greentech media - thin film 2010 - 2010

GTM RESEARCH MARCH 2010

THIN FILM 2010: MARKET OUTLOOK TO 2015EXECUTIVE SUMMARY | SHYAM MEHTA | GTM RESEARCH


THIN FILM 2010 2COPYRIGHT 2010, GREENTECH MEDIA INC ALL RIGHTS RESERVED

TABLE OF CONTENTS

1 INTRODUCTION: BEYOND THE HYPE 91.1 What Factors Drive Thin Film Demand? 111.2 Report Structure 13

2 PV TECHNOLOGIES 142.1 Crystalline Silicon (c-Si) 142.2 Thin Films 14

2.2.1 Cadmium Telluride (CdTe) 152.2.2 Copper Indium (Gallium) DiSelenide (CIS/CIGS) 162.2.3 Amorphous Silicon (a-Si) 172.2.4 Multi-junction Cells 192.2.5 Tandem-junction/Micromorph PV 19

2.3 Third-Generation Thin Film 202.3.1 Dye-Sensitized Cells (DSC) 202.3.2 Organic PV (OPV) 21

3 MANUFACTURING 233.1 Batch vs. Continuous Manufacturing 233.2 Thin-Film PV Process Flow 243.3 Deposition Processes 25

3.3.1 CdTe 253.3.2 CIS/CIGS 26Sputtering 26Co-evaporation 27Electroplating 28Nano-Particle Printing 28Ion Beam Assisted Deposition 283.3.3 Amorphous Si 29

3.4 Module Integration 303.5 Encapsulation 313.6 Glass Lamination 323.7 Materials Requirements 32

3.7.1 CdTe 323.7.2 CIS/CIGS 343.7.3 Amorphous Si 353.7.4 Commodity Materials 36

4 TECHNOLOGY CHARACTERISTICS 374.1 Effi ciency 37

4.1.1 Why Effi ciency Matters 374.1.2 Research Cell Effi ciencies 374.1.3 Commercial Cell vs. Module Effi ciency 384.1.4 Historical Module Effi ciencies 394.1.5 Projected Future Effi ciency 404.1.6 Limitations to Improvements: Theoretical Maximum Effi ciencies 41

4.2 Substrates 424.3 Module Degradation 434.4 Sensitivity to Temperature 444.5 Spectral (Light) Sensitivity 454.6 Energy Yield 464.7 Area Footprint 484.8 Module Weight 49



5 THIN FILM PV IN 2009 515.1 Surveying the Thin Film Landscape 515.2 Pricing Pressure 54

5.2.1 Polysilicon Prices Crash 545.2.2 Crystalline Module Price Drops 56

5.3 Bankability Poses Challenges 575.3.1 A Solution for Some: Product Guarantee Covers 58

5.4 CdTe: The First Solar Juggernaut Continues 595.4.1 First Solar in 2009 595.4.2 Other Companies 60

5.5 CIGS: Progress Slow but Steady 615.5.1 Increasingly Crowded Space 615.5.2 VC-Funded Companies Come Out 625.5.3 BIPV on the Horizon 625.5.4 Turnkey Equipment Vendors Enter the Field 635.5.5 Effi ciency Status: Continual Progress 645.5.6 Prominent Producers 65

5.6 Amorphous Si: An Inversion of Value Proposition 665.6.1 New Entrants and Equipment Sales: At Near - Standstill 675.6.2 Commercial Production and Sales Agreements 685.6.3 Pricing: Extreme Reductions and Regional Disparities 695.6.4 Effi ciency Progress: Tandem Holds the Key 705.6.5 Prominent Producers: A Crowded, But Nascent Space 715.6.6 Corporate Insulation Provides Differentiation 74

5.7 VC Investment in Thin Film 75

6 MANUFACTURING COSTS 786.1 Module Cost Structure 786.2 The Problem with Cost Estimates 796.3 Current Costs 816.4 Cost Roadmaps 84

6.4.1 First Solar: Onwards and Upwards 846.4.2 Applied Materials: $1/Watt Remains the Goal 856.4.3 Oerlikon: Too Good to be True? 85

6.5 Cost Forecasts 866.5.1 Capex Costs 886.5.2 Glass Costs 89

6.6 Module Prices 906.7 Gross Margins 936.8 Required Module Costs at Fixed Margins 946.9 Thin Film Price and Margin Sensitivity to Polysilicon Price 956.10 Pricing in Bankability 976.11 BOS Costs 99

6.11.1 The Case of Large-Area Modules 1016.12 Project Economics: NPV vs. IRR 102

7 MARKETS AND APPLICATIONS 1037.1 Grid-tied Residential 1037.2 Grid-Tied Commercial 1057.3 Grid-Tied Utility-Scale 1077.4 BIPV 1097.5 Off-Grid and Niche Applications 1107.6 Should a Thin-Film Manufacturer Integrate Downstream? 111



