MSK Corporation of
Japan in Q3 2006 and expected to increase its interest further by the end of
2007.

Dr. Zhengrong Shi is the founder of Suntech and serves as the company’s
Chairman as well as its CEO. Dr Shi studied optical science and laser physics
in China before pursuing a PhD in electrical engineering from the University
of New South Wales (UNSW), Australia. After graduating, he led the Thin
Film Solar Cells Research at UNSW from 1992 to 1995 and later joined as
director of Pacific Solar Pty Ltd in 1995. Dr Shi (now an Australian citizen)
then returned to China in 2001 to establish Suntech in the country.

Funds from the Australian government for R&D in PV technology mostly


target Australian universities. However, government support to
commercialise and developed a PV industry in Australia is limited or in most
cases unavailable. Thus technologies developed by UNSW (well known for
its research and teaching facilities in PV) are often commercially acquired by
foreign companies. Dr Shi took the opportunity to start a PV business in
China when the Chinese government offered about US$6 million (€4.5
million) to setup a manufacturing operation in China. Furthermore, the

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Chinese government supports the PV industry in China through funding of
R&D activities. Another positive factor is China’s lower manufacturing and
other investment incentives.

Suntech’s strategic objectives since it began operations in 2002 have been


to consistently reduce production cost, ensure supply of silicon, expand
production capacity and acquired of MSK. These have been the key factors
leading to Suntech’s success and in the global PV industry. The following
diagram describes Suntech’s key objectives and their strategies.

Diagram 7.1.1. Suntech’s Strategic Objectives

7.1.2 Financial Background

In December 2005, Suntech listed on the New York Stock Exchange (NYSE)
through an initial public offering (IPO). Since listing, Suntech has shown
strong continuous growth and financial performance. Revenue grew by
165% from US$85.29 million in 2004 to US$226.00 million in 2005 while
net income grew by 55% from US$19.76 million to US$30.63 million.
Suntech maintained a reasonable gross profit between 29% and 30%
during the period.

A major challenge faced by Suntech has been the increasing prices and
global shortages of silicon in recent years. The shortage has limited Suntech
from realising its production potential, often forcing it to purchase silicon in
the spot market at prices higher than silicon purchased through multiyear

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supply agreements. Higher selling prices of silicon forced Suntech to
increase the selling prices of its cells and modules in recent years, which
threatens its margins. Competition from other manufacturers in China limits
how much Suntech can increase its prices. Furthermore, Suntech preferred
to pay more for its silicon in recent years than have idle capacity.

Table 7.1.2a. Average Selling Price of Suntech’s PV products*


Q1 Q3 Q1 Q3
2005 2005 2006 2006

PV cells (US$ per Wp) 2.63 3.10 3.05 3.34

PV modules (US$ per Wp) 3.29 3.34 3.65 3.86


Source: Suntech’s financial reports; Note:*Prices from MSK not included in the average
selling price

Suntech’s financial performance remained strong in each quarter from Q1


2006 to Q3 2006. Revenue increased by 81.3% from US$89.89 million in
Q1 2006 to US$162.97 million in Q3 2006. However, net income increased
at a slower pace of growth by 48.7% from US$19.32 million to US$28.73
million mainly from an increased in operating expenses and rise in cost of
silicon though it had increased the selling price of PV cells and modules.
Consequently, gross profits declined from 30.1% in Q1 2006 to 22.8% in Q3
2006. According to Suntech’s Q3 2006 financial report, 26.8% of its revenue
was from sales of PV cells, 72.7% from modules and 0.5% from system
integration services. Suntech’s expects its Q4 2006 revenue to be between
US$166 million and US$170 million.

Table 7.1.2b. Suntech’s Financial Performance (US$ million)*


Q1 Q2 Q3
2004 2005 2006 2006 2006

Revenue (US$) 85.29 226.00 89.89 128.15 162.97

Gross profit (US$) 25.11 68.56 27.05 36.12 37.23

Gross profit 29.4% 30.3% 30.1% 28.2% 22.8%

Operating income (US$) 20.01 42.66 20.06 28.19 25.25

Net income 19.76 30.63 19.32 26.54 28.73


Source: Suntech’s financial reports; *Financial results from MSK not included.

7.1.3 Management and Organisation

As Suntech’s Chairman and CEO, Dr Shi decides on the company’s business


directions as well as leading and overseeing the company. Mr Graham Artes
joined Suntech as its Chief Operating Officer (COO) in September 2005 and

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responsible for managing the day-to-day operations of the company. Mr
Artes brings to Suntech 30 years of international experience in
manufacturing and sales. Mr Weiguo Zhang is serves as the Director as well
the Vice General Manager and has years of experience in investments. Dr
Stuart Wenham joined in July 2005 as the Chief Technical Officer (CTO) and
was formerly the co-director of research at Pacific Solar in Australia.

