Media attention and industry headlines have been dominated by the misfortunes of PV manufacturers and installers during 2012. However, other casualties of a turbulent year include the actual PV technologies used by the various manufacturers across the industry value-chain. Indeed, the performance criteria for solar cells and panels during 2012 has been so stringent that only the most mature and lowest-cost solutions will have survived by the year end.
This article discusses how the PV industry previously comprised of competing and prospective technologies has been streamlined significantly in the past 12 to 18 months. It also explains why this streamlining process has effectively ended the prospects of many PV technologies that were considered leading candidates just 2 to 3 years ago.
Finally, the prospects of European PV equipment suppliers are evaluated in the face of a new technological and competitive landscape. The article concludes by asking how European PV equipment suppliers can adapt to a prolonged period without any new order intake.
Legacy technology ‘roadmaps’ provided ample pickings
Until 2011, technologies proposed for PV manufacturing had enjoyed considerable inputs from academic circles, with PV research labs often taking center stage when the latest high-efficiency or thin film concepts were unveiled. Indeed, investments often took the R&D results as a cue for funding cycles, with many examples of highly ambitious mass production ramp-ups in evidence over the past few years.
With the PV industry having reached an end-market demand level at 30 GW per annum by the end of 2012 and module factory-gate pricing in the US$0.5-0.7/W range it seems remarkable in hindsight that start-up PV manufacturers were being funded to kit out 100 MW fabs when there was nothing more than R&D results to support the technology being funded.
And we are not simply referring to a scattering of fabs here and there. Well over 50 (possibly up to 100) PV manufacturers received funding up to and over US$100 million, to scale concepts that had previously been championed only in academic research labs.
The majority of these manufacturers were also scaling up new capacity with highly questionable routes to market. Many were simply using the legacy PV industry model that customers would emerge once product had been made. Some others were working off framework downstream supply contracts whose acceptance criteria were often highly ambitious and would subsequently render the supply deals invalid and worthless well before any panels had been made.
Inevitably, when looking at PV entrants in Europe and North America, new fabs were dominated by thin film approaches, and this may have provided a certain degree of negativity on any generic thin film approach. However, almost in every case, the sentiments were well founded: PV had a roadmap to follow and that meant moving to thin film technologies or introducing high-efficiency processes within the standard c-Si fabs that were supplying much of the market demand.
Thin film approaches also overlapped with the skills at hand in each of Europe and North America across their PV-specific research laboratories, and hungry administrators wishing to accelerate basic R&D into commercial reality. But was there really a PV roadmap of any type, or was there just a collection of ideas coming out of academia that happened to overlap with investment frenzy and global cleantech optimism?
Such was the excitement around PV manufacturing that making the case for funding a viable next-generation PV technology was not difficult. Add to this local manufacturing and being part of creating a manufacturing hub to fuel a renewable energy obligation quota and, before long, many of the boxes had been ticked.
There was no shortage of options to digest between 2006 and 2010. Thin film was in fact merely a category that captured anything non c-Si, not a distinct technology that could be evaluated against c-Si production techniques. In addition to thin film including many different absorber materials, substrate types (glass or flexible) varied widely with very little commonality on show. The only common approaches for thin film production were based around multiple customers that chose to pursue the turn-key options from the likes of Applied Materials, Oerlikon and ULVAC.
Equipment suppliers at the mercy of their customers’ fate
With so many different technical approaches being financed, equipment supply to the PV industry was relatively easy for any tool supplier wishing to benefit from the plethora of new fabs being designed. Being a key tool supplier for a 100 MW fab expansion was enough for many tool suppliers, and in fact gave many suppliers false hope that this was simply the start of something much bigger across a range of possible customers. Some other equipment suppliers got carried away by some of the research preferences of the day, building process tools that had little end-market pull.