8 CAPACITY 1138.1 Capacity vs. Production 1138.2 The Need to Derate 1138.3 Capacity Projections 114

8.3.1 By Technology 1148.3.2 By Region 1158.3.3 Top Manufacturers 117

8.4 Equipment Market 118

9 THIN FILM DEMAND 1199.1 Historical Production and Market Share 1199.2 From Capacity to Production: Murky Waters 120

9.2.1 Thin Film Capacity: A Tenuous Notion 1219.2.2 Potential Production: An Upper Bound 1229.2.3 Exogenous Factors: Market Conditions, Product Value 123

9.3 Quantifying Thin-Film Demand: A Top-Down Methodology 1239.4 Market Sizing 126

10 CONCLUSIONS 12710.1 Predictions 12710.2 Final Thoughts: The Road Ahead 128

11 APPENDIX: COMPLETE LIST OF THIN-FILM MODULE AND EQUIPMENT MANUFACTURERS 131

12 LIST OF PROFILES 136



Figure 1-1: Thin Film Production and Market Share, 2002 - 2008 9

Figure 1-2: Venture Capital Investment in Thin-Film PV, 2007 and 2008 10Figure 1-3: Bankability Sensitivity: Module Price Discount vs. Relative Default Risk 11Figure 1-4: Required Components of the Thin Film Production/Demand Model 12

Figure 2-1: Crystalline Silicon Value Chain 14Figure 2-2: Comparison between Thin-Film and Traditional Crystalline Silicon PV 15Figure 2-3: Thin-Film PV Manufacturing Process 15Figure 2-4: CdTe Cell and Module 16Figure 2-5: CIGS Cell Structure 17Figure 2-6: Single-Junction Amorphous Silicon Cell Structure 18Figure 2-7: Multi-Junction Amorphous Silicon (a-Si) Cell Structure 18Figure 2-8: Multi-junction cell with gallium indium phosphide top cell, tunnel junction, gallium

arsenide bottom cell 19Figure 2-9: Tandem-Junction Cell 20Figure 2-10: Dye-Sensitized Solar Cell 21Figure 2-11: Organic PV Cell Structure 22

Figure 3-1: Batch vs. Continuous (Inline) Production 23Figure 3-2: Tandem-Junction Amorphous Si Process Flow 24Figure 3-3: Simplifi ed Process Flow for Roll-to-Roll Manufacturing of CIGS on Flexible Substrate 25Figure 3-4: Closed-Space Sublimation Process Used for CdTe 26Figure 3-5: Sputtering Deposition Process 27

Figure 3-6: CIGS Co-evaporation Process 27Figure 3-7: Nano-Particle Printing Using CIGS Ink 28Figure 3-8: Ion Beam Assisted Deposition 29Figure 3-9: CVD Process 30

Figure 3-10: Monolithic Module Integration 31Figure 3-11: Cadmium Prices, 2005 - 2010 33Figure 3-12: Tellurium Prices, 2004 - 2008 33Figure 3-13: Projected Use of Tellurium in CdTe PV 34Figure 3-14: Indium Prices, 2004 - 2009 34Figure 3-15: Projected Use of Indium in CIS/CIGS PV 35Figure 3-16: Projected Use of Commodity Materials 36

Figure 4-1: Best Research Cell Effi ciencies, 1975-2007 38Figure 4-2: Historical Module Effi ciencies by Technology 39Figure 4-3: Projected Module Effi ciency by Technology 40Figure 4-4: Theoretical Maximum Cell Effi ciency by Technology Type 41Figure 4-5: PV Substrate Comparison 42Figure 4-6: Substrate Utilization by Technology 42Figure 4-7: Module Degradation by Technology (Glass-Based Modules) Post Burn-in 44Figure 4-8: Effect of Temperature on Effective Module Effi ciency 45Figure 4-9: Spectral Sensitivity for Crystalline and Amorphous Silicon Cells. 45Figure 4-10: Thin-Film Solar Modules Can Be More Tolerant to Shade 46Figure 4-11: Simulated Operating Performance by PV Technology and Location 47Figure 4-12: Module Area Footprint by PV Technology (Based on Current Module Effi ciencies) 48Figure 4-13: PV Module Weight by Technology 49Figure 4-14: CIGS Module Weight - Framed Module vs. Frameless Module 50

