The State of the Thin-Film Photovoltaic Industry NanoTechNews - News in Nanoscience and Nanotechnology

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The State of the Thin-Film Photovoltaic Industry

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There are currently three major thin film players (defined as the three companies with over $1 billion in thin-film assets): First Solar (FSLR), Sharp (SHCAY.PK) and Applied Materials (AMAT). There are numerous other thin-film startups that are in such early phases of development that its difficult to analyze potential production and capex costs if their technology ever matures. These are mostly CIGS companies and include Nanosolar, Miasole, Heliovolt, Ascent Solar (ASTI), DayStar Technologies (DSTI) and countless others. Most have struggled to get manufacturing efficiencies over 6% for industrial usage. This doesnt include the aerospace panels which can achieve 20% but are incredibly expensive.

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August 2008

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FSLR has been the industry leader for years, but can they maintain their advantages in the face of such fierce competition? All signs indicate that they indeed can. It has been common knowledge that FSLRs technology is about two years ahead of all competitors. Many of the CIGS startups are at the same stage that FSLR was in 2006. Theyre all operating in the test-plant phase before scaling up mass production.
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Cramer has been bullish on FSLR since the summer of last year when it was trading at $50. Ive been buying aggresively since it was at $33 and it now accounts for the majority of my invesment holdings. Cramer recently became so emphatic about buying FSLR that he went bearish on all other solar stocks, with the exception of AMAT, on the belief that FSLR would eat everyones lunch. So, according to Cramer, AMAT is positioned #2 in the solar industry. As a supplier of production
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Workshop on Magnetic Nanostructures on Surfaces GRAPHENE WEEK 2009 ESF-FWF Conference in Partnership with LFUI Press Release: Toshiba makes major advance in quantum computing New papers appearing in JNanoR - Journal of Nano Research Masdars $2 billion investment in thin-film PV manufacturing

machinery, they are not in direct competitors with numerous thin-film producers and dont have to worry about raising the heavy capital required for production. AMAT plans on selling $1.7 billion in thinfilm equipment by 2009. This is a staggering amout which surpasses even FSLR. At first, this seems like
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The State of the Thin-Film Photovoltaic Industry NanoTechNews - News in Nanoscience and Nanotechnology

very bad news for FSLR. When digging through the numbers, however, it may turn out to be quite the opposite. AMATs capex/watt is stated at $3/watt as opposed to FSLRs $1/watt. Sharps capex has been reported at approximately $2 billion/GW, or $2/watt. This may or may not be accurate, since Sharp is also considering purchasing AMAT product.

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Basically, $1.5 billion in AMAT equipment will have the annual production of $500 million in FSLR equipment. The fact that so many competitors are willing to pay triple for AMATs equipment shows the

incredible lead FSLR has on the rest of the field. Secondly, AMAT has stated a goal of getting
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manufacturing costs of the panels down to $1/watt by 2010. FSLR, by comparison, has a goal of approximately $.60/watt by 2010 according to their grid parity roadmap. As of the end of 2007, FSLRs manufacturing cost/watt was already at $1.12. Unless the dollar crashes further, which would slightly increase costs but greatly increase profits, they should break below $1/watt this year. Another indication of their two-year lead: reports are that 40% of the cost in manufacturing conventional solar panels comes from the silicon. At $1/watt, FSLRs manufacturing costs would rival conventional PV even if their silicon was free. Recent forecasts indicate further polysilicon shortages well into 2009.

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With $700 million in cash and the ability to raise billions more, its hard to imagine any of the smaller competitors chipping into FSLRs two-year lead. The only thing that concerns me is whether bigger players with tens of billions in capital to invest, such as GE (GE) or BP (BP), get into the thin-film game. At their current pace of growth, FSLRs lead may be insurmoutable in a few years when grid parity is
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acheived. With a three year backlog in product and a 30% operating margin, I feel FSLR has been too conservative in its growth plans. During their secondary offering last July, they diluted shares outstanding by 10% in order to essentially triple output by 2009. I had expected them to announce another stock offering and at least four new 160 MW plants in the first half of this year. This is in line with analyst expectations, judging by 2010 earnings estimates which top $8/share. Theres still a chance this might be announced upon earnings next month. The first to reach grid parity will see such explosive growth that their competitors will probably be relugated to also-ran status. In the solar arena, grid parity will be the same sort of monopolistic turning point which allowed Intel (INTC) and Microsoft (MSFT) to crush its competition in the late 80s/early 90s. Energy, a $5 trillion annual industry worldwide, is potentially even more rewarding.

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Source: Andrew Ling, http://seekingalpha.com/article/72029-the-state-of-the-thin-film-photovoltaicindustry

~ by vascoteixeira on August 25, 2008.

Posted in industry, investments, nanomaterials, thin films Tags: solar energy, thin films, nanomaterials, industry, solar cells, investments

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The State of the Thin-Film Photovoltaic Industry NanoTechNews - News in Nanoscience and Nanotechnology

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