Rising Sun

The aggregate market valuation of these 28 solar products manufacturers in last year was $118 billion. Investors have been snapping up stocks of solar companies from around the world.

Company/Country	Market Capitalization ($U.S. bil)
REC/Norway	$17.40
ORKLA/Norway	16.7
MEMC/US	12.4
WACKER/Germany	9.9
Q-CELLS/Germany	9.5
FIRST SOLAR/US	7.3
SUNPOWER/US	6
SUNTECH/China	5.8
SOLARWORLD/Germany	5.5
LDK/China	4.5
TOKUYAMA/Japan	4
DC CHEMICAL/South Korea	3
CONERGY/Germany	2.6
YINGLI/China	2
MOTECH/Taiwan	1.8
JA/China	1.5
TRINA/China	1.4
ECD/US	1.2
ERSOL/Germany	0.9
EVERGREEN/US	0.9
RENESOLA/China	0.7
E-TON/Taiwan	0.7
SOLON/Germany	0.7
SOLARFUN/China	0.5
SOLAR MILLENNIUM/Germany	0.5
ATS/Canada	0.4
CHINA SUNERGY/China	0.3
CSI/China	0.2
TOTAL	118.1

 

Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy.

 

Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy. Sources: Bloomberg Financial Markets; FT Interactive, Reuters Fundamentals and Worldscope via FactSet Research Systems; U.S. Department of Energy.

Solar power is still more expensive than fossil fuel generated electricity. But the gap is closing. The rule of thumb in the solar business: Every time the volume of solar cells doubles, its cost drops by 20%. Governments in Germany and Japan have consequently offered generous subsidies to local consumers and companies who invest in building solar power. Those subsidies have sparked booms.

According to the International Energy Agency, by the end of 2005 Germany led the world with the most installed photovoltaic systems (1.43 million kilowatts) followed by Japan (1.42 million kilowatts). The U.S. was a distant third (480,000 kilowatts)..)

The race is on to find a way to make solar grow up so that it can compete, dollar-per-watt, against any fuel on the planet.

The long-term forecast? Bright, with big patches of innovation ahead.

Michael Splinter was raised on the most powerful incantation in the tech industry, Moore’s Law, which roughly holds that computing power per dollar doubles every two years. During his 20 years at Intel. Splinter saw this law deliver exponentially better products and profits.

Now, as chief executive of Applied Materials, the biggest pick-and-shovel maker for the semiconductor and flat-panel display industries, Splinter, 56, wants to forge a sunny-side-up version of Moore’s Law. “Can we, with our customers, drive down the cost per watt of photovoltaics?” Splinter asks. “We’ve got to.”

Currently photovoltaics cost $2 to $3 per watt to build, down from $22 in 1980. Splinter thinks he can help drive the cost of solar to under $1 a watt. At that price, even after adding a dollar or two per watt of installation costs, solar power would rival grid-delivered fossil fuel power. (Bear in mind that watts here are measured at midday peaks. Even in California an installation rated at 1 kilowatt will produce only 1,600 kwh a year.)

Ambitious enough to be on Intel’s shortlist of future chief executives, Splinter leaped at the chance to run his own show at Applied in 2003. The growth in solar captured Splinter’s attention early on. Slowdowns at computer chip makers, who buy nearly all of Applied’s equipment, hit hard. The $9.2 billion (revenue) company has a price-to-earnings ratio below that of Kraft Foods The solar cell manufacturing industry for years made do with hand-me-down tools from the computer chip industry. But last year solar cell manufacturers bought more silicon wafers than chipmakers–and solar’s demand for wafers is growing three times as fast as demand from the rest of the electronics industry. Applied will likely hit $400 million in contracts for solar manufacturing gear by year-end; Splinter wants $1 billion by 2009.

Applied intends to trim the industry’s costs in four ways: boost solar factory throughput, improve the productivity of every tool, cut materials costs by using photovoltaic materials more sparingly and raise solar cell efficiencies. Splinter has already spent close to $1 billion to hire hundreds of people for his solar group, buy two small thin-film equipment makers and invest in a silicon wafer firm in California.

