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Encapsulation and Flexible Substrates

for Thin-Film Photovoltaics
Nano-231

Published October 2010

© NanoMarkets, LC

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Entire contents copyright NanoMarkets, LC. The information contained in this report is based on the
best information available to us, but accuracy and completeness cannot be guaranteed. NanoMarkets,
LC and its author(s) shall not stand liable for possible errors of fact or judgment. The information in
this report is for the exclusive use of representative purchasing companies and may be used only by
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Table of Contents
Executive Summary ......................................................................................................................... 1
E.1 Flexible PV Opens Up New Opportunities for Substrates and Encapsulation ............................ 1 Page | i
E.1.1 Why Flexible PV and Why Now? ............................................................................................... 1
E.1.2 Impact of Substrate Cost Changes: Emerging Alternative Materials ....................................... 2
E.1.3 Reducing Costs and Creating Value with New Encapsulation Technologies ............................ 3
E.2 Opportunities for Firms Supplying Encapsulants ..................................................................... 5
E.3 Opportunities for Firms Supplying Substrates ......................................................................... 5
E.4 Summary of Eight-Year Forecasts of Encapsulant and Substrate Materials for TFPV ................. 6

Chapter One: Introduction ............................................................................................................... 9

1.1 Background to this Report ..................................................................................................... 9
1.1.1 Encapsulation for Thin-Film PV ................................................................................................. 9
1.1.2 Substrates for Thin-Film PV..................................................................................................... 11
1.2 Objectives and Scope of this Report ..................................................................................... 12
1.3 Methodology of this Report ................................................................................................. 12
1.4 Plan of this Report ............................................................................................................... 13

Chapter Two: Encapsulation and Substrates for TFPV: Evolving Technologies ................................. 14
2.1 Current Substrate/Encapsulation Environment ..................................................................... 14
2.1.1 Rigid Thin-Film PV: Glass is King.............................................................................................. 15
2.1.2 Limits to Current Glass-Based Approaches ............................................................................. 15
2.1.3 New Directions for Glass Encapsulation/Substrates ............................................................... 16
2.2 Substrate Requirements for Flexible PV ................................................................................ 17
2.2.1 Flexible Substrate – Rigid Encapsulation ................................................................................ 17
2.3 Are the Days of Rigid Substrates and Encapsulation Over? .................................................... 18
2.4 Alternatives to Glass: Metal and Polymers........................................................................... 18
2.4.1 Polymer Films: How Costs Can Come Down ........................................................................... 19
2.4.2 Metal Options: Steel and Aluminum....................................................................................... 20
2.4.3 Ceramic Films: Advantages and Disadvantages ...................................................................... 20
2.5 Flexible Encapsulants for PV ................................................................................................. 20
2.5.1 The Special Needs of CIGS....................................................................................................... 21

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2.5.2 A Note on CdTe and Substrates/Encapsulation ...................................................................... 22
2.5.3 The Dyad Option: Best of Both Worlds, but at What Cost? .................................................... 22
2.5.4 How Much is Enough: Encapsulation Performance and the Cost Barrier............................... 23
2.6 Key Points Made in this Chapter ........................................................................................... 24
Page | ii

Chapter Three: Opportunities for Encapsulation and Substrate Materials in Thin-Film Photovoltaics 27
3.1 Why Do We Need Flexible PV? ............................................................................................. 27
3.1.1 Opportunities for Innovations in Manufacturing: What Encapsulation Firms Must Do ....... 28
3.1.2 BIPV: The Sweet Spot for Flexible Encapsulation? ................................................................. 28
3.1.3 Mobile Chargers: Opportunities for Flexible Encapsulants? .................................................. 31
3.2 Substrate Markets for PV ..................................................................................................... 32
3.2.1 Markets for Glass: Can It Adapt to the World of Flexible PV? ............................................... 32
3.2.2 In What Part of the PV Market can Plastic Substrates be Most Successful? .......................... 33
3.2.3 Sheet Steel and Aluminum: Bridging the Gap......................................................................... 35
3.3 Encapsulation Markets for PV .............................................................................................. 35
3.3.1 The Future for Plastic Film Encapsulation ............................................................................... 37
3.3.2 A Roadmap for Advanced Encapsulation Markets.................................................................. 37
3.4 Key Points Made in this Chapter ........................................................................................... 38