LIST OF FIGURES



Figure 5-1: Estimated Preliminary 2009 Thin Film Production by Technology (MW-dc) 52Figure 5-2: Top Ten Thin Film Producers, 2008 (MW-dc) 52Figure 5-3: 2009 Industry Distribution by Technology 53Figure 5-4: Thin Film Industry Distribution by Region and Technology 54Figure 5-5: Chronology of Polysilicon Market Dynamics, 2006-2009 55Figure 5-6: Quarterly Module Prices, Q4 2008 - Q3 2009, Canadian Solar 56Figure 5-7: Module Vendors with Product Guarantee Cover 58Figure 5-8: First Solar Manufacturing Capacity and Production, 2008 vs. 2009 59Figure 5-9: Key Performance Metrics in 2009 - First Solar 60Figure 5-10: Industry Players in CdTe 61Figure 5-11: New Entrants in CIGS Manufacturing 61Figure 5-12: Key Progress Indicators for VC-backed CIGS Firms in 2009 62Figure 5-13: Powerhouse Solar Shingles 63Figure 5-14: CIGS Turnkey Vendors 63Figure 5-15: CIGS Module Effi ciencies, 2009 64Figure 5-16: Prominent Industry Players in CIS/CIGS 65Figure 5-17: Thin-Film Technologies - Comparative Economics, 2010 67Figure 5-18: Amorphous Si Companies That Entered Commercial Production in 2009 68Figure 5-19: Amorphous Si Sales Agreements and Project Deployment in 2009 69Figure 5-20: Amorphous Si Module Pricing, 2009 70Figure 5-21: Amorphous Silicon Module Effi ciencies, 2009 71Figure 5-22: Single-Junction Amorphous Si Producers 72Figure 5-23: Double- and Triple-Junction Amorphous Si Producers 73Figure 5-24: Tandem-Junction Amorphous Si Producers 73Figure 5-25: Amorphous Silicon Manufacturers with Large Corporate Parents 74Figure 5-26: VC Investment in Thin-fi lm in 2009 75Figure 5-27: Venture Capital Investment in Thin-Film PV, 2007-2009 76

Figure 6-1: Module Cost Structure 78Figure 6-2: Manufacturing Cost vs. Plant Size, Logarithmic Relation 80Figure 6-3: United Solar Production Cost as a Function of Run Rate, 2009 81Figure 6-4: Fully Loaded Module Manufacturing Costs, Q1 2010 82Figure 6-5: Single-junction Amorphous Silicon Cost Structure, 2010 83Figure 6-6: Publicly Available Thin Film Cost Data 83Figure 6-7: First Solar Cost Reduction Roadmap 84Figure 6-8: Applied Materials Tandem-Junction Cost Reduction Roadmap 85Figure 6-9: Oerlikon Module Cost Reduction Roadmap 86Figure 6-10: Fully Loaded Module Manufacturing Costs, 2012 87Figure 6-11: Fully Loaded Module Manufacturing Costs, 2015 ($/Wp) 88Figure 6-12: Embedded Capex Costs by Technology ($/W) 89Figure 6-13: Glass Cost as Percentage of Module Cost, 2012 89Figure 6-14: Module ASPs, Q1 2010 90Figure 6-15: Module ASPs, 2012 91Figure 6-16: Module ASPs, 2015 ($/W) 92Figure 6-17: Module Prices, 2010 - 2015 92Figure 6-18: Thin Film Gross Margins, 2010 - 2015 93Figure 6-19: Required Thin-Film Module Cost at 25% Gross Margin 95



Figure 6-20: Thin Film Price Sensitivity to Polysilicon Price, 2012 96Figure 6-21: Thin Film Gross Margin Sensitivity to Polysilicon Price, 2012 96Figure 6-22: Module Price Discount versus Corporate Bond Rating 98Figure 6-23: Module Price Discount vs. Relative Default Risk 98

Figure 6-24: Area-Related BOS Cost as Function of Module Effi ciency 99Figure 6-25: BOS Cost, 0.70 m2 vs. 5.7m2 Applied Materials Amorphous Si Modules – Utility-Scale 100Figure 6-26: First Solar BOS Cost Reduction Roadmap 101Figure 6-27: 2012 Module Price and Gross Margin, 0.70 m2 vs. 5.7m2 a-Si (Tandem-Junction) 101Figure 6-28: Project Cash Flow NPV vs. Equity IRR, Fixed-Area Feed-in Tariff Based Installation,

CdTe vs. c-Si 102

Figure 7-1: 5 kW Amorphous Silicon Residential Rooftop Installation, Germany 104Figure 7-2: PV Module Power Density, 2009 vs. 2012 104Figure 7-3: 900 kW Tandem-Junction Commercial Rooftop Installation, Japan 105Figure 7-4: List of Commercial Thin Film Projects Installed/Under Construction in 2009 106Figure 7-5: 21 MW CdTe Utility-Scale Project, Nevada 107Figure 7-6: List of Utility-Scale Thin Film Projects Installed/Under Construction in 2009 108Figure 7-7: 10 kW CIGS BIPV Façade 109Figure 7-8: CIGS-Based Portable Solar Charger 110Figure 7-9: Feasibility of PV Technology Deployment by End-Application 111

