PV International Industry Research Final

Pusat Tenaga Malaysia
Global PV Industry Research

April 2007
Prepared by Pegasus Business and Market Advisory Sdn Bhd 16-C, Jalan SS22/25, Damansara Jaya. 47400 Petaling Jaya, Selangor D.E., Malaysia Tel: 603 7726 5373 Fax: 603 7726 5358
CONTENTS
1. 2. 2.1 2.2 2.3 3. 3.1 3.2 3.3 4. 4.1 4.2 4.3 4.4 4.5 5. 5.1 5.2 5.3 5.4 5.5 5.6 5.7 6. 6.1 EXECUTIVE SUMMARY..........................................................................5 WORLD ECONOMY AND ENERGY OVERVIEW ........................................7 Overview on the World Economy ..............................................................7 Overview on Fossil Fuels .........................................................................9 Overview on Electricity Generation ......................................................... 11 THE PV VALUE CHAIN ........................................................................ 14 The PV Value Chain .............................................................................. 14 Product Range..................................................................................... 18 Drivers of Growth in the PV Value Chain.................................................. 21 INDUSTRY TRENDS AND OUTLOOK .................................................... 24 Photovoltaic Modules ............................................................................ 24 Crystalline Silicon Cells ......................................................................... 31 Polysilicon........................................................................................... 35 Thin Films........................................................................................... 41 Photovoltaic Inverters........................................................................... 45 DEVELOPMENTS IN DEVELOPED & EMERGING MARKETS.................... 49 Germany ............................................................................................ 49 Japan................................................................................................. 53 United States ...................................................................................... 58 China ................................................................................................. 63 Taiwan ............................................................................................... 67 Spain ................................................................................................. 71 South Korea........................................................................................ 75 MAJOR COMPANIES IN THE VALUE CHAIN ......................................... 80 PV Modules Assemblers ........................................................................ 80 Sharp ........................................................................................... 80 Kyocera ........................................................................................ 81 Sanyo........................................................................................... 82
6.1.1 6.1.2 6.1.3
6.1.4 6.1.5 6.1.6 6.1.7 6.1.8 6.1.9
Suntech ........................................................................................ 83 Mitsubishi...................................................................................... 85 SolarWorld .................................................................................... 85 SOLON.......................................................................................... 86 Schott Solar .................................................................................. 88 BP Solar........................................................................................ 89
6.1.10 Isofoton ........................................................................................ 89 6.2 PV Cells Manufacturers ......................................................................... 90 Sharp ........................................................................................... 90 Q-Cells ......................................................................................... 91 Kyocera ........................................................................................ 93 Sanyo........................................................................................... 94 Mitsubishi...................................................................................... 95 Schott Solar .................................................................................. 95 BP Solar........................................................................................ 96 Suntech ........................................................................................ 97 Motech ......................................................................................... 98
6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.6 6.2.7 6.2.8 6.2.9
6.2.10 SolarWorld .................................................................................... 99 6.3 Polysilicon Manufacturers .................................................................... 100 Hemlock ..................................................................................... 100 Wacker ....................................................................................... 101 REC............................................................................................ 102 Tokuyama ................................................................................... 103 MEMC ......................................................................................... 103 Mitsubishi Materials Corporation ..................................................... 104
6.3.1 6.3.2 6.3.3 6.3.4 6.3.5 6.3.6 6.4
Thin Film Manufacturers...................................................................... 105 United Solar Ovonic ...................................................................... 105 Kaneka ....................................................................................... 106 First Solar ................................................................................... 106 Mitsubishi Heavy Industries ........................................................... 107
6.4.1 6.4.2 6.4.3 6.4.4 6.5
Inverter Manufacturers ....................................................................... 108 SMA ........................................................................................... 108 Sharp ......................................................................................... 109
6.5.1 6.5.2
6.5.3 6.5.4 6.5.5 6.5.6 6.5.7 6.6
Fronius ....................................................................................... 109 Xantrex....................................................................................... 110 Kyocera ...................................................................................... 111 Mastervolt ................................................................................... 111 Sputnik ....................................................................................... 112
Others.............................................................................................. 113 Turnkey Providers ........................................................................ 113 Plastic Films ................................................................................ 114 PV Testers................................................................................... 115
6.6.1 6.6.2 6.6.3 7. 7.1
CASE STUDIES ................................................................................. 117 Case Study on Suntech....................................................................... 117 Background ................................................................................. 117 Financial Background .................................................................... 118 Management and Organisation ....................................................... 119 Technology Developments ............................................................. 120 Business Developments................................................................. 122 Ensuring Supply of Silicon Wafers ................................................... 124
7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.1.6 7.2
Short Case Study on Yingli Solar .......................................................... 126 Background ................................................................................. 126 Management and Organisation ....................................................... 127 Developments.............................................................................. 127
7.2.1 7.2.2 7.2.3 8. 8.1 8.2 8.3 9.
CONCLUSIONS ................................................................................. 130 Future Challenges .............................................................................. 130 Future Directions ............................................................................... 131 Opportunities .................................................................................... 133 APPENDIX........................................................................................ 137
Abbreviations
AC a-Si c-Si CdTe CIS CIGS DC EoG FBR GDP mc-Si MG-Si OEM PV R&D sc-Si SoG TCS US : Alternating current : Amorphous silicon (thin film) : Crystalline silicon : Cadmium telluride (thin film) : Copper indium selenide (thin film) : Copper indium gallium selenide (thin film) : Direct current : Electronic grade (silicon) : Fluidised bed reactor : Gross domestic product : Multi-crystalline silicon also known as poly-crystalline silicon : Metallurgical grade silicon : Original equipment manufacturer : Photovoltaic : Research and development : Single-crystalline silicon also known as mono-crystalline silicon : Solar grade (silicon) : Trichlorosilane (gas) : United States of America
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E EX XE EC CU UT TI IV VE ES SU UM MM MA AR RY Y
Cost of energy produced from PV is significantly high compared to electricity produced by the utility companies. Thus growing government support for PV in Germany, Japan and the United States will continue to be the main driver of growth for PV. Consequently, government support in the emerging PV markets of Western Europe (notably Spain and Italy), Korea and China will also drive growth further in the coming years. Key programmes introduced by various governments to stimulate demand for PV include: Government mandated power buy back schemes from the utility companies above the normal utility rates; Direct government subsidies to the end-users to offset the costs of purchase and installing the PV system; Financing at low interest and tax incentives for purchase and installing PV systems; and Government mandate setting the minimum usage level for
renewable energy. Production of PV cells and modules is estimated to increase from 1,727 MWp in 2005 to about 2,400 MWp by 2006. This report projects demand for PV will increase by 20% annually in 2007-2010 to reach 5,000 MWp by 2010. China is becoming a leading manufacturer of PV modules with export markets in Europe and the US. However, increasing demand for PV in recent years and constraints in silicon production has created global shortages of polysilicon causing prices of the material to rise and increasing production costs. Construction of new polysilicon plants will only begin in 2008-2009 to relieve the global polysilicon shortage. Production of polysilicon for the PV industry is projected to increase from 13,500 tons in 2006 to 49,300 tons by 2010. Shortages and increasing prices of polysilicon in recent years have driven demand for thin film modules. Thin film modules do not require polysilicon and has a lower production cost than crystalline silicon cell modules. The European Photovoltaic Industry Association predicts demand for thin film modules would increase from 100 MWp in 2005 to 1,000 MWp by 2010 increasing its market share from 6% in 2005 to 20% by 2010.
Diagram 1. Developments in the PV Value Chain
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W WO OR RL LD DE EC CO ON NO OM MY YA AN ND DE EN NE ER RG GY YO OV VE ER RV VI IE EW W
2.1
Overview on the World Economy

Developments in the world economy. Traditionally economic developments in the high-income countries of the US, European Union and Japan have influenced the direction of the world economy. In recent years, strong economic growth in China and India and their integration into the global economy are beginning to influence the world economy. Despite soaring global oil prices and rising interest rates in many countries across the world, the world economy managed to sustain moderate economic growth from 2004 to 2006. The world economy experienced a moderate slowdown in its GDP growth from 4.1% in 2004 to 3.5% in 2005 before regaining to 3.9% by 2006.1 Much of the worlds economic growth in 2006 occurred during the first half of the year. However, the economies in the high-income countries of the US, European Union and Japan began to show signs of cooling in 2006. While GDP in the US grew marginally from 3.2% in 2005 to 3.4% in 2006, GDP growth in Japan cooled from 2.7% to 1.4% during the period. However, strong economic growth in China and India above 8.0% annually in 20052006 minimised the impact of a cooling economy in the high-income countries on the globally economy.
Table 2.1a. World Economic Performance Real GDP growth (%) 1980- 2000 World High-income countries Developing countries Asia-Pacific South Asia Europe and Central Asia Latin America and Caribbean Middle East and North Africa Sub-Sahara Africa 3.0 2.9 3.4 8.5 5.4 0.6 2.2 4.0 2.2 2005 3.5 2.7 6.6 9.0 8.1 6.0 4.5 4.4 5.5 2006e 3.9 3.1 7.0 9.2 8.2 6.4 5.0 4.9 5.3
Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
Overall,
the
developing
economies
experienced
moderate
to
strong
economic growth from 2004 to 2006. While the high-income countries experienced growth of 2.7% in 2005 and 3.1% in 2006, the developing economies in various regions across the world experienced growth of 4.4%9.0% in 2005 and 4.9%-9.2% in 2006. Growth has been strongest in AsiaPacific contributed by Chinas strong economic growth followed by South Asia from Indias economic growth. Nevertheless, the developing economies began to show signs of cooling in the second half of 2006.2 Outlook on the world economy. In the immediate term, the economies of the high-income countries and the developing economies would cool at a lower rate of economic growth in 2007. Projections are the US economy would grow from 3.4% GDP growth in 2006 to 2.7% by 2007. Consequently, Chinas economy would grow from 10.7% GDP growth in 2006 to 8.7% in 2007 as the country implements fiscal and monetary measures to control inflation. A major impact from a slower economic growth in the major economies is reduction in imports subsequently affecting the worlds economic growth. However, the positive impact is it would reduce inflationary pressure on the world economy.
Table 2.1b. World Economic Forecast Real GDP growth (%) 2007f World High-income countries Developing countries Asia-Pacific South Asia Europe and Central Asia Latin America and Caribbean Middle East and North Africa Sub-Sahara Africa 3.2 2.4 6.4 8.7 7.5 5.7 4.2 4.9 5.3 2008f 3.5 2.8 6.1 8.1 7.0 5.5 4.0 4.8 5.4 2008-2030f 2.9 2.4 4.0 5.1 4.7 2.7 3.0 3.6 3.3
Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
In the medium term, projections are the developing economies would continue to grow at a faster pace than the high-income countries from 2007 to 2008 and continue to do so in the next decade. Forecasts are the economy in the high-income countries would grow by 2.4% in 2007 and 2.8% in 2008. The developing economies would grow by 4.2%-8.7% in 2007 and 4.0%-8.1% in 2008. Among the developing economies, growth
Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
would be strongest in Asia-Pacific contributed by Chinas strong economic growth. China would eventually replace Germany as the worlds third largest economy after the US and Japan within this decade and influence the world economy through its imports and exports.2 Concerns on the direction of the world economy. Any significant economic slowdown or recession in the US and Chinas would adversely affect the world economy. Movements in value of Chinas currency follow closely with the US dollar and currently undervalued. Thus a significant decline in the value of the US dollar and the economies of the US and China would adversely affect imports from these countries. This represents a major threat to the world economy. Another economic threat is the volatility of oil prices. Oil prices began to show a decline from its peak (about US$75 per barrel) in 2006 but the possibility of a return to higher oil prices remains. Geopolitical uncertainties in Iraq and Iran would have a significant impact on the worlds oil prices. Return to higher oil prices under a scenario of a cooling world economy in 2007 could dampen economic growth in 2008 and beyond. Furthermore, return to higher oil prices would increase the potential for inflation.
2.2
Overview on Fossil Fuels

Developments in fossil fuels. The 10-year period prior to 2000 was a period of low crude oil prices below US$20 per barrel. Thus, there were limited efforts to invest in new oil wells to boost crude oil supply. Demand for energy rose at a faster pace in 2000-2006 fuelled by economic growth in the developing economies especially in Asia-Pacific and South Asia. Increasing demand and tightening supplies caused a surge in oil prices from below US$20 per barrel in 1999 to nearly US$75 per barrel by the third quarter of 2006. Furthermore, geopolitical uncertainties in the Middle East and adverse weather conditions affecting oilrigs on the US Gulf Coast exacerbated the supply situation. Prices of natural gas paralleled with oil prices from 2000 to 2006. However, thermal coal only followed suit in 2004 as an alternative to oil and natural gas to fuel the economies of China and India. Prices of the three fossil fuel categories began to decline by the fourth quarter of 2006. Prices of oil declined from its peak of US$75 per barrel during the third quarter of 2006 to as low as US$50 per barrel by the first quarter of 2007. Factors contributing to the decline were a slowing global economy, production from new oil wells constructed after 2000 and warmer winters in Europe and North America.
Figure Figure 2.2. 2.2. World World Fossil FossilFuel FuelPrices Prices Historical (1990-2005) & Forecast (2006-2010) at Historical (1990-2005) & Forecast (2006-2010) atCurrent CurrentPrices Prices
80 80 70 70 60 60 50 50 40 40 30 30 20 20 1 0 1 0 -1 0 1 0 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0
Crude CrudeOil Oil
Thermal ThermalCoal Coal
Natural NaturalGas Gas
Source: BP Statistical Review of World Energy (June 2006) and Pegasus forecast
Energy
consumption
between
the
developed
and
developing
economies. World consumption of energy has been growing at an average of 2.0% annually in recent years. The OECD countries currently consume slightly more than half of the worlds energy but consumption has been growing below the worlds average at 1.0% annually. Reasons for the slower growth in consumption are slowing population growth, maturing economy and energy conservation practices in the OECD countries.
Table 2.2. Regional Growth in Energy Demand Grouping OECD Region North America Europe Asia Total OECD Non-OECD Europe and Eurasia Asia-Pacific Middle East Africa South and Central America World Average Average Annual Growth in 2003-2030 1.3% 0.7% 1.0% 1.0% 1.8% 3.7% 2.4% 2.6% 2.8% 2.0%
Source: International Energy Outlook 2006, US Department of Energy
However, energy consumption from the non-OECD countries has been growing at a higher rate than the worlds average in recent years. Energy
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consumption among the non-OECD countries in various regions of the world was 1.8%-3.7% fuelled by economic growth in the developing economies. Growth in consumption has been strongest among the developing economies especially from China and India brought about by the countries vibrant economic growth. Outlook on fossil fuels. Though prices of crude oil have declined from its peak of US$75 per barrel, analysts are in the opinion that prices of fossil fuels in 2007 and beyond would not decline to levels prior to 2000. Energy consumption in the developing economies especially in Asia-Pacific would continue to outstrip consumption in the OECD countries in this decade and the next fuelled by economic growth. The US Department of Energy predicts that by 2015, the proportion of the worlds energy consumption from the non-OECD countries would outstrip the OECD countries. The oil and gas reserves of the Middle East, North Africa and Russia would play a major role in meeting the worlds future need for energy. These regions remain under-exploited and meeting future needs would depend on new investments in downstream and upstream activities. Uncertainties remain on the amount and speed of new investments to increase production and availability for exports. Any significant shortfall in investments would adversely affect the global energy balance and contribute towards volatility in future energy prices.
2.3
Overview on Electricity Generation

Developments in worlds electricity generation. Worldwide electricity generation grew from an average of 2.9% annually in 1996-2000 to 3.3% annually in 2000-2004. From 2000 to 2004, electricity generation grew from 14,595.7 billion kWh to 16,599.1 billion kWh according to the US Energy Information Administration (EIA). Electricity generation in the OECD countries slowed from an average growth of 2.3% annually in 1996-2000 to 1.4% annually in 2000-2004. However, generation from the non-OECD countries grew at a faster rate from an average of 4.0% annually in 1996-2000 to 6.1% annually in 2000-2004. As a result, the proportion of the worlds total electricity generation from the OECD countries declined from 62.4% in 2000 to 58.0% in 2004 while the proportion from the non-OECD countries increased from 37.6% to 42.0% during the period.
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Gains in energy efficiency, slower population growth and a maturing economy in most of the OECD countries have slowed growth in electricity consumption and generation. However, stronger economic growth among the non-OECD countries has fuelled consumption and generation of electricity at a faster rate than the OECD countries. Strong economic growth in the non-OECD countries of Asia created the fastest increase in electricity consumption growing at an average of 9.1% annually in 2000-2004. Thus, Asias share of the worlds electricity generation increased from 17.0% in 2000 to 21.2% in 2004. China was the main contributor to Asias growth in electricity generation and is the worlds second largest generator of electricity after the United States. Chinas share of the worlds electricity generation increased from 8.9% in 2000 to 12.5% in 2004.
Table 2.3a. Regional Growth in Electricity Generation Elect. generation (bil kWh)
2000 2004
Average annual growth

19962000 20002004
Share of world generation

2000 2004
OECD North America Europe Asia OECD Non-OECD Europe and Eurasia Asia Middle East Africa Sth & Ctrl America Non-OECD World 1,372.6 2,479.5 437.9 416.9 782.8 5,489.7 14,595.7 1,497.1 3,517.1 566.6 505.4 882.4 6,968.6 16,599.1 -0.1% 6.3% 6.5% 3.2% 4.3% 4.0% 2.9% 2.2% 9.1% 6.7% 4.9% 3.0% 6.1% 3.3% 9.4% 17.0% 3.0% 2.9% 5.6% 37.6% 9.0% 21.2% 3.4% 3.0% 5.3% 42.0% 4,589.4 3,040.3 1,476.3 9,106.0 4,794.4 3,250.2 1,585.9 9,630.5 2.5% 2.3% 1.7% 2.3% 1.1% 1.7% 1.8% 1.4% 31.4% 20.8% 10.1% 62.4% 28.9% 19.6% 9.6% 58.0%
Source: US Energy Information Administration
Outlook on worldwide electricity generation. The US EIA projects world electricity generation to grow at an average rate of 2.8% annually between 2003 and 2030. In a maturing economy, electricity generation in the OECD countries would grow at an average of 1.6% annually. However, stronger economic growth in the non-OECD countries would increase generation at an average of 4.2% annually.
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Table 2.3b. Regional Projection in Electricity Generation

Electricity generation (billion kWh) 2003 OECD: North America Europe Asia OECD Non-OECD: Europe and Eurasia Asia Middle East Africa S. & C. America Non-OECD World 1,377 3,014 448 408 756 6,003 14,885 1,985 5,027 738 607 1,162 9,518 19,898 3,071 10,599 1,108 1,035 2,196 18,009 31,560 3.0% 4.8% 3.4% 3.5% 4.0% 4.2% 2.8% 10.0% 25.3% 3.7% 3.1% 5.8% 47.8% 9.7% 33.6% 3.5% 3.3% 7.7% 57.1% 4,442 2,975 1,465 8,882 5,109 3,471 1,799 10,380 6,944 4,350 2,257 13,551 1.7% 1.4% 1.6% 1.6% 25.7% 17.4% 9.0% 52.2% 22.0% 13.8% 7.2% 42.9% 2010 2030 Avg. annual growth 2003-2030 Share of world generation 2010 2030
Source: US Energy Information Administration
The non-OECD countries of Asia would continue to show the strongest growth though at a slower pace averaging 4.8% annually from 2003 to 2030. This would increase the Asias share of the worlds electricity generation from 21.2% in 2004 to 25.3% by 2010 nearly equal to North Americas share. Chinas strong economic growth would continue to be the main contributor in Asia increasing at an average of 4.9% annually from 2003 to 2030. Thus, Chinas share of the worlds electricity generation would increase from 12.5% in 2004 to 15.1% by 2010.
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T TH HE EP PV VV VA AL LU UE EC CH HA AI IN N
3.1
The PV Value Chain

Activities in the value chain. Currently crystalline silicon cells account for 94% of the PV modules produced in the world. Thin films using a-Si followed by CI(G)S and CdTe account for the remaining 6% of the modules produced. Crystalline silicon cell modules would continue to dominate the PV market but forecast thin films share of the module market would increase to about 20% by 2010. value chain for the PV industry. Producers of silicon - process and refine silicon into semiconductor grade silicon as the feedstock. Producers of ingots and wafers cast silicon into ingots and subsequently slice ingots into thin silicon wafers. Cell producers - applies coatings and electrical contacts to the wafers or thin films to convert it into light absorbing conductors. Module manufacturers frames and laminates the assembled cells and installs the electrical contact points to produce the modules. Component manufacturers - manufactures other electrical and nonelectrical components that make up the PV system. Installers and system integrators - designs and installs a complete PV system for operation. The following describes the players in
Diagram 3.1a. Value Chain for the Photovoltaic Industry
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Table 3.1a. The Activities of the Value Chain Value Chain Silicon feedstock Silicon is in abundance in the form of sand, quartz, granite, clay and mica. Silicon is initially mined and then extracted to produce metallurgical grade silicon (MG-Si) and has wide usage in the aluminium and chemical industry. For silicon to reach semiconductor grade for use in electronics and PV, MG-Si has to be processed into polysilicon that forms the feedstock to produce the ingots. There are companies specialising in recycling silicon wastes, broken silicon wafers and off spec silicon sourced from the semiconductor and PV industry while some cell manufacturers conduct their own recycling. Ingots and wafers Wafer manufacturers receive the polysilicon feedstock and process it into polysilicon (mc-Si) or monosilicon (sc-Si) ingots. These ingots are then sliced or sawed into thin wafers.
Description of Activity
Production of sc-Si ingots is through the float zone or Czochalski process. Ingots produced through the flat zone process produces purer sc-Si ingots than the Czochalski process.
Production of mc-Si ingots is generally through the directional solidification or casting process. It is less costly to produce mc-Si ingots but have a lower light conversion efficiency then sc-Si.
An alternative method is to process the polysilicon feedstock into thin sheets or ribbons of specific length and then cut into wafers. Cells PV cells produced from the wafers are the light absorbing materials. Wafers produced from sawed ingots have a damaged surface and therefore etched with an alkaline solution. Phosphorus is used to diffuse the surface of the silicon wafer doped with boron. An antireflective coating (silicon nitride or titanium dioxide) is usually applied to increase the amount of light absorbed by the cell. The wafer is then metallised by screen-printing (usually with a silver paste) to form gridlike contacts on the front of the wafer. The rear of the wafer is also screen-printed (usually with aluminium) covering the area or in a gridlike pattern. Many companies involved in manufacturing PV cells from wafers are also involved in manufacturing thin film cells. Others specialises only on manufacturing thin film cells. Production of thin film cells involves thinly depositing light absorbing materials on low cost backing
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Table 3.1a. The Activities of the Value Chain Value Chain materials such as glass, metal sheets or plastic. The most common light absorbers used in thin films is a-Si and others include CdTe and CI(G)S. A transparent layer of oxide (such as tin oxide) forms the front electrical contact and a metal layer forms the rear electrical contact. PV Modules Many PV cell manufacturers are also manufacturers of PV modules. Manufacturing PV modules is basically an assembly process. The cells are stringed to form a large circuit on a panel and framed with aluminium. A sheet of glass (usually tempered glass) covers and protects the panel and the panel backed with laminates, electrical connections and fitted with junction boxes. Typical modules are flat panels and available in various sizes. Modules are also available as building integrated modules in the form of roof tiles, hipped roofs, windows and walls. Components Besides the modules, other components comprise a PV system. These include the mounting structures to hold the PV modules, inverters to convert direct current (DC) into alternating current (AC), power controllers, meters, connectors, electrical cabling and battery storage devices. Installation The final part of the value chain involves installing the modules and its components to form the PV system. Installation may be grid-connected or off-grid systems. Players in this segment of the value chain range from small local businesses to large multinational companies. Small businesses generally install PV systems of less than 10 kWp in homes. Some module manufacturers are also involved as systems integrators installing larger PV systems in stadiums, commercial buildings and power plants. Description of Activity
Characteristics of the value chain. The beginning of the value chain is characterised as small number of players involved in large-scale production of silicon. As the value chain moves downstream, the number of players in each sector of the value chain increases and characterised with smaller scale production capacities. Consequently, as the value chain moves upstream, the number of players decreases and characterised with larger scale production capacities.
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Compared to manufacturing PV modules, manufacturing silicon requires high investments in capital (per MWp), technological know how and largescale production to produce the economies of scale. As the value-chain moves downstream, investments in capital (per MWp) reduces and smaller scale production is feasible to achieve reasonable economies of scales - the barrier to entry decreases downstream along the value chain. Thus, the barrier to entry is highest to manufacture silicon with few players in the industry while the barrier to entry to install PV systems is the lowest with the greatest number of players.
Diagram 3.1b. Characteristics of the value chain
Studies also show that profit margins are highest in the upstream activities of the value chain and generally decline as activities move downstream. The following are the typical profit margins across the value chain in 2005-2006: Manufacturing polysilicon - 50%-60%; Manufacturing wafer - 35%-40%; Manufacturing PV cells - 25%-30%; Manufacturing PV modules - 5%-10%; Manufacturing inverters 25%-30%
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Installing PV systems - 20%-25%; Integration across the value chain. Very few players have integrated across the value chain except for the larger companies. Increasing demand for PV with constraining supply of silicon in the last three years has resulted in some companies involved in cell and module manufacturing to move upstream into wafer manufacturing and some into silicon production to ensure security of supply. Moving upstream in recent years has been mostly through acquisition, partial stake in companies or forming joint ventures PV industry is beginning to shows signs of consolidation.
Table 3.1b. Example of Major Companies Involve in the Value Chain

Company Silicon Ingots/ wafers Cell production Module assembly Components Installation
Sharp Kyocera Sanyo Mitsubishi SolarWorld Isofoton Q-Cells BP Solar Suntech Motech Unisolar REC MEMC Hemlock Wacker
S S S
S S S S
S S S S S S S S S
S S
S S
S S S
S S
S S S S S S
S S S S S S S
S S S
S S S S
S S
S Includes subsidiary companies and joint ventures. S Planning
3.2
Product Range
Major categories of modules manufactured and commercially available are crystalline silicon and thin film cell modules. Crystalline silicon cell modules account for 94% while thin film cell modules account for 6% of the modules produced worldwide in 2006.
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Crystalline silicon modules. Modules are either mc-Si or sc-Si cells produced from sawing ingots into wafers, which produces a significant amount of waste. An alternative method to reduce waste is to process silicon into sheets or ribbons of specific length and then cut into wafers. Thin film modules. These modules use non-crystalline light absorbing materials thinly deposited on a low cost material such as glass, stainless steel or plastic. Common thin film modules produced and commercial available are a-Si (silicon in a different form), CdTe and CI(G)S. Other categories of cells include silicon powder melted on a low cost conducting substrate but currently suffer poor uniformity and surface roughness. Conductive polymer solar cells can be produced at low cost but suffers degradation from ultraviolet (UV) light and therefore has a short lifespan. Another is mc-Si thin film on glass developed by CSG Solar but currently is not yet widely available.
Diagram 3.2. Categories of Cells and Modules
Currently crystalline silicon cells are the mainstay of most PV modules in the market. Technically crystalline silicon is not the ideal material for a light absorbing semiconductor but benefits from decades of R&D. Furthermore, silicon cells are stable with good light conversion efficiencies. Crystalline silicon cells account for 94% of the modules in the global market in 2006; mc-Si cells produced from sawn silicon ingots account for 57% of the modules. sc-Si cells produced from sawing high-purity single crystal boule account for 33% of the modules.
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Crystalline silicon sheets and ribbons account for 4% of the modules.