The management of Suntech places a high level of importance on R&D to


advance Suntech’s business growth. The board directors include Dr Shi, Dr
Wenham and Dr Jiangjia Ji who all have considerable R&D experience in PV
technologies. Besides, Dr Tihu Wang joined in April 2006 as the Vice-
General Manager for R&D bringing 23 years experience leading and
conducting research in silicon materials. Mr Yichuan Wan joined in
December 2002 as the Manager for PV Cell Research and Development
bringing his experience in developing and manufacturing PV products. Mr
Guangchun Zan joined in November 2005 as the Deputy Research Director
of R&D and has considerable experience in high-efficiency solar cell designs.
Mr Zan was previously with the Centre for Photovoltaic Engineering and
School of Photovoltaic Engineering at UNSW.

The workforce in Suntech are involved in R&D, manufacturing, business


development, sales, purchasing and back-end operations including finance,
administration and information technology (IT). The workforce in China
grew by six-fold in a span of three years from nearly 250 in 2003 to nearly
1,400 in 2005. The global workforce reached 2,200 in 2006 including those
in China, Japan (230 employees in its subsidiary company MSK), United
States and Europe and expects the workforce to increase to nearly 3,000 by
2007. Suntech will employ 200 new employees at its new manufacturing
and R&D facility in Caohejing Hi-tech Park, Shanghai, once it begins
operations in 2008.

7.1.4 Technology Developments

In 2006, Suntech had about 60 employees involved in R&D at its R&D


centre in Wuxi, including those recruited abroad. Half of the employees at
the R&D centre specialise in their own fields of R&D in PV technologies.
These areas of involvement by Suntech’s researchers include R&D in silicon
materials, solar cell device physics, processing technologies and design of
advanced PV manufacturing equipments. Researchers at MSK’s R&D facility
in Japan bring their expertise developing building integrated PV modules
such as PV roof tiles and architectural glass windows.

Suntech manufactures a range of mc-Si and sc-Si PV cells and modules for
grid and off-grid applications used in the residential, commercial, industrial

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and public utility sectors. One of Suntech’s key business objectives is to be
the “lowest cost per watt” provider of PV products in the industry. The
management of Suntech is in the opinion that the long-term growth of the
industry and its business would have to depend less on government
incentives. Thus, prices of its PV products would have to decline to create
demand and stimulate business growth.

To achieve this, Suntech would have to reduce the manufacturing cost of its
PV cells and modules through improved technologies. Suntech allocated
nearly US$20 million in 2006-2007 for R&D and exploring new technologies.
Of the amount, US$10 million were for R&D in increasing the conversion
efficiency of its PV cells.

By mid-2006, Suntech held seven patents and another 16 pending


applications in China. Besides its R&D centre in Wuxi, Suntech (led by Dr
Wenham) has a technical collaboration agreement with UNSW’s Centre of
Excellence for Advanced Silicon Photovoltaic and Photonics. The agreement
includes a US$1.2 million contribution to the Centre to fund R&D to develop
technologies to increase the conversion efficiency of PV cells. Furthermore,
Suntech expects to establish a new manufacturing and R&D facility
(estimated to cost US$60 million) at the Caohejing Hi-Tech Park in Shanghai
by early 2008.

Suntech’s acquisition of MSK provides opportunities for both companies to


exchange and receive new technologies from the other. MSK would receive
from Suntech technical support and technologies for thinner silicon wafers
and higher conversion efficiency for its PV cells. MSK strengths in BIPV in
Japan provide opportunities for Suntech to provide value-added system
integration services in China. Furthermore, MSK’s product development in
building integrated PV modules (e.g. PV roof tiles and architectural glass
windows) provides value-added solutions to Suntech’s customers.

Silicon feedstock cost about 70% of the manufacturing costs of Suntech’s


modules. Through R&D, Suntech is shifting productions towards thinner
wafers and improving the conversion efficiency rates of its PV cells are the
two key strategies implemented to reduce the manufacturing cost. By Q1
2006, Suntech shifted production towards 210-micron wafers and
developing the capabilities to utilise wafers with a thickness of 180-micron.
Suntech has also made advances in R&D to utilise wafers with a thickness of
150-microns.

In Q4 2006, Suntech announced it would adopt the “semiconductor finger


technology” which it co-developed with UNSW. The technology overcomes

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the limitation of the standard screen painting process used in the industry
to produce PV cells.

„ The technology involves using heavily doped semiconductor strips


built into the cell surface and therefore collects electrical charges
more effectively.

„ The technology also reduces the number of metal contact strips on


the cell surface therefore reducing shading from the sun increasing
the cells ability to absorb more sunlight.

This allowed Suntech to increase the conversion efficiency of its solar grade
mono-crystalline silicon cells by as much as 18% compared to the industry’s
14%-15% and targets to achieve 20% conversion efficiency by 2008. Even
with lower grade silicon wafers, the technology has the longer-term
potential to increase the conversion efficiency up to 17%.5 This enables
Suntech to utilise lower grade silicon wafers (that otherwise would be
treated as rejects) and reduce the manufacturing cost of its PV cells (per
watt peak).