Charles Gay, who is leading Applied’s solar business, obsesses about speed. Computer chips are made in batches; solar cells are produced continuously. Coating tools once used to put films on sheets of glass are being tweaked so they can also rapidly coat thousands of individual wafers. Thin-film solar makers want to work with the 64-square-foot sheets of glass used by Applied’s LCD customers, but solar glass is four times as thick as display glass. So Applied is strengthening the arms of the robots it sells to hold glass sheets. “We’d like to move one ton of silicon wafers through a line in an hour,” Gay says. At that speed one factory could produce a gigawatt of solar modules per year, ten times as much as the U.S. is now installing. “This is like the 1970s in the computer chip business,” says Splinter, flashing a 200-watt smile.

 

Solar power is the ultimate alchemy

Over the next 25 years solar is expected to be the fastest-growing alternative source of electric energy. But it is complex, expensive magic and has burned many entrepreneurs and investors in the past. With clean power in great demand, and fresh capital coming in from governments and capital markets, the solar economy is again humming with new materials, ideas, designs and business plans. Solar now meets only a 0.1% sliver of our electricity needs, but opportunities for growth and invention are bright.

Enthusiasts like to point out that an hour of sunlight packs enough energy to power the entire world for a day. Or this: If you could cover an area about the size of Massachusetts in the Southwest U.S. entirely with solar cells, you could generate enough electricity to quench America’s need for electric power.

But building solar cells, the devices that convert photons from the sun into streams of electrons and electricity, is complex, expensive magic to pull off–and has burned many entrepreneurs and investors in the past.

Today, solar energy contributes about a tenth of a percent (0.1%) of the U.S.’s electricity needs. Both Germany and Japan, where government have provided more subsidies, use a larger percentage of solar power.

Among alternative energies, solar energy is a child starlet: alluringly clean, endlessly promising-yet petulantly expensive and hard to manage. For investors, solar energy stocks have been an astonishing story this year: The aggregate market value of a group of 28 solar companies now tops $118 billion.

On average, the value of those companies has risen almost by half since January. Driving those market valuations is the expectation of more growth ahead: Analysts both in industry and in the government anticipate that solar will be the fastest-growing alternative source of electric power over the next 25 years.

How will it happen?

This year’s E-gang, our ninth annual look at technology innovation, offers a snapshot of some of the inventions and entrepreneurs that are part of this solar boom. The work starts with tool makers–those companies that are building and refining the equipment needed to make solar cells.

Then there are inventors, who keep trying to squeeze more power from every ray of sunlight. Manufacturers of different versions of solar power vie to have their approach designated as the most promising. There are plenty of contestants: the traditional approach of building crystalline solar cells, pairs relatively higher efficiency with higher costs.

There are thin-films of solar materials, some made from exotic combinations of materials, others still relying on silicon. Then there is one of the oldest ways of getting power out from the sun: solar “thermal” installations, which absorb the sun’s energy, transforming it into heat so it can boil water and run a turbine.

Finally there are those who innovate through their business models and strategic approach–the installers turned financiers, who help customers juggle the costs and risks of investing in solar. None have had more experience in this than Germany’s solar installers, who are cashing in on their government’s generous subsidies for solar power. The stock market has also been a boon to many Chinese companies, which have jumped into the business of building everything from solar wafers to finished panels.

Solar Options in India

In India, the prospect of solar energy is sunny but without being too hot. Today, the country generates almost 1,748 MW power through solar energy. That’s a pittance when compared to India’s total demand of almost 1.3 lakh MW every year. However, companies with investments in the technology believe that the potential for solar energy is much larger than the above share.

“In the next five years, I see solar technology supplying a major part of the world’s energy requirement,” says Ratul Puri, Executive Director, Moser Baer. Mr Puri wouldn’t believe otherwise. In the last couple of years, he has invested almost Rs 161 crore in the manufacturing of photovoltaic solar cells and panels.

The company also has plans of investing another Rs 330 crore for setting up a silicon photovoltaic cell manufacturing plant for which it has tied up with Applied Materials. Solar Semiconductor, another photovoltaic manufacturing entity has lined up an investment of $40 million to set up two production units in Andhra Pradesh.