Table 3.2a. Major Players in PV Crystalline Silion (mc-Si and sc-Si) Sharp Kyocera BP Solar Q-Cells Mitsubishi SolarWorld Sanyo Schott Solar Isofoton Motech Suntech a-Si Thin Film United Solar Kaneka Fuji Electric Sharp Mitsubishi Schott Solar CI(G)S Thin Film Shell Solar Showa Shell Wurth Solar Daystar Nanosolar CdTe Thin Film First Solar Antec Solar
Crystalline silicon wafers account for 40%-50% of a modules production cost. The high cost of silicon especially in the last 3-4 years has led the industry to seek lower cost materials and thin films shows promise. Besides its lower cost, production allows for greater use of automation and therefore less labour intensive. Furthermore, thin films allows for an integrated approach to the module design. However, thin films have yet to make any significant impact to the maturing crystalline silicon technology. Thin films account for 6% of the modules produced and marketed in 2006: Thin films from a-Si are the most widely developed of the thin film technologies production. CdTe thin films account for 1.5% and CI(G)S account for less than 0.5% of the worlds production of PV modules. Though current technologies using thin film are potentially cheaper to produce than crystalline silicon, thin films have lower conversion efficiency. Furthermore, some thin films have shown degradation in efficiency over a period by as much as 15%-35%. and account for 4.5% of the worlds module
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Table 3.2b. PV Modules and Efficiency Range Type of Cells/Modules mc-Si sc-Si a-Si (thin film) CdTe (thin film) CI(G)S (thin film) Module Efficiency 12%-15% 14%-17% 6%-9% 8%-10% 9%-11%
3.3
Drivers of Growth in the PV Value Chain

PV technology initially had niche applications in space, telecommunications and consumer electronics (e.g. calculators) and has diverse into larger scale electricity generation. Despite PVs strong growth in recent years, it is starting from a small base and currently accounts for less than 1% of the worlds electricity generation. Furthermore, cost of electricity produced from PV is significantly high compared to conventional electricity produced by the utility companies and other forms of renewable energy such as wind power and biomass. Drivers of growth in the PV value chain. Electricity produced by many power plants across the world is very much dependent on non-renewable fossil fuels. Higher fuel prices and political instability, war and threat of terrorism in the oil producing countries have forced governments to consider renewable energy to ensure security in the energy supply to sustain economic development. Awareness on global warming among citizens and governments in many countries has generated interest for renewable energy. Many governments have signed the Kyoto Protocol agreeing to reduce greenhouse emissions, which contributes towards global warming. Furthermore, governments are setting stricter standards on air pollution and renewable energy including PV is an option to reduce pollution. Escalating demand for PV and constraining supply of silicon in recent years has constrained production of crystalline silicon based PV systems. The result has been escalating prices across the PV value chain from production of silicon to modules. This has generated interest to develop and commercialise thin film technologies that uses minute amounts of silicon (aSi thin films) and thin films that do not use silicon (CIS, CIGS and CdTe thin films). Escalating demand for PV and constraining supply of silicon has also generated interest among manufacturers across the value chain to reduce
21
production cost through improvements in production efficiency and efficient utilisation of silicon. This is an important driver within the value chain since successes of companies greatly depend on their ability to reduce cost and become more efficient. This is would be very relevant in the future in the event of reduced government subsidies, slowdown in demand and increasing competition. Reducing cost would also result in PV becoming more affordable generating greater interest from the end-users.
Diagram 3.3. Market Drivers for the PV Value Chain
Government support for PV. Current cost to generate electricity through PV remains very high compared to conventional electricity produced by the utility companies and other forms of renewable energy. Thus government support for PV through financial incentives has been a key driver leading to increasing end-user demand and growth of the industry. Thus government support in Germany, Japan, United States will continue to drive the PV industry. Consequently, government support in the emerging PV markets of Western Europe (notably Spain and Italy), China, Korea and Taiwan will drive the future growth of the industry. Government support programmes to generate end-user demand for PV can be generalised into the following:
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Mandated power buy back schemes from the utility companies above the normal utility rates. Direct government subsidies to the end-users to offset the costs of purchase and installing the PV system. Financing at low interest and tax incentives for purchase and installing the PV systems. Government mandate setting the minimum usage level for
renewable energy. Government programmes directly supporting the PV industry typically involves financial support for industries and research institutions to conduct R&D in PV technologies. Typically in the developing economies especially in Asia government support includes: Tax holidays to attract companies to invest and establish new manufacturing facilities. Overseas trade missions and networking between foreign and the local industries to attract investments. Encouraging companies to establish their manufacturing and R&D operations in science or technology parks. Cost to produce electricity from PV will continue to remain higher than conventional electricity for some time. Thus government support will continue to be the key catalyst driving the market and industry at least for another decade.
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4 4..
I IN ND DU US ST TR RY YT TR RE EN ND DS SA AN ND DO OU UT TL LO OO OK K
4.1
Photovoltaic Modules
Demand and supply growth. The market for PV modules has been booming in the last five years growing at an average rate of nearly 43% annually from 2001 to 2006. The market increased from 1,727 MWp in 2005 to an estimated 2,400 MWp in 2006. Driving the market worldwide are the government supported renewable energy programmes namely in Western Europe (particularly in Germany and Spain), Japan and the US. Projected market for PV modules by 2010, from various sources, range from a conservative 5,000 MWp to an optimistic forecast of 11,000 MWp. Growth in the global market would remain strong from 2007 to 2010 but expected to cool as the market in Germany levels off or begins to decline. Thus, the assumption is the market would grow at a slower pace in 2007-2010 compared to 2001-2006. Based on 20% annual growth in 2007-2010, the global market would reach 5,000 MWp by 2010.
Figure Figure 4.1a. 4.1a.PV PV Module Module Production Production and and Projections Projections (MWp) (MWp)
10,000 10,000
9,220 9,220
8,000 8,000
Productionin inMWp MWp Production
6,855 6,855 4,977 4,977
6,000 6,000 4,000 4,000 2,000 2,000 0 0

759 759
2,400 2,400 1,727 1,727 1,195 1,195 560 399 560 288 399 78 201 288 89 126 155 201 78 89 126 155 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002
2003 2003
2004 2004
2005 2005
2006 2006
2007 2007
2008 2008
2009 2009
2010 2010
Historical Historical
40% 40% Annual AnnualGrw Grwth th
Source: 1995-2005 from PV News: 2006 from Pegasus estimates
New silicon plants from existing and new players would come into production in 2008 and beyond, relieving the constraint and gradual reduction in module prices by 5%-7% annually in 2008-2010. Excesses in silicon production beyond 20% annual growth for PV in 2008-2010 would create an oversupply of silicon. Furthermore, aggressive build-up in
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production capacity for PV modules especially in China would increase the potential to supply beyond the 20% annual growth for PV. A combination of these two factors would cause prices of modules to decline faster than the expected 5%-7% annually in 2008-2010 and increase demand beyond the projected 20% annual growth for PV. The largest market for PV in 2005 was Germany with demand increasing from 363 MWp in 2004 to 635 MWp in 2005. Japan was the second largest market growing from 272 MWp in 2004 to 290 MWp by 2005. The US was the third largest market with 103 MWp installed in 2005 and Spain contributed significantly to 20 MWp. Other significant markets in Europe during the period included Austria (8 MWp), France (7 MWp), Italy (7 MWp) and Switzerland (4 MWp) and Britain (3 MWp). In Asia, Korea installed 6.5 MWp and China installed 27 MWp in 2005. Industry players. Japanese companies dominate the PV module industry accounting for 48% of the worlds production or 833 MWp in 2005. Japans Sharp, Kyocera, Sanyo, Mitsubishi and MSK together accounted for 710 MWp or 41% of the worlds production during the period. China is increasingly making headways into the global PV module market with production from China reaching 443 MWp or 26% of the worlds production in 2005.
Figure Figure 4.1b. 4.1b.Share Share of of World World PV PV Module Module Production Production in in 2005 2005(MWp) (MWp)
Others Others 32.0% 32.0%
Sharp Sharp 23.0% 23.0%
Isofoton Isofoton 2.3% 2.3% Solarw Solarwatt att 2.1% 2.1% BP BPSolar Solar 2.7% 2.7% Suntech Suntech 2.9% 2.9%
MSK MSK 3.5% 3.5%
Mitsubishi Solon Solon Mitsubishi 6.5% 6.5% 3.5% 3.5%
Sanyo Sanyo 7.2% 7.2% Kyocera Kyocera 8.2% 8.2%
Shell ShellSolar Solar 3% 3%
Schott Schott Solar Solar 3% 3%
Note: Estimates from companies production
The industry scenario in the last five years has been a period of acquisitions, joint ventures, expanding operations and players entering and exiting the market. Shell Solar exited from manufacturing c-Si modules in
25
2006 to focus on thin films. During the period, Germanys SolarWorld acquired Shell Solars facilities for c-Si modules and Chinas Suntech acquired a majority stake in Japans MSK. Isofoton established an office in the US in 2004 to penetrate the countrys market. Sharp and Kyocera expanded their manufacturing operations from Japan to Britain, Czech Republic and Mexico. China has been significantly increasing production and production capacity in recent years. Manufacturing modules require more labour while PV cells and wafers require more automation. Chinas advantage is its low labour cost compared to the United States, Japan and Europe. Thus, China is able to produce modules at a lower manufacturing cost to compete in the global market. Chinese manufacturers have been increasing their production capacity for c-Si modules from 1,500 MWp in 2005 to 2,800 MWp in 2006. By 2007, Chinas production capacity would increase to nearly 4,000 MWp and further increases expected by 2010. Product. In 2005, c-Si modules accounted for 94% of the worlds module production - mc-Si cell modules accounted for 57%, sc-Si cell modules 33% and c-Si ribbons/sheets 4%. Modules using mc-Si cells have lower conversion efficiency than sc-Si modules but its market share has been increasing over sc-Si modules with improvements in efficiency. Shortages of silicon in recent years have created opportunities for thin films with its lower manufacturing costs and not constrained by supplies of silicon. By 2005, thin films using a-Si, CI(G)S and CdTe increased to 6% of the worlds module production.
Figure Figure 4.1c. 4.1c.PV PV Modules Modules by byType Type in in 2005 2005 c-Si c-Siribbon/sheets, ribbon/sheets, 4% 4% a-Si a-Sithin thinfilm, film,5% 5%
Others, Others,1% 1%
sc-Si, sc-Si,33% 33%
mc-Si, mc-Si,57% 57%
Note: Derived from various estimates
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Though c-Si modules would continue to dominate the world market by 2010, projections are thin films share of the market would increase from 6% in 2005 to 20% by 2010. The appeal for thin film modules is it requires little or no silicon and production costs are lower than c-Si modules. However, efficiencies technologies. thin are films are hard lower to mass-produce than c-Si cost-effectively under and generally modules current
FIgure FIgure 4.1d. 4.1d.Share Share of of the the Module Module Production Production by byType Type 4% 4% 4% 4% 6% 6% 6% 6% 7% 7% 14% 14% 17% 17% 20% 20%
100% 100% 80% 80% 60% 60%
96% 96% 40% 40% 20% 20% 0% 0% 2003 2003
96% 96%
94% 94%
94% 94%
93% 93%
86% 86%
83% 83%
80% 80%
2004 2004
2005 2005
2006 2006 Thin Thinfilms films
2007 2007
2008 2008
2009 2009
2010 2010
Crystalline Crystallinesilicon siliconmodules modules
Note: Assumption of projection Total module demand increasing from 759 MWp in 2003 to 4,977 MWp by 2010; Thin films increasing from 30 MWp in 2003 to 1,000 MWp by 2010 according European Photovoltaic Industry Association.
Price trend. Prices of modules across the world increased from 2004 to 2006. In Germany, prices rose sharply from 2004 to 2005 as demand for PV in the country increased by 85% annually. The exception was Japan with the strength of the Yen, low inflation and economies of scale in Japanese production. Furthermore, most of the major Japanese manufacturers have integrated across the value chain beginning from manufacturing of wafers and ingots to modules ensuring supplies of silicon materials. Two key factors contributed towards increasing modules prices from 2004 to 2006: A demand exceeding supply situation for PV contributed towards increasing prices of modules as shortages of silicon limited module production. Silicon accounts for 40%-50% of a modules production cost and with increasing demand for silicon but silicon production limited by
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capacity, contract prices of silicon reached US$55 per kg by 2006 from US$25 per kg and spot prices to US$300 per kg.
Figure Figure 4.1e. 4.1e. Average Average Module Module Prices Prices (per (per Wp) Wp) 4.50 4.50 600 600 500 500 400 400 3.50 3.50 300 300 3.00 3.00 200 200 2.50 2.50 100 100 0 0 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 Germany Germany () () US US(US$) (US$) Japan Japan(Yen) (Yen)
4.00 4.00
2.00 2.00
Source: 2000-2005 from IEA; 2006-2010 forecasts by Pegasus
Projections are world prices of modules would stabilise by 2006-2007 and then decline 5%-7% annually from 2008 onwards as new silicon plants begin production relieving the supply constraint. Another factor (though not as significant) would be the gradual use of thinner silicon wafers, which would partially reduce the manufacturing costs of modules. Business potential and opportunities. Projected demand for PV would grow at average of 20% annually in 2007-2010. Thus, module production would double from 2,400 MWp in 2006 to 5,000 MWp by 2010. Based on this projection, new PV systems installed during the period would total 15,500 MWp (see Table 4.1a). Assuming the average price of PV modules at US$3.50 per Wp and 15,500 MWp produced ands installed in 2007-2010, the value of the market for PV modules would total US$54.3 billion. Acquiring even a 5% share of the market value represents a significant business potential for many PV module manufacturers. Of significance, is the European Union and the US are net importers of c-Si modules produced mainly in the developing economies with their cost of production (mainly in labour cost) such as China, the Czech Republic and Mexico.
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Table 4.1a. Forecast of PV Demand (MWp) Based on Annual Growth Rates Forecast Annual Growth At 20% At 30% At 40% 2006 2,400 2,400 2,400 2007f 2,880 3,120 3,360 2008f 3,456 4,056 4,704 2009f 4,147 5,273 6,586 2010f 4,977 6,855 9,220 Total 20072010 15,460 19,303 23,869
Western Europe (namely Germany and Spain), Japan and the US would continue to be significant markets for PV in 2007-2010 driven mainly by government supported renewable energy programmes. The European Union initially targeted 3,000 MWp of PV by 2010 but at current rate of installation 4,500-5,000 MWp is possible according to various estimates. The European Renewable Energy Council projects 41 GWp of installations by 2020 and 200 GWp by 2030. Japan plans to install 4,800 MWp of PV by 2010 and the countrys PV roadmap projects 30 GWp installed by 2020 and 205 GWp by 2030. In the US, PV installations would reach 2,100 MWp by 2010 under the various federal and state programmes for PV. The US industry roadmap for PV projects installations to reach 36 GWp by 2020 and 200 GWp by 2030. Significant markets in Asia that would drive demand for PV include China and Korea. Through the countries renewable energy programme, China plans to install 450 MWp by 2010 and Korea 1,300 MWp MWp by 2012. The industry also represents a market potential for suppliers of materials and components for manufacturing modules. Besides the PV cells, other key materials and components include the frame, glass, ethyl vinyl acetate (EVA) film, tedlar layer, interconnect, adhesive and junction box. Excluding the PV cells, the total cost of these materials is about US$0.40 per Wp (see table 4.1b). Thus, the market value of these materials produced for manufacturing 15,500 MWp of modules in 2007-2010 period would amount to US$6.2 billion.
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Table 4.1b. Market Value of Materials for PV Modules in 2007-2010 Materials/ Components Glass EVA Frame Junction box Tedlar Interconnect Adhesive Total Proportion of Material Cost 22% 19% 17% 16% 15% 8% 4% 100% Material Cost US$ per Wp 0.09 0.07 0.07 0.06 0.06 0.03 0.01 0.40 Market Value (US$ million) 1,364 1,153 1,073 998 918 477 217 6,200
Note: Cost breakdown and total material cost sourced from GT Solar. Market valued based on market of 15,500 MWp in 2007-2010.
Market challenges. The market for PV will continue to grow and prices reduced over time. However, PV will continue to depend on government support in 2007-2010 as cost electricity from PV remains 5-10 times above conventional electricity produced by the utility companies. Possibilities of reduced government support and changes in government policies not in favour towards PV would dampen demand. Furthermore, delays in implementing renewable energy programmes for PV would stall demand for PV. Aggressive build-up in module production capacity in China could displace many players across the world with its lower labour cost. Manufacturing PV modules requires more labour while cells and wafers is more of an automated process. Chinas production capacity for PV modules would increase to nearly 4,000 MWp by 2007 and further increases expected by 2010. Suntech and Tianwei Yingli New Energy Resources (Yingli Solar) in China have already announced possibilities of increasing their plants production capacity to 1,000 MWp. Many silicon manufacturers have announced plans to increase production by 2008 and beyond but the possibility of silicon shortages remains subsequently affecting production of c-Si modules. Silicon manufacturers remain cautious about expanding too rapidly because of the high cost of investment in a new silicon plant. Thus, there is still the possibility of limited silicon supply beyond 2008, which would constrain production of c-Si modules.
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Most of the financing for PV installations are through loans including preinstallation in newly constructed homes in an overall home mortgage. Endusers would expect the monthly payment for their PV system to be comparable to the amount received from the utility companies power buyback schemes and savings in the electricity bill. A rise in interest rates would increase the monthly loan payment and dampen demand for PV. Furthermore, rise in interest rates for mortgages would dampen demand for newly built homes with pre-installed PV. Any external impact that would increase or decrease demand for PV modules would have a subsequent impact across the value chain and the overall PV industry. Production capacity from manufacturing of wafers to modules increased tremendously from 2003 to 2006 with further increases expected. A slowdown in demand for modules due to government policies or action towards PV would create excess capacity across the value chain.
4.2
Crystalline Silicon Cells

Demand and supply growth. Demand for c-Si cells increases with increasing demand for PV modules. Production of c-Si cells increased from 1,627 MWp in 2005 to an estimated 2,250 MWp in 2006. While projections for demand and supply of modules would increase by 107% from 2006 to 2010, projections for c-Si cells would increase at slower rate by 77% during the period. Main reason is c-Si cells compete with thin films and that demand for thin films would increase at a faster rate than c-Si cells in 20072010.
Figure Figure 4.2a. 4.2a.Crystalline Crystalline Silicon Silicon Cell CellProduction Production and and Projection Projection 5,000 5,000 3,977 3,977 3,447 3,447
4,000 4,000 2,956 2,956 2,680 2,680 2,250 2,250 2,000 2,000 1,145 1,145 1,000 1,000 729 729 1,627 1,627
MWp MWp
3,000 3,000
-2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010
Note: Estimates derived from various sources
31
The market for ci-Si cells grew at an average of 46% annually from 729 MWp in 2003 to an estimated 2,250 MWp in 2006. Nevertless, demand for c-Si cells exceeded supply but production constrained by the silicon shortage. Though ci-Si cells would continue to dominate the market for PV modules, its growth would slow to an average of 15% annually increasing from 2,680 MWp in 2007 to nearly 4,000 MWp by 2010. Furthermore, its share for the module market would decline from 94% in 2006 to 80% by 2010 overtaken by thin films. Japan and Germany would continue to be a net exporter of c-Si cells while the US and China a net importer in 2007-2010. Japan exports much of the c-Si cells to supply Japanese module plants in Europe, Mexico and the US. Germany exports its c-Si cells to supply module plants in other parts of Europe, the US and China. China will continue to be a net importer of c-Si cells in 2007-2010 as production capacity for PV modules would exceed c-Si cells. In 2006, Chinas total production capacity for c-Si modules was nearly 4,000 MWp while production capacity for cells was 2,000 MWp. Industry players. Japanese and European cell manufacturers dominate the global market. In recent years, major Chinese manufacturers have been increasing their cell production capacity and many announced plans to increase capacity beyond 2006. In 2005, China accounted for 9% of the worlds production producing nearly 160 MWp. By 2006, China (excluding Taiwan) produced an estimated 690 MWp accounting for nearly 29% of the worlds production. However, Chinas production of c-Si cells is for the countrys domestic market.
Figure Figure 4.2b. 4.2b.Share Share of of World World Silicon Silicon Cell CellProduction Production in in 2005 2005(MWp) (MWp)
Others Others 20.2% 20.2%
Sharp Sharp 24.3% 24.3%
Q-Cells Q-Cells 9.4% 9.4% Kyocera Kyocera 8.1% 8.1%
Shell Shell Solar SolarSuntech Suntech 3% 3% 4.6% 4.6% Isofoton Isofoton 3.2% 3.2%
BP BPSolar Solar 4.8% 4.8%
Schott Schott Solar Solar 5% 5%
Mitsubishi Mitsubishi 6.4% 6.4%
Sanyo Sanyo 7.0% 7.0%
Motech Motech 3.4% 3.4%
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Japanese companies dominate the market for c-Si cells accounting for nearly half of the worlds production. Together Japanese companies Sharp, Kyocera, Sanyo and Mitsubishi accounted for 46% of the worlds production or 790 MWp in 2005. Major European companies include Q-Cells, Schott Solar, BP Solar and Isofoton accounting for 22% of the worlds production or nearly 390 MWp. Suntech is China leading producer of c-Si cells accounting for nearly 5% of the world production and 44% of Chinas production at 68 MWp in 2005. Product. The three major categories of c-Si cells in production are mc-Si (multi-crystalline), sc-Si (mono-crystalline) and c-Si ribbon/sheets. Until recent years, sc-Si cells dominated the market but now overtaken by mc-Si cells because of its lower costs. Though mc-Si cells have lower conversion efficiency than sc-Si cells, its efficiency has been improving with developments in technology. The process to saw ingots into wafers for mcSi and sc-Si produces silicon wastage. Technologies developed by Evergreen Solar and Schott Solar produce mc-Si ribbons and sheets, which can be cut rather than sawed to produce wafers and reduces wastage.
FIgure FIgure 4.2c. 4.2c.Type Type of of c-Si c-SiCells Cells by byProduction Production in in 2005 2005 c-Si c-Siribbon/sheets ribbon/sheets 4% 4%
sc-Si sc-Si 35% 35%
mc-Si mc-Si 61% 61%
Note: Derived from various estimates
Price trends. C-Si cells account between 60% and 70% of the production cost of a PV module. Prices of c-Si cells increased from 2003 to 2006 brought about by increasing market for PV modules subsequently creating demand for c-Si cells but wafer production constrained by shortages of silicon. Prices of c-Si cells would stabilise by 2006-2007 and decline from 2008 onwards with production from new silicon plants relieving the supply constraint.
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Figure Figure 4.2d. 4.2d.Estim Estimated ated and and Projected Projected Cell CellCosts Costs (per (per Wp) Wp) 2.50 2.50 2.45 2.45 2.43 2.43 2.28 2.28 US$per per Wp Wp US$ 2.10 2.10 1.95 1.95 2.34 2.34 2.30 2.30 2.14 2.14 1.99 1.99
2.30 2.30
1.90 1.90
1.70 1.70
1.50 1.50 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010
Note: Rough estimate based on assumption cells account for 65% of the module cost
Average prices of c-Si cells would decline by 5%-7% annually from 2008 to 2010 as demand for PV cell grows by an average of 15% annually. If buildup in c-Si cell and silicon production capacity were to continue unabated, an oversupply situation would exist. If this were to happen, prices of c-Si cells would decline faster than 5%-7% anticipated. On the other hand, if silicon manufacturers were to take a more cautious approach in expanding their production capacity and/or demand for c-Si cells were to increase beyond 15% annually, prices of c-Si cells may go on an uptrend. Business potential and opportunities. Based on projections that demand for c-Si cells would grow at an average of 15% annually in 2007-2010, demand for c-Si cells would total 13,000 MWp during the four-year period. Assuming an average cost of c-Si cells at US$2.70 per Wp, equates to a market value of US$35.1 billion during the period.
Table 4.2. Forecast for c-Si Cell Demand (MWp) Average Annual Growth At 15% 2006 2,250 2007f 2,680 2008f 2,956 2009f 3,447 2010f 3,977 Total 20072010 13,060
China would continue to be a net importer of c-Si cells in 2007-2010. Chinas production capacity for PV modules exceeds its production capacity for c-Si cells. Estimated that Chinas production capacity for c-Si cells would increase from 1,400 MWp in 2006 to 2,500 MWp by 2007 but capacity for
34
modules would increase from 2,800 MWp to 4,000 MWp. Even with the increase in Chinas silicon production capacity, production would not be able to meet Chinas demand. The US would also continue to be a net importer of c-Si cells as US companies focuses technologies on thin films. The federal and various state renewable energy programmes for PV is creating demand PV installations. Though the US focuses on development of thin films, module-manufacturing plants in the US would depend on substantial quantities of imported c-Si cells for their modules. In the technology front, successful companies are those that possess the technology to reduce the cost c-Si cells per Wp. Cells account for 60%-70% of the manufacturing cost of PV modules. Though cell manufacturers do not have control on the cost of silicon, cost per Wp can be reduced through improving the cells conversion efficiency, producing thinner wafers and developing technologies that reduce silicon wastage in manufacturing wafers. Market challenges. The affect of a reduction in demand for PV would have adverse consequences on c-Si cell manufacturing with the current build-up in production capacity. Another threat is if silicon manufacturers remain cautious in expanding silicon production while demand for PV continues to increase. Under both scenarios, cell manufacturers would be left with idle plant capacity and in cases of silicon shortages would be forced to obtain their silicon at higher prices. Silicon manufacturers are insisting on multiyear supply contracts with some form of initial payments before delivery of their silicon and silicon wafers. Smaller cell manufacturers or companies without sufficient financial resources would be unable to enter into such multiyear supply agreements and would face difficulties in obtaining the silicon material. Purchasing in the spot market can be four to six times higher than the contract prices. Thin films compete with c-Si and manufacturers are currently developing technologies to improve efficiency and lower cost of manufacturing thin films. Furthermore, thin films are not constrained by shortages of silicon and have the potential to displace c-Si cells with its lower end-user price.
4.3
Polysilicon
Demand and supply growth. The electronics and PV industry both use silicon wafers for their components. Until recently, c-Si cell manufacturers could depend on recycled off spec and waste silicon wafers from the
35
electronics industry. Prior to the burst of the technology bubble in 2001, silicon manufacturers increased their production capacity in anticipation for increased silicon demand from the electronics industry. During the burst of the technology bubble, silicon manufacturers experienced excess capacity and therefore reluctant to increase capacity. With the excess capacity, silicon manufacturers were in a position to supply their silicon to the wafer and cell manufacturers as demand for PV grew. Silicon manufacturers were reluctant to increase their capacity and with the electronics industry recovering, c-Si cell manufacturers eventually faced shortages for the silicon materials. Driven by growing demand for PV most of the existing silicon manufacturers are only beginning to respond by adding capacity and new industry players entering the industry. It takes 2-3 years to construct a polysilicon plant and most new constructions began in 2006. Thus, production from new plants would only begin in 2008-2009 to relieve the silicon shortage. Short-term measures undertaken by existing silicon manufacturers in 2006-2007 to partially relieve the shortage are de-bottlenecking and expanding their existing production lines but would not totally relieve the shortages.
Figure Figure 4.3a. 4.3a.Silicon Silicon Production Production for for the the PV PV Industry Industry(tons) (tons) Thousands Thousands 60 60 49.3 49.3 50 50 40 40 30.5 30.5 30 30 20.7 20.7 20 20 10 10 0 0 2003 2003
Source: Piper Jaffray
SiliconProduction Productionin inTons Tons Silicon
44.1 44.1
21.2 21.2
17.6 17.6 13.5 13.5 15.9 15.9
2004 2004
2005 2005
2006 2006
2007 2007
2008 2008
2009 2009
2010 2010
Estimates indicate increases in polysilicon production for the PV industry would begin in 2008 after a period of shortages. Production would double from 15,900 tons in 2007 to 30,500 tons in 2008 with new plants coming onto production. Further increases are expected with production increasing 45% to 44,100 tons in 2009 but increasing at a slower rate of 12% to 49,300 tons by 2010.
36
Industry players. The US accounts for more than 50% of the worlds production of polysilicon followed by Japan at 24% and Germany at 18%. In the next few years, production from other countries such as Norway, China, Spain and Korea will increase their share of the worlds polysilicon production. Major polysilicon manufacturers supplying to both the electronics and PV industry are Hemlock (US), Wacker (Germany), REC (Norway/US), Tokuyama (Japan) and MEMC (US).
Figure Figure 4.3b. 4.3b.Share Share of of World World Silicon Silicon Production Production in in 2005 2005(by (bytons) tons)
Tokuyama Tokuyama 16.6% 16.6%
MEMC MEMC 12.1% 12.1%
Mitsubishi Mitsubishi 9.1% 9.1%
Sumitomo Sumitomo 2.6% 2.6% Others Others >1% >1%
REC REC 16.9% 16.9% Wacker Wacker 17.6% 17.6%

