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Now that their analysts and investors meeting has been completed, the executives of First Solar have left the casinos and watering holes of Las Vegas behind them and gotten back to running their increasingly complex company. Although no news was forthcoming on two key issues—the location and timing of the company’s expected capacity expansion moves and the hiring of a replacement for chairman/CEO Mike Ahearn (although he did say the decision won’t happen until at least the fall)—the company did outline revised conversion efficiency, balance of system, and module manufacturing cost reduction roadmaps, as well as enough financial and related info to keep the bulls snorting and the bears growling for awhile.
The market wathers have already parsed, pared, and pontificated on First’s newly modified business models, the nuts and bolts of what Ahearn calls the company’s "sustainable competitive cost advantage." But the updates on the manufacturing and technology sides of the business warrant some additional scrutiny.
In a nutshell, First Solar’s revised module manufacturing cost reduction and factory run-rate roadmaps show more of the same relentlessly continuous improvement mindset the company has become known for.
On the module side, Sohn outlined how the new five-year plan calls for 56-68% reductions in the cost per manufactured watt, driving down to a targeted range of 52 to 63 cents per watt by 2014. The largest portion of the cost cutting will be facilitated by conversion efficiency improvements (about 18-25% of the weight, with better throughputs, plant scaling, etc. also contributing). The impact of building factories in low-cost locations such as Malaysia has been much reduced in the current roadmap, dropping from accounting for 15-17% of the cost reduction improvements to 3-4% in the company’s new gameplan.
As for the factory run-rate numbers, Sohn said the current 49+MW per line per year figure will jump to more than 80MW sometime in 2014, well up from the 25MW annual numbers that the company posted when it made its initial public offering in 2006—and way up from the 10-12MW figure that was the norm in the early days.
The per-line jump from 25MW to 50MW meant that First Solar had to build 50% fewer lines to reach that 1GW capacity number. Company execs expect that trend to continue, with increases in module output coming via improved yields, throughputs, and especially conversion efficiencies in existing manufacturing facilities, pushing out the need to build factories until they are absolutely necessary.
The presence of VP of technology Dave Eaglesham at the event, who is rarely allowed out in public, added a bit of welcome techie-geekiness to the proceedings. Since this was the first time that the company shared its conversion efficiency roadmap since that legendary IPO, he had a chance to talk about, or in some cases “dance around,” the details of First’s technologies and how they align with its long-term mission.
The VP, whose banter was sprinkled with talk of a technological "horse race" and categorical "buckets" and numbers being "racked up," made it clear from the git-go that First Solar is in constant technology assessment mode, externally and internally, with many irons in the fire (my words, not his) to find ways to maintain its "sustained differentiation."
When First racks up other technologies against its own cadmium-telluride thin film PV, it does so from a really long-term (as in 50-100 years) perspective and a tech’s ability to scale in a prodigious yet affordable way. "We don’t think that anything that’s over a dollar per watt in terms of capex is going to have substantial legs in terms of its ability to go to scale," said Eaglesham.
As with anything to do with First Solar, cost is also paramount when it comes to technology evaluation. Unless a prospective improvement in the device, the process, the materials set, or whatever other bucket can match up with the company’s aggressive cost-per-watt model, it won’t make the cut.
"If adding the materials will improve the cost per watt or cost per kilowatt-hour that we produce, then it’s something we’re very interested in," Sohn told me when I interviewed him in late April. "If adding an exotic material will improve the wattage but the cost of doing so doesn’t compensate appropriately, then it’s not something we’re interested in."
"But of course we have to evaluate that at scale," he continued. "Frequently that question might be asked and the answer to that question might be very different at 20 MW than the answer at 1 GW. We constantly assess that and run those models, [and ask], How much will this cost at scale?"
When Eaglesham and First Solar frame the technology horse race, it’s always about how the other ponies do when they match up with the strengths of CdTe, now and into the future. Noting how most employees think of themselves as working in thin film PV company first, and then CdTe, he went over the shared commonalities among TFPV technologies—lower bill of materials and capex than crystalline silicon, better efficiencies in low light (but lower efficiencies in good sun as well), etc.—and then cited a couple of CdTe’s advantages, such as its sweet-spot band-gap in terms of the solar spectrum as well as its ability to be processed at a very fast film deposition rate.
For those who wonder whether First Solar might be getting into copper indium gallium (di)selenide (CIGS) or other thin-film or nano-thin film PVs, Eaglesham provided a bit of insight into how the company scrutinizes them. "When we look at how we rack up against other thin-film technologies and when we assess other thin-film technologies that we’re interested in getting into ourselves, one of the primary issues that you have to face is that it is very difficult to find other semiconductors that you can deposit anywhere near as fast [as CdTe]."
Apparently First Solar believes CIGS has some fast-deposition and scaleability potential. When I asked Sohn about this during our interview, he would not confirm or deny whether the company is involved in R&D on that or any other non-CdTe thin film. But several anonymous sources told me during the recent IEEE PV Specialists Conference that it's an "open secret" that First has a small team, led by former Solyndra chief scientist Marcus Beck, working on CIGS at an undisclosed California location.
But when it comes to another area of possible R&D focus at First Solar--multijunction devices--Eaglesham noted during his presentation that the company is "not that wild" about any such technology for the following reason: "The second junction has to deliver at a cost per watt that makes sense for the incremental power [gain]. Let’s say my first junction is delivering 11%, my second junction gives me another 3%. Well I gotta figure out how to pay for that second junction at 3% incremental efficiency. I gotta figure out how to manufacture that device at a cost that makes sense."
"At First Solar, every time we’ve gone through this, if you had a device that made sense as a second device, in a multijunction, it would always economically make more sense to only make that device," he concluded, since it’s such a challenge to make multijunction approaches work out at the cost per watt required at the module level under the company's strict metrics.
So two or more junctions don't necessarily stack up better than one, in First Solar's cost-conscious estimation.
In the final part of this two-part blog-column, I will take a look at First Solar's conversion efficiency history and current efforts, including some of the technological pathways the company is exploring to push efficiencies ever closer to the theoretical limits. Click here to go to part two.