Globally, the demand for solar technology was almost $2 billion in 2003, which has increased to $15 billion in 2006 and is expected to reach $100 billion by 2015.

However in India, the growth story has been limited to either villages with no distribution networks or the government’s initiative of using clean energy for public lighting systems. Over the last three years, almost 3,000 villages have tapped into solar technology to fulfill their basic needs of lighting, heating, cooking and entertainment.

Almost 55,000 street lighting systems in the country are also being powered on solar energy. But, commercial users are not excited. That’s because price matters. And it’s probably the only deterring factor that puts solar energy late in the contention list of renewable sources that India can tap into in the wake of over-the-top crude oil prices. Today, the cost of producing a single unit of solar energy from photovoltaic cells ranges from Rs 15 to Rs 30 as compared to Rs 2 to Rs 6 per unit for thermal energy.

In fact, the capital cost would be to the tune of almost Rs 25 crore to set up a photovoltaic plant that generates 1 MW electricity. This very high and precisely the reason that makes it unattractive for commercial uses for now. “Solar technology has still not reached a stage where it can be used for economic solutions,” says P Ramesh, managing director, Energy Division, Feedback Ventures. “While the establishment cost is high, the cells also need to be replaced every 7 to 8 years. In a commercial situation, that makes the technology hugely inappropriate,” he adds.

This is exactly where innovation can play a big role. “Photovoltaic doesn’t seem to be making the cut and my hopes are on another solar technology, Concentrate Solar Power (CSP). Energy is generated using mirrors to focus sunlight, producing heat. There is no need for silicon and this is almost 50% cheaper,” says G M Pillai, director general, World Institute of Sustainable Energy (WISE).

Already being used in the US, the technology is still in the pilot project stage in India. Mr Puri, though, believes that it’s just a matter of time when solar technology becomes competitive. “While the costs of other sources have been increasing, historically, the cost of solar technology has been declining at a rate of almost 3-4% per annum. In fact, over the next five years, I believe the costs will come down by 10%,” he says. Another positive is that solar technology is a very clean energy, and since there is so much of sun that India gets it is quite possible that Indians will adopt solar in a big way.

 

Polysilicon Based Solar Module production

The Polysilicon Based Solar Module production process involves four steps in chain event:

• Use the raw material sand (SiO2) to produce a very pure form of silicon called polysilicon.
• Use polysilicon to produce wafers and ingots.
• Use wafers and ingots to produce solar cells.
• Use solar cells to produce solar modules.

Manufacturers are yet to immerse in vertically integrating the whole process. There are a few getting their feet wet – Trina Solar (TSL), Yingli Green (YGE), Suntech Power (STP) and Canadian Solar (CSIQ).

• Trina produces solar modules from polysilicon and has plans in the offing for very large scale polysilicon manufacturing.
• Yingli also has business plans along similar lines. They are yet to announce any plans to produce polysilicon.
• Suntech is focused on the wafer to module business currently.
• Candian Solar started out focused solely on producing solar modules from cells but since then has expanded to wafer to solar cell production line and has announced plans for a polysilicon to wafer and ingot line.

The table below compares these 4 manufacturers:

Manufacturer	SunTech Power	Trina Solar	Yingli Green	Canadian Solar
Level of Vertical Integration	Wafer to Module 100%	100% Integrated Ingot &  wafer, Cell and module business	100% Integrated Ingot &  wafer, Cell and module business	Cell Capacity at 25% of Module. No Ingot and Wafer Production Capacity
Module Capacity Y 2007	540MW	150MW	200 MW	400 MW
Module Capacity 2008 (Projected)	1 GW	350 MW	400 MW	400 MW

Suntech has the edge in most aspects with the closest rival Yingli lagging well below 50% in terms of integrated capacity. On the raw material procurement side, Suntech has procured most of its needs through long-term supply contracts. Yingli may be close too although the exact figures remain unannounced. Trina is at 70% for 2008 and may encounter high spot pricing to procure the rest of the raw material. Canadian Solar claims to have procured 90% of the raw material. Raw materials needs are different for each company. For Canadian Solar it is a mixture of polysilicon, wafer/ingots, and solar cells, for Yingli and Trina it is just polysilicon and for Suntech it is wafers.