Figure 8-1: Global Thin Film Manufacturing Capacity by Technology, 2006 - 2012E 114Figure 8-2: Global Thin Film Manufacturing Capacity by Region, 2006 - 2012E 115Figure 8-3: 2012 Thin Film Capacity by Technology and Region 116Figure 8-4: Projected Top Thin Film Manufacturers by Capacity, 2012 117Figure 8-5: Global Thin Film Capacity by Equipment Vendor (MW-dc) 118

Figure 9-1: Historical Thin-Film Production and Market Share 119Figure 9-2: Thin-Film Production by Technology, 2008 120Figure 9-3: CIGS and Amorphous Si Mid-Year Capacity Utilization, 2006-2008 121Figure 9-4: Thin Film Potential Production by Technology, 2009E - 2012E 122Figure 9-5: Required Components of Thin-Film Production/Demand Model 123Figure 9-6: Estimated Thin-Film Production, 2009 – 2012 (MW-dc) 124Figure 9-7: Estimated Global Thin-Film Production by Technology, 2009E – 2012E (MW-dc) 125Figure 9-8: Global PV Market Share by Technology, 2012E 125Figure 9-9: Thin-Film Module Market Size, 2009E – 2012E ($ Million) 126

Figure 10-1: Mid-Year Capacity Utilization, CIGS and Amorphous Si, 2009 – 2012 129

Figure 11-1: List of CdTe Manufacturers 131Figure 11-2: List of CIGS Manufacturers 131Figure 11-3: List of Amorphous Si Manufacturers 133Figure 11-4: List of Turnkey Equipment Providers 135



ABOUT THE AUTHOR

Shyam Mehta

Shyam Mehta is a Senior Analyst at GTM Research, focusing on global solar markets. Before joining GTM Research, Shyam was a Financial Analyst at Goldman Sachs Global Investment Research where he covered equities in the alternative energy sector, primarily solar companies. Prior to Goldman, Shyam was a Research Analyst at The Brattle Group, an economic consulting fi rm, where his work focused on problems within the electricity industry. Shyam received his Bachelor’s in Mathematics from U.C. Berkeley.

Research AssistanceRichard Tesler | GTM Research



LIST OF COMPANIES

Abound Solar

Anwell

Applied Materials

ARENDI S.p.A.

Astronergy (Chint Solar)

Auria Solar

Bangkok Solar

Best Solar

Calyxo GmbH (Q-Cells)

Canrom

centrotherm AG

CG Solar

China Solar Power Ltd

China Stream Fund Solar Energy

Clairvoyant Energy

Dupont Apollo

Energosolar

ENN Solar

EPV Solar

Ersol Thin Film GmbH

First Solar

Flexcell (VHF Technologies SA)

Formosun

Free Energy Europe

Fuji Electric

Gadir Solar

Genesis Energy

Golden Photon

Green Energy Technology

Grupo Unisolar

GS Solar

GUANGHUI New Energy

Hanergy

Harbin Hopeful Star

Heliodomi S.A.

Heliosphera

HK Solar

Huilon

ICP Solar (Intersolar)

Inventux Technologies AG

Jenn Feng

Johanna Solar

Kaneka Solartech Co., Ltd.

Kenmos PV

Lambda Energia

LG Display

Malibu GmbH

Masdar

Matsushita Battery

Mitsubishi Heavy Industries

Moncada

Moser Baer

Nanjing Lunt Co

NanoPV Corporation

Nanowin

NexPower Technology

Novergy

Oerlikon



Pa Yang (Efun)

Parity Solar

Polar Photovoltaics

PowerFilm Solar (Iowa Thin Films)

Pramac Swiss SA

Primestar Solar

Qingdao Chengye Glass

QS Solar

Roth & Rau CTF Solar

Russian Nano Solar Technologies

Sanyo ENEOS

Sanyo Solar

Schott Solar GmbH

Sencera

Sharp

Shenzhen Sumoncle

Shenzhen Topray Solar

Shihua

Signet Solar

Sinonar

Solar Array Ventures, Inc

Solar Cells (Koncar)

Solar Plus

Solar Thin Films

SolarMorph

Solarpro

Solems

Soltech

Sun Well Solar (CMC)

Sunfi lm AG

SUNGEN International Limited

Sunner Solar

Sunovia

T-Solar

Terra Solar

Tianjin Jinneng Solar Cell Co.