7.1.5 Business Developments

Suntech purchases silicon wafers from its suppliers to manufacture its PV


cells. The company’s production of PV cells doubled from 67.7 MWp in 2005
to an estimated 134.9 MWp in 2006. In 2005, nearly 74% of Suntech’s cell
production was for its in-house manufacturing of modules while 26% sold to
other module manufacturers. In 2006, that Suntech consumed an estimated
85% of its cell production for its module while 15% sold to other module
manufacturers. By 2006, Suntech increased the quantity and proportion of
its cell production for its module manufacturing to meet increasing orders
for its modules from its overseas customers.

Suntech has been increasing its cell production and capacity annually since
it began operations in 2002. However, its share of the production and
capacity in China began to show a decline in 2005 brought about by other
manufacturers in China increasing their cell production and capacity. In the
immediate term, Suntech expects to increase its production capacity to 420
MWp and production to 280 MWp by the end of 2007. According to Dr Shi,
Suntech may increase its cells production capacity to 1,000 MWp by 2010
depending on the growth of the global PV market.

5
Suntech increased the conversion efficiency of its poly-silicon cells from 15.2% to 15.4% by the Q1. 2006

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Table 7.1.5a. Suntech’s PV Cell Production in China
2002 2003 2004 2005 2006e

Capacity (MWp) 15 30.0 60.0 150.0 270.0

Share of capacity in China 62.5% 66.7% 69.0% 41.7% 19.9%

Production (MWp) 0.9 6.4 29.5 67.7 134.9

Share of production in China 18.2% 46.0% 59.0% 43.4% 19.5%


Source: ENF

Suntech has been increasing its PV module production and capacity annually
since 2002 to keep up with demand from its overseas clients. One of
Suntech’s major clients is Solarworld, which it supplies as an OEM and in
2006 agreed to supply 24 MWp of PV modules. Like its cell production
capacity, Suntech may increase its module production capacity to 1,000
MWp by 2010.

Table 7.1.5b. Suntech’s PV Module Production in China


2002 2003 2004 2005 2006e

Capacity (MWp) 15.0 30.0 60.0 150.0 470.0

Share of capacity in China 18.5% 13.5% 11.5% 10.0% 11.8%

Production (MWp) 0.8 1.5 25.9 49.8 114.1

Share of production in China 3.9% 3.3% 14.4% 11.3% 9.4%


Source: ENF

Suntech exports nearly 80% of its production while the remaining 20% is
for its domestic market. However, the company expects the domestic
market will eventually account for 50% of its production as China embarks
to increase usage of renewable energy to account for 15% of the country’s
electricity generating capacity by 2020. Suntech major export markets are
in Europe, US and Japan. Major markets in Europe are Germany and Spain
and to a lesser extent Italy. Suntech, as with most export oriented
manufacturing businesses in China, has the advantage of lower
manufacturing and operating cost to compete in the international markets.

Suntech markets its PV products outside of China through distributors while


in China the company supplies its products namely PV cells to module
manufacturers and directly to the end-users. Its sales and marketing
strategy is to established a diversified geographical and customer mix
including end market applications.

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„ Besides, depending on distributors, Suntech recently established
Suntech America and Suntech Europe as part of its long-term
strategy to market its PV cells and modules.

„ Suntech’s acquisition of MSK provides the company a platform to


enter the Japanese market and MSK’s offices in Europe and the US
synergises with Suntech’s overseas market expansion strategy.

„ Suntech’s business relationship with SolarWorld as an OEM provides


Suntech the opportunity to indirectly enter other markets in
Europe, which its does not have a strong presence such as France
and Greece.

Suntech is establishing new offices outside of Wuxi (its head office) to


increase its market presence in China. In recent years, Suntech has
established sales offices in Shenzhen and Shanghai.

Suntech’s acquisition of MSK provided the company a platform to enter the


Japanese market and synergise with MSK’s already established presence in
the US and European markets. Suntech’s acquisition also enables it to
acquire MSK’s expertise in systems integration and technologies in building
integrated products, which the company considers as value added with high
profit margins. The acquisition would also result in some of MSK’s
manufacturing activities and backend operations relocated to China offering
MSK the opportunity to lower its manufacturing and operating cost.

7.1.6 Ensuring Supply of Silicon Wafers

Suntech faced a major challenge in last 2-3 years on supplies of silicon


feedstock for its PV cells i.e. constrain in supplies and rising prices. On the
technology front, its strategy is to develop technologies using thinner silicon
wafers and improving the conversion efficiencies of its PV cells. On the
supply side, its strategy is to enter medium to long-term agreements with
its suppliers for wafers at fixed-prices and below spot prices. These
agreements ensure security in supply and reduce its manufacturing cost for
PV cells. Suntech expects 70% if not all of its projected needs for silicon
wafers in 2007 would be from such agreements.

