A timeout advantage for fab managers

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According to a myriad of recently released market research data, the PV market grew over 100% in 2008, well above the CAGR growth levels of the last five years or more. Looking more closely at the data, the fourth quarter of 2008 indicated a massive change in the industry’s dynamics as the supply change shifted from prolonged undersupply to significant oversupply. The impact of the global financial crisis became fully evident and demand virtually came to a halt.

Encouragingly, PV manufacturers have by necessity – but also with a good degree of near-term vision – tempered capacity expansions, preserved cash and focused on the key business areas that will position them for the next wave of growth, whenever and wherever that will take place.

In the meantime, there looks to be a shakeout across the industry. In a recent seven-day excursion to Germany to attend the Photon conference and exhibition in Munich, followed by the PV Fab Managers’ Forum in Dresden, I was able to talk to a number of executives in many areas of the industry. Though impossible to recount all of these conversations here, there were several emerging developments that I thought would be interesting to share.

The poly party’s over

Kept under wraps for several years but now out in the open, the frustration and anger at the major polysilicon producers for forcing companies to sign long-term supply contracts and make substantial pre-payments is tangible. With spot prices peaking in 2008 at around US$500 per kg, one could almost see and feel that bubble burst in a spectacular fashion. I asked Photon Consulting analysts in Munich how low poly prices will go, and answers ranged from US$50 per kg to as low as US$30 per kg.
 
My impression is that no one really knows where prices will hit bottom. In a conversation with Nick Sarno, Senior VP of Manufacturing at LDK Solar in Munich, he expressed his view that the Photon forecast is too extreme and that the Sage prognosis is too conservative. In his pragmatic view, the truth would probably be found somewhere in the middle.

However, the rapidly declining spot prices are allowing purchasers to renegotiate contracts both on price and payment terms. Although those I talked to in Germany hesitated to give specifics, the look of relief on their faces spoke volumes. Only a few days ago, Anton Milner, CEO of Q-Cells, vented his pent-up frustration over poly contract terms by declaring in a conference call that polysilicon pre-payments were a thing of the past. He hopes the producers get a “brutal” lesson from the price declines because this was not something he expected the industry to have to experience again, commenting that it was not how the industry should have to operate.

Show me the money?

It also became clear in my travels that the pace of industry growth will slow, and we may well see negative growth for the year. This has far more to do with the credit crisis than true demand for PV. When companies spoke to me about the difficulties in obtaining credit, whether for cell production expansions, thin-film start-up capital or project finance for large-scale utility plants, what became apparent was that not only was it difficult to raise capital, but it is becoming impossible to raise any capital at all. In a way, it’s a credit crisis – but, to put it more accurately, it’s becoming a credit freeze.

Digestion period

The rapid industry growth in recent years has proved to be the catalyst for PV to be taken seriously, which looks set to remain the case for some time. However, a slowdown is upon us and in more ways than I can detail here, it is important that we get manufacturing pointing in the right direction for the next and potentially exponential growth phase that should see grid parity achieved across a broad swathe of countries.

On the exhibition floor in Munich, I was impressed with many new production tools that featured throughput improvements, greater modularization and attention to technical developments on things such as handling thinner wafers. The number of metrology and inspection tools on show indicated that yield improvement could become a key focus for fab managers in the future.

Innovation is most definitely alive and well, but something was missing, in my opinion.

Travelling to Dresden from Munich via train instead of by plane brought home to me what was missing on the exhibition floor and in the conference sessions at the Photon event.

Although I had to change trains and the journey took 6 hours, the timetable said I would arrive in Dresden at 6:02 pm. As I live in the UK, we take such exact times and approximate by 10 minutes, not to be disappointed or shocked that a train could actually do that distance and be exactly on time.

Needless to say, the train did arrive at exactly 6:02pm. There had been no signal failures, leaves on the track, trains in front broken down or any other disruption to the journey.

Talking to and video interviewing fab managers such as Frank Schitthelm of Deutsche Cell at the PVFMF event, it was clear that I wouldn’t have the same experience travelling on a cell production line. Fab managers are faced with a lack of industry standards, correct tool specifications and unscheduled maintenance, to name but a few problems.

The current lull in the industry is a perfect time for fab managers to regroup and refocus on collaboration with suppliers. This will ensure that important issues are tackled, issues that are difficult to address when the industry is growing at 40% plus CAGR – let alone 100% – in a spike year.

I was pleased to see fab managers focused on improving ‘quality’ across manufacturing operations, summed up the best by Gerhard Rauter of Q-Cells in the opening session of the Dresden conference.

Though the debate of standards being required goes on, most would seem to be pulling in the right direction. In order to capitalise on the next wave of growth, manufacturers are addressing quality of operations that not only result in manufacturing cost reductions but enable high utilization rates, flexible production and improved cell performance, to name but a few. Quality focus across the manufacturing lines will be the key to grid parity goals and beyond – it is not a simple question of gigawatt-level ramping.

Safe in the knowledge that I was to most likely reach my destination exactly on time and undamaged, I realised that this is where the PV industry needs to be. It’s not just about SEMI standards and semiconductor industry best practices getting us to the required quality level, but more likely it will take best practices applicable from the automotive and aerospace industries. That said, perhaps we need to add in best practices from the German railway industry as well. 

With few PV manufacturers adopting continued fast-track expansions in 2009, the industry has the calm before the next storm to address the quality over quantity issues. Although this will not be resolved in the current period, much momentum can be built in this timeframe.

19 August 2021
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25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?
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In this webinar, JA Solar will present its product portfolio based on the latest technologies to improve your PV projects, ensuring maximum reliability and performance. During the webinar we will receive insight from JA Solar about its solar technology roadmap and how the manufacturer is providing customers with innovative solutions to suit their needs, while we will also analyse how to determine the best product solution for each solar project.
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The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.

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