Tianwei SolarFilms Co

Trony Solar

ULVAC

United Solar

Willard & Kelsey Solar Group

XsunX

Xunlight

Yuanchang Group

Yutong Light Energy

Zia Watt Solar



EXECUTIVE SUMMARY

E.1 Introduction: Beyond the Hype

From only 17 MW in 2002 to 966 MW in 2008 (a compounded annualized rate of 96%), thin fi lm’s rise over the last decade has been remarkable, indeed. Fueled by the greatest success story in the PV industry – cadmium telluride producer First Solar – thin fi lm has captured the imagination of industry participants and interested observers alike. First Solar represents the disruptive potential of thin-fi lm PV in full – high throughput (1,111 megawatts in 2009), competitive effi ciency (11%), and an industry-leading cost (currently 83 cents per watt), enabling signifi cant profi t (the only pure-play solar company to be listed on the S&P index).From market entry in 2002, the company has gone on to become the largest PV module producer in the world in what has seemed like the blink of an eye. The basis for this remarkable turnaround was a fundamental insight on part of investor/entrepreneur Harold McMaster in the early 1980s: that “the essential cost element of large area solar arrays was glass, and [he] could treat the actual solar cell as simply a different kind of coating on glass.” In other words, thin-fi lm PV represented a technology that could be manufactured using glass’s high-throughput coating process instead of the slow, cumbersome batch process of traditional crystalline silicon wafer-based PV -- and one that had one-hundredth the feedstock requirement.

FIGURE E-1: THIN FILM PRODUCTION AND MARKET SHARE, 2002 - 2008

Source: The Prometheus Institute, GTM Research



Thin fi lm PV, though, was not born with First Solar, nor was it even fi rst commercialized by the company: Sanyo introduced an amorphous crystalline hybrid cell as early as 1974, and many Japanese companies (e.g., Fuji, Kaneka, Mitsubishi) were selling thin-fi lm modules by the late 1990s. Interest in mass-producing thin-fi lm technologies, however, remained marginal until the mid-2000s, when the emergence of a polysilicon bottleneck-restricted crystalline silicon PV supply and it made it more expensive. The search for alternative technologies led to a tidal wave of investment and entrepreneurial activity in thin fi lm, with 46 companies entering the market between 2004 and 2008, as well as $1.8 billion in venture capital investment in the space. As market share rose from a mere 3% in 2001 to 12% in 2007, companies spoke confi dently of hundreds of megawatts of production at below a dollar per watt being within arm’s reach. It was only a matter of time before thin fi lm would replace crystalline silicon as the dominant PV technology, fi nally enabling the long sought-after dream of grid parity.

FIGURE E-2: VENTURE CAPITAL INVESTMENT IN THIN-FILM PV, 2007 AND 2008

Source: GTM Research

Or was it? As of 2010, only one other company besides First Solar – triple-junction amorphous silicon fi rm United Solar – has produced in excess of 100 MW annually. If another company has broken the $1-per-watt module cost barrier, they have not announced it. The cost structure of most amorphous silicon, considering its low effi ciency, is barely competitive with crystalline silicon, and CIGS producers have



encountered technical issues in manufacturing that have forced them to delay commercial production since 2007. To make matters more diffi cult, capital constraints made banks and developers shy away from thin fi lm in favor of more mature and abundant crystalline silicon modules for projects in 2009. First Solar aside, one would have to admit that the results have yet to live up to the talk. As Asian crystalline silicon PV producers continue to ramp down costs and increase capacity beyond the gigawatt level, the question must be asked: will results ever meet expectations, and if so, when? In other words, will thin fi lm fulfi ll its potential and make meaningful inroads into the solar energy landscape, creating new markets in the process? Or will it be relegated to a bit-player role in the growth of the global PV market?

FIGURE E-3: BANKABILITY SENSITIVITY: MODULE PRICE DISCOUNT VS. RELATIVE DEFAULT RISK


E.2 What Factors Drive Thin Film Demand?

Assessing thin fi lm’s impact on the global PV market in the years ahead requires an understanding of the factors that infl uence demand for this technology, and how these factors interact when determining technology selection in PV markets. Essentially, these are all the variables come into play when computing the values of a specifi c set of fi nancial metrics on a risk-adjusted basis for the project at hand, which include capital cost, levelized cost of energy (LCOE), IRR, or net present value depending on the market and application. As shown in Figure E 4, this list can be very extensive. It includes:



» Operational characteristics such as module degradation rate, temperature coeffi cient, and spectral response;

» System cost variables such as module price and balance-of-system costs;

» The price and availability of substitutes, i.e., crystalline silicon PV;

» Market characteristics, such as incentive structures, market application type, and environmental conditions (temperature, humidity, insolation);

» Potential supply, which in turn depends on available manufacturing capacity, throughput, and yield;

» Qualitative factors such as perceived supplier, technology, and product risk, which determine whether the project will ultimately receive fi nancing.

FIGURE E-4: REQUIRED COMPONENTS OF THE THIN FILM PRODUCTION/DEMAND MODEL


Each of the above factors ends up playing a material role in infl uencing demand for thin-fi lm PV and driving its installation. Thin fi lm economics, for example, become a lot more attractive when polysilicon prices rise. Conversion effi ciencies affect both balance-of-system costs as well as viability in space-constrained (rooftop) markets. Capacity, throughput, and yield become gating factors for how much thin-fi lm PV can potentially be produced, and therefore deployed. Temperature coeffi cients come into play when considering projects in hot climates and desert environments. Incentive structures determine whether capital cost minimization or energy output maximization is the end goal. Moreover, supplier and technology-specifi c risks prevented many thin fi lm projects from receiving fi nancing in 2009, even though project economics were very attractive for $1 per watt amorphous silicon panels sold by suppliers like China-based QS Solar.