Chapter Four: Eight-Year Forecasts of Encapsulation and Substrate Markets for Thin-Film
Photovoltaics ................................................................................................................................ 41
4.1 Forecasting Methodology .................................................................................................... 41
4.1.1 Economic and Policy Issues ..................................................................................................... 42
4.1.2 Data Sources ........................................................................................................................... 42
4.1.3 Scope of Forecast .................................................................................................................... 43
4.1.4 Alternative Scenarios and Other Factors Taken Into Consideration....................................... 44
4.2 Forecasts of Substrate Markets: By Type of PV and Type of Substrate ................................... 45
4.2.1 Forecasts of Substrates for Thin-Film Silicon PV ..................................................................... 45
4.2.2 Forecasts of Substrates for CdTe PV ....................................................................................... 46
4.2.3 Forecasts of Substrates for CIGS PV ........................................................................................ 46
4.3 Forecasts of Encapsulation Markets: By Type of PV and Type of Encapsulation ...................... 48
4.3.1 Forecasts of Encapsulation for Thin-Film Silicon PV ............................................................... 49
4.3.2 Forecasts of Encapsulation for CdTe Silicon PV ...................................................................... 50
4.3.3 Forecasts of Encapsulation for CIGS PV .................................................................................. 51
4.4 Summary of Forecasts .......................................................................................................... 52

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4.4.1 Forecasts of Substrate/Encapsulation by TFPV Technology ................................................... 52
4.4.2 Forecasts of Substrate/Encapsulation Material by Material Type ......................................... 54
Acronyms and Abbreviations Used In this Report ....................................................................... 57
About the Author ...................................................................................................................... 58
Page | iii

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List of Exhibits
Exhibit E-1
Summary of Substrate and Encapsulation Material Revenues from TFPV ............................................. 7
Exhibit 4-1
Substrate Materials for TF Si PV Cells .............................................................................................. 45 Page | iv
Exhibit 4-2
Substrate Materials for CdTe PV Cells .............................................................................................. 47
Exhibit 4-3
Substrate Materials for CIGS PV Cells .............................................................................................. 48
Exhibit 4-4
Encapsulation Materials for TF Si PV Cells ........................................................................................ 50
Exhibit 4-5
Encapsulation Materials for CdTe PV Cells ........................................................................................ 51
Exhibit 4-6
Encapsulation Materials for CIGS PV Cells ........................................................................................ 52
Exhibit 4-7
Substrate and Encapsulation Material Revenues by TFPV Technology ................................................ 53
Exhibit 4-8
Substrate and Encapsulation Material Revenues by Material Type ..................................................... 54

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Executive Summary
E.1 Flexible PV Opens Up New Opportunities for Substrates and Encapsulation
Until very recently the only opportunities for manufacturers of substrates and encapsulation
Page | 1
materials for the PV industry stemmed solely from the growth in the industry. PV sales were
growing dramatically fast; thus so was sales of substrate/encapsulation material. And that
material was inevitably glass. In particular, glass encapsulation and substrates were almost
universal for thin-film PV (TFPV); they were highly effective and relatively inexpensive.

In the past year or so, the PV market situation faced by the substrate/encapsulation business
has changed radically. Most obviously, the worldwide economic downturn has meant that the
TFPV industry cannot expect the growth that it has seen in the past. And if, as we expect,
government will in the future be less generous with subsidies for PV, the days of rapid growth
for PV may be over for quite some time. In addition, with the shortage of silicon now well and
truly over, TFPV has lost one of the biggest factors that promoted it in the first place.