Since the solar modules produced by these manufacturers are technically similar, the difference in profitability is largely determined by the raw material acquisition costs and efficiency in the production supply chain. Vertical integration along with raw material acquisition through long-term supply contracts is the solution the bigger manufacturers are opting for. The downside to long-term supply contracts is the risk of raw material prices falling as supply approaches or exceeds demand.

There is a couple of business risks associated with the whole group:

• Competition from pure-play solar manufacturers.
• Competition from solar manufacturers that use a material other than polysilicon as the base raw material.

Pure-play solar manufacturers have to their advantage the ability to concentrate on one step thereby realizing better efficiency and ultimately better profit margins. Such solar companies include MEMC Electronic Materials and LDK Solar in the polysilicon and wafer production business and JA Solar Holdings and China Sunergy in the cell to module business. Eventually, some of these manufacturers may become part of vertically integrated businesses.

Competition using raw materials that are alternatives to polysilicon comes from manufacturers such as First Solar, which uses cadmium telluride (CdTe) and Ascent Solar, which uses copper-indium-gallium-diselenide [CIGS]. There are also a number of other technologies that are in early stages of development. First Solar has profit margins well beyond the polysilicon based producers because of lower raw material and production costs. The projections are for the company to grow at an even faster rate keeping cost advantages intact. However this is a moot point. The real challenge for the polysilicon manufacturers is to reduce costs in the production chain swiftly to compete with all such technologies successfully. The biggest advantage that polysilicon manufacturers have is the abundant availability of raw material at the very basic level – silica (found as sand or quartz)

Canadian Solar and Trina Solar have the biggest upside, given the low forward P/E. An announcement regarding procurement of the remaining raw material requirements at reasonable prices for 2008 should allow Trina Solar to reduce the gap in valuation. Canadian Solar is projected to have very low net profit margins. Skepticism surrounding the net profit margins the company will realize going forward is a major reason for the valuation gap.

Myths about Solar Energy

“Solar energy only works in the daytime, and it can’t provide the reliable power we need.”

Solar thermal power plants can store energy during daylight hours and generate power when it’s needed. The Solar power plants collect the sun’s energy as heat; Ausra is developing thermal energy storage systems which can store enough heat to run the power plant for up to 20 hours during dark or cloudy periods.

 

“Solar energy is too expensive for mass adoption.”
While PV solar panels are still coming down in cost, they are still well above the costs of utility-scale generation. Solar thermal power plants such as Ausra’s generate electricity by driving steam turbines with sunshine. Ausra’s solar concentrators boil water with focused sunlight, and produce electricity at prices directly competitive with gas- and coal-fired electric power.

 

“We would have to cover too much land with solar power plants.”
Solar is one the most land-efficient sources of clean power we have, using a fraction of the area needed by hydro or wind projects of comparable output. All of America’s needs for electric power – the entire US grid, night and day – can be generated with Ausra’s current technology using a square parcel of land 92 miles on a side. For comparison, this is less than 1% of America’s deserts, less land than currently in use in the U.S. for coal mines, and a tiny fraction of the land currently in agricultural use.

 

“Solar is too small to help with climate change.”
Today the electric power industry is growing in the U.S. and worldwide while facing unprecedented changes in the regulatory environment. It has become clear that to preserve a climate similar to today’s, most human emissions of carbon dioxide will need to be eliminated by about 2050. Studies have shown that solar thermal power can, at very reasonable cost, eventually provide the majority of American electric power. To impact global climate change and American dependence on energy imports, renewables will need to replace many of our existing power sources. One coal-fired power plant emits as much CO2 as 1 million cars, so replacing our electricity generation with renewables will have the greatest impact on climate change.

The future of solar is nanotech: Nanogram, Sunflake and other upcoming technologies

Nanotechnoloy firm NanoGram, mainly for development of next-generation solar cells, it’s a good time to point out some up-and-coming technologies that work on very small scales to make photovoltaic cells more efficient.