Source: Prometheus Institute
Hemlock Hemlock 24.6% 24.6%
Most of the major players are insisting on multiyear supply agreements from buyers and requiring some form of initial payments before delivery. This is to prevent a situation experienced by the silicon manufacturers in 2001. During the period, the electronics industry forecasted strong growth for silicon and silicon manufacturers subsequently expanded their capacity. During losses. the burst of the technology bubble, silicon are manufacturers cautious in experienced declining orders resulting in excess capacity and financial Interestingly, Japanese manufacturers more expanding their capacity compared to European and US manufacturers. Driven by growing demand for PV, global shortage and rising prices of polysilicon new players are beginning to enter to supply the PV industry. The following is an overview of some of the new industry players.
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Table 4.3. Snapshot of New Players Entering the Silicon Industry Company DC Chemical Overview Koreas DC Chemical (DCC) will construct a new 3,000 tons polysilicon plant marking its first venture into the business. DCC will employ Siemens reactor technology and use Trichlorosilane (TCS) as the feedstock gas. Cell manufacturer SunPower will pay DCC US$250 million in a multi-year supply agreement to finance construction of the silicon plant. Hoku Scientific Hoku Scientific, a fuel cell company in Hawaii, announced it in May 2006 it would construct a 1,500 tons polysilicon plant at a cost of US$250 million in the state of Idaho. Isofoton Spains Isofoton (cell and module manufacturer), an Andalusian government agency and Endesa (Spanish utility company) will build a 2,500 tons plant in Los Barrios, Spain. Econcern Econcern announced in 2006 that it would form a joint venture to build a polysilicon plant with a production capacity of 2,000-3,000 tons. The new plant would be located in Saint Auban, France, and begin production in 2008. M.Setek M.Setek, a Japanese polysilicon wafer manufacturer will add a silicon line to its business operations. The plant begins production in 2007 with an initial capacity of 1,000 tons. China Southern Glass China Southern Glass (CSG) announced it would invest in a US$150 million polysilicon plant in Hubei Province. The plant would begin production in 2008-2009 and eventually have a production capacity of 4,000-5,000 tons.
Product. Silicon accounts for 40%-50% of the production costs of PV modules. Growing demand for PV and shortages of silicon resulted in the contracted selling price of the material increasing from US$25 per kg in 2003 to US$50 per kg by 2006. Thus, silicon wafer manufacturers are developing technologies to reduce the wafer thickness. The European Photovoltaic Industry Association predicts the average wafer thickness would gradually reduce from 240 microns in 2005 to 150 microns by 2010.
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Figure Figure 4.3c. 4.3c. Projection Projection in in Silicon Silicon Usage Usage for for Wafers Wafers 16 16 14 14 12 12 gmsilcon silconper per Wp Wp gm 10 10 8 8 6 6 4 4 2 2 0 0 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 14.0 14.0 11.0 11.0 12.0 12.0 240 240 10.0 10.0 9.0 9.0 200 200 180 180 8.5 8.5 170 170 8.0 8.0 160 160 150 150 7.5 7.5 250 250 200 200 150 150 100 100 50 50 0 0 320 320 350 350 300 300 Wafer thickness thickness (microns) (microns) Wafer 300 300
Source: European Photovoltaic Industry Association
Price trend. Prices of polysilicon would reach its peak by 2007 and then decline in 2008 onwards as new polysilicon plants begin production. However, silicon manufacturers would expand their production cautiously and new players may abort their plans to build new plants if demand for PV is unable to accommodate new silicon production. Furthermore, with technologies being developed to use less silicon per Wp through thinner wafers, silicon manufacturers would be extremely cautious in expanding their production capacity too aggressively.
Figure Figure 4.3d. 4.3d.Estim Estimated ated and and Projected Projected Contracted Contracted Silicon Silicon Cost Cost (US$ (US$per per kg) kg) 70 70 60 60 50 50 US$per per kg kg US$ 40 40 32 32 30 30 20 20 10 10 0 0 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 24 24 50 50 45 45 53 53 50 50 45 45 41 41
Note: 2003-2006 from Prometheus Institute; 2007-2010 rough estimates derived from various sources
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Projections are contracted prices of polysilicon would increase from US$50 per kg in 2006 and reach its peak at US$53 per kg by 2007. With new plants coming into production in 2008, prices would begin to decline from US$50 per to US$41 per kg by 2010. However, prices could decline more aggressively if annual growth for PV is less than 20% anticipated in 20072010. Another factor that would cause polysilicon prices to decline at faster rate are if new polysilicon plants were to come into production too aggressively. Business potential and opportunities. Based on projections that demand for polysilicon would grow at an average of 41% annually in 2007-2010, demand for polysilicon would total 140,000 tons during the four-year period. Assuming an average cost of polysilicon at US$47 per kg, equates to a market value of US$6.6 billion during the period.
Table 4.3. Forecast for Polysilicon Demand (tons) Average Annual Growth At 41% 2006 13,523 2007f 15,928 2008f 30,510 2009f 44,125 2010f 49,308 Total 20072010 139,871
Demand for PV will continue to grow in 2007-2010, though at slower pace of 20% annually. Growth for PV subsequently creates demand for polysilicon and therefore presents market and business opportunities for polysilicon manufacturers to increase their production capacity. The investment cost per MWp for a silicon production plant is higher than wafer, cell and module manufacturing. The Siemens process to manufacture silicon is used in 90% of silicon production worldwide. The advantage of the Siemens process is it is a well-established process and therefore represents low technology risk to the investors. The facility is easier to build compared to the newer technologies and suitable for manufacturing silicon for the PV and electronics industry. Being an established technology, there is little risk of patent infringement. Market challenges. New players have announced their entry into silicon production but yet to begin construction. Furthermore, there are also unconfirmed reports about new players intending to enter the business. There is the possibility that some of the new players may eventually abort their plans if there is a silicon overcapacity in 2008 and beyond. If new plants were to come into production too aggressively beginning in 2008 creating overcapacity, silicon manufacturers could face a similar scenario experienced during the burst of the bubble technology in 2001.
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There are about 50 companies involved in thin films and currently many are start-ups. Thin films are gaining popularity, increasing at a faster rate of growth and its share of the module market. Thus, there is a potential threat with developments in technologies to mass-produce thin films at lower costs and improve conversion efficiency displacing c-Si modules in 2007-2010.
4.4
Thin Films
Demand and supply growth. Shortages of silicon in recent years have driven demand for thin film technologies. The appeal for thin film is it requires little or no silicon and production at costs lower than c-Si modules. Thin films accounted for about 6% of the PV modules in 2005 but expected to increase its share to 15% of the market by 2010. The European Photovoltaic Industry Association predicts demand for thin films to increase 10-fold from 100 MWp in 2005 to 1,000 MWp by 2010. Production would increase by more than two-fold from 200 MWp in 2007 to 500 MWp in 2008 as existing players expand production capacity and start-up companies begin production.
Figure Figure 4.4a. 4.4a. Thin Thin Film Film Production Production and and Projection Projection (MWp) (MWp) 1,200 1,200 1,000 1,000 800 800 MWp MWp 600 600 400 400 200 200 30 30 0 0 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 150 150 200 200 1,000 1,000
700 700 500 500
50 50
100 100
Source: European Photovoltaic Industry Association
From 2003 to 2006, shortages of silicon materials combined with rising prices of c-Si modules drove the market for thin films. However, the market driver for thin films in 2007-2010 would be its lower costs and shorter energy payback period. Advancement in conversion efficiency, longer lifespan of thin films and its potential in building integrated PV are other factors that would drive demand for thin films.
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Industry players. There are more than 50 companies mainly in Europe, United States and Japan involved in developing thin film technologies. These companies sector are generally small privately owned companies or start-ups. Many of the leaders involved in manufacturing c-Si modules have entered into thin films including Sharp, Mitsubishi Heavy Industries (MHI), Schott Solar and Sanyo. In 2005, four companies dominated the market for thin films which included United Solar Ovonics (US), Kaneka (Japan), First Solar (US) and MHI (Japan) accounting for 75% of the thin film market. Production capacity for thin films generally ranges from 25 MWp to 50 MWp but there are already plans by United Solar and First Solar to increase capacity by more than 200 MWp by 2010.
Figure Figure 4.4b. 4.4b.Share Share of of the the World World Thin Thin Film Film Production Production in in 2005 2005(MWp) (MWp)
Mitsubishi, Mitsubishi,12.0% 12.0% First FirstSolar, Solar,20.0% 20.0% Others, Others,25.0% 25.0%
Kaneka, Kaneka,21.0% 21.0%
United UnitedSolar, Solar, 22.0% 22.0%
Venture capitalists are investing millions of dollars in thin-film start-ups such as United Solar, Nanosolar, Miasole, Konarka and DayStar Technologies. However, only a few companies have actually brought thin film technology into large-scale production. While prices of silicon cell modules have been increasing, prices of thin film modules have been declining. First Solar claims that it had reduced the production cost of its thin films to US$1.50 per Wp about 40%-45% less than the industry average for c-Si modules manufactured in the US. Product. Thin films are less subjected to cell temperatures while c-Si cells decrease in conversion efficiency as the temperature rises. The advantage of manufacturing thin films is it uses greater automation than manufacturing c-Si modules. However, thin films are hard to mass-produce cost effectively because of the difficulty of coating large surface areas.
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Nanosolar, Honda Engineering and Sharp announced they have developed technologies to mass produce thin films. Another disadvantage of thin films is their lower efficiency (generally less than c-Si modules) but there are already developments to improve efficiency. The leader among thin films is a-Si accounting for nearly 75% of the thin film market. These thin films use small quantities of silicon in amorphous form deposited as thin layers. Other thin films include copper indium selenide (CIS), copper indium gallium selenide (CIGS) and cadmium telluride (CdTe). Among the thin films, a-Si has the lowest efficiency (6%9%) compared to CI(G)S (9%-11%) and CdTe (8%-10%). Main reason for the dominance a-Si thin films is it is among the earliest thin film technologies researched and developed. Over the medium term, CIGS thin films are generating interest with improvements in efficiency on par with mc-Si modules under laboratory conditions and their potential for mass production. Price trend. The direction on prices of thin films in 2007-2010 is possession of technologies to mass-produce thin films cost effectively. Nanosolar, Honda Engineering and Sharp announced they have developed technologies to mass-produce thin films. United Solar and First Solar have already established plans to increase their production capacity to more than 200 MWp by 2010. Solarbuzzs monthly survey of module prices indicates that the lowest price of a-Si thin film module in March 2007 was 30% less than the lowest price of a mc-Si module. This is a significant reduction from US$4.00 per Wp in September 2006 to US$3.00 per Wp in March 2007.
Table 4.4. Lowest Module Prices (US$ per Wp) Comparison Lowest Price Modules sc-Si module mc-Si modules a-Si thin film modules Source: Solarbuzz September 2006 4.15 4.05 4.00 March 2007 4.24 4.32 3.00
Business potential and opportunities. Based on projections that demand for thin films would grow at an average of 67% annually in 2007-2010, demand for thin films would total 2,400 MWp during the four-year period. Assuming an average cost of thin films at US$2.00 per Wp, equates to a market value of US$4.8 billion during the period.
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Table 4.4. Forecast for Thin Film Demand (MWp) Average Annual Growth 67% 2006 150 2007f 200 2008f 500 2009f 700 2010f 1,000 Total 20072010 2,400
Thin films lower manufacturing cost, potential for mass production to lower cost further and improvements in conversion efficiency (especially CIGS thin films) offers opportunities for manufacturers to market lower cost PV systems. Price has been and will continue to be an important determinant for end-user acceptance of PV. Thin films lower prices to the end-users represent a market potential for manufacturers and will be an important determinant to propel its marketing. Another potential of thin films is manufacturers are not constrained by supply for materials used in manufacturing thin film as experienced with cSi modules. This provides manufacturers the flexibility to manufacture and market thin films according to market demand. Thin films offer applications that are not possible with flat panel c-Si modules. Thin films provide opportunities for applications in building integrated modules including roof tiles, windows and facades. Thin films can be deposited on many types of surfaces such as flexible plastics, glass and coatings on building materials to generate electricity. Thus, thin films offer vast opportunities in various applications. Market challenges. Shortages and rising prices of silicon materials in recent years provided opportunities for the development thin films. New silicon plants would come into production beginning in 2008 relieving the silicon shortage and prices of c-Si modules would begin to decline narrowing the gap between prices of thin film and c-Si modules. Excess capacity in the c-Si value chain would cause prices of c-Si modules to decline faster and retard the market potential for thin films. Key challenges currently faced for thin films are improvements in conversion efficiency and lowering manufacturing cost through mass production. Current costs of thin film modules are still too high and electricity generated more than five times the electricity rates from the utility companies. To gain wide acceptance among end-users, the challenge is to improve thin films efficiency and lower manufacturing cost further.
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A potential risk for thin films is the toxicity of some of the chemicals used. For example, cadmium used in CdTe thin films is toxic with adverse effects on human and animal health. Thus, it is important for manufacturers to establish programmes to discard thin films appropriately once they passed their lifespan.
4.5
Photovoltaic Inverters
Demand and supply growth. The market for PV inverters is dependent on new demand for PV and replacement of old inverters that have passed their lifespan in existing installations.3 By capacity (Wp), the market for PV inverters grew at an average of 45% annually from 400 MWp in 2001 to 2,600 MWp in 2006. Driven by strong demand for PV, about 90% of the inverter capacity installed was for new installations and remaining 10% were for replacements of old inverters. Strong demand for PV in Germany and Spain is the main driver of growth for inverters in the European market.
Figure Figure 4.5a. 4.5a.PV PV Inverter Inverter Production Production and and Projection Projection (GWp) (GWp) 7 7 6 6 5 5 GWp GWp 4 4 3.2 3.2 3 3 2 2 1 1 -1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 0.3 0.3 0.4 0.4 0.6 0.6 0.8 0.8 1.9 1.9 1.3 1.3 2.6 2.6 3.9 3.9 4.7 4.7 5.7 5.7
0.2 0.2
0.2 0.2
Note: Rough estimates based on market for PV for the year and product lifecycle of seven years.
Projections are the market for inverters would grow by an average of 22% annually from 3,200 MWp in 2007 to 5,700 MWp by 2010, based on the projection that the market for PV would grow 20% annually reaching 5,000 MWp by 2010. Demand for PV in 2007-2010 would continue to drive the market for inverters accounting for about 90% of the installations by capacity with remaining for replacements of old inverters.
Typical PV inverter has a lifespan of 5-10 years.
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Industry players. In Japan, there are nearly 20 companies involved in manufacturing PV inverters and similar numbers in North America. While in Europe, there are about 30 companies involved in manufacturing inverters. The industry is characterised by a few players dominating the market. Sharp leads the market in Japan while in North America SMA and Xantrex leads the market. SMA, Xantrex and Fronius lead the market in Europe. Most of the European companies involved in inverters are German, Dutch, Austrian and Swiss companies.
Figure Figure 4.5b. 4.5b.Share Share of of World World Inverter Inverter Production Production in in 2005 2005(MW) (MW) Kyocera, Kyocera,4.6% 4.6% Mastervolt, Mastervolt,3.2% 3.2% Sputnik, Sputnik,1.9% 1.9% Others, Others,25.2% 25.2%
Xantrex, Xantrex,5.0% 5.0% Fronius, Fronius,10.7% 10.7%
Sharp, Sharp,18.9% 18.9%
SMA, SMA,30.5% 30.5%
Note: Estimates derived from various sources
SMA Technologies is a German company and leads the industry with nearly 31% share of the market with major markets in Europe and the US. Sharp is the second largest player with its market mainly in Japan and its inverters marketed along with its PV system. Austrias Fronius accounts for 11% of the market with markets mainly in Europe and the US but also has a distribution network in Asia-Pacific. Other market leaders include Xantrex (Canada), Kyocera (Japan), Mastervolt (Netherlands) and Sputnik (Switzerland). These seven companies together accounted for threequarters of the world market in 2005. Product. Most of the inverters currently produced and marketed are string inverters for home PV installations ranging from 2 kWp to 10 kWp. With increasing number of PV installations in the megawatts, several manufacturers have developed central inverters for large installations. The technology of the inverters varies from manufacturer to manufacturer such as differences in size, efficiency, weight and reliability.
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There is a growing trend among major manufacturers to provide additional features in their inverters. These include remote monitoring, communications capabilities, plug and play with the controllers and manufacturing lighter inverters. Sharp has developed inverters for homes to a new level with gadgetry including colour LCD screens with interactive functions. These interactive functions include energy savings tracker, realtime status display of energy generated, home power consumption, power purchased and sold back to the utility company. Price trend. Prices of inverters very much depend on the brand, technology and features which influences the cost of manufacturing the inverters and the price end-users are willing to pay. Inverter size also affects the end-user price of the inverter per Wp. For example, inverters with similar features, a 3 kWp inverter is likely to cost 50% less than a 1 kWp inverter on a per Wp basis. Another example, in the US, the price for inverters for installations above 70 kWp is US$0.40-0.80 per Wp while for installations of less than 10 kWp the price is US$0.50-2.40. As a guide, prices of inverters declined by 5%-7% annually from 2001 to 2006 due to increases in production volume resulting in economies of scale in manufacturing. Increasing integration of components, reduction in mechanical parts, increasing use of electronics and reducing the assembly time in the manufacturing process have also reduced the production cost in recent years. Prices of inverters will continue to decline by 5%-7% annually in 2007-2010. Business potential and opportunities. Based on projections that demand for inverters would grow at an average of 22% annually in 2007-2010, demand for inverters would total 17,500 MWp during the four-year period. Assuming an average cost of inverters at US$0.50 per Wp, equates to a market value of US$8.8 billion during the period.
Table 4.5. Forecast for Thin Film Demand (MWp) Average Annual Growth 22% 2006 2,601 2007f 3,168 2008f 3,855 2009f 4,707 2010f 5,736 Total 20072010 17,466
Inverters have a lifespan of 5-10 years while PV modules have a lifespan of 25-30 years. Thus, inverters can be replaced 3-5 during the lifespan of a PV system and over the longer-term, the replacement market for inverters would be just as important as the market for new PV installations. The proportion of inverters sold by capacity currently accounts for 10% of the production. The proportion will gradually increase over the longer term as
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old inverters come to the end of their lifespan and an opportunity for manufacturers in the replacement market. Inverters especially string inverters have gone beyond its basic function of converting current from DC to AC. Increasing use of electronic gadgetry and stylish designs are current trends for newer models of inverters attracting interest and purchase from the end-users. Further interest is generated as inverter prices decline and becomes more affordable. In general, inverters are becoming more like consumer electronic items and market opportunities exist for such inverters. Market challenges. Different countries have different regulations and standards for PV inverters. Currently there are no European standards or regulations for inverters. For example, in Europe, Germany permits use of inverters without transformers but required in Spain and the United Kingdom.4 This represents a significant barrier for manufacturers to develop inverters specifically for each country. Regulations for inverters in the US are more stringent than Europe. There is a lack of uniform regulations for inverters and each state in the US has its own regulations with different safety, interconnection and testing requirements. Furthermore, utility companies may also have their own regulations for inverters. Lack of uniform to standards produce to across inverters on markets with regional makes markets it difficult for Thus any
manufacturers manufacturers
global
acceptance. preventing
prefer
focus
economies of scale in production. Different regulations require product modification and specification and thus manufacturers (especially smaller companies) tend to focus on regional markets. Reliability problems in inverters are often associated with capacitors since they are sensitive to temperatures. R&D on capacitors for inverters is limited and capacitors developed focuses on other segments of the electronic industry such as consumer electronics, which accounts for a greater proportion of the capacitors sold. Thus, inverter manufacturers unable to do much to improve the reliability of the capacitors other than design around the problem which increases costs.
The Netherlands and Switzerland have similar standards for inverters as Germany
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5 5..
D DE EV VE EL LO OP PM ME EN NT TS SI IN ND DE EV VE EL LO OP PE ED D& &E EM ME ER RG GI IN NG GM MA AR RK KE ET TS S
5.1
Germany
Germany leads the world with the highest installation capacity for PV. The rise in installation began when Germanys federal government introduced the 100,000 Roofs programme in January 1999 to stimulate demand for PV by offering low-interest loans. The loans were initially interest free but charged 1.9% interest from 2000 to 2003. Currently soft loans are available through other programmes by KfW Promotional Bank. However, installations accelerated when Germanys introduced high buyback rates (guaranteed for 20 years) from the utility companies under the Renewable Energy Sources Act in 2000. The Act provided preferential feed-in tariffs with a 5.0%-6.5% annual decrease from 2005 onwards. In 2006, feed-in tariffs were 0.406 per kWh for freestanding systems while for buildings and sound barriers, 0.4874-0.518 per kWh. Germanys experience has convinced many governments in Europe to adopt similar programmes to stimulate demand for PV.
Table 5.1a. PV Installation and Production in Germany 2003 Cumulative installation (MWp) Source: IEA 431 2004 794 2005 1,429
Germany held its national election in 2005 and there are concerns that Germany would shift support for PV from a new government. This is unlikely to happen: Implementation of the Renewable Energy Sources Act took many years of political debates before voted by Germanys Bundestag (parliament) and changing the law would require further and lengthy political debates. Environmental awareness, economic benefits and job creation from the PV industry creates strong political support from German constituencies. The German PV industry is one of the fastest growing industries in the country and has already invested 5 billion from 1998 to 2005 with additional investments since 2006.
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Any efforts by Germanys utility companies to persuade the government to reduce support for PV would have negative implications from the German public and political parties supporting PV. However, Germany would review its feed-in tariff in 2007, which could have an impact on demand for PV in Germany. If new feed-in tariffs were to be less favourable than previous feed-in tariffs, demand would soften and reduce module prices. This would make modules become more attractive to the end-users after experiencing years of increasing prices. According to Photon International, demand was already softening in late 2006 when the government-guaranteed price for PV electricity dropped 5% but prices of modules kept on rising, reducing returns on investments to home and business owners. Germany accounted for 19% of the worlds production of PV cells and 16% of the worlds production of modules in 2005. The German PV industry has become a significant sector of the countrys economy generating about 30,000 job opportunities according to the German Solar Industry Association (BSW). Furthermore, the industry invested about 5 billion between 1998 and 2005 in new production capacity and R&D. Consequently, revenue from the industry increased from 350 million in 1999 to 3.7 billion by 2005.
Table 5.1b. Production in Germany 2003 PV cell production (MWp) PV module production (MWp) Source: IEA 100 80 2004 190 205 2005 332 276
Considering investments made by the German industry, jobs created and industry revenue, it is more likely that the German government will continue with incentive schemes to stimulate demand and growth of the industry. There are about 50 manufacturers involved across the PV value chain in Germany from manufacturing silicon, wafers, PV cells, modules to inverters. Besides manufacturing, the PV industry has created business opportunities for installers of PV systems, turnkey manufacturers, wholesale and retail distributors, architectural and engineering companies in Germany.
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Table 5.2c. Snapshot of German Companies involved in PV Company CSG Solar Overview CSG Solar began manufacturing crystalline silicon on glass (CSG) in 2006 at its plant in Thalheim and current production Solon capacity is 25 MWp. CSG acquired the technology from Pacific Solar, Australia. Solons plants in Germany and Sweden produce only mc-Si and sc-Si modules. Combined production capacity increased from 90 MWp in 2005 to 110 MWp in 2006. To ensure a reliable supply of PV cells for its modules, Solon signed a 10-year contract with Ersol and 5-year contracts with Q-Cells and SunPower beginning in 2006. SolarWorld SolarWorlds business activities in PV, including activities of its subsidiaries and joint venture companies, range from production of silicon to installation of modules. In 2006, SolarWorld acquired from Shell Solar its silicon, cell and module production facilities in the United States. As a result, SolarWorlds cell production capacity increased from 158 MWp in 2005 to 230 MWp in 2006 and module capacity increased from 175 MWp to 210 MWp during the period. Solar World manufactures mc-Si, sc-Si as well as CIS thin film modules. Deutsche Solar Deutsche Solar is part of the SolarWorld group and is one of the largest producers of mc-Si and sc-Si wafers in Europe. In 2005, the company produced 102 MWp of silicon wafer accounting for 6% of the worlds production. Q-Cells Q-Cells is principally involved in manufacture and marketing of mc-Si and sc-Si cells. The companys cell capacity increased from 290 MWp in 2005 to 350 MWp in 2006 with further expansion to 510 MWp by 2007. The company also has investments in CSG Solar in Germany to produce crystalline silicon on glass modules and in EverQ in the United States to produce cells using ribbon technology. Schott Solar Schott Solar manufactures mc-Si cells as well as a-Si thin film modules. Outside of Germany, the company has plants in the Czech Republic and the United States. From 2006 to 2007, cell production capacity would increase from 130 MWp to 170 MWp while module capacity from 80 MWp to an estimated 110 MWp. Schott Solar will operate a new 30 MWp plant in Germany in 2007 to manufacture a-Si thin film modules. Solar Watt Solar Watt produces both mc-Si and s-Si cells but its plant production capacity is relatively small, increasing from 5-6 MWp in 2005 to 11 MWp in 2006. Its module capacity is sizable with a production capacity increasing from 60 MWp to 100 MWp during the same period.
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Table 5.2c. Snapshot of German Companies involved in PV Company ErSol Solar Energy Overview ErSol manufactures and markets mc-Si and sc-Si cells and modules. The company plans to increase production capacity from 45 MWp in 2005 to 220 MWp by 2009. ErSol entered into a joint venture with Chinas Shanghai Electric Solar Energy to manufacture modules in China using cells produced by ErSol in Germany. The company is also diversifying into thin films. Wacker Polysilicon Wacker is one of the largest producer and supplier of polycrystalline silicon for the semiconductor industry and cell manufacturing. Due to increasing demand for polycrystalline silicon for cell manufacturing, Wacker will increase the production capacity of its plant in Burghausen from 5,500 tons in 2005 to 6,500 tons by 2007. Capacity will increase further to 9,000 tons by 2009.
Production of modules requires higher use of labour compared to other sectors of the PV value chain. Germany imports nearly 60% of the PV modules installed in the country due to Germanys high cost of labour. Main imports are for modules from OEM outside Germany, produced by German companies in lower cost producing countries such as the Czech Republic and foreign brands. Exports account for about 10% of Germany PV production according to the Joint Global Change Research Institute (JGCRI). However, Germany exports about 40% of the silicon feedstock produced in the country.
Diagram 5.2. Main Channel in Germanys PV Value Chain
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In reality, many German companies have invested in overseas production facilities through their subsidiaries or joint ventures. SolarWorld has plants in Sweden and the United States to produce PV modules. SOLON entered into a joint venture to operate a solar grade silicon plant in France and invested in a plant in Austria to manufacture crystalline silicon cells. Besides Germany, Schott Solar has a plant in the United States to produce silicon cells. Shortage of silicon in recent years has been a major challenge and limiting factor in the growth of the German PV industry. Nevertheless, many German companies are already investing in new plants, expanding capacity, developing new technologies and increasing investments outside Germany. In addition to crystalline technologies, German companies have invested in thin film technologies and new players CSG and Sulfurcell entered into production in 2006. Inverter technology has shown impressive growth in recent years and Germany is the worlds leading producer of inverters and includes major companies such as SMA, Fronius, Studier and Siemens. German production of inverters grew from an estimated 590 MWp in 2005 to 910 MWp in 2005 accounting for nearly half or the worlds inverter production in 2006.
5.2
Japan
The principles of Japans New Energy Policy are to ensure security in energy supply, develop a market mechanism for renewable energy and to reduce CO2 emission. Previous programmes to promote PV in the country involved subsidies targeting homeowners, targeting private companies and public the organisations. Programmes homeowners began with
Monitoring Programme for Residential PV Systems from 1994 to 1996 followed by the PV Systems Dissemination Programme from 1997 to 2005. The Photovoltaic Power Generations Systems for Industrial and Other Applications programme targeted private companies and public organisations from 1998 to 2002. PV programmes for homeowners ended after 2005 but the government continues to provide subsidies to private companies and public buildings for PV. Because of the various programmes, PV installations increased to 1,422 MWp by 2005 of which nearly 80% of the installations were in homes. The Japanese government targets to increase PV installations in the country to 4.8 GWp by 2010.
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Table 5.2a. PV Installation and Production in Japan 2003 Cumulative installation (MWp) Source: IEA 860 2004 1,132 2005 1,422
Besides subsidy programmes, Japans Ministry for Economy, Trade and Industry (METI) supports Japanese companies in areas of R&D, establishing standards and accreditation systems, awareness creation and promoting international cooperation. The New Energy Development Organisation (NEDO) is a government body responsible for supporting the industry through research in cell technology, advanced manufacturing technology and developing innovative PV technologies. An important priority of NEDO is to reduce the cost of PV cells and systems to create a mass market for PV. Over the long term, the government anticipates the industry in Japan would be able to sustain itself without subsidies and minimal government support. However, the industry is in the opinion that the government would intervene if there were any considerable slowdown in growth as the industry develops. Japan is the worlds largest producer of PV cells and modules accounting for 46% and 44% respectively of the worlds production in 2005. PV has become an important industry in Japan and many major PV companies such as Sharp, Kyocera and Sanyo have vertically integrated much of their processes across the value chain. An important element of the Japanese industry is to develop export markets and exports currently account for about or 30% of the PV new production. Japanese PV companies initially operations outside Japan besides concentrated on the domestic market but since 2002, many have expanded established manufacturing increasing exports. Japanese manufacturing operations and exports focuses on Europe and the United States.
Table 5.2b. PV Installation and Production in Japan 2003 PV cell production (MWp) PV module production (MWp) Source: IEA 365 402 2004 604 590 2005 824 773
Sharp, Kyocera, Sanyo and Mitsubishi are leaders in the Japanese markets. According to Greenpeace, the industry in Japan generated more than 1.5 billion in revenue in 2005, which excludes revenue generated from manufacturing operations outside Japan. Furthermore, the Japanese PV
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industry directly provides employment opportunities for nearly 9,000 people in the country.
Table 5.2c. Snapshot of Japanese Companies involved in PV Company Sharp Solar Overview The company manufactures a range of mc-Si, sc-Si and a-Si cells. Sharp Solar is the world leader in the manufacture of PV cells and modules. Its share accounts for a quarter of the worlds market and half of Japans market. Besides Japan, Sharp also has plants manufacturing modules in the United States and United Kingdom. Sharp intends to increase its cell and module production capacity from 428 MWp in 2006 to 800-900 MWp by 2010. Kyocera The Solar Energy Division of Kyocera manufactures mc-Si cells and PV modules. Kyocera is the second largest manufacturer of PV cells and modules in Japan. The company has module plants in Mexico and the Czech Republic and a partnership with Chinas Tianjin Yiqing Group to manufacture modules in Tianjin China. Cell production capacity is expected to increase from 240 MWp in 2005 to 500 MWp by 2007. Sanyo Sanyo manufactures a-Si and a-Si/sc-Si hybrid cells for its modules. Besides Japan, the company has plants in Mexico and Hungary producing modules, receiving supplies of PV cells from its plant in Japan. Sanyo expects to increase cell production capacity from 260 MWp in 2006 to 600 MWp by 2010. Mitsubishi Two subsidiaries under Mitsubishi Corporation are involved in production of PV cells and modules. Mitsubishi Electric manufactures mc-Si cells for its modules and cell production capacity increased from 135 MWp in 2005 to 230 MWp in 2006. Mitsubishi Heavy Industries manufactures a-Si and aSi/micro-Si cells for its modules and cell capacity increased from 10 MWp in 2005 to 50 MWp in 2006. Another subsidiary, Mitsubishi Materials manufactures mc-Si at its plant in Japan and the United States with a combined production capacity of 2,850 tons in 2006. Mitsubishi Materials confirmed plans to increase capacity by 300 tons at its plant in the United States. Kaneka Kaneka manufactures a-Si/mc-Si thin film cells and modules. The company plans to increase production capacity from 30 MWp in 2006 to 70 MWp in 2008. Kaneka also operates a PV module plant in the Czech Republic.
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Table 5.2c. Snapshot of Japanese Companies involved in PV Company MSK Overview MSK became a subsidiary company of Suntech, China, when it acquired a majority stake in MSK in 2006. MSK focuses on mc-Si modules and specialises in systems integration and production of building integrated modules. Acquisition by Suntech provides an opportunity for MSK to reduce its production and operating costs by transferring some of its production and back-end operations to China. Kobe Steel (Kobelco) Kobe Steels in-house production capacity is less than 5 MWp but has partnership with Schott Solar to import modules. Current focus is systems integration for installations in public and industrial buildings in Japan. Honda Honda is a new market player in the Japanese PV industry entering the market in 2006. The company will begin full production from its 27.5 MWp capacity plant producing CIGS thin films. Tokuyama The fastest growing business of the Electronic Materials Business of Tokuyama Corporation is manufacturing and marketing of mc-Si to PV cell manufacturers. Due to growth of the PV market, Tokuyama announced plans to increase production of mc-Si at its plant in Higashi from 4,800 tons to 5,200 tons. Tokuyama also has plans to construct and operate a 200 tons verification plant to produce mc-Si using vapour-to-liquid deposition technology. Sumitomo Sumitomo Titaniums mc-Si was initially targeted for the semiconductor industry. With growing demand for silicon from the PV industry, Sumitomo announced its production capacity would increase from 900 tons in 2006 to 1,300-1,400 tons by 2007. JFE Steel (formerly Kawasaki Steel) JFE Steel manufactures mc-Si ingots for PV cell manufacturers in Japan. Annual production increased from 920 tons in 2004 to 1,200 tons in 2005 equivalent to 120 MWp of PV cells. Currently pursuing technologies to develop and produce wafers.
Sharp, Kyocera, Sanyo and Mitsubishi have vertically integrated most of their production across the value chain. Other smaller players producing crystalline cells and modules in Japan purchase their wafers and cells from the major players. Nevertheless, Japan is dependent on imported silicon for their ingots and wafers since domestic production is insufficient to meet demand from the industry. Domestic silicon manufacturers supplying to the PV industry include Tokuyama, Mitsubishi Materials Corporation and JFE Steel. Sumitomo Titanium also supplies to the PV industry but supplies are limited since the focus of its production is for the electronic industry.
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Diagram 5.2. Main Channel in the Japanese PV Value Chain
Some smaller players in the industry import their modules. Kobe Steel has a partnership and imports modules from Germanys Schott Solar. Kawasaki Heavy Industries has investments in Evergreen Solar (based in the United States) gaining the exclusive right to sell Evergreen Solars modules in Japan. Japan imports relatively small volumes of silicon wafers from Ningjing Songgong Semiconductor in China amounting to 50-60 MWp in 2005. In 2005, nearly 80% of the PV installations in Japan were in homes. A unique characteristic of the Japanese market is that many Japanese PV manufactures are also involved in PV installation or systems integration. According to industry estimates, the value added to a PV system increases by about 20%-30% with installation. Furthermore, Japanese module manufacturers involved in installation also provide maintenance services. Another unique characteristic is the strategic alliance developed between the module manufacturers and companies involved in constructing houses. New homes in Japan are mostly prefabricated and mass-produced. This provides an opportunity for module manufacturers to incorporate building integrated modules during prefabrication, significantly reducing the cost of a PV system. Homes account for about 80% of the PV installations in Japan and central government PV subsidies for homes ended in October 2005. The industry is in the opinion that demand for PV among Japanese homeowners would continue without subsidies from the central government. However, a number of municipal governments are offering subsidies and soft loans for
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PV to homeowners. Many residential property developers are promoting zero-energy homes integrating energy efficiency with PV. Furthermore, modules manufacturers and property developer are actively advertising zero-energy homes with PV on television. Because of increasing consumer awareness, many homeowners associate PV with personal economic and environmental benefits. The government has set targets to increase PV installations by nearly 3.4 GWp from 2006 to 2010 targeting public buildings and private companies with subsidies. The anticipated effect is reduction in prices of PV, which would make PV more affordable to Japanese homeowners.
5.3
United States
The PV market in the United States received a boost when President Bush signed The Energy Policy Act in August 2005 to increase renewable energy usage including PV in the country. The Act provided federal incentives for residential users and businesses with a 30% tax credit for PV systems installed during 2006-2007. The Act caps tax credits at US$2,000 for residential users. The PV industry in the United States is seeking extension of the tax credit after 2007. California is currently the dominant market for PV in the United States accounting for 73% of the grid-connected installations in the country in 2005. This has been largely due to strong programmes from Californias state government towards renewable energy including PV. The state of New Jersey is the second largest market accounting for 17% of the gridconnected installations in the United States. Like California, New Jersey provides state level programmes supporting PV but demand during the second half of 2006 slowed due to problems in state budget and uncertainty about the payment mechanisms. Currently, 20 states in the United States have rebate programmes sponsored by the state governments or utility companies. Another 17 states, including California, have set goals to increase usage of renewable energy including PV. Projections from the US PV Industry Roadmap anticipate installed capacity for PV would reach 200 GWp by 2030.
Table 5.3a. PV Installations in the United States 2003 Cumulative installation (MWp) Source: IEA 275 2004 376 2005 479
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Californias renewable energy initiative including PV began in 1996 with a $540 million fund. In August 2006, Californias Governor Schwarzenegger signed the Million Solar Roofs Plan to install one million homes in California with at least 3 GWp of PV by 2017. Under the initiative, Californias government would budget US$2.9 billion (2.3 billion) in rebates on PV installed in homes. The initiative extended the budget to as much as US$3.4 billion (2.7 billion) for installations in utilities owned by the Californias municipalities. Other states such as New Jersey, New York State, Florida, New Mexico, and Washington State are following Californias rebate programmes as well as experimenting with new programs. According to Solar Energy Industries Association (SEIA) of the United States, manufacturers in the country accounted for 40% of the worlds PV market and 100% of the domestic PV market in 1997. Since then, the United States has lost its leading position, experiencing growing imports from Europe, Japan and more recently China. The close proximity of Mexico to the United States, especially California, and Mexicos lower labour cost has seen companies such as Kyocera and Sanyo operate plants near Mexicos border supplying PV to the United States. However, the US is the worlds largest producer of crystalline silicon and will continue to be the largest producer through 2010. By 2005, the United States accounted for nearly 9% of the worlds production of PV cells and 11% of the worlds production of modules. Production of PV cells grew by 35% from 2003 to 2004 but at a slower pace of 13% from 2004 to 2005. However, production of modules increased by 96% from 2003 to 2004 and 42% from 2004 to 2005. The US Energy Information Administration reports there were 29 manufacturing companies involved in PV, directly providing job opportunities for nearly 3,100 people in 2005. This excludes those involved in installation, wholesale and retail distribution, architectural and engineering companies.
Table 5.3b. PV Production in the United States 2003 PV cell production (MWp) PV module production (MWp) Source: IEA 102 71 2004 138 139 2005 156 198
The largest manufacturer of PV cells in the US is Germanys SolarWorld when it bought over Shell Solars mc-Si cell plant in 2005. Many major silicon based PV manufacturing companies in the US are subsidiaries of foreign companies such as Japans Sharp, Kyocera, Sanyo and Mitsubishi Materials Corporation, SolarWorld and Schott Solar from Germany and REC from Norway.
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Other foreign companies have established sales offices, such as Mitsubishi Electric from Japan, Isofoton from Spain and Suntech from China. Q-Cells, a German company, is negotiating with potential partners in the US to establish its markets in the country. SOLON of Germany acquired Global Solar Energy from UniSource Energy to enter markets in south western US. Foreign companies have also formed joint ventures or have significant stake in US PV companies. Q-Cells invested in Soloria Corporation based in California to develop PV using low concentration of silicon. Hemlock Semiconductor, the worlds largest producer of crystalline silicon is a joint venture between Dow Corning and Japanese companies Shin-Etsu Handotai and Mitsubishi Materials Corporation.
Table 5.3c. Snapshot of US Companies involved in PV Company and Location Evergreen Solar Evergreen Solar manufactures PV modules at its plant in Marlboro, Massachusetts, and production capacity will reach 140 MWp by 2007. The company is the majority shareholder of joint venture company EverQ (with Q-Cells and REC) to produce silicon ribbon solar wafers in Thalheim, Germany. First Solar First Solar manufactures CdTe thin film modules at its plant in Perrysburg, Ohio, and increased production capacity from 25 MWp in 2004 to 75 MWp in 2006. A new plant located in Oder, Germany, with an initial capacity of 100 MWp begins operation in 2007. First Solar announced in January 2007 that it would begin construction of a module plant with a capacity of 100 MWp in Kulim High Technology Park, Malaysia. The plants operation is expected to begin in 2008. Nanosolar Nanosolar, a company founded in 2001 began developing technologies on CIGS thin film. The company based in Palo Alto, California, received its first seed money from Googles Larry Page and Sergey Brin in 2003 and funds worth more than US$100 million from various venture capital firms and government grants. The company begins production in 2007 and aims to eventually increase production capacity to 430 MWp. SunPower SunPower, based in Sunnyvale, California, is listed on NASDAQ. The company manufactures modules and has a silicon plant manufacturing cells with a capacity of 100 MWp. SunPowers A-300 cells are unique because the metal contacts for collecting and conducting electricity are on the cells back surface. Overview
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Table 5.3c. Snapshot of US Companies involved in PV Company and Location Miasole Miasole manufactures CIGS thin film cells at its plant in California. The company is a pre-IPO company funded by venture capitalists and expects to list on the stock market in 2007 or 2008. Miasole began producing thin films in 2006 with an initial production capacity of 50 MWp. The company hopes to increase capacity to 200 MWp by end of 2007. United Solar Ovonics United Solar Ovonics manufactures a-Si thin film solar cells in Auburn, Michigan. Production capacity increased from 25 MWp in 2005 to 50 MWp in 2006. In 2005, the company signed an MOU with Chinas Tianjin Jinneng Investment Company to form a joint venture to operate a 25 MWp a-Si plant in Tianjin, China. In 2007, the company begins operating a 50 MWp plant in Greenville, Michigan. Hemlock Semiconductor Formed a joint venture with Dow Corning, Shin-Etsu Handotai and Mitsubishi Materials to produce mc-Si in Hemlock, Michigan. Capacity will increase from 10,000 tons in 2006 to 14,500 tons in 2008 and further to 19,000 tons by 2009. MEMC Electronic Materials MEMC manufactures mc-Si wafers and granules at is plant in St. Peters, Missouri. MEMC plans to increase its capacity of mc-Si production from 4,000 tons to 8,000 tons by 2008. MEMC signed a 10-year agreement to supply mc-Si to Suntechs plant in China beginning in 2007. Hoku Scientific Based in Hawaii, Hoku is a new player in the PV industry. The company will operate a module plant in the state of Idaho beginning in 2007. The company also plans to operate a plant manufacturing mc-Si in 2008 with an initial capacity of 1,500 tons Overview
The US is self sufficient in crystalline silicon with three of the worlds major producers (Hemlock, REC and MEMC) located in the country. According to the US Energy and Information Administration (EIA), imports into the United States include PV cells mainly from Japan for US subsidiaries of Japanese companies. The US imports modules mainly from China and from Mexico, where two Japanese companies have manufacturing operations near the US border. Imports of modules from Europe are likely to increase in the near future as European PV manufacturers establish distribution networks and regional offices in the US. In 2005, 78% of US exports of PV were modules of which nearly 90% of the modules were exported were to Europe mainly Germany. Other markets for US PV exports were Canada, Mexico and re-export trade through Hong Kong and Singapore. According to the EIA, 40% of the modules exported were thin film modules.
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Diagram 5.3. Main Channel in the US PV Value Chain
Many US PV manufacturers have expanded production but growth has been most aggressive outside the US. SunPower based in California tripled its production capacity in the Philippines while First Solar will invest in a new PV module plant at Kulim High Technology Park in Malaysia. Evergreen entered into a joint venture with Q-Cells and REC to manufacture wafers, cells and modules in Thalheim, Germany. While US companies lag behind in crystalline cells and modules, it is becoming a leader in thin film technology. Thin films accounted for one-fifth of the PV production in the US in 2005. New players are entering the market for thin films supported by the capital markets and venture capitalists. Evergreen, SunPower and United Solar Ovonics raised funds for expansion through the capital market. Nanosolar, Konarka, HelioVolt and Miasole received significant funds from venture capitals. Furthermore, companies such as First Solar have expanded production of thin films into Germany to be close to their customers. The United States faces a major challenge to successfully implement PV in the country. The United States does not have a national standard to allow PV to connect to the grid. Different states have different technical and legal requirements making it difficult for manufacturers to market a standard PV system for the United States. The PV industry in the United States is currently proposing an interconnection standard.
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5.4
China
In 2005, about 50% of the PV installations in China have been mostly for government electrification programmes in remote villages where nearly 30 million households have no access to the electricity grid. About 50% of the PV installations are small off-grid installations in homes, community centres, in PV-wind hybrid systems and water pumps. About 35% are for industrial applications such as communication systems, 10% in consumer products and only 5% are grid-connected installations.
Table 5.4a PV Installations in China 2003 Cumulative installation (MWp)

