Lux Researchs latest report, Turning Lemons into Lemonade: Opportunities in the Turbulent Photovoltaic Equipment Market, has examined the opportunities present for the currently beleaguered photovoltaic equipment manufacturers, which are suffering from significant industry overcapacity.
As Lux Research points out, "Production equipment is the backbone of the PV industry." However, suppliers have seen sales dwindling and margins tightening on the back of manufacturers canceled or postponed capacity expansion plans.
Report author Fatima Toor says that despite low 2012 global capacity utilization rates 55% for crystalline silicon (x-Si) module production; 70% for cadmium telluride (CdTe); and 80% for copper indium gallium (di)selenide (CIGS) there are a number of opportunities for photovoltaic equipment manufacturers to stay afloat.
Product differentiation is the key continues Toor, who believes manufacturers of polysilicon, wafers, cells and modules with idle capacities should be considering equipment upgrades, in order to differentiate from the competition.
"Those that sit idle while their equipment idles are sealing their fate," she states, adding, "These upgrades will enable long-term survival of the key PV industry manufacturers since they will be able to differentiate their products from standard offerings."
Equipment opportunities
Specifically, the report says next generation photovoltaic technologies are presenting a number of new prospects to equipment manufacturers in the form of equipment upgrades in the near term and capacity expansions in the long term. Such next generation technologies include:
- Quasi-monocrystalline silicon (qc-Si) ingot growth, which has the potential to provide "significant benefit" to manufacturers, due to the minor production changes involved. "The qc-Si ingot growth enables square c-Si wafers instead of standard pseudo square and reduces production costs of c-Si wafers by 40%," writes Toor.
- CIGS and CdTe thin film. Innovations in production equipment will help to attain both higher efficiencies and lower production costs. CIGS module production is said to be the most diversified in terms of manufacturing techniques. Toor adds, "A high degree of automation is CIGSs biggest asset, as well as its biggest challenge," and that "utilizing off-the-shelf equipment will allow CIGS companies to reach scale."
- The large-scale commercialization of cells and modules employing new material stacks, like epitaxial silicon, copper zinc tin sulfide (CZTS) and gallium arsenide (GaAs), which are said to be in need of equipment innovation. "These technologies use a combination of standard and new PV production equipment, providing an opportunity for equipment manufacturers," states Toor. She adds that CZTS may become the next step for CIGS manufacturers.
- Monocrystalline silicon (c-Si) ingot growth using Czochralski (CZ). Equipment improvements for this technology are said to be "glaringly obvious" in terms of higher efficiencies and reduced costs. The process is currently "too costly," says Toor, and "wafer slicing wastes too much silicon, standard cell designs lose 10% to 12% of absolute efficiency from their highest efficiency potential and module manufacturing remains unnecessarily labor intensive."
- Cells using such high efficiency technology as heterojunction with intrinsic (HIT), passivated emitter rear cell (PERC), selective emitter (SE), interdigitated back contact (IBC) and metal wrap through (MWT). This segment is said to represent between 60 to 70% of new sales. Regarding PERC and IBC technologies, Toor says they benefit from aluminum oxide (Al2O3)- based passivation. Meanwhile, SE cell designs are said to hinge on ink printing or ion implantation.
The report did not cover amorphous silicon (a-Si) as Toor believes its market share will decrease in the face of higher efficiencies and improved lifetimes of other thin film technologies.
Geographical dominance
Germany is still leading the photovoltaic production equipment market, with half of the top 10 suppliers headquartered there. While Asia, and predominantly China, is home to 43% of the 493 equipment companies surveyed for the Lux Research report, they reap "significantly" lower revenues compared to the big German companies, which comprise 20%. The U.S., in comparison, is said to house just two of the top 10 photovoltaic equipment manufacturers. Its strength is said to lie in R&D, and thin film.
Toor says that Germanys market position is starting to slip, due to cheaper offerings elsewhere. "With Chinese companies offering incumbent equipment technologies for cheaper, it will be key for German companies to focus on innovation rather than try to compete on low price so that they can differentiate their equipment offerings," she advises.
The same is true for Europe, which is said to represent the lions share of specialized equipment manufacturing, versus Asia, which is said to lead the way in "easy to replicate" equipment. "Asian equipment manufacturing companies are poised to take over the market of PV production equipment in the areas of polysilicon and ingot production, wet chemistry, thermal diffusion, coating deposition, soldering, and glass processing," continues Toor.
There may be opportunities for equipment manufacturers in emerging markets, including India, South America and the Middle East. Already, reports Lux Research, companies like Spire and Meyer Burger have delivered module production equipment to Brazil, Chile and India. "Business development teams within equipment manufacturers should look to these geographies now while the sales function should refresh their passports or start scouting for local talent to position for growth," notes Toor.
The top 10 equipment manufacturers are: Applied Materials (U.S.), GT Advanced Technologies (U.S.), NPC Incorporated (Japan), ULVAC (Japan), Meyer Burger/Roth & Rau (Switzerland/Germany), Schmid (Germany), RENA (Germany), Manz (Germany), Centrotherm (Germany), and CETC-48 (China).
Key conclusions
Overall, Toor concludes that:
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- Siemens production will remain the choice method for the polysilicon industry. The company currently holds an 88% market share;
- Differentiation is key to survival;
- Cheaper alternatives are needed to C-Si ingot growth;
- To avoid market elimination, wafer manufacturing techniques must be optimized; and
- Equipment and material alternatives are required for CIGS and CdTe production.
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