PV Talk: Solar Frontier sets sights on US CIGS play

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Japanese CIGS thin-film manufacturer Solar Frontier has seen significant success as a supplier to its booming domestic market, but has yet to match that overseas. Speaking to PV Tech at Solar Power International in Las Vegas at the end of October, the company’s new CEO Atsuhiko Hirano outlined his vision to take Solar Frontier global and his hopes for the role of CIGS technology in the PV market.

Solar Frontier CEO, Atsuhiko Hirano.
A 1MW PV plant at Coalinga, USA, using Solar Frontier modules. The company is planning to expand its presence in the US. Image: Rolf Schulten, photon-pictures.com.

What has been your main objective since becoming CEO?
My main mission is to take Solar Frontier to the next stage of growth, which will be globalisation. We have done a tremendous job in Japan, and that has helped us consolidate our business. But as we see a large amount of future growth coming from outside Japan, that is our ambition to capture that non-Japanese market.

Indeed your results in August revealed that 90% of your module sales have been in Japan. Which markets are you particularly interested in exploring next?
We’re strongly committed to America, which has a lot of attractions for us because of the high level of electricity market deregulation. Other than the US, although the growth rate has gone down, Europe remains still a big chunk of our market. Some of that market has moved into the self-consumption model. And in that market our product can exhibit strength, because it’s not just about bigger and better, it’s about the optimisation of the power that we can deliver on the rooftop. So self-consumption is opening a new opportunity for us.

You’ve already outlined plans to set up a network of small fabs as part of your strategy for globalisation. What’s the thinking behind that?
It is our belief that it would be better to have production capacity closer to end markets; given there are a lot of these tariff issues coming up, and also foreign exchange is another big factor, having our factories closer to the market will mitigate some of those risks. And we have been learning that there are a lot of unique issues in different market places that cannot be sorted out by one unified solution. So it makes sense for us to get closer to our markets.

The blueprint for this approach I understand is your new fab in Tohoku. Why is that so important for your future strategy?
Yes, our growth strategy is based on that and the success of our new factory. It’s really a collection of all the knowledge we have gained from MP3 [Solar Frontier’s 900MW fab in Kunitomi]. That has been the biggest breakthrough in thin-film technology in terms of commercial production. On top of that we have now designed the newest production technology, which will substantially reduce the capex as well as production cost of our modules. And that will bring us highly competitive against any technology in the future. So we have a big hope and high confidence that the MP4 technology will be verified as early as next year.

Explain more about how your new technology helps cut costs.
MP4, our fourth plant, has a compact production line and offers higher precision than in MP3, so that has allowed us to have more efficient production costs. We believe we can reduce the production cost by 30% compared to our existing plant, and also the capex will be reduced compared to original MP3.

Earlier this year you revealed plans for a plant in Buffalo, New York State. Does this represent the first phase in your MP4 roll-out abroad?
We have a confidentiality agreement on that, so I can’t elaborate in more detail, but earlier this year we announced an MOU to study the feasibility of us working with the New York State University College of Nanoscale Science and Engineering to scope out the potential to make a factory in New York, but also to collaborate in R&D.

There has been a lot of discussion at SPI about a pending boom in the US solar market ahead of the scaling back of the Investment Tax Credit in 2016/17. Presumably you’re not going to have any new fab up and running in the US in time to meet that demand. How else do you hope to make the most of the opportunities in the US?
We have been somewhat restricted in what we can do [in the US] because the volume availability of our product has been highly tied up in Japan. So we were only able to ship a small amount, but with that small amount we’ve been selective and found long-term partners who understand our technology and are willing to collaborate in building sort of a virtual value chain through the partnership model. And hopefully with a bit more volume availability coming up in 2015, or a strategic decision to put more volume into this market, I think we can make that work in a more established way.

So you’re going to free up more module capacity for US market – will that come from Japan?
This is not an easy judgement as there is still a big market in Japan and we can achieve a substantially higher ASP there. But given there will be a potential future production plant in, say, New York or wherever in the US, we will need to build up our sales capacity. And we know we cannot do this overnight. So the business discussion has gone on for the last year; in the coming year we have to cement that relationship through actual, physical transactions then start gradually building up capacity to get ourselves prepared for a new factory.

Is the ITC sunset part of your decision to prioritise the US?
It is, but we do still believe that after the ITC termination there will be a continuous investment demand. The US has in some places reached grid parity, and if grid parity is the key for future growth, we can bring in our technology to further reduce the LCOE [levelised cost of energy] to make it competitive against other sources of energy; that will naturally build future demand. So yes the ITC does have some impact, but I think as a technology company we should focus on where we can improve on the economics.

CIGS and other thin-film technologies have had a difficult time coping the falling price of c-Si module. What are your hopes for the extent to which you will be able to compete with c-Si modules?
There is still a strong mindset in the industry about efficiency being the key driver. But once we have broken through that barrier, the clients that have used our product have become strong believers in the kilowatt-hour advantage of our power generation. Admittedly there is still somewhat a barrier; especially in markets where we have not been present we do have quite a bit of work to be done. But once we have broken through and it’s proven, especially when people look at the IRR not just the capex, it’s going to look very attractive.

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