Source: Research China
2004 65
2005 92
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China plans to increase PV installations to 450 MWp by 2010 and 4-8 GWp by 2020. From 2006 to 2011, Chinas government aims to install 265 MWp to nearly 2 million households in the remote villages and further 1,700 MWp by 2020. In addition, the government would support 50 MWp in rooftop installations, 8 MWp installation in the Gansu desert and a 20 MWp power plant in the Gobi Desert. These Rooftop programmes involved government subsidies for purchase of PV systems. In 2006, the Shenzhen municipal government implemented laws requiring PV installations in newly constructed buildings. Shanghais municipal government initially proposed the 100,000 Rooftop in 2005 to install 300 MWp by 2015. However, the plan is under review and instead the municipal government targets to install 7 to 10 MW of PV by 2010, partly through installations on 10 buildings yearly. Chinas Renewable Energy Law came into effect in January 2006 as the countrys framework to increase renewable energy to 15% of the energy consumed by 2020. However, the Law lacks clear regulations to implement and enforce renewable energy programmes in China including PV. The Law mentions power buyback or feed-in tariffs for PV but deemed too costly according to Chinas Director of Renewable Energy. Development of Chinas PV industry since 2004 has less to do from demands from the domestic market but more from its export markets. China exports more than 90% of the modules produced in the country. Main export markets are Germany, United States, Japan and recently Spain. From 2003 to 2005, production of PV cells increased 10-fold from 14 MWp to 156 MWp and similarly for modules from 45 MWp to 443 MWp. Thus,
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China accounted for 9% of the worlds production of PV cells and 25% of the worlds production of PV modules during the period. Production of PV cells is estimated to have increased to 690 MWp and modules to 1,200 MWp by 2006.
Table 5.4b. PV Production in China 2003 PV cell production (MWp) PV module production (MWp)
Source: CNF
2004 50 180
2005 156 443
14 45
During the supply bottleneck of 2004-2005, German companies turned to China for supplies of PV products but many factories and the products produced failed to meet international quality standards and certifications. However, the scenario has since changed and many larger Chinese PV manufacturers have become more professional and their products internationally certified. There are nearly 25 cell manufacturers and 130 panel manufacturers in China. However, most of the manufacturers are small companies with relatively small production capacities. Suntech Power, Baoding Tianwei Yingli New Energy Resources, Nanjing PV-Tech, JinAo Solar and Jiangsu Shunfeng Photovoltaic Technology together account for 61% of Chinas total cell production capacity and 60% or the production volume in 2006. Suntech Power, Kyocera (Tianjin), Ningbao Solar, Yingli New Energy Resources and Yunnan Tianda Photovoltaic together accounted for 29% of Chinas module production capacity and 27% of the production volume in 2006.
Table 5.4c. Snapshot of Chinese Companies involved in PV Company Baoding Tian Wei Yingli New Energy Resources Overview Yingli is another market leader in China and involved in manufacturing mc-Si wafers, cells and modules. The companys plant is located in Baoding National High-New Tech Industrial Development Zone in Baoding, Heibei province. From 2006 to 2007, Yinglis cell production capacity is expected to increase from 90 MWp to 400 MWp while module capacity is expected to increase from 100 MWp to 200 MWp.
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Table 5.4c. Snapshot of Chinese Companies involved in PV Company Suntech Power Overview Suntech is Chinas leading manufacturer of PV cells and modules and among the world leaders. The company manufactures both mc-Si and sc-Si cells. In 2006, Suntech acquired a 66.6% stake in Japans MSK (a leading Japanese module manufacturer) and the remaining stake acquired by the end of 2007. Listed on the New York Stock Exchange (NYSE), Suntech exports nearly 80% of its production manly to Western Europe and the United States. From 2006 to 2007, cell production capacity will increase from 270 MWp to 300390 MWp and module capacity from 470 MWp to 600 MWp. Nanjing PV Tech Nanjing PV Tech only began production in 2005 and currently manufactures only mc-Si and sc-Si cells. The company is a joint venture between the Chinese Electrical Equipment Group and the Australian Photovoltaic Research Centre. Cell production capacity increased from 32 MWp in 2005 to 180 MWp in 2006 and expected to increase further to 300 MWp by 2007. Nanjing PV Tech supplies most of its cells to the domestic market. Kyocera (Tianjin) Solar Energy Kyocera (Tianjin) Solar Energy is a joint venture between Kyocera of Japan and the Tianjin Yiqing Group of China. Its plant, located in Tianjin, only manufactures mc-Si and sc-Si PV modules mainly for the domestic market. Production capacity increased from 120 MWp in 2004 to 240 MWp in 2005. Kyocera (Tianjin) has yet to announce any plans to increase production capacity. Jiangsu Linyang Solarfun The company currently manufactures mc-Si and sc-Si PV cells and modules at its plant in Qidong, Jiangsu Province, and also developing technologies to develop film cells. Cell production capacity will increase from 20 MWp in 2005 to 120 MWp by 2007 while module capacity will increase from 50 MWp to 80 MWp during the period. Solarfuns products are mostly exported to Europe, namely Germany followed by Spain and Italy. Its parent company Solarfun Power Holdings listed on NASDAQ in 2006. Jiannxi LDK Solar Hi-Tech LDK Solar is a new company under the Liouxin Group, which manufactures protective and electrical equipments. GT Equipment signed an agreement with LDK Solar in 2005 for a turnkey project producing silicon wafers. The agreement also includes increasing the production capacity to 1,000 MWp by 2010.
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Table 5.4c. Snapshot of Chinese Companies involved in PV Company Ningbo Solar Electric Power Overview Ningbo Solar Energy Power manufactures both mc-Si and sc-Si PV cells and modules at its plant. From 2005 to 2006, cell production capacity increased from 20 MWp to 35 MWp while module capacity increased from 60 MWp to 70 MWp. ReneSola The company, listed on Londons AIM stock market in 2006, is principally involved in recycling waste silicon to producer wafers. ReneSola increased production of silicon wafers to 400 tons in 2006 and expects to increase production to 800 tons by 2007. ReneSola has a three-year supply contract with Taiwans Motech and a two-year contract with Chinas Jiangsu Linyang Solarfun beginning in 2007.
Lower investment and production cost is Chinas competitive edge driven by growing global demand as well as the entrepreneurial spirit of Chinese businesses. Chinas government supports funding in R&D for PV (estimated at 12-13 million from 2006 to 2010) through the National Development and Reform Commission and the Ministry of Science and Technology. However, most of the current key production lines are from Germany and the United States. Production of modules uses more labour and does not require the same level of technical expertise compared to other manufacturing processes in the value chain. Thus, Chinas low labour cost has led the country to become a leading producer and exporter of modules. Chinas production of silicon is limited and depends almost entirely on imports. The global shortage of silicon in recent years has been the main obstacle to the industrys growth in recent years. Thus, China also has to rely on imported wafers and cells to complement local production.
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Diagram 5.4. Main Channel in Chinas PV Value Chain
Chinas silicon industry is limited in production capacity. The local industry supplies electronic grade silicon mainly to the semiconductor industry and only 30-40 tons (equivalent to about 3 MWp) is available for the PV industry. Plans are underway in Leshan, Sichaun province, and Luoyang, Henan province, to increase capacity to 1,500 tons by 2009-2010. Despite efforts to increase local production, China will continue to be dependent on imported silicon since the silicon industry requires a high level of technology and capital investment. Furthermore, the high technology used to produce silicon is proprietary-owned by major multinationals. From 2005 to 2006, the production capacity for PV cells increased from 360 MWp to an estimated 1,350 MWp but wafer capacity increased from 72 MWp to an estimated 250. Thus, Chinas production of wafers would be unable to meet domestic demand and would continue to rely on imports. To ensure security in supplies for silicon and wafers, most major manufacturers in China have signed medium to long-term supply agreements with multinational companies.
5.5
Taiwan
In 2000, Taiwans Industrial Technology Research Institute (ITRI) implemented a five-year programme sponsored by the Energy Commission (now known as the Energy Bureau under the Ministry of Economic Affairs). The programme involved conducting research on thin film PV technology and demonstration projects on commercial, industrial and educational facilities. The grid-connected PV installations are less than 10 kWp and
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subsidised at about US$5,000 per kWp. Total installations in Taiwan, being mainly small-scale demonstrations projects, reached only 1.0 MWp in 2005.
Table 5.5a. PV Installations in Taiwan 2003 Cumulative installation (MWp) 0.3 2004 0.5 2005 1.0
Source: Energy Bureau, Ministry of Economic Affairs (Taiwan)
In 2005, Taiwan adopted an energy policy to meet the conditions of the Kyoto Protocol. Taiwan has set a goal for renewable energy including PV to account for 10% of the islands power generation capacity by 2020. The Bureau of Energy is encouraging municipalities to install PV systems, provide subsidies for home installations and construction PV power generating facilities in remote areas such as mountain villages and islands off Taiwan. The Kaohsiung City Stadium will install a 1 MWp PV system to be ready for the Eighth World Games in 2009. The Ministry of Economic Affairs has identified PV as a potential industry for the island and strong growth potential in the global markets. Taiwan prevails in high technology industries especially in semiconductors and flat panel LCD. However, in recent years development in these industries have slowed and subjected to global economic cycles. The Ministry is in the opinion renewable energy is less affected by economic cycles as countries adopt strategies to reduce their carbon emission and seek greater access to renewable energy. The PV industry in Taiwan is relatively new and at an infancy stage compared to Japan, Germany and the United States. The most prominent Taiwanese industry player is Motech and was the worlds ninth largest producer of PV cells in 2005. Motech produced 60 MWp of PV cells accounting for 3% of the worlds PV cell production during the period. With a current small market for PV and no significant manufacturer for PV modules in Taiwan, Motech exports most of Taiwans production.
Table 5.5b. PV Production in Taiwan 2003 PV cell production (MWp) PV module production (MWp) 30 <1 2004 45 <1 2005 80 <1
Source: Energy Bureau (Taiwan), Motech and E-Ton Solar production estimates
Taiwan has nearly 30 industry players involved in PV but many are new entrants into the industry. However, a few players currently dominate the industry and mostly concentrated in cell and wafer manufacturing. In cell
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manufacturing Motech is the industry leader followed by E-Ton Solar Tech and new players include DelSolar, Gintech Corporation and Mosel Vitelic. Among the industry players for silicon ingots and wafers are Tatung and Sino American Silicon Products.
Table 5.5c. Snapshot of Taiwanese Companies involved in PV Company Motech Solar Overview Motech manufactures poly-crystalline silicon cells at its plant located in Tainan Science Industrial Park. Production capacity increased from 60 MWp in 2005 to 200 MWp in 2006. Motech signed a three-year contract with Chinas Renesolar and a five-year contract with Renewable Energy Corporation to supply its cells beginning in 2007. E-Ton Solar Tech E-Ton Solar Tech, established in 2001, manufactures mc-Si and sc-Si cells at its plant located in Tainan. The company increased its production capacity from 60 MWp in 2005, 100 MWp in 2006 and to 200 MWp by 2007. The company announced in February 2007 that it had signed a technical cooperation agreement with the University of New South Wales, Australia, to develop high-efficiency cells. DelSolar DelSolar is part of Taiwans Delta Group, which produces a wide range of electronic products including electronic devices, optoelectronics and networking. DelSolar entered into the PV industry in 2005 producing mc-Si and sc-Si cells at its plant located in Hsin Chu Science Park with an initial production capacity of 25 MWp in 2005. The company expanded production capacity to 50 MWp in 2006 and will expand further to 100 MWp by 2007. Sino American Silicon Products Established Taiwan. in 1998, company Sino has American an Silicon Products Topsil specialises in manufacturing silicon ingots and wafers in The alliance with Semiconductor Materials based in Denmark. The company supplies its products both in the domestic and international markets including China, Japan, Europe and the US. Green Energy Technology and San Chih Semiconductor Green Energy Technology is a new subsidiary company of Tatung Company, a major manufacturer of consumer electrical and electronic products in Taiwan. Green Energy began operations in 2005 producing silicon wafers. Another subsidiary of Tatung is San Chih Semiconductor which began operations electronics in 1975 producing but has silicon wafers for the industry diversified silicon wafer
production for the PV industry. Production is for both domestic and export markets.
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Table 5.5c. Snapshot of Taiwanese Companies involved in PV Company Gintech Corporation Overview Gintech is a new entrant into Taiwans PV industry and established in 2005. The company manufactures mc-Si and sc-Si cells and has production capacity of 48 MWp. The company will shift production to a new plant at Hsin Chu Science Park and capacity will reach 300 MWp by 2009. Mosel Vitelic Mosel Vitelic is a manufacturer of DRAM (dynamic random access memory) used in integrated circuits. In 2006, Mosel Vitelic announced it would enter into manufacturing silicon wafers in 2007 and RFID (radio frequency identification devices) in 2008. The company would eventually cease manufacturing DRAM because of the competitiveness of the market and shift production to wafers and RFID, which the company believes has greater growth potential.
The Ministry of Economic Affairs recognises that Taiwans industry weakness in PV is the lack of integration in the value chain. Taiwan does not have an established industry for silicon production, ingot and wafer fabrication, manufacturing modules and even thin film technology. However, the Ministry recognises that Taiwans strength and experience in the semiconductor industry puts it at an advantage to develop the islands PV industry. Known as the Motech Effect, many Taiwanese companies have therefore shown interest to enter the industry.
Diagram 5.5. Main Channel in Taiwans PV Value Chain
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Taiwans government has proposed to inject nearly US$200 million in the next 10 years to develop the PV industry. The Bureau of Energy has planned the following strategies to develop the industry: Assist Taiwanese PV companies to gain access to supplies of silicon and encourage foreign silicon suppliers to set up factories on the island. Provide subsidies to companies developing high-efficiency and lowcost silicon cells and support development of next-generation PV cells. Assist the industry to develop test and inspection techniques for photovoltaic modules, photovoltaic area networks and photovoltaic production equipments. Besides these, the government has sent trade missions outside Taiwan to attract foreign companies to invest and set up manufacturing plants on the island. The Industrial Development Bureau (IDB) under the Ministry of Economic Affairs is responsible for developing the PV industry in Taiwan. Realising the infancy of the industry, the Solar Photovoltaic Materials Industry Promotion Plan" takes effect in 2007 to assist Taiwanese companies to learn about key materials used in PV. Under the Plan, IDB will assist in attracting foreign companies to Taiwan and companies such as Tokuyama and REC have expressed interest to work with Taiwanese companies. Other areas under the plan include assisting in import of key materials such as silicon, liquid silver, aluminium, low-iron glass and module packaging materials. Other areas include assisting in product development with potential Taiwanese companies such as Formosa Plastics, Tatung and Taipower. In March 2006, ITRI signed a contract with TV Rheinland Group, Germany, to install Taiwan's first photovoltaic module testing laboratory. The testing laboratory would provide the necessary certification for Taiwanese companies to export their modules. In July 2006, the Ministry of Economic Affairs announced that it would build a silicon plant to supply much needed silicon to develop the PV industry. The plant would begin operation in 2008 with an initial capacity of 300 tons, increasing to 1,000 tons by 2010.
5.6
Spain
The development of the PV market and industry in Spain from 2000 to 2005 was a result of the Renewable Energy Promotion Plan. Under the plan, Spain
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targeted to install 150 MWp of PV from 2000 to 2010 through various incentives and funding. These included funding for R&D to improve technologies in PV, public subsidies and tax incentives for installing PV systems, and feed-in tariffs at 0.40 for installation below 5 kWp and 0.20 for installations above 5 kWp. PV installations in homes reached nearly 2,000 by 2005 and mostly less than 5 kWp.
Table 5.6a. PV Installations in Spain 2003 Cumulative installation (MWp)