NanoGram has already had several commercial successes, including inventions in both electronics and medicine. However, the company has of late turned its sights on boosting the efficiency of solar cells.

The company is working on ultra-thin crystalline silicon which it says will reduce the cost of silicon-based solar cells to below $1 per watt hour, a price point that is generally considered a breakthrough.

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SunFlake A/S, a European company, makes the same claim of being able to manufacture a low-cost cell with about 30 percent efficiency, roughly double the efficiency of the average solar cell available today.

Headed by noted scientist Martin Aagesen, the company plans to make use of a type of nanowire discovered by Aagesen that he calls “nanoflakes.” Blessed with a perfect crystalline structure, nanoflakes are capable of absorbing nearly all light directed at them, according to the company.

By growing its nanowires into a low-grade silicon substrate, SunFlake will reduce the need for large amounts of high-quality polysilicon when making cells. However, it has yet to announce plans to commercially manufacture cells.

Another methods on the horizon is the use of metal oxide nanoparticals in cells. Dr. Jin Zhang of the University of California, Santa Cruz, plans to use a combination of nanoparticles and quantum dots (using nano-crystals, as SunFlake does) to make a highly efficient solar cell.

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(Nanotechnology, by the way, refers the field of science that works at the atomic and molecular scale, roughly between 1 to 100 nanometers. Elements and compounds take on different characteristics when they are so tiny, and studying them is leading to new users and inventions, as we’re seeing here.)

A team led by Zhang and including other researchers from China and Mexico recently tested a prototype cell using a nanocomposite material of their own devising. The cell performed even better than the researchers expected.

“We’re manipulating the energy levels of the nanocomposite material so the electrons can work more efficiently for electricity generation,” Zhang told ScienceDaily. His research is currently supported by various governmental groups from the three countries involved.

One note when considering these up-and-coming technologies: It will probably be about five years before they hit the market in force. However, as new technologies become more common, existing cost balances between different solar technologies, like polysilicon and CIGS cells, will likely be upset.

 

SUN Power-Advantages and Disadvantages

There are many advantages worth considering when it comes to solar energy and everything that it offers. There are many advantages that solar energy has over oil energy. Not only does solar energy benefit your pocketbook, but it also benefits the environment as well. However, there are two sides to everything, and there is a list of solar power disadvantages to accompany the list of advantages.

Advantage: Solar energy is a completely renewable resource. This means that even when we cannot make use of the sun’s power because of nighttime or cloudy and stormy days, we can always rely on the sun showing up the very next day as a constant and consistent power source.

Disadvantage: The Solar Cells and Solar Panels that are needed to harness solar energy tend to be very expensive when you first purchase them.

Advantage: Oil, which is what most people currently use to power their homes, is not a renewable resource. This means that as soon as the oil is gone, it is gone forever and we will no longer have power or energy.

Disadvantage: Solar power cannot be harnessed during a storm, on a cloudy day or at night. This limits how much power can be saved for future days. Some days you may still need to rely on oil to power your home.

Advantage: Solar cells make absolutely no noise at all. They do not make a single peep while extracting useful energy from the sun. On the other hand, the giant machines utilized for pumping oil are extremely noisy and therefore very impractical.

Advantage: Solar energy creates absolutely no pollution. This is perhaps the most important advantage that makes solar energy so much more practical than oil. Oil burning releases harmful greenhouses gases, carcinogens and carbon dioxide into our precious air.

Advantage: Very little maintenance is required to keep solar cells running. There are no moving parts in a solar cell, which makes it impossible to really hurt them. Solar cells tend to last a good long time with only an annual cleaning to worry about.

Advantage: Solar panels and solar lighting may seem quite expensive when you first purchase it, but in the long run you will find yourself saving quite a great deal of money. After all, it does not cost anything to harness the power of the sun. Unfortunately, paying for oil is an expensive prospect and the cost is still rising consistently. Why pay for expensive energy when you can harness it freely?

Advantage: Solar powered panels and products are typically extremely easy to install. Wires, cords and power sources are not needed at all, making this an easy prospect to employ.