As a result, we believe that firms in the TFPV business can no longer count on the levels of
growth they have seen in the past. Neither can materials firms that sell into the TFPV business.
Nonetheless, we believe that firms selling substrates and encapsulants into the TFPV industry
still have big opportunities. In particular, while previous opportunities in this space were all
about volume, today they are about creating value-added substrate/encapsulation products.
In the long run—because of the higher gross profit margins—these may actually be better
profit opportunities than in the past. And—unless the worldwide economy collapses or
government withdraws total support from renewable energy—materials suppliers in this space
can still expect respectable business growth. As we discuss below there may even be a
disruptive opportunity in the substrate/encapsulant space; using the term "disruptive" in its
original meaning.

E.1.1 Why Flexible PV and Why Now?

Although flexible PV has been talked about for many years, it barely exists in reality.
However, today there are a number of factors that are combining to push it towards the
market. One of these has already been mentioned; the poor state of the economy and the
likelihood of governments that are less sympathetic to the PV industry than in the past.
Combine that with growing competition from commodity c-Si or a-Si PV panels and the TFPV
industry is looking for newer, higher value products that it can sell. Alternatively, the industry
wants new ways to reduce its cost of manufacturing.

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As it happens, flexible PV offers an apparent route to achieving these goals. Flexible building
integrated PV (BIPV) products, such as flexible roofing shingles, open up new markets for PV;
the large markets that are concerned as much or more about aesthetics as they are about
being "green." And there is also a developing niche market for such items as rollable solar
chargers for portable electronics, and PV applied to textile products like umbrellas, handbags, Page | 2
and clothing.

We note that such intrinsically flexible products as those listed above are an emerging business
and that it takes both flexible substrates and flexible encapsulation to create such products.
Flexibility as a way of reducing cost is easier to achieve. What we are talking about here is the
use of R2R manufacturing to create TFPV products as a way of offsetting the falling cost of
traditional, crystalline silicon PV and the end of the advantage that TFPV originally enjoyed
from the silicon shortage. Typically, where R2R processing is used for TFPV today, the final
product inevitably uses a flexible substrate and conventional glass encapsulation.

At least three kinds of opportunities for materials suppliers are created by the current
situation. First, for both mainstream R2R processing and for the creation of new intrinsically
flexible PV products, we believe the market is looking for better flexible substrates. This could
be more flexible glass, polymer films, metals, or possibly something else.

The second opportunity is to improve on the existing glass substrate + glass encapsulation
paradigm. This is an opportunity, not just because this is where the bulk of the market is right
now, but also because rigid TFPV is often associated with the highest performance and there
will always be a need for the high-performance TFPV products. Finally, there is the (still wide
open) opportunity to create a novel flexible encapsulation method that will prove an enabling
technology for intrinsically flexible products. We believe that this technology would—in the
technical sense of the term—be a disruptive technology, in that it could prove a key enabling
technology opening up BIPV markets and perhaps even technically related markets such as
intrinsically flexible displays.

E.1.2 Impact of Substrate Cost Changes: Emerging Alternative Materials

Challenges for glass makers: However, for the foreseeable future glass seems likely to remain
the staple of the PV substrate and encapsulation market. But now, pressured by the calls for
flexibility and the appearance of alternatives to glass, glass makers who have sold into the
TFPV market are looking for new directions.

For one thing, the glass makers will inevitably find that the cost pressure imposed on the TFPV
panel makers will be transferred to them. As the cost pressures on the glass makers mount
there will be incentives for the glass suppliers to provide cheaper substrates, probably in part

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by making them thinner, following in the footsteps of the crystalline silicon PV industry where
wafer thinning is an ongoing trend. This will be aided by using stronger glass formulations, as
Corning has done for displays with its Gorilla Glass product.

But the other and more dramatic trend in cost reduction will be with the accelerating Page | 3
transition to flexible substrates. Flexible substrates, as we have already seen, facilitate the
cost lowering enabled by R2R processing. The glass maker's response to this may well be in
the form of flexible glass. Such glass already exists, but is not yet being targeted towards the
PV market.