Source: IEA
2004 37.0
2005 57.4
27.0
In August 2005, the Spanish government implemented the Renewable Energy Plan (2005-2010) which superseded the Renewable Energy Promotion Plan. The new plan revised total PV installations from 150 MWp to 400 MWp by 2010. The Renewable Energy Plan eliminated subsidies and focussed on encouraging PV installations through attractive feed-in tariffs. Spains experience with subsidies created much time-consuming bureaucracy and complications. The Spanish government was in the opinion that feed-in tariffs was sufficient to support demand for grid-connected PV in the country. However, subsidies would continue for non grid-connected installations in remote places too far away from the grid. From 1999 to 2005, Spain received nearly 290 million in investments for the PV industry. Spain has relatively fewer manufacturing companies involved in PV unlike Germany, Japan, US and China. The only cell and module manufacturers are Isofoton and BP Solar Espaa, while smaller but significant players include Artersa and Siliken which only manufactures PV modules.
Table 5.6b. PV Production in Spain 2003 PV cell production (MWp) PV module production (MWp) Source: IEA 40 50 2004 72 67 2005 70 69
Due to Spains small market in 2000-2005, the industry depended on exports mainly to Germany. Isofoton mentioned in its 2005 annual report that it exported nearly 80% of its production. However, with the implementation of Spains Renewable Energy Plan, exports now account for 65% of its production. By 2005, the PV industry in Spain provided 4,900 job opportunities in manufacturing, installation, wholesale and retail distribution, and turnkey manufacturing. Job creation in the Spanish PV
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industry will increase further by 6,000-7,000 by 2010 from various sources. With the revised PV installations from 150 MWP to 400 MWP by 2010, PV cell and module manufacturers are already doubling their production capacity. Furthermore, Spain will have its own silicon plant by 2009 with a production capacity of 2,500 tons. Spains PV industry began when Isofoton became a commercial spin off from technologies developed by the Madrid University of Polytechnics production of bifocal PV cells from silicon wafer. The University fabricated PV panels including cells in-house, proving Spanish technological and engineering capabilities in PV. The university continues to conduct research on PV technologies in collaboration with Spanish PV companies. Areas of research include production technologies on thinner PV cells improvements in cell conversion efficiency and testing new materials for PV cells; and substrate production technologies for PV cells. Currently Isofoton is the leading Spanish player in the local industry. The number of local manufacturers in Spain is few but the PV industry in the country is near vertical integration from wafer to module manufacturing and installation. By 2009, Spain will have its own silicon plant with an initial production capacity of 2,500 tons completing the vertical integration across the value chain. The vertical integration is largely due to Isofotons position in the country, which includes a silicon plant by 2009.
Table 5.6c. Snapshot of Spanish Companies involved in PV Company Isofoton Overview Isofoton is Spains largest manufacturer of silicon cells and PV modules. The company manufactures sc-Si cells and modules at its plant in Malaga. Isofoton plans to increase cell and module production capacity from 90 MWp in 2005 to 160 MWp by 2007. Isofoton will operate a silicon plant (Silicio Energia) by 2009 with an initial capacity of 2,500 tons. BP Solar Espaa Part of the BP Solar Group based in the United Kingdom. BP Solar Espaa manufactures mc-Si cells and modules. Depending on the availability of silicon, BP Solar Espaa intends to increase its cell production capacity from 70 MWp in 2006 to 200 MWp by 2008. Atersa Atersa began its business in 1979 and manufactures both mcSi and sc-Si modules. It is also involved in turnkey installations and production of machineries for modules. The company increased capacity from 6 MWp in 2005 to 18 MWp in 2006 and will increase further to 25 MWp by 2007.
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Table 5.6c. Snapshot of Spanish Companies involved in PV Company Siliken Overview Siliken manufactures mc-Si and sc-Si PV modules besides manufacturing equipments for module manufacturing plants. Besides flat panel modules, Siliken also manufactures custom made building integrated modules. The company increased capacity from 10MWp in 2005 to 25 MWp in 2006 and will increase further to 40 MWp by 2007.
Isofoton and BP Solar Espaa currently manufacture only sc-Si cells. Production from BP Solar Espaa is for its module manufacturing while Isofoton supplies some of its sc-Si cells to module manufacturers in Spain. Artesa and Siliken, which only manufactures modules, manufactures both mc-Si and sc-Si modules and therefore have to import mc-Si cells. Imports are generally multi-year supply agreements. For example, Q-Cells entered into a supply agreement with Atersa to supply 73 MWp of PV cells from 2006 to 2009.
Diagram 5.6. Main Channel in Spains PV Value Chain
Among the Spanish PV manufacturers, Isofoton has aggressively ventured into the international markets. Isofotons main export is Germany but beginning to enter into new markets and establish regional offices. The company entered the Italian market in 2003, the US in 2005 and China in 2006. Isofoton is also involved in rural electrification projects in the developing countries with offices in Ecuador (South American market), Senegal (West African market) and in Morocco.
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Current feed-in tariffs for PV in Spain are more attractive than Germanys tariffs and are the driver of growth for the PV market and industry in Spain since 2006. For PV systems less than 100 kWp, the tariff is 575% above the average electricity tariffs (determined by the energy authorities) for 25 years after commissioning and 460% thereafter. For PV systems above 100 kWp, the tariff is 300% above the average electricity tariffs for 25 years and 240% thereafter. Current tariffs have created attention and strong interest among private investors for large-scale installations. The government periodically reviews and revise feed-in tariffs. Though the industry is in the opinion that tariffs would reduce in the next review, they believe it would remain attractive to investors. The incentives have also attracted foreign module manufacturers and system integrators to enter the Spanish market and bid for large scale PV installation projects. Chinas Suntech will supply 23.2 MWp of modules to Atersa for the Photovoltaic Grid Connection Park in the Extremadura region of Spain beginning in the middle of 2007. Globalia Corporacion Empresarial, an energy company based in Madird, has invested in a 60 MWp solar farm that will begin operations in the second quarter of 2007. Germanys City Solar won a contract to construct a 2 MWp solar farm in the Spanish province of Alicante for a group of 200 individual investors. Acciona Solar won a contract to construct a 2.4 MWp solar farm belonging to a group of 280 individual investors in Castejon, Navarre, at a cost of US$23 million. The industry in Spain is in the opinion that the country would reach its target of 400 MWp before 2010. However, the government may revise and increase its target for PV installation by 2010 and could reach as high as 1,100 MWp according to Spains photovoltaic association. However, application for permits for installing PV systems is bureaucratic and done only by Spanish companies. If too slow, it may remain an obstacle for Spain to achieve its target of 400 MWp by 2010.
5.7
South Korea
Koreas revised 10-year National Plan for Energy Technology Development targets renewable energy to account for 3% of the total electricity generation capacity by 2006 and 5 % by 2012. The Ministry of Commerce,
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Industry
and
Energy
(MOCIE)
through
Korea
Energy
Management
Corporation (KEMCO) manages Koreas renewable energy plan including PV, hydrogen fuel cells and wind power for development and promotion. US$2.4 billion has been budgeted under the 10-year plan to develop and promote the local PV industry. The Ministry is in the opinion the local PV industry has strong export potential and aims for Korea to achieve 10% of the global market for PV by 2012 employing nearly 50,000 people. The Ministry targets for the country to achieve 1.3 GWp in PV installation capacity by 2012. The plan targets to install 100,000 homes through a Rooftop programme and 70,000 commercial and public buildings with PV systems by 2012. Support programmes from the Ministry include demonstration projects to raise public awareness on PV; feed-in tariff guaranteed for 15 years, and requirement for new public buildings over 3,000 square metres be installed with renewable energy facilities representing 5% of the buildings construction budget. There are doubts among some industry members whether Korea would achieve its target of 1.3 GWp by 2012 with PV installations in country totalling only 15 MWp in 2005. Some industry players mentioned there is a lack of promotion to generate interest from consumers and private companies to drive demand for PV. Another obstacle to drive demand is the bureaucracy causing delays or long waiting period for approvals to install PV. Estimates from industry sources indicate total PV installations in Korea may have reached only 25-35 MWp in 2006. An estimated 3,000 homes and 300 buildings were installed with PV in 2006 ranging from 3 kWp to 400 kWp installations. However, some industry players mentioned the government is taking efforts to improve the bureaucratic process to quicken application.
Table 5.7a. PV Installations in South Korea 2003 Cumulative installation (MWp)