„ In July 2006, Suntech entered into a 10-year binding agreement


with MEMC Electronic Materials, Inc., to purchase silicon wafers.
The purchases valued between US$5 billion and US$6 billion allows
Suntech to purchase wafers at pre-determined prices. As part of
the agreement, Suntech would provide interest free loans or
security deposits to MEMC to expand its production capacity to

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meet Suntech’s supply requirements. MEMC would also receive
warrants to purchase a 4.9% equity stake in Suntech.

„ In October 2006, Suntech announced it had into a 5-year


agreement with Renewable Energy Corporation (REC) of Norway to
purchase silicon wafers. The purchased valued at US$180 million
allows Suntech to purchase wafers at a predetermined fixed price
below the spot market prices. Furthermore, prices negotiated with
REC would decrease in the subsequent years during the duration of
the agreement. The agreement structured on “take or pay contract”
would require Suntech to purchase specified quantities of silicon
wafers and pay REC if it does not take delivery.

„ In November 2005, Suntech entered into a 5-year agreement to


purchase solar grade silicon wafers from Shanghai Cotonsec Solar
Technology Co., Ltd. The purchase valued between US$475 million
and $580 million would allow Suntech to purchase silicon wafer at a
predetermined price subjected to annual review and increase its
purchase volume during the agreement period.

„ In December 2006, Suntech announced an agreement to purchase


silicon wafers over a five-year period from Sunlight Group, Inc.
Sunlight based in the United States has silicon wafer manufacturing
facilities in China and Japan. Purchases estimated to worth between
US$366 million and US$670 million during the five-year period
allows Suntech to increase its purchases at fixed prices each year
with the prices reviewed annually.

„ Suntech also has a 10-year agreement for Deutsche Solar AG of


Germany to supply fixed quantities of silicon wafer monthly
beginning in January 2006. It also has a 10-year cooperation
agreement with LDK Hi-tech Co., Ltd. of China beginning with
supply of 30 MWp of silicon wafers in 2006 and 100 MWp in 2007.

„ Suntech entered into an agreement with Luoyang Silicon Co., Ltd.,


of China to establish a joint venture facility with a capacity of 30
MWp to produce PV cells and modules. The new facility located in
Luoyang, China, and expected to be operational in 2007. As part of
the joint venture agreement, Luoyang Silicon would supply to the
new facility on an exclusive basis silicon wafers for manufacturing
the PV cells.

„ Suntech entered into a 10-year agreement with China’s LDK Hi-


Tech to supply Suntech 30 MWp of silicon wafers in 2006 and 100
MWp in 2007.

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Besides improving long-term supplies of silicon wafers, Dr Shi expects
immediate cost savings in 2007 with purchases of the wafers below the spot
market prices. This would contribute towards improvements in the profit
margins. Having long-term supply contracts augurs well for Suntech with its
aggressive strategy to increase production capacity from 270 MWp in 2006
to 660-720 MWp by 2007.

7.2 Short Case Study on Yingli Solar

7.2.1 Background

Company : Baoding Tian Wei Yingli New Energy Resources Co., Ltd.
Address : No. 3055 Fuxing Middle Road, Baoding National New
High-Tech Industrial Development Zone, Baoding,
Heibei, China
Tel : +86 312 8929 700
Fax : +86 312 315 1881
Website : http://www.yinglisolar.com

Baoding Tien Wei Yingli New Energy Resources (Yingli Solar) is another
major manufacturer of PV products in China. The company’s headquarter is
located at the Baoding National New High-Tech Industrial Development Zone
in Baoding, Heibei Province. The company began in June 2002 when it
initially assembled modules and has since integrated across value chain
manufacturing mc-Si silicon ingots, wafers and cells for production of its PV
modules.

The General Manager and founder of Yingli Solar is Mr Liangsheng Miao who
has a master’s degree in business administration from Beijing University.
Unlike Dr Shi from Suntech, Mr Miao had only 2-3 years in the PV industry
before establishing Yingli Solar in 2002. Yingli Solar’s success in recent
years is a result of Mr Miao’s entrepreneurial spirit rather technical
qualification. Mr. Miao is also the Executive Director of China’s Photovoltaic
Committee of the China Renewable Energies Association.

Tibet Tianwei Yingli New Energy Resources (Tibet Yingli) is a subsidiary


company of Yingli Solar. Tibet Yingli is involved in assembling and marketing
PV modules in the Tibetan region as part of China’s Renewable Energy
Development Programme. The subsidiary’s plant is at the Dazi Industrial
Garden in Tibet and has production capacity of 3 MWp. Another subsidiary is
Chengdu Yingli with its operations at Xindu Industrial Garden, Chengdu.
Besides marketing Yingli Solar’s range of PV modules, Chengdu Yingli is also

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involved in installation and systems integration for grid and off-grid PV
systems.

