Ed Gunther
Has a permanent swerve or shift downward of the PV (Photovoltaic) Learning Curve been caused by PV industry overcapacity, normalized polysilicon prices, and the aggressive SunShot goals?
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| From SunShot Grand Challenge: The SunShot Swerve |
On the second day of the SunShot Grand Challenge Summit and Technology Forum, SunPower Corporation (NASDAQ:SPWR) President Emeritus Dr. Richard Swanson presented “The SunShot Swerve” providing his perspectives on where the PV industry is today and how SunShot has influenced the industry’s direction.
After explaining the book that motivated the title, Dr. Swanson said:
What I have come to believe is we have a modern version of that in the SunShot program where so much intellect has come together that we will actually change the future in a positive way.
In a transformational rethink of solar strategy, the SunShot Initiative set aggressive goals for module and systems costs and elevated the importance of reducing soft costs and the grid integration of non-dispatchable solar resources to the same level as solar technology cost reductions and innovation.
Revisiting the PV Learning Curve
The SunShot goal of $1.00 per Watt ($/W) installed utility scale PV systems and $0.50 per Watt modules was greeted with skepticism by the PV industry and looked impossible relative to the historical PV Learning Curve established over some 35 years predicting a twenty percent (20%) reduction in module manufacturing cost with every doubling of global cumulative installations. The PV Learning Curve was once again validated when polysilicon shortages pushed modules prices higher in 2005 but returned to the trend line in 2009.
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| From SunShot Grand Challenge: The SunShot Swerve |
Recent PV industry developments have challenged the mechanical evolution of the learning curve. In 2011, module prices dipped below the learning curve at $1.25/W followed by IHS iSuppli’s prediction of crystalline silicon solar module prices hitting $1 per Watt by the first quarter of 2012. The PV industry asked: “Where could they have gotten that aggressive a goal? Nothing like that could ever possibly happen.” I too was skeptical of the later prediction at the time.
In fact, silicon module prices have dipped below $1/W in 2012 as a result of fierce competition in a period of significant manufacturing overcapacity and the return of polysilicon pricing to historical levels.
Furthermore, Yingli Green Energy Hold. Co. Ltd. (NYSE:YGE) and Trina Solar Limited (NYSE:TSL) have announced plans to achieve manufacturing costs of $0.70/W or less by the end of 2012. And bids for installing large scale PV plants are now in the $1.20 to $1.70 per Watt range.
Dr. Swanson said:
The learning curve has taken a jog very likely. There are many reasons for this, but I firmly believe that one of the reasons is the slap in the face that these audacious goals that came out of the SunShot program gave our community.
“The Swerve” is the only explanation for the shift of the PV Learning Curve along a path aligned with the SunShot goals.
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| From SunShot Grand Challenge: The SunShot Swerve |
The aggressive SunShot goals spurred innovation beyond the SunShot funded companies, and an NREL crystalline silicon (c-Si) roadmap in preparation has manufacturing costs of $0.60/W for modules “baked in”.
Dr. Swanson credits SunShot with accelerating SunPower’s roadmap to $1/W monocrystalline silicon back contact modules by one year to 4Q 2013.
Arranging the c-Si value chain from polysilicon to systems according to cost, the module and installed system portion now account for 59% of the cost: 21% for the module and 38% for the system. Of course, SunPower’s consistent strategy leveraging cell efficiency to reduce module and system costs dovetails with the observation.
After reviewing SunPower’s latest module with greater than 21% total area efficiency based on Gen 3 solar cells, Dr. Swanson said: “It will not be very long in the future before 20% will become the standard silicon solar cell.”
Looking at Future Trends in c-Si, Dr. Swanson highlighted kerfless wafers as standing out on the revolutionary side and mentioned SunPower’s investment in the Epi (epitaxial) based kerfless wafer company named Solexel.
By smashing the $1/W module price metric, c-Si has become a front running solar technology in the SunShot race with established scale advantages, a moving target of increasing efficiencies, and a proven technology for manufacturing investments and field installations.
Other perspectives
A week later at TechConnect World 2012 in Santa Clara, California USA, additional viewpoints were expressed on the PV Learning Curve.
E. I. Du Pont De Nemours And Co (NYSE:DD) Global Market & Product Planning Manager, Photovoltaic Encapsulants, Dr. Penny L. Perry said:
On a log scale module reductions have been virtually linear through the growth of the solar industry until 4Q 2011 when it dropped off well below the line.
Dr. Perry observed there was probably not a lot of room left for cost reductions in the material portion of modules. Efficiency improvements, increasing module reliability and durability, and reducing system cost, not just module costs, are the three keys to reducing the overall PV system LCOE (Levelized Cost of Energy). Extending module lifetimes beyond 25 years to 30 or 40 years while maintaining 90% power output was mentioned as a possible, achievable target to further reduce LCOE.
Applied Materials, Inc. (NASDAQ:AMAT) Energy and Environmental Solutions, Chief Marketing Officer & Managing Director, Business Development, Kevin Chen said:
What is interesting is that as we track recent quotations in the market, we are seeing that the price per watt is tracking below all of these trend lines. So the question is can the market sustain this?
Will we come out of this curve because of the oversupply situation or will we continue it, and the answer remains to be seen.
Mr. Chen’s takeaway was “the traditional trajectory of cost reduction is being accelerated” and increasing cell efficiency should be the focus for further reducing the cost per Watt.
However, critics argue the SunShot goals are harmful to the PV industry and the current pricing is unsustainable. These arguments will be confirmed if module pricing returns to the PV Learning Curve as the market shakeout and consolidation resolves itself over the coming quarters and years.
Meanwhile per “High efficiency grabs the headlines, but cost reduction remains the priority” by Finlay Colville in a Guest Blog at PV-Tech.org, the heralded improvements in silicon cell efficiency through advanced cell design will have to wait until “the leading candidates for non-silicon cost reduction have been exhausted” perhaps as late as 2014!
At the Applied Materials 2012 Investor & Analyst Meeting Webcast, the Breakout Session video, The Solar Roadmap: Continuing Cost Reduction, presented by Applied Solar President Charlie Gay, Ph.D., is quite informative regarding developments in crystalline silicon solar technology from an AMAT perspective and references one of Dr. Swanson’s Swerve slides. Per the AMAT “Benchmark Cell Evolutionary Sequence” slide, SunPow
er’s next step is evolutionary thinner wafers or a discontinuous move to kerfless wafer technology.
DISCLOSURE: No position in any of the stocks mentioned.
Edgar Gunther is a photovoltaic enthusiast who researches and pens the GUNTHER Portfolio under the Photovoltaic Blogger moniker. The GUNTHER Portfolio is an eclectic collection of niche Blog posts about solar photovoltaic technologies, companies, industry developments, and occasional energy politics sprinkled with insight, analysis, and irreverent commentary.