Source: IEA
2004 8.5
2005 15.0
6.0
MOCIE and the Ministry of Science and Technology (MOST) support R&D programmes on PV in Korea. KEMCO and MOCIE have contracted the Korean Photovoltaic Development Organisation (KPDO) and Korea University to manage R&D projects on PV including demonstration projects with the industry, with other Korean universities and national research institutes. Current R&D objectives are on developing technologies to commercially mass produce PV products and reduce production costs. The government targets to reduce cost of producing PV modules from US$3.3 per Wp in
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2006 to US$1.9 per Wp by 2010. R&D on cell materials focuses on crystalline silicon targeting to improve cell efficiency from 15% in 2006 to 18% by 2010. Korea is a new player in the global PV industry with few manufacturers involved in PV, lagging behind China and Taiwan. Furthermore, most manufacturers entered the industry between 2003 and 2005 and characterised with small production capacities or running pilot plants. Many manufacturers entered the industry at a time of increasing shortages of silicon and foreign silicon suppliers requiring multiyear supply agreements. Additionally, the industry has not yet vertically integrated with manufacturing concentrated on PV cells and modules. Unlike Koreas electronic and electrical industry, Korean PV manufacturers have yet to establish an international network for exports.
Table 5.7b. PV Installations and production in South Korea 2003 PV cell production (MWp) PV module production (MWp)
Source: IEA and industry estimates
2004 1 3
2005 3 9
0.5 3
The most prominent players in the Korean PV industry are Kyungdong Photovoltaic Energy and Hyundai Heavy Industries with significant production capacities. DC Chemical will operate a plant producing silicon to supply the domestic and export markets when it begins operation in 2008. LG Group intends to enter the PV industry and there are possibilities that Samsung may follow suit in the near future.
Table 5.7c. Snapshot of South Korean Companies involved in PV Company Neskor Solar Company Overview Neskor Solar manufactures sc-Si cells at its plant in Incheon. Cell production is for the domestic market. The company began production in 2003 and has a production capacity of less than 1 MWp. Photon Semiconductor & Energy Hae Sung Solar Photon Semiconductor & Energy manufactures sc-Si cells and modules. The company began manufacturing in 2003 with an initial production capacity of 0.3 MWp and increased to 31 MWp in 2005. Hae Sung Solar is a manufacturer of small size PV modules including lighting modules. The companys plant is located in Yong Tang Dong which has a production capacity of less than 5 MWp.
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Table 5.7c. Snapshot of South Korean Companies involved in PV Company Symphony Energy Overview Symphony Energy began operations in 2004 and has its plant at Gwangsan and a sales office in Seoul. The company manufactures mc-Si and sc-Si modules mainly for the domestic market. The plants production capacity is 10 MWp. Unison Unison is one of Korea's largest suppliers of wind energy systems. Unison entered into the PV business in 2005 and operates a 15 MWp module plant. Hyundai Heavy Industries The Electro Electric Systems Division of Hyundai Heavy Industries is involved in a diverse range of heavy industries including shipbuilding, high-speed railway systems and energy. The company initial operated a pilot mc-Si module plant with a production capacity of 10 MWp. By late 2005, Hyundai increased its production capacity to 200 MWp. Kyungdong Photovoltaic Energy Kyungdong Photovoltaic Energy (KPE) is part of the Kyung Dong group involved in a wide range of manufacturing activities. KPE manufactures mc-Si cells and modules including standalone systems such as for telecommunication systems. The companys plant is located at Science-Based Industrial Park in Changwon and has a production capacity of 40 MWp. DC Chemicals DC Chemicals produces a wide range of chemicals including basic chemicals, fine chemicals and petrochemicals. The company will begin operating a silicon plant in 2008 with a production capacity of 4,000 tons. The company already has a multi-year supply contract with companies in the US and China.
Until 2008 when DC chemical operates its silicon plant, the Korean industry would have to depend on imports. Consequently, Korean module manufacturers have to depend on imported cells for their modules. Due to limited production of modules in Korea, nearly all of the modules manufactured in Korea are for the domestic market. Most of the large-scale installations in Korea are imported modules.
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Diagram 5.7. Main Channel in Koreas PV Value Chain
Hyundai Heavy Industries is making inroads into the Korean PV industry. Its entry into the industry in Korea began with a 10 MWp mc-Si pilot module plant. Hyundais strategy is to integrate across the value chain including manufacturing of silicon, wafers, cells, module and system integration. Initial focus of Hyundais development was on manufacturing modules and system integration and Hyundai may enter into cell manufacturing by 2009. Other areas of developments include manufacturing of inverters. LG Chem and Samsung are potentials for the Korean PV industry given their expertise in OLED display screens. LG Chem installed a pilot 5 MWp module plant in 2005 and plans to increase capacity to 50 MWp by 2007 and 100 MWp by 2010. LG Silitron is involved in wafer manufacturing for the electronic industry and may enter into wafer manufacturing for the PV industry.
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6 6..
M MA AJ JO OR RC CO OM MP PA AN NI IE ES SI IN NT TH HE EV VA AL LU UE EC CH HA AI IN N
6.1
PV Modules Assemblers
6.1.1
Company Division Address Tel Fax Website
Sharp
: Sharp Corporation : Sharp Solar Systems Group : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japan : +81 74563 3579 : +81 74562 8253 : http://sharp-world.com/solar/index.html
Sharp Solar is the worlds leading manufacturer of PV modules accounting for nearly 23% of the worlds market in 2005. During the year, Sharp shipped 428 MWp of modules from its plants in Japan, United States and the United Kingdom. Sharp manufactures a range of mc-Si, sc-Si and a-Si thin film modules. Currently, mc-Si and sc-Si modules account for about 99% of its shipments. Three of Sharps module assembly plants are in Japan at Katsuragi City in Nara Prefecture, Yaita City in Tochigi Prefecture and Yao City in Osaka Prefecture. Realising the growing potential for PV outside of Japan namely in Western Europe and the United States, Sharp expanded its manufacturing operation into the region beginning in 2003. Sharp operated its first overseas plant in Memphis, Tennessee, in the United States in 2003. Its second overseas plants in Wrexham, United Kingdom began operations in 2004. The combined production capacity from Sharps five plants was 500 MWp in 2005 increasing to 600 MWp by 2006. Over the longer-term, Sharp intends to increase its capacity to 1,000 MWp by 2010. Besides the conventional flat panel modules, Sharp manufactures building integrated modules including roof tile, steel roof and hipped roof integrated modules. Other modules produced include for space applications, LED-glass integrated a-Si modules and for large industrial installations. Sharp introduced its a-Si/micro-Si thin film modules in November 2006 intended for industrial and commercial installations.
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The Japanese housing market has been the main driver for Sharps business growth in Japan. Thus, Sharp works closely with leading residential property developers to provide system integration services. With the Japanese governments policy to increase PV installations in industrial and commercial buildings, Sharp is increasing its market focus in these sectors. Sharp views government subsidies and mandatory power buy-back programmes by utility companies in Western Europe and the United States as potential opportunities for growth.
6.1.2
Kyocera
: Kyocera Corporation : Solar Energy Division : 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161, Japan : +81 75604 3476 : +81 75604 3475 : http://global.kyocera.com/prdct/solar/index.html : http://www.kyocerasolar.com
Kyocera ranked second after Sharp accounting for 8% of the worlds shipment of PV modules and 17% of the Japanese market in 2005. Shipment of its modules increased from 105 MWp in 2004 to 142 MWp in 2005. Kyocera markets both mc-Si and sc-Si modules. Kyocera has two module assembly plants in Japan located at Yukaichi City in Shiga Prefecture and Ise City in Mie Prefecture focussing supply on the Japanese market. Taking opportunities on the growing markets outside Japan, Kyocera expanded its manufacturing operations outside the country. The company formed a partnership with Chinas Tianjin Yiqing Group to operate a plant in Tianjin, China, focussing supply on Chinas domestic market. The plant began its operation in 2003 with an initial capacity of 30 MWp and later increased to 40 MWp in 2004. Kyoceras second overseas plant began operations in Tijuana, Mexico, in 2004, with an initial of 36 MWp. Production from Tijuana are mainly to markets in the US namely California taking advantage of the lower manufacturing cost in Mexico and its close proximity to California. The third overseas plant located at Kazan in the Czech Republic opened in 2005 with an initial capacity of 24 MWp. The plant in
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Kazan supplies to the West European markets and takes advantage of the lower manufacturing cost in the Czech Republic. Kyoceras combined production capacity from its plants increased from 240 MWp in 2005 and expects to increase further to 500 MWp by 2007. Besides the conventional flat panel, Kyocera also manufactures building integrated modules including roofs, hipped roof, balconies and walls. Other modules marketed include for industrial and commercial buildings. Kyocera also manufactures see-through modules and frameless edge covered modules. In 2005, Kyocera introduced off the shelf or standard packages for medium size installations ranging from 10 kWp to 13 kWp. The company introduced six types of systems for installations on tilted and flat roofs. During the year, Kyocera also introduced its stain proof PV modules designed to remove dust on the glass panels with rainwater. Kyocera markets its modules through its authorised dealers, contractors, industrial users and OEM. Besides more efficient delivery of supply, Kyocera is in the opinion that operating plants outside of Japan optimises the companys effort to develop modules customised to the needs of its markets.
6.1.3
Sanyo
: : : : : Sanyo Solar Industries Co. Ltd 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570, Japan +81 6900 1246 +81 6900 9305 http://www.sanyo.com/industrial/solar/
Company Address Tel Fax Website
Sanyo accounted for 7% of the worlds PV module production in 2005 and shipment doubled from 65 MWp in 2004 to 125 MWp in 2005. Its modules range from sc-Si, a-Si and modules using a hybrid of a-Si and sc-Si (heterojunction with intrinsic thin layer or HIT) cells. Sanyo is one of the worlds largest manufacturers of modules using a-Si thin films. Sanyo has four module assembly plants in Japan at Sumoto City in Hyogo Prefecture, Kaizuka City in Osaka Prefecture, Oizumi City in Gunma Prefecture and Kitakata City in Fukushima Prefecture. The plant at Kitakata City produces modules using a-Si thin film cells. In January 2007, Sanyo announced that it would construct a new assembly plant for modules in Shiga Prefecture at a cost of US$16.6 million.
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Sanyos overseas plants are in Monterrey, Mexico, and Dorog, Hungary, leveraging on the lower manufacturing cost in these countries. The two plants in Mexico and Hungary use a-Si/sc-Si hybrid HIT cells for their modules. Production from the plant in Monterrey focuses supplies to markets in the United States namely California due to its close proximity. Production from Sanyos plant in Dorog supplies markets in Western Europe. Sanyos production capacity from its plants totalled 160 MWp in 2005. Sanyo will increase capacity to 250 MWp in 2007 and further to 600 MWp by 2010. Besides flat panels, Sanyo manufactures building integrated modules including roof tiles and see-through but are mainly for the Japanese markets. Sanyos modules using the hybrid a-Si/sc-Si (HIT) cells use less space per kWp and therefore suitable for installations in small areas. Furthermore, the modules are lighter and therefore suitable for large-scale horizontal installations and as roofing tiles. Sanyo is working closely with residential property developers in Japan such as Daiwa House, Mitsui Homes, Sanyo Homes and local builders to promote its HIT roofing tiles. In the United States, Sanyo is increasing marketing focus on California with the introduction of the One Million Roofs Plan to install 3 GWp of PV modules in California by 2018. In Western Europe, focus is on countries that have introduced incentives for installing PV and implemented companies. mandatory power buy-back schemes from the utility
6.1.4
Suntech
: Suntech Power Holdings Co., Ltd. : 17-6 ChangJiang South Road, New District, Wuxi, Jiangsu 214028, China : +86 (510) 8531 5000 : +86 (510) 8534 5049 : http://www.suntech-power.com
Suntech is a relative newcomer in the PV business but has acquired a significant market share in the global market within a relatively short period. Suntech has its beginnings in China when it began to manufacture PV modules in September 2002 and currently the largest module manufacturer in China. In December 2005, Suntech listed on the New York Stock Exchange (NYSE).
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In 2005, Suntech accounted for only 3% of the worlds module shipment at 50 MWp and shipment doubled to 114 MWp by 2006. Suntech acquired a 66.6% stake in MSK of Japan in 2006 and would acquire the remaining shares by late 2007. In February 2007, Suntech announced shipments from these two plants totalled 158-159 MWp in 2006. At an estimated world production of modules at 2,400 MWp in 2006, combined shipment from Suntech and MSK would account for nearly 7% of the global share during the period. Some of the production from MSKs plants would shift to Suntechs plant in China beginning in 2007 to leverage on the lower manufacturing cost in the country. Consequently, MSK would focus on developing, manufacturing and marketing higher-valued building integrated modules and Suntech would tap on MSKs expertise in systems integration. Suntechs plant in China located in Wuxi in Jiangsu Province produces both mc-Si and sc-Si modules. Production capacity began with 15 MWp in 2002 and increased 10-fold to 150 MWp in 2005 and further to 270 MWp by 2006. MSKs plants in Japan are in Saku City in Nagano Prefecture, Ohmuta City in Fukouka Prefecture and in Sihikari City on the island of Hokkaido. The Japanese plants also produce mc-Si and scSi modules and their combined capacity increased from 100 MWp in 2003 to 200 MWp in 2004. Suntech will increase its combined production capacity from 470 MWp in 2006 to 600 MWp by 2007 and plans further increase to reach 1,000 MWp by 2010. Currently Suntech exports nearly 80% of its production in China mainly to Western Europe and the United States. Over the longer term, Suntech expects to ship 50% of its production in China to the domestic market. Acquisition of MSK provides Suntech an opportunity to enter the Japanese market, which it considers a difficult market to penetrate for non-Japanese module manufacturers. Besides Suntechs own offices in Western Europe and the United States, the company would leverage on MSKs network in Western Europe through its office in London and agencies across Europe.
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6.1.5
Mitsubishi
: Mitsubishi Electric Corporation : Mitsubishi Electric Nakatsugawa Works : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan : +81 57366 2125 : +81 57362 0038 : http://global.mitsubishielectric.com/bu/solar/index.html
Mitsubishi Electric Corporation (MEC) manufactures mc-Si PV modules with shipment amounting to 100 MWp in 2005. MEC currently assembles all its modules at its two plants in Japan at Iida City in Nagano Prefecture and at Nagaokakyo City in Kyoto Prefecture. MEC has no immediate plans to expand production outside Japan. Production capacity from MECs two plants increased from 135 MWp in 2005 to 230 MWp in 2006. MEC initially focussed on the Japanese market namely on residential buildings and expanded into the overseas markets in 2002. In Western Europe, MEC initially focussed on the German market and currently expanding its markets in Spain and Italy. In the United States, MEC targets markets, which have introduced incentives and power buy-back schemes from the utility companies. MEC introduced its lead-free solder modules in 2006 for markets in Western Europe and the United States. In China, MEC is involved in rural electrification projects but views growth potential once China successfully implements its policies and schemes to increase PV usage in the urban areas such as Shanghai. Over the longer term, MEC intends to increase its shipment of modules from 100 MWp in 2005 to 300 MWp by 2010.
6.1.6
SolarWorld
: : : : : SolarWorld AG Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany +49 22855 9200 +49 228559 2099 http://www.solarworld.de
SolarWorld had its beginnings in 1998 as a dealer of components for PV systems to company covering the whole value chain. Prior to 2006, SolarWorld was a small player in the world module market compared to giants such as Sharp, Kyocera and Sanyo. Production increased from 30
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MWp in 2004 to 44 MWp in 2005 accounting for only 3.5% of the worlds shipment in 2005. In early 2006, Shell Solar sold its facilities including R&D centres in the United States and Germany to SolarWorld. With the acquisition, the estimated total shipment of PV modules from the plants owned by SolarWorld and those previously owned by Shell Solar was 128 MWp in 2006. With an estimated world production of PV modules at 2,400 MWp in 2006, shipments from the plants would account for 5% of the worlds module shipment during the period. SolarWorld assembles both mc-Si and Sc-Si modules. An estimated 63% of its module production is in Germany and 37% in the United States. Its modules plants in Europe are in Freiberg, Germany, and Gllivare, Sweden. The combined capacity of these two plants reached 52 MWp by 2005. In the United States, its plant in Camarillo, California, produces both sc-Si and CIS thin film modules. Total capacity increased to an estimated 175 MWp in 2006 mainly due to SolarWorlds acquisition of Shell Solars module plant in the United States. Capacity would increase further to an estimated 225 MWp by 2007 with doubling of the production capacity of its plant in Camarillo to 100 MWp. SolarWorlds traditional market in Europe is Germany. Spain and Italy represents its other core markets in Europe with incentives and power buyback schemes implemented by the countrys governments. Its plant in Sweden focuses on supplies to the Scandinavian countries but also supplies to other markets. The United States is a new and potential market for SolarWorld thus the reason for increasing its Camirillo plant capacity to 100 MWp by 2007. By then, the Camarillo plant would be one of the largest if not the largest module plant in the United States.
6.1.7
SOLON
: : : : : SOLON AG Ederstrae 16, D-12059 Berlin, Germany +49 308187 9100 +49 308187 9110 http://www.solon-pv.com/english/index.html
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SOLONs is the worlds tenth largest manufacturer of PV modules but unlike its competitors previously focussed on manufacturing modules in the value chain. This put SOLON at risk in security of supplies for silicon cells for its PV modules. Thus, SOLON is diversifying is business activities across the value chain to ensure security of its supplies. SOLON entered into a joint venture with Dutch company Econcern to operate a solar grade silicon plant in France. The plant would be operational by the end of 2008 with an initial capacity to produce more than 3,000 tons. Solon has also invested in a plant to manufacture crystalline silicon cells in Austria. The plant would begin operations in early 2008 with an initial capacity of 20 MWp. In the immediate term, Solon signed three long-term supply contracts for PV cells in 2005 with Ersol for 10 years, Q-Cells and SunPower for five years. SOLONs module assembly plants in Germany are located in Berlin and Griefswald producing mc-Si and sc-Si modules. In 2006, SOLON acquired S.E. Project Srl, an Italian manufacturer and distributor of PV modules. S.E. Project is significant player in the Italian market for PV and the acquisition included a module plant with a capacity of 10 MWp. Combined production capacity from SOLONs plants increased from 40 MWp in 2004 to an estimated 110 MWp in 2006. Consequently, production increased from 34 MWp to an estimated 90 MWp during the period. At an estimated world production of 2,400 MWp, SOLON would account for nearly 4% of the worlds shipment of PV modules in 2006. SOLON traditional market is Germany and main market outside the country is Spain where it has several supply contracts. SOLON is increasing its market presence in Italy, United States and Australia. SOLONs acquisition of S.E. Project is to increase its stake in the Italian market at an early stage to tap on the opportunity when Italy introduces its power buy-back scheme for solar generated electricity. In early 2006, SOLON acquired Global Solar Energy based in the United States from UniSource Energy. The acquisition provided an opportunity for SOLON to tap on Global Solar Energys network in southwestern United States to market its modules.
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In January 2007, SOLON announced its planned investment and strategic partnership with Australias CBD Energy, a turnkey contractor for CO2-free power plant projects in Australia.
6.1.8
Schott Solar
: : : : : Schott Solar GmbH Carl-Zeiss-Str. 4, 63755 Alzenau, Germany +49 (0) 6023 9105 +49 (0) 60239 11700 http://www.schott.com/photovoltaic/english/index.html
Schott Solar, based in Alzenau in Germany, is a subsidiary company of Schott AG. Schott Solar produces mc-Si and a-Si thin film modules. Production from Schott Solars plants increased from 32 MWp in 2004 to 57 MWp in 2005 accounting for slightly more than 3% of the worlds shipment during the period. In addition to the 57 MWp produced, Schott Solar also outsourced 28 MWp of production to OEM. Estimates are that production from its plants have increased by 44% from 2005 to 82 MWp in 2006. Schott Solar currently has four plants assembling PV modules. Two plants are located in Germany at Alzenau and Putzbrunn, another in the Czech Republic at Valasskenezirici and another in the United States at Billerica in the state of Massachusetts. Besides, its in Putzbrunn has 3 MWp facility to produce a-Si thin film modules. Furthermore, Schott Solar will operate a new a-Si 30 MWp plant in Jena, Germany, by late 2007. Total production capacity increased from 32 MWp in 2004 to 82 MWp in 2005 and remained at that level in 2006. The new plant in Jena would increase production capacity to 112 MWp by late 2007. Schott Solars module plant in the Czech Republic leverages on the countrys lower cost of production and modules from the plant are destined mainly to the West European markets. The plant in Alzenau supplies not only markets in Europe but also markets in Asia and Africa. The plant in Billerica supplies the South American markets besides North America. In November 2006, Schott Solar announced the possibility of closing its plant in Billerica. The main reason was its inability to obtain sufficient supply of silicon for its silicon cells rather than changes in demand for PV in the United States. If the plant closes, Schott Solar would make efforts to sell the plant to another company with sufficient supply of silicon. In such as
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scenario, Schott Solar would then import modules from its plants in Europe into the United States.
6.1.9
BP Solar
: : : : : : BP PLC BP Alternative Energy (BP Solar) Building B Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN, United Kingdom +44 (0) 19 3276 2000 +44 (0) 19 3277 4372 http://www.bpsolar.com
BP Solar shipped 46 MWp from its plants in 2005 accounting for slightly less than 3% of the worlds shipment during the period. BP Solar produces mc-Si and sc-Si modules. BP Solar also outsourced an estimated 44 MWp to OEM in 2005. BP Solar has module assembly plants across four continents. These include plants in Madrid (Spain), Sydney (Australia), Fredericks in the state of Maryland (United States) and a joint venture plant with the Tata Group in Bangalore (India). The plant in Australia with a capacity of 40 MWp in 2006 is the largest module assembly plant in the southern hemisphere. BP Solar plans to increase the combined production capacity of its plants to 200 MWp by the end of 2008. BP also has ventures with local partners in Saudi Arabia, South Africa, Thailand and Indonesia. BP Solar exited from the thin film business to concentrate on silicon-based cells for its modules. Nevertheless, R&D in thin film technologies would continue to be a long-term strategy for future possibilities.
6.1.10
Isofoton
: : : : : Isofoton SA Calle Montalbn, No. 9, 28014 Madrid, Spain +34 91 414 7800 +34 91 414 7900 http://www.isofoton.com
Isofoton began as a commercial spin-off from R&D activities by Spains Madrid University of Polytechnic in developing technologies for production of bifocal PV cells from silicon wafer. In 1997, Grupo Berg became Isofotons new owner and began strengthening Isofotons commercial activities
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including developing new technologies, increasing production capacity and expanding markets. Isofoton is among the leading manufacturer of PV modules in Europe and the leader in Spain. The company shipped 40 MWp sc-Si cell modules in 2005 and accounted for slightly more than 2% of the worlds module shipment during the period. Estimates shipment increased to 56-60 MWp in 2006. Current production of modules is at its new plant located in the Andalucia Technology Park in Malaga, Spain, which began operations in 2005. It is also the site for its R&D activities and production of sc-Si cells. With the shift to the new plant, production capacity increased from 60 MWp in 2004 to 90 MWp in 2005. Capacity further increased to an estimated 130 MWp in 2006 and plans to increase capacity to 200 MWp by 2008. Exports traditionally accounted for about 80% of Isofotons production of modules but now account for about 65% since the introduction of Spains Renewable Energy Plan in 2005. Current main export market in Europe is Germany and establishing new markets. Isofoton formally entered the Italian market in 2003 and established subsidiary company Isofoton Italy. The following year, Isofoton entered the market in the United States and established Isofoton North America. China is a new and strategic market for Isofoton and established Isofoton China in 2006 with its new office located in Beijing. Isofoton also has subsidiary companies in the developing countries involved in rural electrification projects. Isoequinnocial based in Quito, Ecuador, represents Isofotons business in Latin America namely Ecuador, Columbia, Panama, Peru and Venzuela. Isofoton established Isofoton Maroc in 2005 in Morocco after it won an international bid for a rural electrification project in the country. Another subsidiary Isofoton West Africa established in Senegal in 2005 serves the West Africa market.
6.2
PV Cells Manufacturers
6.2.1 Sharp
: : : : : : Sharp Corporation Sharp Solar Solar Systems Group 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japanu +81 74563 3579 +81 74562 8253 http://sharp-world.com/solar/index.html
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Sharp leads the world in production of PV cells accounting for 24% of the worlds shipment in 2005. Cell production increased from 324 MWp in 2004 to 428 MWp in 2005. Types of PV cells currently manufactured include mcSi, sc-Si and a-Si cells. Sharp sources the wafers to produce the cells from its own wafer plant and purchases from external wafer manufacturers. Sharps mc-Si and sc-Si cell plant is located in Japan at Katsuragi City in Nara Prefecture. In 2005, Sharp expanded production of its plant to include a 15 MWp thin film production facility. All the production from the plant in Katsuragi City is for its module assembly plants located in Japan, United States and the United Kingdom. Production capacity reached 500 MWp in 2006. In February 2007, Sharp announced that is would increase the cell production capacity of its plant in Katsuragi City to 710 MWp by 2007. It had earlier announced in October 2006 that capacity would increase to 600 MWp by 2007. New subsidies and power buy-back schemes from utility companies for PV in Europe and the United States led Sharp to increase its production capacity. By 2010, Sharp plans to increase its cell production capacity further to 800-900 MWp. Sharp announced that it would enter into the upstream activities of the value chain and invest in a silicon plant to boost its cell capacity. The silicon plant would have an initial annual capacity of 1,000 tons, equivalent to 110 MWp of cell capacity. The plant would recycle semiconductor silicon scrap into solar grade polysilicon. In the technology front, Sharp is developing technologies to reduce cell thickness from 200 microns to 180 microns as well as improving the efficiency. Sharp is also developing super efficient thin-film multi-junction solar cells. In November 2006, Sharp announced it would introduce a new thin film consisting of an upper amorphous layer and a lower microcrystalline silicon layer with a conversion efficiency of 8.5% and targeted for modules in industrial and commercial installations.
6.2.2
Q-Cells
: : : : : Q-Cells AG Guardianstrasse 16, 06766 Thalheim, Germany +49 (0) 34946 6860 +49 (0) 349466 8610 http://www.q-cells.com
Q-Cells is principally involved in production of mc-Si and sc-Si cells and supplying to the module manufacturers. Production of PV cells from Q-Cells
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increased by two-folds from 76 MWp in 2004 to 166 MWp in 2005 accounting for 9% of the worlds shipment in 2005. Estimated production in 2006 was 240 MWp. Q-Cell produces both mc-Si and sc-Si for its customers. Q-Cells cell production plant is located in Thalheim, Germany. The plants production capacity increased from 170 MWp in 2004 to 290 MWP in 2005. Capacity increased to 350 MWp by 2006 and estimates capacity would increase to 510-530 MWp by end of 2007. Besides developing technologies to produce thinner wafers, Q-Cells has several investments to tap on new technologies to reduce cost and improve cell efficiency. The company formed a joint venture with Evergreen Solar (United States) and REC (Norway) to operate a plant producing wafers, cells and assembling modules. The venture named EverQ has its plant in Thalheim, which began operations in April 2006 with an initial capacity of 30 MWp. EverQ uses string ribbon technology for wafer production and reduces wastage compared to the conventional method of slicing silicon into wafers. Q-Cells also has a stake in CSG Solar to develop and commercialise crystalline silicon on glass technology developed by Australias Pacific Solar. The technology involves a silicon layer of only 1.5 micron deposited on a glass substrate and provides considerable potential in reducing cost. CSG Solars 25 MWp plant based in Thalheim began operations in early 2006. Another investment is in Swiss-based VHF Technologies which QCells has a 23.4% stake. VHF Technologies is commercialising a technology for applying a-Si on flexible plastic to produce flexible PV modules. Q-Cells sees potential for such modules in building integrated PV. Soloria Corporation based in Freemont in California has developed a new form of low-concentration solar PV technology that uses less silicon material thereby reducing the cost of production. Soloria intends to go into full-scale production by 2008. In 2005, exports accounted for 37% and markets to module assemblers in Germany accounted for 63% of the shipment from Q-Cells plant in Thalheim. Q-Cells current marketing strategy is to increase exports to 50% of its production by 2008. In the immediate term, targeted markets are Southern Europe namely Spain; East Asia namely China, Japan and South Korea; and North America namely California. Q-Cells established Q-Cells
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Asia Limited in Hong Kong to handle its business across East Asia and India. In the United States, Q-Cells is negotiating with potential North American partners and through its relationship with its US based joint venture partner Evergreen Solar in EverQ.
6.2.3
Kyocera
: : : : : : : Kyocera Corporation Solar Energy Division 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161, Japan +81 75604 3476 +81 75604 3475 http://global.kyocera.com/prdct/solar/index.html http://www.kyocerasolar.com
Kyocera ranked third in production of PV cells in 2005, accounting for nearly 8% of the worlds shipment in 2005. Cell production increased from 105 MWp in 2004 to 142 MWp in 2005. Current PV cells manufactured by Kyocera are mc-Si cells and sources wafers for its cells from its own wafer plant. Kyoceras cell plant is located in Yukaichi City in Shiga Prefecture, Japan. Kyocera will increase capacity at the plant from 240 MWp in 2005 to 500 MWp by 2007 to meet the growing demand for cells from its module assembly plants in Japan, China, Mexico and the Czech Republic. R&D on its mc-Si cells currently focuses on increasing cell efficiency and developing technologies to lower the production cost by reducing the cell thickness and developing cells with large a surface area. Kyocera achieved significant success in improving the conversion efficiency of its cells in the last 20 years. For 15cm x 15cm mc-Si cells, efficiency improved from 14.5% in 1989 to 17.7% by 2005. By October 2006, Kyocera introduced it new 15cm x 15cm cells with an efficiency of 18.5% developed using the companys proprietary d.Blue process, which maximises sunlight collection by reducing reflectivity.
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6.2.4
Sanyo
: : : : : Sanyo Solar Industries Co. Ltd 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570, Japan +81 6900 1246 +81 6900 9305 http://www.sanyo.com/industrial/solar/
Production of cells from Sanyos plants accounted for 7% of the worlds shipment in 2005. Cell production from Sanyos plants doubled from 65 MWp in 2004 to 125 MWp in 2005. Current cells produced are sc-Si, a-Si and a-Si/sc-Si hybrid HIT (hetro-junction with intrinsic thin layer) cells. Sanyo sources the wafers for sc-Si from its wafer plant in the United States (Sanyo Solar USA) and other wafer manufacturers. Monosilane and TCO (transparent conducting oxide) substrate used to produce a-Si are externally sourced. Production of Sanyos a-Si/sc-Si hybrid HIT cells are its plant in Kisuki-Cho in Shimane Prefecture and Kaizuka City in Osaka Prefecture. Sanyo produces its a-Si cells at its semi-conductor division at Kaitaka City in Fukushima. Sanyos production strategy is to the production of its hybrid cells. Sanyo announced in October 2006 that it would invest more than US$350 to increase the production capacity of its plants over the next five years. Production capacity would increase from 160 MWp in 2005, 260 MWp in 2007 and 350 MWp by 2008. Capacity may reach 600 MWp by 2010 depending on the global demand for its PV modules. Sanyos strategy in the technology front is to increase the efficiency of its aSi/sc-Si hybrid HIT cells to 22% by 2010. The hybrid cell is a combination of sc-Si cells surrounded by a-Si cells and the process to produce the cells makes it possible to produce thin cells with a thickness of 200 microns. The hybrid cells are sensitive to low levels of light and have a higher level of efficiency at high temperatures than conventional silicon cells. Sanyo entered a seven-year contract beginning in January 2009 with Hoku Scientific in the United States to ensure security of supply of polysilicon for its wafers. The contract provides for delivery of polysilicon to Sanyo at predetermined volume and price each year. Without a polysilicon plant, Hoku would seek financing to build a 2,000 tons plant (equivalent to 220 MWp of cell capacity). Under the contract, both parties have the right to
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terminate the agreement if Hoku were unsuccessful in raising capital to build the plant within six months of the contract.
6.2.5
Mitsubishi
: Mitsubishi Electric Corporation : Mitsubishi Electric Nakatsugawa Works : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan : +81 57366 2125 : +81 57362 0038 : http://global.mitsubishielectric.com/bu/solar/index.html
Mitsubishi Electrical Corporation (MEC) produces mc-Si cells. From 2004 to 2005, shipment from MEC increased from 75 MWp to 100 MWp 2005 accounting for 6% of the worlds cell production during the period. MEC sources its wafer for its cells from wafer manufacturers. MEC manufactures its mc-Si cells at its plant in Iida City in Nagano Prefecture. Production capacity increased from 90 MWp in 2004 to 135 MWp in 2005. Capacity increased further to 230 MWp in 2006 and plans to increase capacity to 300 MWp by 2010. MEC began to supply part its cell production as an OEM to Ebara Corporation in 2005. In September 2006, MEC announced it had successfully increased the size of its mc-Si cells from 15 cm to 15.6 cm improving the efficiency of its mcSi 185 kWp modules by 9% compared to previous similar models. Output improved further by increasing the distance between cells and placing a film in the spaces to reflect light to the cells.
6.2.6
Schott Solar
: : : : : Schott Solar GmbH Carl-Zeiss-Str. 4, 63755 Alzenau, Germany +49 (0) 6023 9105 +49 (0) 60239 11700 http://www.schott.com/photovoltaic/english/index.html
Schott Solar produces mc-Si cells for PV modules and to a lesser a-Si thin film cells. Production increased from 70 MWp in 2004 to 90 MWp in 2005 accounting for 5% of the worlds shipment of PV cells in 2005. Schott Solars module plants consume 60% of the production while the remaining 40% supplied to other module assemblers. Estimated production in 2006
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was about 110 MWp. Schott Solars sources its supply of wafers from its own internal production (produced 39 MWp in 2005) and from other wafer manufacturers. Schott Solars plants in Alzenau (Germany) and in Billerica (United States) produces silicon cells while its plant in Putzbrunn (Germany) produces a-Si thin films cells. The plants in Germany accounts for about 85% of Schott Solars total cell production while the plant in the United States accounts for 15%. Schott Solar announced in November 2006, its Billerica plant faced difficulties in obtaining supply of silicon for its cell production. Thus, the plant may close if it is unable to obtain sufficient supply to run its production through 2007. Cell production capacity increased from 60 MWp in 2004 to 130 MWp in 2005 and remained at the level in 2006. Like many manufacturers in the PV industry, Schott Solar faces difficulties in identifying adequate sources of silicon for its cell production. Depending on the supply situation for silicon, production capacity may increase to 160-180 MWp by 2007. Schott Solar has the ability to increase production capacity by up to 50 MWp with six months.
6.2.7
BP Solar
: : : : : : BP PLC BP Alternative Energy (BP Solar) Building B Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN, United Kingdom +44 (0) 19 3276 2000 +44 (0) 19 3277 4372 http://www.bpsolar.com
Production of silicon cells from BP Solars five plants across the world accounted for 5% of the worlds shipment in 2005 increasing from 85 MWp in 2004 to 90 MWp in 2005. BP Solar exited from production of thin films in 2003 to focus R&D and production on mc-Si and sc-Si cells. BP Solar has four PV cell plants across the world including Madrid (Spain), Sydney (Australia), Fredericks (United States) and a joint venture plant in Bangalore (India). The combined production capacity of the plants increased from nearly 140 MWp in 2005 to 200 MWp by 2006. In November 2006, BP Solar announced it would increase the production of its plant in Fredericks to 150 MWp by the end of 2008. Depending on the availability of silicon BP Solar in Spain intends to increase its cell production capacity from 70 MWp in 2006 to 200 MWp by 2008. The plant would also increase its wafer
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manufacturing capacity and integrate its warehousing and shipping facilities to a single site at Fredericks. The plant would continue to supply polycrystalline wafers to its plant in Australia and joint venture plant in India for cell production. BP Solars strategy in the technology front is to improve the conversion efficiency of its mc-Si cells to close the efficiency gap between mc-Si and sc-Si cells. The objective is to offer mc-Si cells with the efficiency of sc-Si cells at a lower cost than sc-Si cells. As a result, BP Solar unveiled its Mono2 prototype mc-Si modules in October 2006. The process developed by BP Solar to produce the cells involves a printing process whereby the cells produce 2% more energy than the conventional printing process. BP Solar claims to have secured sufficient supplies of silicon feedstock to cover its growth in the next few years. This involved negotiating with its feedstock suppliers with long-term supply agreements. In October 2006, BP Solar signed a six-year agreement with REC to deliver polycrystalline wafers.
6.2.8
Suntech
: : : : : Suntech Power Holdings Co., Ltd. 17-6 ChangJiang South Road, New District, Wuxi, Jiangsu 214028, China +86 (510) 8531 5000 +86 (510) 8534 5049 http://www.suntech-power.com
Suntech has risen within a relatively short period to become an industry leader in production of PV cells in China. Cell production from Suntechs plant increased from 30 MWp in 2004 to 68 MWp in 2005 accounting for 4% of the worlds shipment in 2005. During the year, nearly 75% of the cell production from Suntechs plant was for its own modules and 25% to other module assemblers. Estimated production of PV cells in 2006 was 135 MWp and Suntech expects production to increase to 280 MWp by 2007. The companys production includes mc-Si and sc-Si cells and undertaking research to develop thin film cells. The production plant for silicon cells is in Wuxi in Jiangsu Province, China. Production capacity at the plant increased from 60 MWp in 2004 to 270 MWp in 2005. Suntech expects to increase capacity to 420 MWp by the end of 2007 and may increase capacity by as much as 1,000 MWp by 2010. The company entered into an agreement with Chinas Louyang Silicon Company in 2006 to establish a joint venture company (Louyang Silicon) operating a
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PV cell and module plant in Louyang, China, with an initial capacity of 30 MWp. To ensure sufficient supply of silicon wafer, Suntech entered short to longterm supply agreement with Chinese and foreign wafer manufacturers. These include supply agreements with SolarWorld and its subsidiary Deutsche Solar (Germany), MEMC Electronic Materials (Germany/United States), Renewable Energy Corporation (Norway), Sunlight Group (United States), LDK Hi-tech (China), Baoding Yingli New Energy Company (China) and Shanghai Cotonsech Solar Technology (China). These supply agreements ensures Suntechs growth in the next five years. Suntechs strategy in technology development is to reduce the cost of manufacturing and improve the conversion efficiency of its PV cells. It has achieved in reducing cell thickness to 210 microns and developing technologies to reduce cell thickness further to 180 microns and subsequently to 150 microns. Suntech claims to have increased the conversion efficiency of its mc-Si cells to 15.4% and sc-Si cells to 18.0% for its pilot production and targets 20.0 efficiency by 2008.
6.2.9
Motech
: : : : : : Motech Industries, Inc. Motech Solar Tainan Science-Base Industrial Park No. 3, Da-Shun 9th Road, Hsin-Shi, Tainan 74145, Taiwan +886 6 505 0789 +886 6 505 1789 http://www.motech.com.tw
Motech is Taiwans largest PV cell manufacturer and entered into the PV cell business in 2000. Production of PV cells from its plant in Taiwan was just 3.5 MWp in 2001. Since then, production has increased from 35 MWp in 2004 to 60 MWp in 2005 accounting for 3% of the worlds shipment of PV cells in 2005. Motech manufactures both mc-Si and sc-Si PV cells which it supplies to modules assemblers. The company trades publicly on Taiwans Over-theCounter (OTC) market of the Taiwan Stock Exchange. Motechs PV cell plant in Taiwan is located at the Tainan Science-Base Industrial Park in Tainan. Production began in 2001 initially producing mc-Si cells and later in 2003 to include sc-Si cells. Production capacity increased from 35 MWp in 2004 to 60 MWp in 2005. Capacity increased to 200 MWp by 2006 but could have increased to 240 MWp if not for the global constraint for silicon wafers. Motech intends to increase production capacity
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to 1,000 MWp by 2010. The company would achieve this by operating its own silicon wafer plant. Motech and MEMC Electronics Materials negotiated in mid-2006 to jointly build and operate a silicon wafer plant in Taiwan but did not materialise into any agreement. In February 2007, Motech announced it would build a plant producing silicon wafer in Kunshan, China. The capacity had yet to be determined (in February 2007) but Moetch expects the new plant to begin operating in 2008. Silicon wafer produced from the plant would be shipped to other cell manufacturers included Motechs plant in Taiwan. To ensure delivery of silicon wafers in the immediate term, Motech has signed supply agreements with wafer manufacturers. Motech signed a supply agreement with ReneSola in late 2006 supplying most of Motechs requirement in 2007. Motech has achieved considerable success in improving the efficiency of its PV cells. The conversion efficiency of its mc-Si cells improved from 14.5% in 2003 to 15.5% by 2005. Consequently, the efficiency of its sc-Si cells improved from 15.5% from 2003 to 16.5% by 2005.
6.2.10
SolarWorld
: : : : : Solar World AG Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany +49 22855 9200 +49 228559 2099 http://www.solarworld.de
SolarWorld accounted for only 2% of the worlds shipment of PV cells in 2005 at 38 MWp. SolarWorld acquired Shell Solars cell production plants in 2006. Combined cell production from SolarWorlds plant and those previously owned by Shell Solar resulted in shipment estimated at 110 MWp in 2006. This would account for nearly 5% of the worlds shipment of PV cells in 2006 estimated at 2,400 MWp. SolarWorlds main product line is mcSi and sc-Si cells but also produces CIS thin film cells. The companys cell plants are located in Freiberg (Germany), Gelsenkirchen (Germany) and Camarillo (United States). The plant in Gelsenkirchen produces mc-Si cells while the plant in Camarillo produces sc-Si and CIS thin film cells. SolarWorlds combined plant capacity increased from 30 MWp in 2004 to 60 MWp in 2005. With the acquisition, capacity increased to 160 MWp in 2006. SolarWorld announced that it would increase the combined production capacity of its plants exceeding 1,000 MWp by 2010. This included a new plant in Hillsboro in the state Oregon, United States. The
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plant in Hillsboro would begin operation in 2007 and eventually have a production capacity of 500 MWp by 2009. To ensure security of supply of silicon wafers, SolarWorld operates a silicon wafer plant in Freiberg and a new plant in Hillsboro. Each of the wafer plants would have the capacity to produce silicon wafers equivalent to 500 MWp of PV cells by 2009. SolarWorld has formed a joint venture with Dutch company Scheuten Solarholding to operate a plant in Saxony, Germany, with a capacity of 1,000 tons producing solar grade polysilicon. SolarWorld together with chemical group Degussa will operate a joint venture plant (Joint Solar Silicon) in Rhienfelden, Germany, to produce solar grade polysilicon. Besides markets in Europe and the United States, SolarWorld has also set its sights in Chinas market, which it views as a potential high growth market for PV. SolarWorld and its subsidiary Deutsch Solar has entered into an agreement to supply silicon wafers to Suntech for manufacturing of its PV cells.
6.3
Polysilicon Manufacturers
6.3.1 Hemlock
: : : : : Hemlock Semiconductor Corporation 12334 Geddes Rd., Hemlock, Michigan 48626, United States of America +1 (989) 642 5201 http://www.hscpoly.com/
Hemlock Semiconductor is a joint venture between Dow Corning (63%), Shin-Etsu Handotai (25%) and Mitsubishi Materials Corporation (12%). Hemlocks plant is located in the state of Michigan, United States, is the worlds largest producer of polysilicon accounting for nearly 25% of the worlds production capacity in 2005. About 40% of Hemlock customers are from the PV industry and 60% from the semiconductor industry. Hemlocks main raw material (silicon) comes from Dow Cornings mining operations in South America and the United States. Hemlock uses the Siemens reactors and trichlorosilane gas to produce polysilicon. Current production of polysilicon is exclusively from Hemlocks plant in the United States. In 2006, Hemlock began on a US$400-US$500 million
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expansion plan to increase the production capacity of its plant. Capacity increased from 7,700 tons in 2005 to 10,000 tons in 2006. By 2008, Hemlock intends to increase its production capacity to 14,500 tons and finally reach 19,000 tons by 2009. However, expansion in 2008 and 2009 would depend on buyers agreeing to sign long-term supply contracts with Hemlock. Such contracts would involve fixed prices for polysilicon and upfront payments to finance the expansion of the plants production capacity. Besides expansion of its plant in Hemlock, the company is also searching and evaluating for a second production site outside the United States. The second production site would begin operations with the next five years. Key considerations for the location are costs of energy, tax incentives, incentive schemes to attract production, cost of labour, cost of land and physical infrastructure. Possible location could be within Asia according to some industry sources considering the growing potential for PV in the region especially China.
6.3.2
Wacker
: : : : : : Wacker Chemie AG Wacker Polysilicon Hanna-Seidel-Platz 4, 81737 Munich, Germany +49 896 2790 +49 896 27979 1770 http://www.wacker.com/cms/en/home/index.jsp
Wacker Polysilicon is a division of Germanys Wacker Chemie a diversified chemical company with polysilicon as one of its key business areas. Its polysilicon plant is located in Burhausen, Germany, and polysilicon production experienced growth of 12% from 2004 to 2005 and sales reaching nearly 290 million in 2005. The plant is the worlds second largest polysilicon plant with a production capacity of 5,500 tons in 2005. The plant shipped nearly 40% of the production to the PV industry during the year. Wackers plant in Bughausen and obtains key raw material to produce the silicon from its mine located in Stetten, Germany. The plant currently uses the Siemens reactor to produce the polysilicon. Wacker currently has two pilot reactors using the fluidised bed reactor (FBR) to produce solar silicon. With strong demand growth for PV and its plant running at full capacity in 2005 and 2006, Wacker will increase capacity by 4,500 tons from 5,500 tons in 2006 to 9,000 tons by 2007. Much of the polysilicon scheduled
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coming into production from the 4,500 tons expansion have been already assigned to Wackers customers under a multi-year supply agreement involving prepayments. Plans are to increase capacity further in stages to reach 14,500 tons by the end of 2009. According to the company, its expansion plans are progressing as scheduled.
6.3.3
REC
: : : : : REC Silicon AS (Norway)/REC Silicon Inc. (US) 3322 Road "N" N.E., Moses Lake, WA 98837, United States of America +1 509 765 2106 +1 509 766 9325 http://www.recgroup.com
The head office of REC Silicon AS is in Norway and the parent company of REC Silicon Inc. based in the United States. REC has two plants producing polysilicon and both plants are located in the United States. REC was the third largest producer of polysilicon in 2005 with a production capacity of 5,300 tons. REC operates a plant in Moses Lake in the state of Washington and in 2005 acquired a polysilicon plant in Butte in the state of Montana from Advanced Silicon Materials. REC has expanded its business vertically in the value chain from production of polysilicon to wafer manufacturing, cell production, module assembly to system integration. REC also has a shareholding in CSG Solar (production of crystalline silicon on glass modules) based in Germany and EverQ (production of cells using ribbon technology) based in the United States. RECs key strategic objective is to reduce production cost and increase production capacity. This strategy involves gradually phasing out production of electronic grade polysilicon (as its contracts with manufacturers in semiconductor industry ends) and freeing production towards solar grade polysilicon. This simplifies production, creates economies of scale and subsequently reduces costs. Besides the Siemens reactors already installed in existing facilities, REC will use fluidised bed reactors (FBR), which produces polysilicon at lower production costs, at its new facilities. Besides additional capacity and de-bottlenecking in existing plants, a new 6,500 TONS polysilicon plant in Moses Lake is currently under construction at a cost of US$600 million. The new plant adjacent to its existing plant in Moses Lake will use the FBR process to produce polysilicon. Production will begin in 2008 and become fully operational by 2009. By 2010, capacity would double to more than 13,000 tons from 5,300 tons in 2005.
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6.3.4
Tokuyama
: : : : : : Tokuyama Corporation Electronic Materials Business, Silicon Business Division Shibuya Konno Bldg., 3-1, Shibuya 3-chome, Shibuyaku, Tokyo 150-8383, Japan +81 3 3499 8937 +81 3 3499 8967 http://www.tokuyama.co.jp/eng/
The main product of the Electronic Materials Business of Tokuyama is polycrystalline silicon. Tokuyamas plant is located in Shunan City in Yamaguchi Prefecture, Japan, and the largest manufacturer of polysilicon in Japan. The plant uses the Siemens reactor and production capacity in 2005 was 5,200 tons. During the year, Tokuyama supplied 25% of the production to the cell manufacturers and 75% to the semi-conductor industry. In February 2005, Tokuyama began construction of a pilot 200 tons plant to produce polysilicon specifically for the PV industry. The process uses the vapour liquid deposition (VLD) technology and has a higher efficiency over technologies using the Siemens reactor. The process under evaluation and if successful would come into commercial production in 2008. A new polysilicon plant is currently under production at a cost of US$385 million. The new plant located in Shunan City would have a production capacity of 3,000 tons when it begins operation in 2009. This would increase capacity to 8,200 tons by 2009. However, Tokuyama would continue to supply the main share of the additional production to the semiconductor industry and supply only 500 tons for the PV industry.
6.3.5
MEMC
: : : : : MEMC Electronic Materials, Inc. 501 Pearl Drive (City of O'Fallon), St.Peters, Missouri, 63376, United States of America +1 636 474 5000 +1 636-474-5158 http://www.memc.com
Monsanto Electronic Materials Company (MEMC) is a subsidiary of Monsanto Chemical Company and headquartered in St. Peters in the state of Missouri, United States. MEMC has a polysilicon plant located in Pasedena in the state of Texas, United States, and another in Merano, Italy. Production capacity at
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its two plants totalled 3,800 tons in 2005 accounting for 12% of the worlds production capacity for polysilicon. MEMC uses both the Siemens and FBR technologies to produce polysilicon. Besides the silicon feedstock, MEMC also produces and supplies silicon wafers for PV cell manufacturers. Capacity of its Pasadena plant was 2,700 tons and its Merano plant 1,100 tons in 2005. Its Pasedena plant mainly supplies to markets in the United States while its Merano plant supplies mainly to markets in Western Europe. Besides the traditional chunk silicon, MEMC is the only company producing granular polysilicon on an industrial scale. Granular polysilicon has cost and productivity advantages over the traditional chunk polysilicon. Some cell manufacturers prefer granular polysilicon over chunk silicon since it allows production of PV cells using the string Ribbon technology. Currently REC and Wacker have pilot plants for producing granular silicon. MEMC plans to increase the production capacity of its Merano plant from 1,100 tons in 2005 to 1,600 tons by 2007. Its Pasadena plant would double in capacity from 2,700 tons in 2005 to 6,400 tons by 2008. Thus, total capacity would reach 8,000 tons by 2008 from 3,800 tons in 2005. MEMC also plans to build a third plant but has yet to announce the location of the plant, start of construction and the plant capacity. If the third plant were to operate before the decade, then capacity would reach beyond the 8,000 tons.
6.3.6
Mitsubishi Materials Corporation

: : : : : : Mitsubishi Materials Corporation Electronic Materials and Components Business 5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8117 Japan +81 3 5252 5206 +81 3 5252 5272 http://www.mmc.co.jp/english/index.html http://www.mpsac.com/
Mitsubishi Materials Corporation (MMC) is part of Japans Mitsubishi group. MMC has a polysilicon plant in Japan and another in the United States. The production capacity at these two plants totalled 2,850 tons in 2005 accounting for 9% of the worlds production capacity of polysilicon. MMC uses the Siemens reactor to produce polysilicon. Currently MMC supplies about 90% of the production to semiconductor manufacturers and only 10% to PV cell manufacturers.
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Its plant in Japan is in Yokkaichi and the United States in Mobile in the state of Alabama and the combined plant capacity was 2,850 tons in 2005. Capacity at the Yokkaichi plant was 1,600 tons and Mobile plant was 1,250 tons during the period. Sumitomo Mitsubishi Silicon Corporation (SUMCO) manufactures mc-Si and sc-Si solar cells. Due to strong demand for polysilicon from one of MMCs major customers, SUMCO, capacity at the two plants will increase from 2,850 tons in 2005 to 3,200 by 2008. The capacity at the Yokkaichi plant will increase from 1,600 tons to 1,800 tons while the Mobile plant will increase from 1,250 tons to 1,500 tons during the period.
6.4
Thin Film Manufacturers