In practice, however, an analytical model that quantifi ably links all of these variables to estimate thin fi lm production/demand by technology has yet to come into fruition; particularly challenging is the question of quantifying the highly subjective factor of



supplier and technology risk. Absent such a model, the best one can do is to shed as much light as possible on each of these different drivers, with the hope that this will lead to accurate insights about the evolution of the thin fi lm market and its impact on the global PV landscape over the next half-decade. That is the goal of this report.

E.3 Report Findings

The following are some of the major fi ndings of this study:

1. Thin-fi lm capacity will stand in excess of 10 GW of thin-fi lm capacity by the end of 2012. Figure E 5 displays historical and estimated global thin fi lm capacity. Capacity grew from just 349 MW at the end of 2006 to over 4.4 GW by the end of 2009, more than doubling every year. This refl ects the attractiveness of investment in thin fi lm due to the impact of the polysilicon shortage during that time. A large part of this was due to the rampant build-out of First Solar’s operations, from just 25 MW in 2006 to 1.2 GW by the end of 2009, as well as the emergence of a number of small and mid-sized turnkey amorphous silicon manufacturers in 2008 and 2009. From 2010 onwards, the rate of expansion is expected to slow materially; this refl ects more sober plans in the aftermath of global oversupply, low consequent capacity utilization, and the lack of fi nancing. Still, there will be over 10 GW of thin fi lm capacity by the end of 2012, and there is room for upside adjustment if demand grows faster than expected. Amorphous silicon is expected to constitute a dominant majority at 5.65 GW, while CdTe and CIGS will have roughly even capacity share at 2.47 GW and 2.11 GW respectively.

FIGURE E-5: GLOBAL THIN FILM MANUFACTURING CAPACITY BY TECHNOLOGY, 2006 - 2012E




2. Amorphous silicon and turnkey CIGS production will dominate Asian production. Looking at Figure E 6, which breaks out estimated 2012 capacity by both region and technology, it is clear that Asian countries have adopted amorphous silicon as the technology of choice in the thin fi lm department due to its low barrier to entry, although similar trends have also emerged in CIGS production in Asia of late. Amorphous silicon is also likely to lead Europe as well, with a number of early Applied Materials and Oerlikon customers being based there. Although all three technologies are expected to be fairly equally represented in North America by 2012, the growth in this region going forward is expected to be largely due to the growth of a few of the many CIGS manufacturers in the U.S. First Solar’s Malaysia plant will make up 85% of the ROW (rest of the world) category in 2012, signaling that thin fi lm is yet to take off outside PV’s core manufacturing regions.

FIGURE E-6: 2012 THIN FILM CAPACITY BY TECHNOLOGY AND REGION


3. Best-practice producers across all technologies will achieve costs of 80 cents per watt by the beginning of 2012, but there will be signifi cant variation across producers. Figure E 7 displays forecasted module costs for the beginning of 2012. CdTe costs are expected to drop to about 70 cents by this time. While possible tellurium price spikes present some risk to these numbers, the threat is limited by a thinner fi lm (down



to 2-2.5 nm) and higher feedstock utilization from conversion effi ciency gains. In the case of amorphous silicon, it is expected that single-junction technology will hit its practical effi ciency ceiling (8% to 8.5%) for many producers by 2012, and will start getting phased out thereafter. Tandem-junction, which just began to spread its wings in 2009, will take its place and become more representative of the a-Si market, at 10% effi ciency. Costs for these technologies are expected to range from $0.80 to $1.20 per watt. CIGS should show an exponential improvement in costs from 2010 to 2012, due to the commercialization of high-throughput manufacturing through roll-to-roll processes by a few producers. For these fi rms, costs could be as low as 80 cents a watt. On the other end, smaller fabs that persist with glass substrates could be up to 50% more expensive, at $1.25 per watt.

FIGURE E-7: FULLY LOADED MODULE MANUFACTURING COSTS, 2012


4. First Solar will continue its dominance, remaining the largest thin fi lm manufacturer in the world over the next three years. Figure E 8 presents the top 20 thin fi lm companies by estimated manufacturing capacity as of 2012. As shown, First Solar is expected to maintain its lead as by far the largest thin fi lm manufacturer in the world, with over 2 GW of capacity spread across its plants in Germany, France, Ohio, and Malaysia. It is followed by Sharp (tandem-junction a-Si), Showa Shell



Sekiyu (CIS), Solyndra (cylindrical CIGS), and QS Solar (double junction a-Si). Put together, the fi rms on this list made up almost 90% of total thin-fi lm production in 2008, implying that most of the top current producers should continue to be amongst the biggest in the industry in the near term. They also make up almost two-thirds of total thin fi lm capacity in 2010 and 2012. Interestingly, for all of China/Taiwan’s regional dominance, only one company (QS Solar) is in the top ten, suggesting that many of the producers from this region are small and mid-sized fi rms whose survival over the course of the next several years remains questionable.