7.2.2 Management and Organisation

Mr Mao, as an entrepreneur, is the driver of Yingli Solar’s business setting


the company’s directions and strategies. Mr. Xiangdong Wang is the Vice
President responsible for plant operations while Mr Zhiheng Zhao is the Vice
President responsible for business operations. Dr Seok Jin Lee (a Korean
National) brings his experience in PV as Yingli Solar’s Chief Operating
Officer. Prior to joining Yingli Solar, Dr Lee worked with Hyundai Heavy
Industries as the General Manager for the company’s solar business. Dr Lee
has a master’s and doctorate degree in electrical engineering from Yonsei
University, Korea.

Dr Guoxiao Yao brings his technical expertise in PV as the Yingli Solar’s


Chief Technical Officer. Dr Yao graduated with a master’s degree in solar
engineering from the European Solar Engineering School, Dalama
University, in Sweden. Dr Yao also has a doctorate from his studies on PV
engineering from the University of New South Wales, Australia, which is
renowned for its research and developing new technologies in PV.

Yingli Solar’s employees have been increasing since it began operations. The
number of employees increased from 300 in 2003 to more than 1,000 by
the end of 2006. Nearly 85% of the employees are involved in
manufacturing wafers, cells and modules. Production of modules, which
requires greater use of labour than manufacturing wafers and cells, account
for nearly half of the employees involved in manufacturing.

7.2.3 Developments

Yingli Solar’s business strategy is to integrate manufacturing across the


value chain from manufacturing silicon ingots to PV cells for production of
its modules. Yingli plans to increase the production capacity for each of the
processes in the value chain (ingots, wafers, cells and modules) to 600 MWp
by the end of 2008. Suntech’s business strategy, on the other hand, focuses
increasing capacity and production of cells and modules preferring to
purchase wafers from suppliers.

The advantage of Yingli Solar’s integration is it would only need to focus


sourcing for silicon and not subjected to interruption in supply of other
silicon materials across the value chain. Another advantage is it would be in
a position to sell any excess production in the value chain to other
manufacturers. Integrating across the value chain and increasing the

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production capacity to 600 MWp also provides Yingli Solar the economies of
scale and in a position to reduce its production cost.

Yingli Solar’s production of PV cells quadrupled from 13 MWp in 2005 to an


estimated 60 MWp by 2006. All the cells produced at its plant were for
manufacturing of Yingli Solar’s modules. Consequently, production capacity
also increased from 60 MWp in 2005 to 90 MWp by 2006.

Table 7.2.5a. Yingli’s PV Cell Production in China


2003 2004 2005 2006e

Capacity (MWp) 6 10 60 90

Share of capacity in China 13.3% 11.5% 16.7% 6.6%

Production (MWp) - 4.7 13.0 60.0

Share of production in China 0.0% 9.4% 8.3% 8.7%


Source: ENF

Production of modules increased from 13 MWp in 2005 to an estimated 100


MWp by 2006 due to increasing demand from exports. In 2006, Yingli Solar
had to source cells from other cell manufacturers since its cell plant was
unable to produce sufficient quantities due to the global silicon shortage.

Table 7.2.5b. Yingli’s PV Module Production in China


2003 2004 2005 2006e

Capacity (MWp) 50 50 100 200

Share of capacity in China 22.4% 9.5% 6.7% 5.3%

Production (MWp) - 5 13 100

Share of production in China 0.0% 2.6% 2.9% 8.2%


Source: ENF

The company intends to establish a Solar Grade Silicon Crystalline Wafer


Research Centre and a Professional Training Centre. The purpose of the
Research Centre is to develop new technologies in PV whereas the Training
Centre would develop the technical skills of its employees. To keep abreast
with new technologies and its developments, Yingli Solar will continue to
collaborate with other research institutions in China and overseas such as
the University of New South Wales in Australia.

Yingli Solar exports nearly 90% of its production of modules and current
main market is Germany and Spain but yet to make any significant entry for

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its modules into the US market. Exports are through its European
distributors usually through a supply agreement under negotiated prices.
For example, Maaß Regenerative Energien has a supply agreement with
Yingli Solar to receive over 160 MWp of modules from 2006 to 2010.
Another is Phönix Sonnenstrom purchasing 6 MWp in 2006 and 143 MWp by
2010. Yingli sells its production outside the supply agreement to potential
buyers at market prices.

A significant milestone for Yingli Solar is its expected listing on the stock
exchange through a public listing. Initially intending to list on NASDAQ in
the US, the company eventually decided to list on the New York Stock
Exchange. One of the major reasons for Yingli Solar’s listing is to obtain
capital for its plant expansion. Expectations are the company would list on
the New York Stock Exchange sometime in 2007.

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8.1 Future Challenges


Government support for PV. The market for PV will continue to depend
on government support through financial incentives or subsidies until end-
user prices of PV are sufficiently attractive to create mass end-user
demand. Reduced government support and changes in government policies
not in favour towards PV would dampen demand. Delays in implementing
renewable energy programmes for PV would stall demand for PV.

There is already build-up in production capacity across the value chain and
further capacity would come online in 2007-2010. Reduction in government
support for renewable energy programmes would create excess or idle
capacity in the value chain.