6.4.1 United Solar Ovonic
: : : : : United Solar Ovonic LLC 3800 Lapeer Road, Auburn Hills, Michigan 48326, United States of America +1 248 475 0100 +1 248 364 0510 http://www.uni-solar.com
United Solar Ovonic accounted for 22% of the worlds production of thin films in 2005 establishing it as the worlds largest producer. The company based in the US has its headquarter in Auburn Hills, Michigan, is a wholly owned subsidiary of Energy Conversion Devices (ECD Ovonics) with over 500 employees. United Solar Ovonic manufactures triple junction a-Si thin films with an annual production capacity of 28 MWp in 2005. The company manufactures and markets flexible thin film, peel-and-stick solar laminates that can be integrated with roofs and also supplies OEM laminates to major roofing manufacturers worldwide. United Solar plans to increase its annual production capacity to 300 MWp by 2010. Its second plant located in Auburn Hills with a production capacity of 30 MWp became operational in December 2006. The third plant located in Greenville, Michigan, with an annual capacity of 60 MWp will begin operations in 2007. The company expects to operate its fourth plant in Greenville with a capacity of 60 MWp in 2008.
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6.4.2
Kaneka
: : : : : : Kaneka Corporation Kaneka Silicon PV 3-2-4, Nakanoshima, Kita-ku, Osaka 530-8288, Japan +81 6 6226 5315 +81 6 6226 5144 http://www.pv.kaneka.co.jp
Kaneka initially produced a-Si thin films cells for the electronic consumer market, which it has since discontinued. In 1999, the company began manufacturing thin films cells for power generation with the construction of a new plant in Toyooka City, Hyogo Prefecture, and Otsu City, Shiga Prefecture. Currently Kaneka manufactures thin films for rooftop applications for the Japanese market and has close association with major residential property developers such as PanaHome Corporation. Other products produce using thin films include see through windows and heater integrated PV modules for melting snow. Production of Kanekas thin films increased from 20 MWp in 2004 to 21 MWp in 2005. Production capacity at its plant in Japan increased from 24 MWp in 2005 to 30 MWp by December 2006. The company will increase capacity further to 55 MWp by July 2007 and 70 MWp by 2008. Kaneka began to develop the European market in 2002 and has a 10 MWp module manufacturing plant in Olumouc, Czech Republic. The European plant currently supplies thin film modules to the European markets and plans to increase its capacity as its markets in Europe develops.
6.4.3
First Solar
: : : : : First Solar inc. 4050 E. Cotton Centre #6-68, Phoenix, Arizona 85040, United States of America +1 602 414 9300 +1 602 414 9400 http://www.firstsolar.com
First Solar accounted for 20% of the worlds production of thin films and the third worlds largest producer in 2005. Shipment from First Solar increased from 6 MWp in 2004 to nearly 20 MWp in 2005. The company is a US based company with its headquarter in Phoenix, Arizona. First Solar is one of the few companies in the world manufacturing CdTe thin films and currently the worlds largest producer of the thin film. The company currently operates a
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75 MWp plant in Perrysburg, Ohio, and a second plant in Frankfurt, Germany, would begin operations expectedly in the second half of 2007. In January 2007, First Solar announced it would expand production with a new plant located in Malaysia at Kulim High Technology Park. Construction of the new plant begins in 2007 and production expected to begin in the second half of 2008 at an estimated cost of US$150 million. Capacity would be fully ramped to 100 MWp when it begins operations, employing nearly 500 people. Lower operating cost, infrastructure and 15-year corporate tax holiday were the main reasons attracting First Solar to invest in Malaysia.
6.4.4
Mitsubishi Heavy Industries

: : : : : : Mitsubishi Heavy Industries Ltd Solar Cell Power System Group 3-1, Minatomirai 3-chome, Nishi-ku, Yokohama 2208401, Japan +81 45224 9595 +81 45224 9264 http://www.mhi.co.jp/power/e_a-si/index.html
Mitsubishi Heavy Industries (MHI) accounted for 12% of the worlds production of thin films in 2005 producing 12 MWp during the period. MHI manufactures a-Si thin film cells at its plant in Isahaya City in Nagasaki Prefecture. In February 2007, MHI announced that it would begin construction of a new plant at its Nagasaki shipyard. Production capacity increased from 10 MWp in 2005 to 50 MWp in 2006 and may increase to 300 MWp by 2016 depending on world demand for thin films. Since 2000, MHI and New Energy and Industrial Technology Development Organization (NEDO) have been jointly developing a tandem-type thin film cell to improve film efficiency to 12%. The cell consists of a layer of a-Si and a microcrystalline-Si layer developed using high-speed thin film deposition technology. The technology allows the cells to absorb a broader range of light (from ultraviolet to infrared) thus improving the efficiency. Another area is film cells that provide stable efficiency throughout the 20-25 year lifetime of a module.
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6.5
Inverter Manufacturers
6.5.1 SMA
: : : : : : SMA Technologie AG Solar Technology Hannoversche Strasse 1-5, 34266 Niestetal, Germany +49 561 9522 0 +49 561 9522 100 http://www2.sma.de/en/home/index.html http://www.sma-america.com
SMA Technologies established in 1981 is a commercial spin off R&D activities in computer-based controlled systems from Kassel University, Germany. SMA is the worlds leading manufacturer of PV inverters accounting for nearly 31% of the worlds PV inverter shipment in 2005. Its main market is Europe accounting for 42% of the market and the US accounting for 41% of the market. Sales reached 172 million in 2005 according to a statement from SMA. The company has its headquarter in Niestetal, Germany, employing more than 1,000 people in Germany and its subsidiaries worldwide including US, China, Korea, Italy, Spain and France. Product development and manufacturing are at SMAs plant in Niestetal. SMA focuses on developing a range of inverters for rooftop mounted PV installations. Marketed under the Sunny Boy range, these inverters are transformerless and have a high efficiency of 98%. SMA also markets a range of central inverters for 100 kWp to 1 MWp installations for large open space systems or PV power stations. SMAs target market in Asia is Korea and China and has offices in these countries. In the fourth quarter of 2006, after inspection and auditing of SMAs plant in Germany, Koreas KEMCO certified SMAs products for use in Korea. In Korea, SMA will market inverters for installations in homes from 2.5 kWp upwards and central inverters up to 1 MWp. SMA has no immediate plans to enter the Japanese market since there are already established players in the country.
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6.5.2
Sharp
: : : : : : Sharp Corporation Sharp Solar Solar Systems Group 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japanu +81 74563 3579 +81 74562 8253 http://sharp-world.com/solar/index.html
Sharp accounted for nearly 19% of the worlds inverter market in 2005. In Japan, Sharp accounted for 65% of the market since installations of Sharps PV modules are often with its inverters and other brands of modules. Except the US, Sharp does not promote and market its inverters in Europe since European players dominate the market and well established. In Japan, inverters are a mature market and the Japanese government no long supports or funds R&D for PV inverters. To increase its market share for inverters in the Japanese market, Sharp introduced a new line of gadgetry Sunvista inverters for the residential market featuring colour LCD screens with interactive functions. These include an energy savings tracker enabling users to set targeted power consumption, real-time status display of energy generated by the PV modules, home power consumption, power purchased from the utility and sold back to the utility company. Sharp jointly developed with Daihen Corporation central inverters intended for commercial users and utilities in large-scale PV power-generating systems from 100 kWp to 1 MWp. Design and manufacture of these large inverters are only on an order basis and have an efficiency of 95%.
6.5.3
Fronius
: : : : : : : Fronius International GmbH Solar Electronics Division Gnter Fronius Stra1, 4600 Wels, Austria + 43 (0) 7242/241 0 +43 (0) 7242/241 0 http://www.fronius.com http://www.fronius-usa.com/
Fronius has been involved in solar electronic devices since 1992 an accounted for nearly 11% of the worlds inverter market in 2005. The company is Austrian based with its head office is in Wels, Austria, and a US
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subsidiary company based in Brighton, Michigan, established in 2002. Fronius also has a network of distributors across Europe, US and AsiaPacific. Fronius has nearly 1,700 people employed worldwide including 40 in the US. Its main markets are Europe accounting for 16% of the market and the US accounting for 6% of the market in 2005. In Europe, the main market is Germany and Spain becoming an increasingly important market while Korea has longer-term potential. Production capacity tripled from 70 MWp in 2003 to 200 MWp in 2005. Fronius has one of the lightest inverters in the US market making its easier for installers to mount on the wall. The IG inverter, for the European market has a plug-n-play function between the inverter and controller. Inverters have a standard 5-year warranty and extendable to 10 years for a premium. Fronius provides a 20-year service guarantee for its central inverters to its service partners.
6.5.4
Xantrex
: : : : : Xantrex Technology Inc. 8999 Nelson Way, Burnaby, British Columbia, Canada V5A 4B5 +6 04 422 8595 +6 04 420 1591 http://www.xantrex.com
Xantrex is a Canadian company with a head office in Vancouver, British Columbia. Xantrex accounted for 5% of the worlds PV inverter market in 2005 and main markets are the US followed by Europe. The company leads after SMA in the US accounting for 16% of the market share and 5% in the European inverter market. In 2005, Xantrex opened a sales office in Beijing, China, to expand its market in the country. Besides inverters, Xantrex also manufactures other power related electronic products. Major clients for Xantrexs inverters include Schott Solar, BP Solar and Kyocera. More than 100 MW of Xantrexs inverters have been sold in the US market by May 2006 and nearly 30 MW were sold in 2005. Xantrexs plants in the US manufacturing power related electronic products include Arlington, Livermore, Elkhart and in Spain in Barcelona. In March 2007, Xantrex announced that it had entered into an agreement with Chinas Shanghai Power Transmission & Distribution to form a joint venture with an initial investment of US$10 million. The joint venture would
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operate a plant manufacturing PV and wind power electronic products exclusively for the renewable energy market in China.
6.5.5
Kyocera
: : : : : : : Kyocera Corporation Solar Energy Division 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161, Japan +81 75604 3476 +81 75604 3475 http://global.kyocera.com/prdct/solar/index.html http://www.kyocerasolar.com
Like Sharp, Kyocera also manufactures inverters besides PV cells and modules. In 2005, Kyocera accounted for 4.6% of the worlds market for inverters. However, Kyoceras inverters are exclusively for the Japanese market for installations with Kyoceras PV modules. Kyocera accounts for 17% of the Japanese market for inverters. Main market for Kyoceras inverters in Japan is the residential market for 3-5 kWp module installations. Other inverters manufactured for the Japanese market are for 10-100 kWp module installations for public and industrial facilities. Kyoceras R&D centre for manufacturing inverters is in Sakura City, Chiba Prefecture, a short distance from Tokyo. Current development is producing more compact and lighter weight inverters. In the last three years, cost of producing inverters has been declining by 3%-5% annually.
6.5.6
Mastervolt
: : : : : Mastervolt International BV Snijdersbergweg 93, 1105AN - Amsterdam, Noord Holland, The Netherlands +31 20 3422100 ++31 20 6971006 http://www.mastervolt.com
Founded in 1991, Mastervolt is Dutch company and manufactures a range of power related electronic equipments besides PV inverters. In 2005, PV inverters from Mastervolt accounted for 3.2% of the world market and its sales concentrated in Europe. In Europe, its main markets are in Germany and Spain. Mastervolt has nearly 120 employees in six countries including
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Germany, US, Spain, France, Barcelona and China besides its head office in Amsterdam. Mastervolt increased the production capacity of its inverters from 45 MW in 2005 to 100 MW by the end of 2006. This would position Mastervolt to ship over 40,000 inverters annually. The company currently outsource manufacturing of inverters to Nedap Power Supplies in the Netherlands and the increase in capacity was from another plant in Poland managed by an unnamed associate of Nedap Power Supplies. In the future, all production of inverters will relocate from the Netherlands to Poland. The companys Soladin inverter models for homes are plug and play to the controllers and fitted with a communications port for remote monitoring. Mastervolt claims its Sumaster model performs at full power at high temperatures of 40 degrees Celsius, due to force cooling and therefore suited for installations in hot temperatures.
6.5.7
Sputnik
: : : : : Sputnik Engineering AG Hheweg 85, CH-2502 Biel, Switzerland +41 32 346 56 00 +41 32 346 56 09 http://www.solarmax.com
Sputnik Engineering based in Biel, Switzerland, specialises in grid-connected PV inverters including string inverters for homes and central inverters for PV power stations. Established in 1991, Sputnik accounted for 1.9% of the worlds market for PV inverters in 2005 with sales concentrated in Europe. The company has nearly 90 full time employees in Switzerland and offices in Germany and Spain. Sputnik is expecting to increase its sales of inverters to 180 MW by the end of 2007. Germany would continue to be Sputniks main market in the immediate future and expect sales in Spain to increase from 20 MW in 2006 to 60 MW by the end of 2007. During the period, it expects sales to increase sales in Italy from 1 MW to 6 MW and in France 1 to 6 MW. By 2008, Sputnik is expecting to increase sales further to 250 MW.
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6.6
Others
6.6.1 Turnkey Providers
: : : : : Spire Corporation One Patriot Park Bedford, Massachusetts 01730, United States of America +361 411 3838 +361 411 3839 http://www.spiresolar.com
Spire has been involved in the PV industry since 1980 and a leading supplier of a wide range equipments and machineries for manufacturing in PV products besides providing turnkey projects. Based in Massachusetts, US, Spire claims more than 150 customers across the world using technologies developed by the company. Spires equipments, machineries and services range from manufacturing silicon wafers, PV cells to modules from a production line of 5 MWp to 100 MWp. Spire also provides its clients the technology to manufacture building integrated modules. Areas of services include initial training at its facility in Massachusetts and then at the clients plant. The company can also source supply for its clients, materials for manufacturing including PV cells and encapsulation materials. Spire provides training for its clients engineers and operators at its facility in Massachusetts and at the clients plant.
Company Address Tel Fax Website : : : : : GT Solar Inc 243 Daniel Webster Highway, Merrimack, New Hampshire 03054, United States of America +1 603 883 5200 +1 603 595 6993 http://www.gtsolar.com
Based in Merrimack, US, GT Solar began its business in 1994. GT Solar supplies equipments and machineries as well as provide turnkey projects in manufacturing PV. Its turnkey projects, equipments and machineries include manufacturing in wafers, cells and modules. In 2006, GT Solar entered into production of polysilicon, supplying Siemens-type reactors. Other areas of services include consultation and engineering services.
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: : : : :
Energo Solar SA Rue del la Criox dOr 19/A, CH-1024 Geneva, Switzerland +361 411 3838 +361 411 3839 http://www.energosolar.com
EnergoSolar based in Geneva, Switzerland, specialises in equipments, machineries and turnkey projects for production of a-Si thin film modules. Besides, the company offers maintenance, service and spare parts and technological upgrades. The company claims its technology can massproduce thin films at a production cost of 1 per Wp. Production capacity begins at 6 MWp and expandable in 6 MWp increments. Furthermore, the technology to produce thin films does not require high purity clean rooms and uses less energy than production of crystalline cells. The company also provides consulting services to acquire the necessary raw materials, factory layout, materials handling, technical support, maintenance and training of for the clients engineers and operators.
6.6.2
Plastic Films
: : : : : : Etimex Technical Components GmbH Vistasolar Industriestrasse 3, D-89165 Dietenheim, Germany +49 (0) 7347 670 +49 (0) 7347 67209 http://www.etimex.de
Etimex Technical Components is a company based in Dietenheim, Germany. The company specialises in plastics for food and pharmaceutical packaging as well as plastic films for the PV industry. The company produces films, under the VISTASOLAR brand, for encapsulating PV cells for manufacturing modules. Since 1980, Etimex has been producing standard and premium EVA (ethyl vinyl acetate) films for encapsulating cells. In 2004, Etimex introduced TPU (thermoplastic polyurethane) films for encapsulating cells, which has better toughness, flexibility, chemical resistance, adhesive characteristics and optical properties.
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: : : : :
Bridgestone Corporation 10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340, Japan +81 03 3567 0111 +81 03 3567 4615 http://www.bridgestone.co.jp/english
Bridgestone is a Japanese company with its head office in Tokyo. The company manufactures rubber-based products, high purity fine ceramics, silicon wafers for the semiconductor industry and EVA films for PV modules. Bridgestone currently manufactures EVA films at its Iwata plant and in 2006, its production capacity was 400-500 tons a month. Due to increasing demand from module manufacturers, Bridgestone will increase production capacity to 800-1,000 tons a month with an additional calendar machine. Bridgestone invested nearly Yen 1.2 billion (US$10.2 million) and expect the expanded production to begin by the end of 2007.
Company Address Tel Fax Website : : : : : Coveme SPA Via Emilia, 288, 40068 San Lazzaro di Savena/Bologna, Italy +86 769 8828 8636 +86 769 88280962 http://www.coveme.com
Coveme is an Italian company based in Bologna (northern Italy) with more than 30 years in manufacturing high performance films and papers. For the PV industry, the company manufactures high performance laminates for back-end protection of PV modules. Its production plant is in Gorzia (northern Italy) and has five production lines to produce 4,000 tons of film, paper, and laminates annually. The plant has the ability to produce laminates from 12 to 500 microns.
6.6.3
PV Testers
: : : : : Spire Corporation One Patriot Park Bedford, Boston, Massachusetts 01730, United States of America +361 411 3838 +361 411 3839 http://www.spiresolar.com
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Spire also supplies PV testers to its clients besides machineries, equipments and providing turnkey projects for manufacturing PV products. For PV modules, the company supplies equipments to tests the electrical performance of modules up to 200 cm x 137 cm and up to 162 cm x 102 cm. Another is to test performance high voltage isolation to ensure that the cell circuit do not leak electrical currents onto the exposed module surfaces. Spire also supplies a portable array tester to measure and record the current and voltage characteristics of the PV modules.
Company Address Tel Fax Website : : : : : Energy Equipment Testing Services Ltd Unit 2, Glan-y-Llyn Industrial Estate, Taffs Well, CF15 7JD, Wales, United Kingdom +44 (0) 29 2082 0910 +44 (0) 29 2082 0911 http://www.eets.co.uk
Energy Equipment Testing Services (EETS) based in Wales, United Kingdom, is a provider of equipments and services for companies involved in renewable energy including PV. Its module testers measure the currentvoltage characteristics of PV modules up to 1.5x1.5 metres and a computerbased system, which acquires the performance data of the modules. The company also supplies cell testers to test the electrical performance of PV cells under simulated sunlight. Another is a portable array tester to measure and record the current and voltage characteristics of the PV modules.
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7 7..
C CA AS SE ES ST TU UD DI IE ES S
7.1
Case Study on Suntech

7.1.1 Background
: Suntech Power Holdings Co., Ltd. : 17-6 ChangJiang South Road, New District, Wuxi, Jiangsu 214028, China : +86 (510) 8531 5000 : +86 (510) 8534 5049 : www.suntech-power.com
Suntech Power Holdings Co., Ltd, is a company established in China with its head office in Wuxi, Jiangsu. Suntech is primarily involved in the design, development, manufacture and marketing of PV cells and modules. Suntech was officially set-up in September 2001 and began manufacturing operations in September 2002. The company is currently the leading PV cell and module manufacturer in China and among the global leaders. Besides China, major markets for Suntech include Japan, Europe and the United States. Suntech acquired a two-third equity interest in MSK Corporation of Japan in Q3 2006 and expected to increase its interest further by the end of 2007. Dr. Zhengrong Shi is the founder of Suntech and serves as the companys Chairman as well as its CEO. Dr Shi studied optical science and laser physics in China before pursuing a PhD in electrical engineering from the University of New South Wales (UNSW), Australia. After graduating, he led the Thin Film Solar Cells Research at UNSW from 1992 to 1995 and later joined as director of Pacific Solar Pty Ltd in 1995. Dr Shi (now an Australian citizen) then returned to China in 2001 to establish Suntech in the country. Funds from the Australian government for R&D in PV technology mostly target Australian universities. However, government support to commercialise and developed a PV industry in Australia is limited or in most cases unavailable. Thus technologies developed by UNSW (well known for its research and teaching facilities in PV) are often commercially acquired by foreign companies. Dr Shi took the opportunity to start a PV business in China when the Chinese government offered about US$6 million (4.5 million) to setup a manufacturing operation in China. Furthermore, the
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Chinese government supports the PV industry in China through funding of R&D activities. Another positive factor is Chinas lower manufacturing and other investment incentives. Suntechs strategic objectives since it began operations in 2002 have been to consistently reduce production cost, ensure supply of silicon, expand production capacity and acquired of MSK. These have been the key factors leading to Suntechs success and in the global PV industry. The following diagram describes Suntechs key objectives and their strategies.
Diagram 7.1.1. Suntechs Strategic Objectives
7.1.2
Financial Background
In December 2005, Suntech listed on the New York Stock Exchange (NYSE) through an initial public offering (IPO). Since listing, Suntech has shown strong continuous growth and financial performance. Revenue grew by 165% from US$85.29 million in 2004 to US$226.00 million in 2005 while net income grew by 55% from US$19.76 million to US$30.63 million. Suntech maintained a reasonable gross profit between 29% and 30% during the period. A major challenge faced by Suntech has been the increasing prices and global shortages of silicon in recent years. The shortage has limited Suntech from realising its production potential, often forcing it to purchase silicon in the spot market at prices higher than silicon purchased through multiyear
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supply agreements. Higher selling prices of silicon forced Suntech to increase the selling prices of its cells and modules in recent years, which threatens its margins. Competition from other manufacturers in China limits how much Suntech can increase its prices. Furthermore, Suntech preferred to pay more for its silicon in recent years than have idle capacity.
Table 7.1.2a. Average Selling Price of Suntechs PV products* Q1 2005 PV cells (US$ per Wp) PV modules (US$ per Wp) 2.63 3.29 Q3 2005 3.10 3.34 Q1 2006 3.05 3.65 Q3 2006 3.34 3.86
Source: Suntechs financial reports; Note:*Prices from MSK not included in the average selling price
Suntechs financial performance remained strong in each quarter from Q1 2006 to Q3 2006. Revenue increased by 81.3% from US$89.89 million in Q1 2006 to US$162.97 million in Q3 2006. However, net income increased at a slower pace of growth by 48.7% from US$19.32 million to US$28.73 million mainly from an increased in operating expenses and rise in cost of silicon though it had increased the selling price of PV cells and modules. Consequently, gross profits declined from 30.1% in Q1 2006 to 22.8% in Q3 2006. According to Suntechs Q3 2006 financial report, 26.8% of its revenue was from sales of PV cells, 72.7% from modules and 0.5% from system integration services. Suntechs expects its Q4 2006 revenue to be between US$166 million and US$170 million.
Table 7.1.2b. Suntechs Financial Performance (US$ million)* Q1 2004 Revenue (US$) Gross profit (US$) Gross profit Operating income (US$) Net income 85.29 25.11 29.4% 20.01 19.76 2005 226.00 68.56 30.3% 42.66 30.63 2006 89.89 27.05 30.1% 20.06 19.32 Q2 2006 128.15 36.12 28.2% 28.19 26.54 Q3 2006 162.97 37.23 22.8% 25.25 28.73
Source: Suntechs financial reports; *Financial results from MSK not included.
7.1.3
Management and Organisation
As Suntechs Chairman and CEO, Dr Shi decides on the companys business directions as well as leading and overseeing the company. Mr Graham Artes joined Suntech as its Chief Operating Officer (COO) in September 2005 and
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responsible for managing the day-to-day operations of the company. Mr Artes brings to Suntech 30 years of international experience in manufacturing and sales. Mr Weiguo Zhang is serves as the Director as well the Vice General Manager and has years of experience in investments. Dr Stuart Wenham joined in July 2005 as the Chief Technical Officer (CTO) and was formerly the co-director of research at Pacific Solar in Australia. The management of Suntech places a high level of importance on R&D to advance Suntechs business growth. The board directors include Dr Shi, Dr Wenham and Dr Jiangjia Ji who all have considerable R&D experience in PV technologies. Besides, Dr Tihu Wang joined in April 2006 as the ViceGeneral Manager for R&D bringing 23 years experience leading and conducting research in silicon materials. Mr Yichuan Wan joined in December 2002 as the Manager for PV Cell Research and Development bringing his experience in developing and manufacturing PV products. Mr Guangchun Zan joined in November 2005 as the Deputy Research Director of R&D and has considerable experience in high-efficiency solar cell designs. Mr Zan was previously with the Centre for Photovoltaic Engineering and School of Photovoltaic Engineering at UNSW. The workforce in Suntech are involved in R&D, manufacturing, business development, sales, purchasing and back-end operations including finance, administration and information technology (IT). The workforce in China grew by six-fold in a span of three years from nearly 250 in 2003 to nearly 1,400 in 2005. The global workforce reached 2,200 in 2006 including those in China, Japan (230 employees in its subsidiary company MSK), United States and Europe and expects the workforce to increase to nearly 3,000 by 2007. Suntech will employ 200 new employees at its new manufacturing and R&D facility in Caohejing Hi-tech Park, Shanghai, once it begins operations in 2008.
7.1.4
Technology Developments
In 2006, Suntech had about 60 employees involved in R&D at its R&D centre in Wuxi, including those recruited abroad. Half of the employees at the R&D centre specialise in their own fields of R&D in PV technologies. These areas of involvement by Suntechs researchers include R&D in silicon materials, solar cell device physics, processing technologies and design of advanced PV manufacturing equipments. Researchers at MSKs R&D facility in Japan bring their expertise developing building integrated PV modules such as PV roof tiles and architectural glass windows. Suntech manufactures a range of mc-Si and sc-Si PV cells and modules for grid and off-grid applications used in the residential, commercial, industrial
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and public utility sectors. One of Suntechs key business objectives is to be the lowest cost per watt provider of PV products in the industry. The management of Suntech is in the opinion that the long-term growth of the industry and its business would have to depend less on government incentives. Thus, prices of its PV products would have to decline to create demand and stimulate business growth. To achieve this, Suntech would have to reduce the manufacturing cost of its PV cells and modules through improved technologies. Suntech allocated nearly US$20 million in 2006-2007 for R&D and exploring new technologies. Of the amount, US$10 million were for R&D in increasing the conversion efficiency of its PV cells. By mid-2006, Suntech held seven patents and another 16 pending applications in China. Besides its R&D centre in Wuxi, Suntech (led by Dr Wenham) has a technical collaboration agreement with UNSWs Centre of Excellence for Advanced Silicon Photovoltaic and Photonics. The agreement includes a US$1.2 million contribution to the Centre to fund R&D to develop technologies to increase the conversion efficiency of PV cells. Furthermore, Suntech expects to establish a new manufacturing and R&D facility (estimated to cost US$60 million) at the Caohejing Hi-Tech Park in Shanghai by early 2008. Suntechs acquisition of MSK provides opportunities for both companies to exchange and receive new technologies from the other. MSK would receive from Suntech technical support and technologies for thinner silicon wafers and higher conversion efficiency for its PV cells. MSK strengths in BIPV in Japan provide opportunities for Suntech to provide value-added system integration services in China. Furthermore, MSKs product development in building integrated PV modules (e.g. PV roof tiles and architectural glass windows) provides value-added solutions to Suntechs customers. Silicon feedstock cost about 70% of the manufacturing costs of Suntechs modules. Through R&D, Suntech is shifting productions towards thinner wafers and improving the conversion efficiency rates of its PV cells are the two key strategies implemented to reduce the manufacturing cost. By Q1 2006, Suntech shifted production towards 210-micron wafers and developing the capabilities to utilise wafers with a thickness of 180-micron. Suntech has also made advances in R&D to utilise wafers with a thickness of 150-microns. In Q4 2006, Suntech announced it would adopt the semiconductor finger technology which it co-developed with UNSW. The technology overcomes
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the limitation of the standard screen painting process used in the industry to produce PV cells. The technology involves using heavily doped semiconductor strips built into the cell surface and therefore collects electrical charges more effectively. The technology also reduces the number of metal contact strips on the cell surface therefore reducing shading from the sun increasing the cells ability to absorb more sunlight. This allowed Suntech to increase the conversion efficiency of its solar grade mono-crystalline silicon cells by as much as 18% compared to the industrys 14%-15% and targets to achieve 20% conversion efficiency by 2008. Even with lower grade silicon wafers, the technology has the longer-term potential to increase the conversion efficiency up to 17%.5 This enables Suntech to utilise lower grade silicon wafers (that otherwise would be treated as rejects) and reduce the manufacturing cost of its PV cells (per watt peak).
7.1.5
Business Developments
Suntech purchases silicon wafers from its suppliers to manufacture its PV cells. The companys production of PV cells doubled from 67.7 MWp in 2005 to an estimated 134.9 MWp in 2006. In 2005, nearly 74% of Suntechs cell production was for its in-house manufacturing of modules while 26% sold to other module manufacturers. In 2006, that Suntech consumed an estimated 85% of its cell production for its module while 15% sold to other module manufacturers. By 2006, Suntech increased the quantity and proportion of its cell production for its module manufacturing to meet increasing orders for its modules from its overseas customers. Suntech has been increasing its cell production and capacity annually since it began operations in 2002. However, its share of the production and capacity in China began to show a decline in 2005 brought about by other manufacturers in China increasing their cell production and capacity. In the immediate term, Suntech expects to increase its production capacity to 420 MWp and production to 280 MWp by the end of 2007. According to Dr Shi, Suntech may increase its cells production capacity to 1,000 MWp by 2010 depending on the growth of the global PV market.
Suntech increased the conversion efficiency of its poly-silicon cells from 15.2% to 15.4% by the Q1. 2006
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Table 7.1.5a. Suntechs PV Cell Production in China 2002 Capacity (MWp) Share of capacity in China Production (MWp) Share of production in China
Source: ENF
2003 30.0 66.7% 6.4 46.0%
2004 60.0 69.0% 29.5 59.0%
2005 150.0 41.7% 67.7 43.4%
2006e 270.0 19.9% 134.9 19.5%
15 62.5% 0.9 18.2%
Suntech has been increasing its PV module production and capacity annually since 2002 to keep up with demand from its overseas clients. One of Suntechs major clients is Solarworld, which it supplies as an OEM and in 2006 agreed to supply 24 MWp of PV modules. Like its cell production capacity, Suntech may increase its module production capacity to 1,000 MWp by 2010.
Table 7.1.5b. Suntechs PV Module Production in China 2002 Capacity (MWp) Share of capacity in China Production (MWp) Share of production in China
Source: ENF
2003 30.0 13.5% 1.5 3.3%
2004 60.0 11.5% 25.9 14.4%
2005 150.0 10.0% 49.8 11.3%
2006e 470.0 11.8% 114.1 9.4%
15.0 18.5% 0.8 3.9%
Suntech exports nearly 80% of its production while the remaining 20% is for its domestic market. However, the company expects the domestic market will eventually account for 50% of its production as China embarks to increase usage of renewable energy to account for 15% of the countrys electricity generating capacity by 2020. Suntech major export markets are in Europe, US and Japan. Major markets in Europe are Germany and Spain and to a lesser extent Italy. Suntech, as with most export oriented manufacturing businesses in China, has the advantage of lower manufacturing and operating cost to compete in the international markets. Suntech markets its PV products outside of China through distributors while in China the company supplies its products namely PV cells to module manufacturers and directly to the end-users. Its sales and marketing strategy is to established a diversified geographical and customer mix including end market applications.
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Besides, depending on distributors, Suntech recently established Suntech America and Suntech Europe as part of its long-term strategy to market its PV cells and modules. Suntechs acquisition of MSK provides the company a platform to enter the Japanese market and MSKs offices in Europe and the US synergises with Suntechs overseas market expansion strategy. Suntechs business relationship with SolarWorld as an OEM provides Suntech the opportunity to indirectly enter other markets in Europe, which its does not have a strong presence such as France and Greece. Suntech is establishing new offices outside of Wuxi (its head office) to increase its market presence in China. In recent years, Suntech has established sales offices in Shenzhen and Shanghai. Suntechs acquisition of MSK provided the company a platform to enter the Japanese market and synergise with MSKs already established presence in the US and European markets. Suntechs acquisition also enables it to acquire MSKs expertise in systems integration and technologies in building integrated products, which the company considers as value added with high profit margins. The acquisition would also result in some of MSKs manufacturing activities and backend operations relocated to China offering MSK the opportunity to lower its manufacturing and operating cost.
7.1.6
Ensuring Supply of Silicon Wafers
Suntech faced a major challenge in last 2-3 years on supplies of silicon feedstock for its PV cells i.e. constrain in supplies and rising prices. On the technology front, its strategy is to develop technologies using thinner silicon wafers and improving the conversion efficiencies of its PV cells. On the supply side, its strategy is to enter medium to long-term agreements with its suppliers for wafers at fixed-prices and below spot prices. These agreements ensure security in supply and reduce its manufacturing cost for PV cells. Suntech expects 70% if not all of its projected needs for silicon wafers in 2007 would be from such agreements. In July 2006, Suntech entered into a 10-year binding agreement with MEMC Electronic Materials, Inc., to purchase silicon wafers. The purchases valued between US$5 billion and US$6 billion allows Suntech to purchase wafers at pre-determined prices. As part of the agreement, Suntech would provide interest free loans or security deposits to MEMC to expand its production capacity to
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meet Suntechs supply requirements. MEMC would also receive warrants to purchase a 4.9% equity stake in Suntech. In October 2006, Suntech announced it had into a 5-year agreement with Renewable Energy Corporation (REC) of Norway to purchase silicon wafers. The purchased valued at US$180 million allows Suntech to purchase wafers at a predetermined fixed price below the spot market prices. Furthermore, prices negotiated with REC would decrease in the subsequent years during the duration of the agreement. The agreement structured on take or pay contract would require Suntech to purchase specified quantities of silicon wafers and pay REC if it does not take delivery. In November 2005, Suntech entered into a 5-year agreement to purchase solar grade silicon wafers from Shanghai Cotonsec Solar Technology Co., Ltd. The purchase valued between US$475 million and $580 million would allow Suntech to purchase silicon wafer at a predetermined price subjected to annual review and increase its purchase volume during the agreement period. In December 2006, Suntech announced an agreement to purchase silicon wafers over a five-year period from Sunlight Group, Inc. Sunlight based in the United States has silicon wafer manufacturing facilities in China and Japan. Purchases estimated to worth between US$366 million and US$670 million during the five-year period allows Suntech to increase its purchases at fixed prices each year with the prices reviewed annually. Suntech also has a 10-year agreement for Deutsche Solar AG of Germany to supply fixed quantities of silicon wafer monthly beginning in January 2006. It also has a 10-year cooperation agreement with LDK Hi-tech Co., Ltd. of China beginning with supply of 30 MWp of silicon wafers in 2006 and 100 MWp in 2007. Suntech entered into an agreement with Luoyang Silicon Co., Ltd., of China to establish a joint venture facility with a capacity of 30 MWp to produce PV cells and modules. The new facility located in Luoyang, China, and expected to be operational in 2007. As part of the joint venture agreement, Luoyang Silicon would supply to the new facility on an exclusive basis silicon wafers for manufacturing the PV cells. Suntech entered into a 10-year agreement with Chinas LDK HiTech to supply Suntech 30 MWp of silicon wafers in 2006 and 100 MWp in 2007.
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Besides improving long-term supplies of silicon wafers, Dr Shi expects immediate cost savings in 2007 with purchases of the wafers below the spot market prices. This would contribute towards improvements in the profit margins. Having long-term supply contracts augurs well for Suntech with its aggressive strategy to increase production capacity from 270 MWp in 2006 to 660-720 MWp by 2007.
7.2
Short Case Study on Yingli Solar

