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Reports of thin film's death have greatly been exaggerated – or so say some in the solar industry despite almost daily evidence piling up against their positive (albeit long-term) position.
Abound Solar shuttered its operations last month, having been awarded a US$400m Department of Energy loan guarantee. The cadmium telluride (CdTe) thin-film manufacturer only took less than US$70m of the 1705 loan guarantee it was awarded, according to the DoE.
But Abound's executives have cried foul again by blaming the US$30bn that Chinese manufacturers received in government-backed loans.
As increasing numbers of US companies are being forced to admit defeat in the battle to compete with the Chinese on the manufacturing frontline and even General Electric dare not square up to the opposition.
GE, a US industrial giant in robust financial health, last month suspended construction – probably indefinitely – of a 400MW thin-film solar factory in Colorado.
Aurora, a town benighted by last week's cinema shootings, should have been host to the largest solar manufacturing plant with an investment of US$300 million with 355 workers.
More recently, GE revealed even greater lack of ambition for its solar manufacturing business with last week's announcement of 70 job cuts at its plant in Arvada, Colorado.
GE spokeswoman Lindsay Theile said that the company doesn't release product-line sales volumes. But she denied that GE's recent announcements indicated a quiet full-scale retreat from solar by pointing to the company's activity in the supply chain and "utility scale solutions" such as a 23MW project with Invenergy in Grand Ridge, Illinois.
"As far as target markets and future projects go, we are absolutely still in solar and provide system level solutions – inverters, modules and racking. Like wind projects, we go where our customers go for solar."
"The solar industry is changing every day," said Theile. "Over the past six months, the industry has shifted rapidly, resulting in a nearly 50% drop in global module prices due to overcapacity and declining incentives. It’s an environment that requires players to be agile and smart."
"Given these dynamics, we put the build-out of our Aurora, Colorado, plant on pause and will focus our efforts to develop the next generation of solar module technology. This technology will reach a far higher efficiency level and more competitive cost position and will require modifications to the plant design currently underway. This decision has been made to keep GE’s cost goals in line, in order to continue our competitiveness in the solar industry.”
That doesn't sound like a commitment to return to solar manufacturing any time soon.
Solyndra of course has been the most high-profile exit for thin-film manufacturers so far. But equipment manufacturers are also having to re-tool their technology bets.
As Tom Cheyney reported on PV-Tech this time last year, Veeco's exit from CIGS foreshadowed what was to come for OEMs.
Last July, John Peeler, CEO of Veeco, told investors: "Veeco has decided to exit the CIGS solar systems business for various reasons, including the improved performance of mainstream solar technologies and the lower than expected end market acceptance for CIGS technology to date. While CIGS remains an important thin-film solar technology, we have determined that the timeframe and cost to successful commercialization are not acceptable to Veeco."
With a market capitalization of US$1.3bn, Veeco can maybe afford to take a brief wrong turn and continue to manufacture equipment for high-value products such as LEDs, smart phones and hard disk drives – technology which it can adapt for the manufacture of high-efficiency concentrator PV cells. But Veeco's course correction was as prescient as GE's was brutal.
Analysts at NPD Solarbuzz last week forecast a further concentration of technology focus on c-Si as it projects the number of cell and thin-film manufacturers to wither from almost 400 in 2011 to less than 100 by 2016.
However, thin-film companies and the organizers of this year's Intersolar North America should be pleased that there was standing room only for a PV Materials Market Overview given by Joe Berwind from Alternative Energy Investing.
Berwind knows a thing or two about bad bets on solar, having written a book on investing in solar stocks in 2010, a time perhaps when many hoped market caps had bottomed out. But there was further to fall. [See image 2]
Potential lower costs of thin film looked extremely attractive for investors five years ago, with panel prices around US$8.80/watt, PV and public and private money rushed in.
In exclusive comments to PV-Tech, Berwind said: "There seemed to be a preference for thin film on scale and scope. You could win the market at a time when silicon was growing tighter and tighter.
"Lo and behold silicon gets tight and nobody could afford it unless they could take or make a six figure contract for volume. That was driven primarily because the economics of acquiring the base raw materials weren't favourable.
"Ultimately, we know what happened: silicon has in the past simply cycled and fell from heights and we grossly underestimated how the system prices could change as a result of a change in the market."