Overcapacity across the value chain. As new players enter the PV


industry and existing players expand their production capacity across the
value chain, there is possibility of overcapacity in 2007-2010 if capacity
increases too aggressively. Prices of key materials and components such as
polysilicon, wafers, cells, thin films and modules could decline drastically
before manufacturers could recover their cost of investments. Silicon
manufacturers experienced such a scenario during the burst of the
technology bubble in 2001. In such a scenario, consolidation of the PV
industry would occur sooner than expected.

Barriers to entry and business risks. Barriers to entry decreases as the


value chain moves from upstream activities to downstream activities.
Production of polysilicon has the highest barrier to entry and therefore this
segment of the value chain is characterised by fewer players and high
investment cost. As activities moves downstream, the barriers to entry
decreases and the segment of the value chain involved in PV installation has
the lowest barrier to entry with the highest number of players and lowest
investment costs.

„ Investment cost is highest for production of polysilicon and


therefore large-scale production is necessary to achieve economies
of scale. The risk from reduced government support is highest with
the silicon manufacturers because of its very high investment costs
and any financial losses would be the most severe in this segment.

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„ Wafer manufacturers are at risk in securing silicon supply especially
smaller manufacturers who are unable to enter into long-term
supply agreements with the silicon manufacturers. Another risk is
the market moving away from silicon based PV resulting in idle
machineries.

„ Cell manufacturers are at risk in securing supplies for wafers


especially in times of silicon shortages resulting in idle capacity and
inability to supply cells to the module manufacturers. Similar to the
wafer manufacturers, a market moving away from silicon based PV
would result in idle machineries.

„ Modules manufacturers face risk of overcapacity from aggressive


industry expansion in production capacity and new players entering
the industry. A crowded market and slowing demand for PV would
result in pricing pressures. Aggressive expansion into the global
market from manufacturers in China is an overcapacity threat.

Reducing the cost of PV. The challenge for the PV industry is to reduce
the cost of PV systems to the level that it no longer requires government
support. The system price has to be in the range of at least US$3 per Wp to
achieve a significant market and US$1 per Wp to create a mass market.

Current cost of PV system ranges from US$7 to US$10 per Wp and would
to decline beginning in 2008 to US$3.50 per Wp earliest by 2015 according
to some sources. Thus, at least from 2007 to 2015, PV systems would have
to depend on government support to sustain the PV industry and market.

The potential may lie with thin films from improvements in technology to
mass produce thin films cheaply. The US Department of Energy cost goal for
thin films is about US$0.33 per Wp based on a module efficiency goal of
15%. At such price, it is possible for a PV system to cost below US$3 per
Wp. Though possible, it may not occur by the end of the decade until
further improvements in thin film technology.

8.2 Future Directions


Overall scenario. Demand for PV will continue to grow but a slower rate of
growth averaging 20% annually from 2007 to 2010. Based on this
projection, demand will grow from 2,400 MWp in 2006 to 5,000 MWp by
2010. Government renewable energy programmes especially in Germany,
Japan, United States, Spain, Korea and China would drive demand for PV in
2007-2010.

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Shortage of silicon will continue until 2008 when new polysilicon plants
begin operations. The polysilicon industry will also see new players entering
the industry attracted by high profit margins created by the shortages. The
trend within the polysilicon industry is to enter into multiyear supply
agreements requiring initial payments from their customers. This puts
smaller manufacturers purchasing smaller quantities of polysilicon at a
disadvantage since they are often unable to commit to multiyear supply
agreements.

Leading manufacturers will continue to reduce the cost of producing their PV


cells. These include improving cell efficiency among c-Si and thin film cell
manufacturers. Since polysilicon accounts for 40%-50% of a module’s
manufacturing cost, crystalline silicon cell manufacturers will continue to
develop technologies to produce thinner silicon wafers and reduce wastage
from sawing of ingots.

Shortages and increasing prices of polysilicon in recent years have driven


demand for thin film modules. The European Photovoltaic Industry
Association predicts demand for thin film modules would increase from 100
MWp in 2005 to 1,000 MWp by 2010 increasing its share of the module
market from 6% in 2005 to 20% by 2010. Many new thin film
manufacturers are start-up companies attracting venture capitalists in
potential thin-film companies.

China in the global market for modules. China is becoming a leader in


the global PV industry and market with increasing production capacity
across the value chain. Chinese manufacturers have been increasing their
production capacity for c-Si modules from 1,500 MWp in 2005 to 2,800
MWp in 2006. By 2007, China would increase its module production capacity
to nearly 4,000 MWp with further increases expected by 2010.

Development of China’s PV industry since 2004 has less to do from


demands from the domestic market but more from its export markets.
China’s advantage is it low labour cost to manufacture modules compared to
the United States, Japan and Europe. China exports more than 90% of the
modules produced in the country and exports would continue to drive the
industry in China and influence the market for PV modules.

Consolidation of the PV industry. A consolidation within the industry is


already beginning to take place. Major companies previously involved in
downstream activities in module and cell manufacturing are gradually
moving upstream into wafer manufacturing and some have invested into
silicon production. Consolidation is most likely to occur down the value chain
or in downstream activities due to the lower barriers to entry.