FIGURE E-8: TOP 20 THIN-FILM MANUFACTURERS BY 2012 CAPACITY


5. CIGS and amorphous silicon (particularly turnkey line production) will likely not see meaningful market share until 2012, when cost reductions and effi ciency improvements will fi nally start to drive a competitive product offering at an adequate margin. This is also the time horizon required for bankability concerns to be alleviated for thin fi lm companies with quality modules. Figure E-9 displays thin-fi lm market share for two scenarios, a “low-penetration” scenario where overall market share stagnates at 21% by 2012, and a “high-penetration” share that assumes a share of 30% by this time. In both cases, there is limited opportunity for a-Si and CIGS producers after assuming 90 percent utilization for First Solar.



FIGURE E-9: GLOBAL PV MARKET SHARE BY TECHNOLOGY, 2012E


6. High-margin thin-fi lm production will be a game played by the select few. A return to “normal” silicon prices over the next fi ve years and the dramatic improvements that Chinese manufacturers have made in conversion cost and silicon utilization will mean that the race between thin-fi lm and crystalline silicon PV will remain a close one over the next fi ve years; the window of opportunity is small and is constantly contracting. In particular, amorphous silicon will be a low-margin product for most manufacturers, as shown by Figure E-10. There is a serious need for producers to differentiate themselves from one another in this space, and those that have had a head start will have a signifi cant advantage in developing differentiated products; examples include Sharp (higher effi ciency) and Signet Solar (downstream partnerships, parallel-wiring architecture). Single-junction a-Si will become obsolete by 2012, as its cost/effi ciency combination will no longer result in a profi table product.



FIGURE E-10: THIN FILM GROSS MARGINS, 2010 - 2015


7. Amorphous silicon will have disproportionately higher market share in non-European, non-feed-in-tariff markets. The success of amorphous silicon will largely be dependent on the development of utility-scale solar in the Middle East, U.S., India, and China given their suitability for this technology (as simulated operating results from Figure E-11 suggest for hotter climates). In particular, the technology will struggle to penetrate rooftop feed-in-tariff markets where space is a constraint and maximizing gross returns is considered paramount.



FIGURE E-11: SIMULATED OPERATING PERFORMANCE BY PV TECHNOLOGY AND LOCATION

Source: NREL Solar Advisory Model, GTM Research

8. As effi ciencies improve beyond the 12% level, thin-fi lm modules will enjoy increasing share in the residential market. BIPV products introduced in 2011 and 2012, such as Dow’s solar shingles, will serve to expand thin fi lm’s reach in this segment. Figure E 12 indicates CIGS module effi ciencies for all manufacturers in the commercial stage. While in 2008, top CIGS module effi ciency stood at 11.5% (Würth Solar) and 11 fi rms had module effi ciencies of 9% and above, today these metrics stand at 13% and 14 fi rms respectively, indicating that signifi cant progress has been made by manufacturers in increasing effi ciencies. At this rate, it is not inconceivable that CIGS effi ciencies could one day catch up with those of traditional multicrystalline silicon, which currently has module effi ciencies of around 14%.



FIGURE E-12: CIGS MODULE EFFICIENCIES, 2009

Source: Company datasheets, GTM Research

9. All signs point to one of the venture-backed CIGS companies (Solyndra, Nanosolar, Miasolé) emerging as successful representatives of this technology. The future of CIGS as a low-cost technology lies in producing it on fl exible substrates at large scale. At the same time, fl exible substrates also have lower effi ciencies, meaning that continual R&D investment will be required to improve effi ciencies and drive competitiveness. For the most part, CIGS on glass will be a niche market. While prior to 2009, most VC-backed fl exible substrate fi rms had precious little to show for all the investment, the past year saw three of them enter into commercial production and achieve key technological milestones. Nanosolar, which uses a unique process that involves printing nano-particle CIGS “ink” onto aluminum foil, announced that it was producing modules at an annual run rate of 12 MW, had top cell effi ciency verifi ed by NREL at 16.4%, and unveiled its TUV/IEC-certifi ed “Utility Panel” for large-scale deployment. Solyndra, which produces cylindrical panels for commercial rooftops, indicated it had sold 17.3 MW in the fi rst nine months of 2009, including a 1.9-MW system in Belgium, and had reached module effi ciency of 11% to 14%. Moreover, Miasolé, which deposits CIGS on fl exible steel rolls using a sputtering process, announced it had started shipping panels in October 2009. Figure E 13 summarizes these developments.