New opportunities for metal foil and plastics: The bigger challenge and an opportunity for
an entirely new group of suppliers is that flexible TFPV substrates will move away from glass
altogether. Other materials—metal foils and polymers, in particular—can be used in very thin
forms and therefore the costs to the PV panel maker can be quite low. In addition, the polymer
materials cannot be considered entirely mature, so cost reductions in the future may be
smaller than for glass (or metals for that matter). Plastic and metals are also likely to be more
flexible than glass which means that they are a better bet for R2R processing.

Not that non-glass flexible substitutes are a slam dunk. There are considerable barriers to
entry for suppliers unless they can show that their materials work well with existing processes;
especially high-temperature processes. High temperatures degrade flexible substrate
materials, especially polymers, and this has been a major reason why TFPV on flexible
substrates is well behind that on glass in terms of commercialization. And even if a flexible
substrate emerges undamaged from modest temperatures, the thermal expansion and
contraction can leave it with some dimensional irregularities that become a major problem for
aligning the various layers in the cell. Generally the common substrate materials handle high
temperatures in the following order, with the most heat-tolerant material listed first: Glass >
Metal Foils > Polyimide > Other Polymers.

An alternative approach of course, is to change the manufacturing processes used and there
seems to be an opportunity here for lower-temperature processes that will allow flexible
substrates to be used more often. However, getting solar panel makers to adopt entirely new
manufacturing processes is not an easy task.

E.1.3 Reducing Costs and Creating Value with New Encapsulation Technologies
Most of the comments about glass and other materials that we made above also apply to
materials used for encapsulation. The move towards flexible PV products which we expect
opens up an entirely new set of opportunities. Specifically, what is needed is a way to move
beyond the Catch 22 that has held up the flexible PV products market for several years now.

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Very high performance transparent barrier films and similar encapsulating materials have
been around for quite a while, but have found no significant market. One reason for this is
because they are inevitably very expensive; several companies that got into this part of the
encapsulation business have died waiting for the market to take off. Yet without such
encapsulants, the prospect for high-quality intrinsically flexible PV (and electronics) products is Page | 4
dim. Firms offering such products now, however, may take some comfort from the fact that
there has never been a time when the need for flexible products has seemed greater and that,
if a good solution in this space can be achieved, there is probably no better place in the
encapsulation sector where a firm can establish IP and branded image.

While the lack of an existing high-volume market of flexible PV to consume new encapsulation
materials is of some concern to flexible encapsulation developers, there is not as much risk as
one might think. Big companies like Dow Chemical are getting behind flexible PV, and the
nascent flexible encapsulation market is actually quite "diversified"—that is, it does not
depend only on TFPV. Other highly sensitive emerging technologies are also waiting in the
wings for better flexible encapsulation developments. Most notable is the market for OLEDs
for both lighting and displays and in the case of e-paper for signage and displays. OLED
materials are similarly sensitive to moisture and also extremely sensitive to oxygen; and like
many flexible PV applications, they are also at the transition from development to
commercialization. Flexible encapsulation developers moving into commercialization will not
have long to wait for a rapidly growing market.

Performance and cost of the encapsulation materials are the two major factors that the
suppliers of high performance encapsulants will be able to use to create value for TFPV
manufacturers. However, we also note that measuring performance has been a significant
problem for encapsulation developers according to Mocon, a leading moisture and
permeability testing company. For example, CIGS is sensitive to moisture permeation rates
below the detection limits of even state-of-the-art measurement equipment. As a result,
measurements that are critical to development must sometimes be carried out in indirect—
and less reliable—ways. Finding the answer to this problem is something of a niche
opportunity for test labs and would be a crucial step forward for encapsulation firms.

While pricing data are still very closely held by the companies developing these encapsulation
materials, NanoMarkets estimates that they cost on the order of $10 per square meter. We
expect this cost to decline relatively quickly once performance targets are achieved with
confidence, and product volumes and competition beget better yields and lower cost
processes. Still, the cost of the films—even including the cost of depositing them—is not fully
indicative of the total cost of using them. The multistep processes involved also reduce the

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throughput and yield of the TFPV plants in which they are used, increasing overall cost of the
TFPV product beyond the direct cost of the encapsulation. The obvious—but elusive—solution
to this is to develop robust encapsulation systems that do not require so many steps; yet
another opportunity here.
Page | 5
E.2 Opportunities for Firms Supplying Encapsulants
Simpler processing: Indeed, one of greatest opportunities for encapsulant suppliers—one that
would rapidly lead to large swaths of the PV market adopting new materials and processes—is
the simplification of the processes used for creating and applying the most robust
encapsulation films. Current processes for multilayer dyad films, besides containing typically
four to eight distinct deposition steps, also have thermal processing and other steps in
between.