7.2.1 Background
: Baoding Tian Wei Yingli New Energy Resources Co., Ltd. : No. 3055 Fuxing Middle Road, Baoding National New High-Tech Industrial Development Zone, Baoding, Heibei, China : +86 312 8929 700 : +86 312 315 1881 : http://www.yinglisolar.com
Company Address
Tel Fax Website
Baoding Tien Wei Yingli New Energy Resources (Yingli Solar) is another major manufacturer of PV products in China. The companys headquarter is located at the Baoding National New High-Tech Industrial Development Zone in Baoding, Heibei Province. The company began in June 2002 when it initially assembled modules and has since integrated across value chain manufacturing mc-Si silicon ingots, wafers and cells for production of its PV modules. The General Manager and founder of Yingli Solar is Mr Liangsheng Miao who has a masters degree in business administration from Beijing University. Unlike Dr Shi from Suntech, Mr Miao had only 2-3 years in the PV industry before establishing Yingli Solar in 2002. Yingli Solars success in recent years is a result of Mr Miaos entrepreneurial spirit rather technical qualification. Mr. Miao is also the Executive Director of Chinas Photovoltaic Committee of the China Renewable Energies Association. Tibet Tianwei Yingli New Energy Resources (Tibet Yingli) is a subsidiary company of Yingli Solar. Tibet Yingli is involved in assembling and marketing PV modules in the Tibetan region as part of Chinas Renewable Energy Development Programme. The subsidiarys plant is at the Dazi Industrial Garden in Tibet and has production capacity of 3 MWp. Another subsidiary is Chengdu Yingli with its operations at Xindu Industrial Garden, Chengdu. Besides marketing Yingli Solars range of PV modules, Chengdu Yingli is also
126
involved in installation and systems integration for grid and off-grid PV systems.
7.2.2
Management and Organisation
Mr Mao, as an entrepreneur, is the driver of Yingli Solars business setting the companys directions and strategies. Mr. Xiangdong Wang is the Vice President responsible for plant operations while Mr Zhiheng Zhao is the Vice President responsible for business operations. Dr Seok Jin Lee (a Korean National) brings his experience in PV as Yingli Solars Chief Operating Officer. Prior to joining Yingli Solar, Dr Lee worked with Hyundai Heavy Industries as the General Manager for the companys solar business. Dr Lee has a masters and doctorate degree in electrical engineering from Yonsei University, Korea. Dr Guoxiao Yao brings his technical expertise in PV as the Yingli Solars Chief Technical Officer. Dr Yao graduated with a masters degree in solar engineering from the European Solar Engineering School, Dalama University, in Sweden. Dr Yao also has a doctorate from his studies on PV engineering from the University of New South Wales, Australia, which is renowned for its research and developing new technologies in PV. Yingli Solars employees have been increasing since it began operations. The number of employees increased from 300 in 2003 to more than 1,000 by the end of 2006. Nearly 85% of the employees are involved in manufacturing wafers, cells and modules. Production of modules, which requires greater use of labour than manufacturing wafers and cells, account for nearly half of the employees involved in manufacturing.
7.2.3
Developments
Yingli Solars business strategy is to integrate manufacturing across the value chain from manufacturing silicon ingots to PV cells for production of its modules. Yingli plans to increase the production capacity for each of the processes in the value chain (ingots, wafers, cells and modules) to 600 MWp by the end of 2008. Suntechs business strategy, on the other hand, focuses increasing capacity and production of cells and modules preferring to purchase wafers from suppliers. The advantage of Yingli Solars integration is it would only need to focus sourcing for silicon and not subjected to interruption in supply of other silicon materials across the value chain. Another advantage is it would be in a position to sell any excess production in the value chain to other manufacturers. Integrating across the value chain and increasing the
127
production capacity to 600 MWp also provides Yingli Solar the economies of scale and in a position to reduce its production cost. Yingli Solars production of PV cells quadrupled from 13 MWp in 2005 to an estimated 60 MWp by 2006. All the cells produced at its plant were for manufacturing of Yingli Solars modules. Consequently, production capacity also increased from 60 MWp in 2005 to 90 MWp by 2006.
Table 7.2.5a. Yinglis PV Cell Production in China 2003 Capacity (MWp) Share of capacity in China Production (MWp) Share of production in China
Source: ENF
2004 10 11.5% 4.7 9.4%
2005 60 16.7% 13.0 8.3%
2006e 90 6.6% 60.0 8.7%
6 13.3% 0.0%
Production of modules increased from 13 MWp in 2005 to an estimated 100 MWp by 2006 due to increasing demand from exports. In 2006, Yingli Solar had to source cells from other cell manufacturers since its cell plant was unable to produce sufficient quantities due to the global silicon shortage.
Table 7.2.5b. Yinglis PV Module Production in China 2003 Capacity (MWp) Share of capacity in China Production (MWp) Share of production in China
Source: ENF
2004 50 9.5% 5 2.6%
2005 100 6.7% 13 2.9%
2006e 200 5.3% 100 8.2%
50 22.4% 0.0%
The company intends to establish a Solar Grade Silicon Crystalline Wafer Research Centre and a Professional Training Centre. The purpose of the Research Centre is to develop new technologies in PV whereas the Training Centre would develop the technical skills of its employees. To keep abreast with new technologies and its developments, Yingli Solar will continue to collaborate with other research institutions in China and overseas such as the University of New South Wales in Australia. Yingli Solar exports nearly 90% of its production of modules and current main market is Germany and Spain but yet to make any significant entry for
128
its modules into the US market. Exports are through its European distributors usually through a supply agreement under negotiated prices. For example, Maa Regenerative Energien has a supply agreement with Yingli Solar to receive over 160 MWp of modules from 2006 to 2010. Another is Phnix Sonnenstrom purchasing 6 MWp in 2006 and 143 MWp by 2010. Yingli sells its production outside the supply agreement to potential buyers at market prices. A significant milestone for Yingli Solar is its expected listing on the stock exchange through a public listing. Initially intending to list on NASDAQ in the US, the company eventually decided to list on the New York Stock Exchange. One of the major reasons for Yingli Solars listing is to obtain capital for its plant expansion. Expectations are the company would list on the New York Stock Exchange sometime in 2007.
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8 8..
C CO ON NC CL LU US SI IO ON NS S
8.1
Future Challenges
Government support for PV. The market for PV will continue to depend on government support through financial incentives or subsidies until enduser prices of PV are sufficiently attractive to create mass end-user demand. Reduced government support and changes in government policies not in favour towards PV would dampen demand. Delays in implementing renewable energy programmes for PV would stall demand for PV. There is already build-up in production capacity across the value chain and further capacity would come online in 2007-2010. Reduction in government support for renewable energy programmes would create excess or idle capacity in the value chain. Overcapacity across the value chain. As new players enter the PV industry and existing players expand their production capacity across the value chain, there is possibility of overcapacity in 2007-2010 if capacity increases too aggressively. Prices of key materials and components such as polysilicon, wafers, cells, thin films and modules could decline drastically before manufacturers could recover their cost of investments. Silicon manufacturers experienced such a scenario during the burst of the technology bubble in 2001. In such a scenario, consolidation of the PV industry would occur sooner than expected. Barriers to entry and business risks. Barriers to entry decreases as the value chain moves from upstream activities to downstream activities. Production of polysilicon has the highest barrier to entry and therefore this segment of the value chain is characterised by fewer players and high investment cost. As activities moves downstream, the barriers to entry decreases and the segment of the value chain involved in PV installation has the lowest barrier to entry with the highest number of players and lowest investment costs. Investment cost is highest for production of polysilicon and therefore large-scale production is necessary to achieve economies of scale. The risk from reduced government support is highest with the silicon manufacturers because of its very high investment costs and any financial losses would be the most severe in this segment.
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Wafer manufacturers are at risk in securing silicon supply especially smaller manufacturers who are unable to enter into long-term supply agreements with the silicon manufacturers. Another risk is the market moving away from silicon based PV resulting in idle machineries. Cell manufacturers are at risk in securing supplies for wafers especially in times of silicon shortages resulting in idle capacity and inability to supply cells to the module manufacturers. Similar to the wafer manufacturers, a market moving away from silicon based PV would result in idle machineries. Modules manufacturers face risk of overcapacity from aggressive industry expansion in production capacity and new players entering the industry. A crowded market and slowing demand for PV would result in pricing pressures. Aggressive expansion into the global market from manufacturers in China is an overcapacity threat. Reducing the cost of PV. The challenge for the PV industry is to reduce the cost of PV systems to the level that it no longer requires government support. The system price has to be in the range of at least US$3 per Wp to achieve a significant market and US$1 per Wp to create a mass market. Current cost of PV system ranges from US$7 to US$10 per Wp and would to decline beginning in 2008 to US$3.50 per Wp earliest by 2015 according to some sources. Thus, at least from 2007 to 2015, PV systems would have to depend on government support to sustain the PV industry and market. The potential may lie with thin films from improvements in technology to mass produce thin films cheaply. The US Department of Energy cost goal for thin films is about US$0.33 per Wp based on a module efficiency goal of 15%. At such price, it is possible for a PV system to cost below US$3 per Wp. Though possible, it may not occur by the end of the decade until further improvements in thin film technology.
8.2
Future Directions
Overall scenario. Demand for PV will continue to grow but a slower rate of growth averaging 20% annually from 2007 to 2010. Based on this projection, demand will grow from 2,400 MWp in 2006 to 5,000 MWp by 2010. Government renewable energy programmes especially in Germany, Japan, United States, Spain, Korea and China would drive demand for PV in 2007-2010.
131
Shortage of silicon will continue until 2008 when new polysilicon plants begin operations. The polysilicon industry will also see new players entering the industry attracted by high profit margins created by the shortages. The trend within the polysilicon industry is to enter into multiyear supply agreements requiring initial payments from their customers. This puts smaller manufacturers purchasing smaller quantities of polysilicon at a disadvantage since they are often unable to commit to multiyear supply agreements. Leading manufacturers will continue to reduce the cost of producing their PV cells. These include improving cell efficiency among c-Si and thin film cell manufacturers. Since polysilicon accounts for 40%-50% of a modules manufacturing cost, crystalline silicon cell manufacturers will continue to develop technologies to produce thinner silicon wafers and reduce wastage from sawing of ingots. Shortages and increasing prices of polysilicon in recent years have driven demand for thin film modules. The European Photovoltaic Industry Association predicts demand for thin film modules would increase from 100 MWp in 2005 to 1,000 MWp by 2010 increasing its share of the module market from 6% in 2005 to 20% by 2010. Many new thin film manufacturers are start-up companies attracting venture capitalists in potential thin-film companies. China in the global market for modules. China is becoming a leader in the global PV industry and market with increasing production capacity across the value chain. Chinese manufacturers have been increasing their production capacity for c-Si modules from 1,500 MWp in 2005 to 2,800 MWp in 2006. By 2007, China would increase its module production capacity to nearly 4,000 MWp with further increases expected by 2010. Development of Chinas PV industry since 2004 has less to do from demands from the domestic market but more from its export markets. Chinas advantage is it low labour cost to manufacture modules compared to the United States, Japan and Europe. China exports more than 90% of the modules produced in the country and exports would continue to drive the industry in China and influence the market for PV modules. Consolidation of the PV industry. A consolidation within the industry is already beginning to take place. Major companies previously involved in downstream activities in module and cell manufacturing are gradually moving upstream into wafer manufacturing and some have invested into silicon production. Consolidation is most likely to occur down the value chain or in downstream activities due to the lower barriers to entry.
132
With the industry consolidation and increasing production capacity, the industry is gradually developing into a mass production industry improving the economies of scale. With economies of scale, manufacturers will be able to use their cost advantage to drive prices downwards generating greater end-user interest and purchase for PV. With price decreases from largescale production, PV modules will gradually come into a commodity product. Smaller companies without the financial resources to integrate across the value chain will eventually merge with other companies or acquired by the larger companies. However, industry consolidation would also improve the competitive position of some of the smaller companies as they re-orientate their business strategies and enter into niche markets. Future technologies. The technology for c-Si cells and modules is a maturing technology and industry predictions that an efficiency of 25% is the maximum achievable with c-Si technology. Furthermore, applications for c-Si technology are limited to flat panels. Though c-Si modules will continue to dominate the market by 2010, its share of the PV market will gradually erode due to competition from thin films. Better materials, developments in thin-film transistor technology and improved production technologies for thin-films are becoming a reality. Mass production of thin films and improvements in efficiency that were once technological barriers are removing gradually. The advantage of thin films is its potential to produce PV modules at costs much lower than c-Si cell modules. Thin films have vast applications not possible with flat panel c-Si modules. Thin films provide opportunities for applications in building integrated modules including roof tiles, windows and facades. Thin films can be deposited on many types of surfaces and therefore has potential in flexible plastics, glass and coatings on building materials to generate electricity. CIGS thin films are generating interest with improvements in efficiency on par with mc-Si modules under laboratory conditions and their potential for mass production. Japanese companies are developing a-Si/sc-Si hybrid cells and Sharp announced in January 2007 that it had developed the technology to mass-produce a-Si/sc-Si thin films with an efficiency of 13%.
8.3
Opportunities
Business potential. Projected demand for PV would grow at average of 20% annually in 2007-2010. Though at slower pace growth, the PV market still represents enormous potential for manufacturers. The following table
133
summarises the market value of the various segments of the value chain over a four-year period in 2007-2010.
Table 8.3a. Estimated Market Value for PV Industry in 2007-2010 Market Value in Product Total Demand in 2007-2010 Modules Silicon cells Wafers Polysilicon Thin films Inverters 15,500 MWp 13,000 MWp 13,000 MWp 140,000 tons 2,400 MWp 17,500 MWp Unit Cost (US$) 3.50 per Wp 2.70 per Wp 1.40 per Wp 47.00 per kg 2.00 per Wp 0.50 per Wp 2007-2010 (US$ billion) 54.3 35.1 18.2 6.6 4.8 8.8
Opportunities also exist for suppliers of materials for manufacturing PV modules. Total value estimated on the value of these materials during the four-year period in 2007-2010 is US$6.2 billion. The following table describes breakdown of the value of the materials.
Table 8.3b. Market Value of Materials for PV Modules in 2007-2010 Materials/ Components Glass EVA Frame Junction box Tedlar Interconnect Adhesive Total Market Value (US$ million) 1,364 1,153 1,073 998 918 477 217 6,200
Opportunities for PV modules. Significant markets for PV and PV modules in 2007-2010 are Western Europe (namely Germany and Spain), Japan, US, Korea and China, driven by government supported renewable energy programmes. Japan is a relatively closed market for exporters while China is a net exporter of PV and in a position to compete on price with
134
manufacturers intending to export modules into China. The European Union and the US are net importers of PV modules and are potential markets for exporters. Opportunities for c-Si cells. China would continue to be a net importer of c-Si cells in 2007-2010 as the country expands its production capacity for PV modules. Even with the increase in Chinas silicon production capacity, production would not be able to meet Chinas demand for c-Si cells, The US would continue to be a net importer of c-Si cells since US companies currently focus on developing thin film technologies. However, c-Si modules would continue to dominate the market in the US at least until 2010. The federal and various state renewable energy programmes for PV is creating demand for c-Si cells from module manufacturers in the US. Opportunities for polysilicon. Continuing demand for PV in 2007-2010, though at slower pace of 20% annually presents market and business opportunities for polysilicon manufacturers to increase their production capacity. The market during the four-year in 2007-2010 is estimated at US$6.6 billion. Opportunities for thin films. Price will continue to be an important determinant for PV and thin films lower manufacturing cost offers opportunities to market lower cost PV. Thin films offer opportunities for applications in building integrated modules including roof tiles, windows and facades. Thin films also have applications in flexible plastics, glass and coatings on building materials to generate electricity. Opportunities for PV inverters. Inverters have a lifespan of 5-10 years while PV modules have a lifespan of 25-30 years. Currently the replacement market for inverters account for 10% of the inverter production. Over the longer term, the proportion of the replacement market would increase as old inverters come to the end of their lifespan. Inverters have gone beyond its basic function of converting current from DC to AC and there is trend for electronic gadgetry and stylish designs in inverters. Inverters are becoming more like consumer electronics and a potential for manufacturers to develop consumer appeal for their products. Opportunities to attract investments. Countries that can attract investments through tax holidays on income; have an available and educated workforce; offers lower investment cost on land and capital; low labour cost; an established semiconductor industry; and a government with a pro-business policy are potential countries to attract PV manufacturers to invest in the country. Further attractions are countries with low energy cost
135
to the industries and strong physical infrastructure. Developing countries such as the Czech Republic, Mexico and Poland have successfully attracted foreign companies to invest offering similar incentives. First Solars plan to establish a 100 MWp thin film manufacturing plant in Malaysia was also a result of such attractions.
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A AP PP PE EN ND DI IX X
References from reports 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. PV Status Report 2006, August 2006, European Commission, DG Joint Research Centre Polysilicon Supply, Demand & Implications for the PV Industry, 2006, Prometheus Institute Suncreen II, Investments Opportunities in Solar Power, July 2005, Credit Lyonnaise The Chinese Silicon Photovoltaic Industry and Market, 2006, Nicoletta Marigo, Centre for Environmental Policy, Imperial College London Pessimistic vs Policy Driven Market Scenarios towards 2010 in Europe and Globally, December 2005, European Photovoltaic Industry Association Solar Generation, September 2006, Greenpeace and European Photovoltaic Industry Association Photovoltaic in Germany, Market and Industry Development, 2006, Germany Solar Industry Association Future State of the PV Industry, 2006, M. Morgan, W Coleman, Y Yudi, S Yin and C Casillas Pessimistic vs Policy Driven Market Scenario toward 2010 in Europe and Globally, December 2005, European Photovoltaic Industry Association Solar Electricity in 2010, 2001, European Photovoltaic Industry Association Solar Photovoltaic Market, Cost and Trends in the EU, September 2006, IEEJ A Vision for Photovoltaic Technology, 2005, European Commission US Solar Industry, Year in Review, 2006, Prometheus Institute Making Affordable Thin Film Cells a Reality, 2006, Miasole The Status and Outlook for the Photovoltaic Industry, 2006, BP Solar Photovoltaic Energy Barometer, April 2006, ObservER Chinese Solar Cell and Panel Manufacturer Market Survey, 2006, ENF European Solar Cell and Panel Manufacturer Market Survey, 2006, ENF Trend in Photovoltaic Applications, 2006, PVPS, International Energy Agency PV Market in Japan, 2006/2007, RTS Corporation US Solar Industry Year in Review, 2006, Solar Energy Industries Association
References from company websites 22. Sharp Solar - http://sharp-world.com/solar/index.html
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23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33.
34. 35.
Kyocera - http://global.kyocera.com/prdct/solar/index.html Sanyo - http://www.sanyo.com/industrial/solar/ Suntech - http://www.suntech-power.com SolarWorld - http://www.solarworld.de SOLON - http://www.solon-pv.com/english/index.html Schott Solar - http://www.schott.com/photovoltaic/english/index.html Isofoton - http://www.isofoton.com BP Solar - http://www.bpsolar.com Q-Cells - http://www.q-cells.com Motech - http://www.motech.com.tw Mitsubishi Electric - http://global.mitsubishielectric.com/bu/solar/index.html Mitsubishi Heavy Industries - http://www.mhi.co.jp/power/e_a-si/index.html Mitsubishi Materials Corporation - http://www.mmc.co.jp/english/index.html Hemlock - http://www.hscpoly.com/ Wacker - http://www.wacker.com/cms/en/home/index.jsp REC - http://www.recgroup.com Tokuyama - http://www.tokuyama.co.jp/eng/ MEMC - http://www.memc.com SMA http://www2.sma.de/en/home/index.html Fronius http://www.fronius.com Xantrex http://www.xantrex.com Mastervolt http://www.mastervolt.com Sputnik Engineering http://www.solarmax.com First Solar http://www.firstsolar.com Kaneka http://www.pv.kaneka.co.jp United Solar http://www.uni-solar.com Kyocera http://www.global.kyocera.com/prdct/solar/index.html GT Solar http://www.gtsolar.com Spire Corporation http://www.spiresolar.com EnergoSolar http://www.energosolar.com Etimex http://www.etimex.com Bridgestone http://www.bridgestone.co.jp.english Coveme http://www.coveme.com Energy Equipment Testing Services http://www.eets.co.uk
36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56.
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Pusat Tenaga Malaysia

Global PV Industry Research

6.1.1 6.1.2 6.1.3

6.1.4 6.1.5 6.1.6 6.1.7 6.1.8 6.1.9

6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.6 6.2.7 6.2.8 6.2.9

6.3.1 6.3.2 6.3.3 6.3.4 6.3.5 6.3.6 6.4

6.4.1 6.4.2 6.4.3 6.4.4 6.5

6.5.3 6.5.4 6.5.5 6.5.6 6.5.7 6.6

6.6.1 6.6.2 6.6.3 7. 7.1

7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.1.6 7.2

7.2.1 7.2.2 7.2.3 8. 8.1 8.2 8.3 9.

Diagram 1. Developments in the PV Value Chain

Overview on the World Economy

Overview on Fossil Fuels

Crude CrudeOil Oil

Thermal ThermalCoal Coal

Natural NaturalGas Gas

Source: International Energy Outlook 2006, US Department of Energy

Overview on Electricity Generation

Average annual growth

Share of world generation

Source: US Energy Information Administration

Table 2.3b. Regional Projection in Electricity Generation

Source: US Energy Information Administration

The PV Value Chain

Diagram 3.1a. Value Chain for the Photovoltaic Industry

Diagram 3.1b. Characteristics of the value chain

Table 3.1b. Example of Major Companies Involve in the Value Chain

S Includes subsidiary companies and joint ventures. S Planning

Crystalline silicon sheets and ribbons account for 4% of the modules.

Drivers of Growth in the PV Value Chain

Diagram 3.3. Market Drivers for the PV Value Chain

6,855 6,855 4,977 4,977

6,000 6,000 4,000 4,000 2,000 2,000 0 0

40% 40% Annual AnnualGrw Grwth th

30% 30% Annual AnnualGrw Grwth th

20% 20% Annual AnnualGrw Grwth th

Source: 1995-2005 from PV News: 2006 from Pegasus estimates

Others Others 32.0% 32.0%

Sharp Sharp 23.0% 23.0%

MSK MSK 3.5% 3.5%

Mitsubishi Solon Solon Mitsubishi 6.5% 6.5% 3.5% 3.5%

Sanyo Sanyo 7.2% 7.2% Kyocera Kyocera 8.2% 8.2%

Shell ShellSolar Solar 3% 3%

Schott Schott Solar Solar 3% 3%

Note: Estimates from companies production

sc-Si, sc-Si,33% 33%

mc-Si, mc-Si,57% 57%

Note: Derived from various estimates

100% 100% 80% 80% 60% 60%

96% 96% 40% 40% 20% 20% 0% 0% 2003 2003

2006 2006 Thin Thinfilms films

Crystalline Crystallinesilicon siliconmodules modules

Source: 2000-2005 from IEA; 2006-2010 forecasts by Pegasus

Crystalline Silicon Cells

Note: Estimates derived from various sources

Others Others 20.2% 20.2%

Sharp Sharp 24.3% 24.3%

Q-Cells Q-Cells 9.4% 9.4% Kyocera Kyocera 8.1% 8.1%

BP BPSolar Solar 4.8% 4.8%

Schott Schott Solar Solar 5% 5%

Mitsubishi Mitsubishi 6.4% 6.4%

Sanyo Sanyo 7.0% 7.0%

Motech Motech 3.4% 3.4%