Advantage: Solar power technology is improving consistently over time, as people begin to understand all of the benefits offered by this incredible technology. As our oil reserves decline, it is important for us to turn to alternative sources for energy.

Photovoltaic: Technology of Next Millennium

Introduction 

Photovoltaic, or PV for short, is a solar power technology that uses solar cells or solar photovoltaic arrays to convert light directly into electricity with no emission of dangerous gases and with least amount of industrials waste. The first few years of 21^st century have witnessed a large development in the Photovoltaic energy generation and utilization. Due to variety of reasons including the concerns of deteriorating earth atmosphere and global warming, the PV technology has seen large increase in solar panel manufacturing and deployment world over, particularly in Japan and Germany. About 30-40% growth in the sector in last few years is a great incentive for investment. Entrepreneurs, venture capitalists and big industrial houses in the country are coming forward to establish industries in this area. The technology is expected to make a big splash in the Indian industrial world and solve the power crisis being faced in many states.

The main issue with the technology is its affordability. Intense R&D efforts are being made world over to find new materials, processes, and device structures to increase power conversion efficiency of basic unit so as to bring cost of solar generated power equivalent to that of power obtained from conventional sources.

Technology

The photovoltaic effect was first observed in 1839 by Alexandre-Edmond Becquerel. The first modern solar cell was patented by Russel Ohl in 1946. In 1954 Bell Laboratories found that silicon doped with certain impurities was very sensitive to light. This signaled the start of the modern age of solar power technology. The first practical application of photovoltaic was to power orbiting satellites and other spacecraft and pocket calculators, but today, the majority of photovoltaic modules are used for terrestrial grid connected power generations. There is a smaller market for off grid power for remote dwellings, roadside lamp posts, emergency telephones, remote sensing, and cathodic protection of pipelines. Based on different technologies and materials, the solar cells can be grouped into 4 different generations:

First generation photovoltaic cell: The cell consists of a large-area, single-crystal, single layer p-n junction diode, capable of generating usable electrical energy from light sources with the wavelengths of sunlight. The cells are typically made using a diffusion process with silicon wafers. These silicon wafer-based solar cells are the dominant technology in the commercial production of solar cells, accounting for more than 86% of the terrestrial solar cell market.

Second generation photovoltaic cell: These cells are based on the use of thin epitaxial deposits of semiconductors on lattice-matched wafers. There are two classes of epitaxial photovoltaic – space and terrestrial. Space cells typically have higher AM0 efficiencies (28-30%) in production, but have a higher cost per watt. Their “thin-film” cousins have been developed using lower-cost processes, but have lower AM0 efficiencies (7-9%) in production. There are currently a number of technologies/semiconductor materials under investigation or in mass production. Examples include amorphous silicon, polycrystalline silicon, micro-crystalline silicon, cadmium telluride, copper indium selenide/sulfide. An advantage of thin-film technology theoretically results in reduced mass so it allows fitting panels on light or flexible materials, even on textiles. Second generation solar cells now comprise a small segment of the terrestrial photovoltaic market, and approximately 90% of the space market.

Third-generation photovoltaic cell: They are proposed to be very different from the previous semiconductor devices as they do not rely on a traditional p-n junction to separate photo-generated charge carriers. For space applications quantum well devices (quantum dots, quantum ropes, etc.) and devices incorporating carbon nanotubes are being studied – with a potential up to 45% AM0 production efficiency. For terrestrial applications, these new devices include photoelectrochemical cells, polymer solar cells, nano-crystal solar cells, dye-sensitized solar cells and are still in the research phase.

Fourth Generation Photovoltaic cell: This hypothetical generation of solar cells may consist of composite photovoltaic technology, in which polymers with nano-particles can be mixed together to make a single multi-spectrum layer. The multi-spectrum layers can be stacked to make multi-spectrum solar cells more efficient and cheaper.

Out of the four generations listed above, first two have been commercialized. Bulk of the photovoltaic modules deployed so far consist of crystalline silicon. The efficiency of crystalline silicon modules varies from 17-22%, though theoretical limit is around 29%. Using these modules, large solar farms connected to grid, stand alone power stations to electrify villages and small localities have been established. The silicon modules have also been integrated to house hold and commercial buildings to provide the main or alternate electrical energy.