Making this process simpler—by combining steps, reducing the number of dyads, or even
taking a completely different approach altogether—would be of immense value to the
manufacturers that need the greatest moisture protection (like CIGS) and even many that have
more modest barrier requirements. Even though such a simplified process and material would
certainly be significantly more expensive—at least initially—than dyad films as currently
available, it is often the case that eliminating process steps in manufacturing outweighs by far
the cost of more expensive materials that enable the process step eliminations.

Better glass: Other opportunities for encapsulation suppliers relate to the glass used to
encapsulate rigid PV modules. Much of the opportunity is for incremental improvements in
the cost of the glass and reductions in the thickness and quantity of glass used; we include the
use of high-strength glass formulations among these incremental improvements.

But one opportunity that is more dramatic in its potential lies with the development of
ultrathin flexible glass for TFPV, both for substrates and encapsulation. Taken together,
substrates and encapsulation layers of this flexible glass could allow a viable answer to the
(current) fact that glass is completely useless for flexible PV. Ideally, flexible glass would offer
the best of both worlds: the familiarity, temperature tolerance, and barrier performance of
rigid glass along with suitability for a wide range of flexible applications.

E.3 Opportunities for Firms Supplying Substrates

Incremental opportunities: Incremental improvements are also major sources of opportunity
for substrates; these include thinning and otherwise reducing the cost of glass substrates—
including by using high-strength glass formulations—and these cost and bulk reduction
opportunities apply similarly to metal foil and polymer substrates. Another possible

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incremental opportunity—but one we do not see as very likely through most of the forecast
period—is to provide larger and larger glass panels for rigid TFPV substrates, following in the
footsteps of the display industry to capture economies of scale.

However, we see this opportunity as problematic in the near-to-intermediate term simply Page | 6
because of the high level of uncertainty in the TFPV market. In this uncertain environment,
TFPV manufacturers will shy away from the risk involved in building factories and lines that
depend on such high volumes for profitability. The risk is that demand could dry up and force
the factory to run well below capacity, eliminating the cost advantages of such large
equipment.

Process developments and challenges: Beyond the incremental improvements, bigger

opportunities relate to process developments that enable the profitable use of flexible
substrates. One major advantage continually touted by proponents of flexible substrates is
their suitability for roll-to-roll manufacturing. But so far, the alleged cost savings and
economies of scale achievable by R2R manufacturing have not clearly materialized.

We would expect flexible substrate suppliers to continue to work closely with equipment
suppliers to ensure that roll-to-roll processes are viable and inexpensive, and so that flexible
substrates in fact do achieve a sizable cost advantage versus both rigid substrates and
crystalline silicon PV. But keep in mind that this is not necessarily as easy as many have
assumed it to be; for example, we have already seen printing of CIGS stalled for the past two
to three years.

Likewise, proponents of polymer substrates point to the low cost of (most) polymers as a
major benefit, but polymer substrates for TFPV are currently limited to expensive polyimide
because cheaper polymers cannot handle the processing temperatures without failing in some
way. However, if processing temperatures used for manufacturing thin-film PV on flexible
substrates could be reduced dramatically, then polymer substrates could increase their
penetration well above our forecasts.

E.4 Summary of Eight-Year Forecasts of Encapsulant and Substrate Materials for TFPV
Exhibit E-1 summarizes NanoMarkets' forecasts of the substrate and encapsulation markets
for thin-film PV.

For a full version of this report, please contact NanoMarkets at 804-360-2967 or

sales@nanomarkets.net

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