FIGURE E-13: KEY PROGRESS INDICATORS FOR VC-BACKED CIGS FIRMS IN 2009


10. Past 2013, low-cost CIGS systems will rapidly begin stealing share from crystalline silicon (and perhaps CdTe) in IRR-governed U.S. utility-scale markets. By 2012, a few CIGS producers will begin to attain manufacturing costs and effi ciencies on par with First Solar, which will drive competitive economics, especially in non feed-in tariff markets where minimizing capital costs is paramount. Nevertheless, CIGS adoption at the utility scale will be far from immediate, especially in the U.S., given the demonstrated risk-averseness of U.S. utilities; this will also be true when it comes to fi nancing large-scale CIGS utility systems in Europe. Performance and degradation concerns will have to be alleviated before mass adoption proceeds, which may take two or more years.

11. The coming years should see a great deal more consolidation than has been witnessed so far in the thin fi lm industry. Many companies that lack the cushion provided by a large corporate parent will lose the race between profi tability and solvency. Mid-sized amorphous silicon companies will be especially susceptible to this trend, as there is a natural fi t for companies that use equipment from the same vendor (as in the example of Applied customers Sontor and Sunfi lm). In the case of CdTe and CIGS, this will take the form of selling and licensing of IP assets (as has been witnessed in the case of CIGS startup Daystar). Evidence for this thesis comes from Figure E 14, which displays mid-year capacity utilizations for CIGS and amorphous silicon.

COMPANY TECHNOLOGY CAPACITY PRODUCTION EFFICIENCY CERTIFICATION

Nanosolar Nano-printing on aluminum foil 640 MW 12 MW (annualized run rate) 16.4% (best cell), 11-12% (median cell) TUV, IEC

Solyndra Cylindrical panels 70 MW 17.3 MW (Jan - Oct 2009) 11 - 14% (module) IEC, UL

Miasolé Sputtering on fl exible steel 60 MW 10.2 - 10.5% (average module) IEC, UL



FIGURE E-14: MID-YEAR CAPACITY UTILIZATION, CIGS AND AMORPHOUS SI, 2009 – 2012


1.1 Report Structure

As discussed above, the aim of this report is to comprehensively analyze all of the fi rst-order drivers that come together to infl uence thin fi lm demand in the fi nal analysis. Accordingly, each section of this report is focused on a specifi c determining factor.

Section 2 provides an overview of the various PV technologies currently under development and production.

Section 3 discusses the advantages and challenges of thin fi lm manufacturing processes and material requirements.

Section 4 examines key operating and technical characteristics, including conversion effi ciencies, degradation rates, light and temperature sensitivity, module weight/area footprint, and energy yield.

Section 5 provides a comprehensive overview of major developments and trends in thin-fi lm PV in 2009.

Section 6 looks at existing markets and applications for PV and how well thin-fi lm products are suited to each.



Section 7 analyzes manufacturing cost structure for thin-fi lm modules and the evolution of costs, prices, and profi t margins over time.

Section 8 covers historical and projected module manufacturing capacity through 2012 by company, region, and technology.

Section 9 discusses historical and projected thin fi lm production and market share.

Section 10 summarizes the key insights and predictions that emerge from the report and offers concluding thoughts.

Section 11 profi les prominent and upcoming thin fi lm manufacturers, detailing key information such as company history, conversion effi ciency, manufacturing process, location of production facilities, and capacity and production projections.



ASTRONERGY (CHINT SOLAR)

Year Founded 2006

Year Production Started 2009

Technology Type a-Si/μcSi

Location China

Module Effi ciency (%) 9

Substrate Type Glass

Manufacturing Process Oerlikon CVD

Website www.astronergy.com/

Formerly known as Chint Solar, Astronergy is a member of Chint Group, which is a player in the low-voltage electrical, power transmission and distribution industries in China with 2006 sales of $2 billion. The company purchased turnkey equipment from Oerlikon and began production of amorphous silicon modules in 2009. It also produces conventional crystalline silicon modules as well. It is targeting the utility, commercial, and BIPV markets with its amorphous Si products. In March 2009, it raised $50 million from Cybernaut China Investment and Shanghai Lianhe Investment to expand its manufacturing operations. The company won a bid for a 2-MW rooftop project in Hangzhou Energy and Environment Industrial Park in China, and was awarded at least six of the 275 “Golden Sun” PV power plant demonstration projects announced by the Chinese Ministry of Finance in December 2009.

Astronergy Year-end Capacity

Astronergy Production

YEAR 2007 2008 2009E 2010E 2011E 2012E

Historical / Potential Production 0.0 0.0 11.3 56.3 90.0 90.0

Year-end Capacity 0.0 0.0 30.0 120.0 120.0 120.0

SAMPLE COMPANY PROFILE



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greentech media - thin film 2010 - 2010

Documents

module ef ciency

film price

ef ciency progress

historical module ef

module prices

film landscape

film demand

ef ciency matters