Efficiency of a solar cell depends on its ability to absorb solar radiation. Larger the fraction of solar radiation it absorbs, larger will be its efficiency and larger power it will generate. Taking this into account, multi-junction solar cells have been fabricated. The efficiency of triple junction, state of the art solar cell of 40.7%  has been recorded by Spectrolab, USA. The R&D work to improve efficiency further is going on by using 4, 5 or 6 junction solar cells. Using these high efficiency solar cells and focusing solar light to 500X, high efficiency solar concentrator has been devised to give electrical power of few KWp, enough to light up a household of small family. The use of light reflector have reduced the actual device size of the device, thus reducing the usage and price of much costlier semiconductor materials.

The efficiency of basic solar cell unit has further been increased to 42.8% using an altogether novel concept. The credit goes to a group of scientists under the leadership of University of Delaware, USA. The cells achieve this by splitting the incoming light into high, low and medium energy chunks. The light is then directed to different state of the art devices optimized to respective chunks of radiation leading to higher efficiency. The concept is yet to be commercialized.

The last two generations of solar cells are still at research and development stage. It will take some more years to understand the underlying science and technology to bring them to commercial level.

Polysilicon prices expected to stabilise in the near term

Demand for silicon used to make solar cells is likely to rise from 41,000 tonnes in 2006 to 120,000 tonnes in 2010E. Although polysilicon prices have risen the world over, causing concerns on cell/ module makers’  profitability, we believe these prices are due for a correction by Q1/Q2CY09 as more capacities come on stream.

What drives cost reduction for solar energy?

While polysilicon prices are a key cost driver, cell efficiency as well as wafer thickness play important roles in driving costs down. Currently, wafer thickness ranges between 200 nm and 300 nm; it is expected to come down with a theoretical limit of 130 nm, after which wafer becomes transparent and difficult to handle.

A 70 micron decrease in thickness, leads to a 10-15% increase in wafer output or 10-15% cost reduction. A 1% increase in cell efficiency leads to a ~7% cost reduction at all levels in the value chain. Economies of scale also play an important role in cost reduction. Other levers for cost reduction include increase in throughput, reduced breakages, increased proportion of A cells, and increase in uptimes. With a robust 40% demand CAGR expected over CY06-10E, cell capacities are also growing at a rapid pace.

Solar PV: The sun is rising on the global power scenario

From a low base (<1% of global energy consumption, 2.5 GW of sales in CY06), solar photovoltaic over green-house emissions, decreasing cost of solar energy, and increasing government support  are the major growth drivers.

 

Demand side perspective: Opportunity for solar power

Solar constitutes a very small fraction (<1%) of the global electricity production, as of now. However,it has been growing rapidly on a low base, driven by cost reductions, favorable government policies and subsidies and also due to its being an environment-friendly source of energy.

The global solar industry is poised to expand from ~USD 11.7 bn in CY06 to >USD 52 bn in CY11E (in terms of solar systems sold). 

The cost of solar electricity (at > 25 cents/ Kwh) continues to be significantly higher than those of conventional electricity (<10 cents/ Kwh) and this has limited market growth historically.

 

Although production from solar systems varies according to the time of the day, peak output coincides with peak electricity demand. As peak electricity tariffs tend to be substantially higher than normal and comparable to solar power costs, PV systems are becoming economically more viable and hence, can be used as sources of peak power.

Supply side perspective

Technology is the key in this industry because it is a necessary component to create cost reductions. Within the supply chain in photovoltaic, the cell step affords a degree of differentiation, which drives cost reduction. The efficiency and production costs of solar cells are crucial for the efficiency of the entire solar module.

As the industry evolves, multiple players are expected to put up capacities in different stages of the solar value chain. As cell and module making stages require fewer investments and are quicker to ramp up, it is not surprising that capacity has built up more rapidly in these stages, which has resulted in raw material (silicon)  shortage. 

Silicon capacities take a long time to scale up as the manufacturing process is technologically cumbersome and requires huge scale for economic viability.