Polysilicon spot prices have plummeted by 91% from the boom years of 2007–2008 and are predicted to fall yet further in 2013 to an average of US$23/kg by SolarBuzz.
No one at the DoE could have predicted the perfect storm that was about to blow away previous assumptions as silicon prices collapsed, the Chinese rapidly became efficient at PV manufacturing and advances in hydrofracking technology unlocked previously unreachable reserves of natural gas in the US.
Back then, the economics made sense. DoE seemed to be in favour of the development of thin film, even more possibly than governments in other regions, such as Europe and Asia where c-Si PV dominated, said Berwind.
"Get into thin films [was the message] because you're going to beat the learning curve. With every doubling of cumulative capacity you take out 20% of your costs."
Solyndra wanted to raise US$300 million with an IPO in 2010 to fund capacity expansion to prove its business model that high volume manufacturing would reduce costs.
"But no one was listening," said Berwind. "They couldn't get investments or an initial public offering and so in comes the loan guarantee and they've got a perfect storm… then all of a sudden PV prices collapse.
"When module prices were high they could still talk to an overall systems price value proposition to the investor. But when prices started to accelerate their decline, they couldn't do anything about it.
"Thin films used to hold that pole position of promise of cost reduction and that's been taken away from them causing extreme amount of industry distress."
Solyndra collapsed with US$535m from a DoE loan that was fronted and probably forfeited by American taxpayers.
Republicans like to paint the DoE's loans programme as an Obama administration boondoggle. The truth is that the programme was introduced by George Bush under section 1703 of the Energy Policy Act 2005. Obama extended this programme temporarily as section 1705 when he signed the American Recovery and Reinvestment Act 2009. Two nuclear projects have conditional commitments under Bush's 1703 loan programme worth US$10.33bn and Ford closed an agreement with the DoE for a US$5.09bn loan in 2009.
But Republicans don't want to talk about Ford and a nuclear company headquartered in Paris taking American taxpayers' money; they want to talk about Solyndra. Fred Upton, energy and commerce committee chairman, is particularly keen on talking about Solyndra and added a No More Solyndras Act, to his list of politically pointless congressional activity that will never pass the Senate and is even less likely to be signed into law by the president himself. But Fox News needs a lot of material to fill the 24/7 news cycle.
Amid the economics of the time, it seemed to make sense to invest in emerging thin-film companies – the US had already seemed to have lost that particular battle in the early rounds of the trade war with China which had raced ahead with high volume PV manufacturing.
Although the potential losses from Abound are much smaller, Republicans are less likely to pick up this particular political football to boost chances of a touch down in the presidential elections this November.
Berwind pointed out that Abound, formerly AVA Solar, received praise from Republicans in Congress expecting jobs in their states and won part of a US$60 million grant that provided early funding under George Bush’s DoE.
Meanwhile, Romney's own "solar" bets have lost in the shakeout. Konarka and Evergreen Solar were funded by the former Massachusetts governor's US$15m Green Energy fund while Bain Capital now has Yingli Green Energy in its portfolio, said Berwind.
Concern is coalescing out of the pattern of consolidation into something we can almost call hindsight. Perhaps in 2008, out of fear that the US could not catch up to China in terms of c-Si PV manufacture, it favoured acceleration of other technologies perhaps even at the expense of investments in domestic PV manufacturing. The US$0.48 manufacturing tax credit for example hardly makes a dent in the US$34.7bn in the 1705 programme.
In a particularly dark light, it may even appear that the DoE made a bet that went bad based on assumptions that didn't work out the way it planned: price forecasts for polysilicon turned out too high, who knew the Chinese would be so quick to catch up and make modules so cheaply and who saw the knock out blow from the price of natural gas?
But is there hope? Yes, said Berwind, just so long as you can survive until 2015 when the market should rebalance capacity with demand.
CdTe continues to be a dominant thin film flavour and although its growth rates are good, the numbers are dwarfed by c-Si PV [see last slide].
"The rationale for recovery may also include the notion that the silicon cycle will re-emerge at some point. Silicon re-investment is still crazy expensive and there will be reluctance to do it too quickly. That will open a window up for thin film, albeit at a different competitive requirement for performance."