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With the industry consolidation and increasing production capacity, the
industry is gradually developing into a mass production industry improving
the economies of scale. With economies of scale, manufacturers will be able
to use their cost advantage to drive prices downwards generating greater
end-user interest and purchase for PV. With price decreases from large-
scale production, PV modules will gradually come into a commodity product.

Smaller companies without the financial resources to integrate across the


value chain will eventually merge with other companies or acquired by the
larger companies. However, industry consolidation would also improve the
competitive position of some of the smaller companies as they re-orientate
their business strategies and enter into niche markets.

Future technologies. The technology for c-Si cells and modules is a


maturing technology and industry predictions that an efficiency of 25% is
the maximum achievable with c-Si technology. Furthermore, applications for
c-Si technology are limited to flat panels. Though c-Si modules will continue
to dominate the market by 2010, its share of the PV market will gradually
erode due to competition from thin films.

Better materials, developments in thin-film transistor technology and


improved production technologies for thin-films are becoming a reality. Mass
production of thin films and improvements in efficiency that were once
technological barriers are removing gradually. The advantage of thin films is
its potential to produce PV modules at costs much lower than c-Si cell
modules.

Thin films have vast applications not possible with flat panel c-Si modules.
Thin films provide opportunities for applications in building integrated
modules including roof tiles, windows and facades. Thin films can be
deposited on many types of surfaces and therefore has potential in flexible
plastics, glass and coatings on building materials to generate electricity.

CIGS thin films are generating interest with improvements in efficiency on


par with mc-Si modules under laboratory conditions and their potential for
mass production. Japanese companies are developing a-Si/sc-Si hybrid cells
and Sharp announced in January 2007 that it had developed the technology
to mass-produce a-Si/sc-Si thin films with an efficiency of 13%.

8.3 Opportunities
Business potential. Projected demand for PV would grow at average of
20% annually in 2007-2010. Though at slower pace growth, the PV market
still represents enormous potential for manufacturers. The following table

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summarises the market value of the various segments of the value chain
over a four-year period in 2007-2010.

Table 8.3a. Estimated Market Value for PV Industry in 2007-2010

Market Value in
Product Total Demand in Unit Cost 2007-2010
2007-2010 (US$) (US$ billion)

Modules 15,500 MWp 3.50 per Wp 54.3

Silicon cells 13,000 MWp 2.70 per Wp 35.1

Wafers 13,000 MWp 1.40 per Wp 18.2

Polysilicon 140,000 tons 47.00 per kg 6.6

Thin films 2,400 MWp 2.00 per Wp 4.8

Inverters 17,500 MWp 0.50 per Wp 8.8

Opportunities also exist for suppliers of materials for manufacturing PV


modules. Total value estimated on the value of these materials during the
four-year period in 2007-2010 is US$6.2 billion. The following table
describes breakdown of the value of the materials.

Table 8.3b. Market Value of Materials


for PV Modules in 2007-2010
Materials/ Market Value
Components (US$ million)
Glass 1,364
EVA 1,153
Frame 1,073
Junction box 998
Tedlar 918
Interconnect 477
Adhesive 217
Total 6,200

Opportunities for PV modules. Significant markets for PV and PV


modules in 2007-2010 are Western Europe (namely Germany and Spain),
Japan, US, Korea and China, driven by government supported renewable
energy programmes. Japan is a relatively closed market for exporters while
China is a net exporter of PV and in a position to compete on price with

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manufacturers intending to export modules into China. The European Union
and the US are net importers of PV modules and are potential markets for
exporters.

Opportunities for c-Si cells. China would continue to be a net importer of


c-Si cells in 2007-2010 as the country expands its production capacity for
PV modules. Even with the increase in China’s silicon production capacity,
production would not be able to meet China’s demand for c-Si cells,

The US would continue to be a net importer of c-Si cells since US companies


currently focus on developing thin film technologies. However, c-Si modules
would continue to dominate the market in the US at least until 2010. The
federal and various state renewable energy programmes for PV is creating
demand for c-Si cells from module manufacturers in the US.

Opportunities for polysilicon. Continuing demand for PV in 2007-2010,


though at slower pace of 20% annually presents market and business
opportunities for polysilicon manufacturers to increase their production
capacity. The market during the four-year in 2007-2010 is estimated at
US$6.6 billion.

Opportunities for thin films. Price will continue to be an important


determinant for PV and thin films’ lower manufacturing cost offers
opportunities to market lower cost PV. Thin films offer opportunities for
applications in building integrated modules including roof tiles, windows and
facades. Thin films also have applications in flexible plastics, glass and
coatings on building materials to generate electricity.

Opportunities for PV inverters. Inverters have a lifespan of 5-10 years


while PV modules have a lifespan of 25-30 years. Currently the replacement
market for inverters account for 10% of the inverter production. Over the
longer term, the proportion of the replacement market would increase as
old inverters come to the end of their lifespan.

Inverters have gone beyond its basic function of converting current from DC
to AC and there is trend for electronic gadgetry and stylish designs in
inverters. Inverters are becoming more like consumer electronics and a
potential for manufacturers to develop consumer appeal for their products.

Opportunities to attract investments. Countries that can attract


investments through tax holidays on income; have an available and
educated workforce; offers lower investment cost on land and capital; low
labour cost; an established semiconductor industry; and a government with
a pro-business policy are potential countries to attract PV manufacturers to
invest in the country. Further attractions are countries with low energy cost

135
to the industries and strong physical infrastructure. Developing countries
such as the Czech Republic, Mexico and Poland have successfully attracted
foreign companies to invest offering similar incentives. First Solar’s plan to
establish a 100 MWp thin film manufacturing plant in Malaysia was also a
result of such attractions.

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References from reports

1. PV Status Report 2006, August 2006, European Commission, DG Joint


Research Centre
2. Polysilicon Supply, Demand & Implications for the PV Industry, 2006,
Prometheus Institute
3. Suncreen II, Investments Opportunities in Solar Power, July 2005, Credit
Lyonnaise

4. The Chinese Silicon Photovoltaic Industry and Market, 2006, Nicoletta Marigo,
Centre for Environmental Policy, Imperial College London
5. Pessimistic vs Policy Driven Market Scenarios towards 2010 in Europe and
Globally, December 2005, European Photovoltaic Industry Association
6. Solar Generation, September 2006, Greenpeace and European Photovoltaic
Industry Association
7. Photovoltaic in Germany, Market and Industry Development, 2006, Germany
Solar Industry Association
8. Future State of the PV Industry, 2006, M. Morgan, W Coleman, Y Yudi, S Yin
and C Casillas
9. Pessimistic vs Policy Driven Market Scenario toward 2010 in Europe and
Globally, December 2005, European Photovoltaic Industry Association
10. Solar Electricity in 2010, 2001, European Photovoltaic Industry Association
11. Solar Photovoltaic Market, Cost and Trends in the EU, September 2006, IEEJ
12. A Vision for Photovoltaic Technology, 2005, European Commission

13. US Solar Industry, Year in Review, 2006, Prometheus Institute


14. Making Affordable Thin Film Cells a Reality, 2006, Miasole
15. The Status and Outlook for the Photovoltaic Industry, 2006, BP Solar
16. Photovoltaic Energy Barometer, April 2006, Observ’ER
17. Chinese Solar Cell and Panel Manufacturer Market Survey, 2006, ENF
18. European Solar Cell and Panel Manufacturer Market Survey, 2006, ENF
19. Trend in Photovoltaic Applications, 2006, PVPS, International Energy Agency
20. PV Market in Japan, 2006/2007, RTS Corporation
21. US Solar Industry Year in Review, 2006, Solar Energy Industries Association

References from company websites

22. Sharp Solar - http://sharp-world.com/solar/index.html

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23. Kyocera - http://global.kyocera.com/prdct/solar/index.html
24. Sanyo - http://www.sanyo.com/industrial/solar/
25. Suntech - http://www.suntech-power.com
26. SolarWorld - http://www.solarworld.de
27. SOLON - http://www.solon-pv.com/english/index.html
28. Schott Solar - http://www.schott.com/photovoltaic/english/index.html
29. Isofoton - http://www.isofoton.com
30. BP Solar - http://www.bpsolar.com

31. Q-Cells - http://www.q-cells.com


32. Motech - http://www.motech.com.tw
33. Mitsubishi Electric - http://global.mitsubishielectric.com/bu/solar/index.html

34. Mitsubishi Heavy Industries - http://www.mhi.co.jp/power/e_a-si/index.html


35. Mitsubishi Materials Corporation - http://www.mmc.co.jp/english/index.html
36. Hemlock - http://www.hscpoly.com/

37. Wacker - http://www.wacker.com/cms/en/home/index.jsp


38. REC - http://www.recgroup.com
39. Tokuyama - http://www.tokuyama.co.jp/eng/

40. MEMC - http://www.memc.com


41. SMA – http://www2.sma.de/en/home/index.html
42. Fronius – http://www.fronius.com

43. Xantrex – http://www.xantrex.com


44. Mastervolt – http://www.mastervolt.com
45. Sputnik Engineering – http://www.solarmax.com
46. First Solar – http://www.firstsolar.com
47. Kaneka – http://www.pv.kaneka.co.jp
48. United Solar – http://www.uni-solar.com
49. Kyocera – http://www.global.kyocera.com/prdct/solar/index.html
50. GT Solar – http://www.gtsolar.com
51. Spire Corporation – http://www.spiresolar.com
52. EnergoSolar – http://www.energosolar.com
53. Etimex – http://www.etimex.com
54. Bridgestone – http://www.bridgestone.co.jp.english

55. Coveme – http://www.coveme.com


56. Energy Equipment Testing Services – http://www.eets.co.uk

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