Indeed, many equipment suppliers reorganized business segments on the back of purchase orders from just one or two new PV manufacturers, and saw tool supply as a vote of confidence in the specific technology being developed by their subset of customers. While this certainly provided short-term revenue opportunities, the long-term benefits were far from obvious. In fact, many tool suppliers merely participated in the customized fab expansions of their customers, and are left with the problem today of what to do with in-house R&D and production teams confronted with empty order books.
Across Europe and North America, there are currently dozens of PV equipment manufacturers that are wondering what has happened to their PV industry aspirations or the planned future expansions of their customers. With the exception of suppliers to First Solar and Solar Frontier, the supply chains to the other 100+ thin film manufacturers are finally waking up to the fact that their customers may have a thin film fab and a production process that cannot survive within the PV industry today and moving forward.
It almost goes without saying that the prospects of new capacity additions from these manufacturers are not an option either. Much of this equipment is being auctioned off under insolvency proceedings. Sadly however, thin film technology variations are not the only source of European PV equipment suppliers worries today. There is also the issue of legacy domestic supply surrounding the c-Si value-chain. Here, the situation is somewhat different, but the overall effect (lack of orders or customers) is exactly the same as the thin film issues outlined above.
When the PV industry started to add c-Si capacity, much of this capacity was added in Europe. When companies such as Q.Cells, SolarWorld, Schott Solar, Ersol and REC added c-Si capacity in Europe (ingot to module production lines), the PV industry was very much in an early growth phase. And as such, standardized production tools and a range of supplier options were not available. Therefore, many of these PV manufacturers aligned with tool suppliers based in Europe and provided a strong pull for their growth and technology investments.
Equipment suppliers in Germany, France and Italy quickly saw their order books grow, as European c-Si capacity was added. Even companies like Photovoltech, Solland and Photowatt created sufficient market demand for some local tool suppliers that PV suddenly became a dominant market segment focus.
Only a handful of these equipment suppliers were adopted across Asia Pacific (mainly China and Taiwan) when similar c-Si capacity was added during 2007 to 2011. This list of companies was largely confined to Centrotherm, Schmid, Meyer Burger, Baccini (Applied Materials) and Rena. Other tool suppliers were left to wait patiently for European c-Si expansion plans, including the hope that European-funded Southeast Asian GW c-Si fab aspirations in Singapore and Malaysia were set to explode.
But c-Si expansions failed to happen within Europe, and the Southeast Asian GW-fab dreams were scuppered by commercial reality. The result for many European tool suppliers was the end of their PV industry supply strategies.
PV technology filtered out during 2012.
During 2011, PV equipment suppliers were living somewhat in an unreal (or virtual) world. An ordering environment that owed little to market demand, or expected market-share aims of their customers. For some European PV equipment suppliers, aspirations got ahead of reality quickly. Manufacturing expansions were enacted and headcounts increased.
In fact, some went into acquisition mode, even buying competitors that had lost their market-share or had invested in technologies that the PV industry had shown no signs of adopting. And some were even pushing to have full value-chain offerings during 2012, even though the industry had clearly filtered out this strategy as being a viable option for tool supply.
While the harsh shakeout environment in 2012 is seen by many as essential within a mature industry where a top-10 list of manufacturers supplies over 90% of all PV components (from poly to module) the same could be said about the PV technology options that have been pursued and financed until now.
Largely by default, PV technology options are being filtered out. Across the thin film segment, this is clear to see simply by tracking the fab closures, insolvencies and fab auctions advertised on a weekly basis. Within the c-Si segment, there is now a clear distinction between c-Si technologies that are in mass production and satisfying end-market demand and those which are being pushed because the change of process flows would benefit certain tool suppliers.
Indeed, with nobody likely to add any significant amount of c-Si capacity before 2014, c-Si based equipment suppliers currently have no choice but to market their subset of tools that fall into the broad category of potential next-generation equipment. This covers every stage of the value-chain, with diamond wire saws, ion implanters and inkjet printers being just three examples of a long list of prospective tool hopefuls. However, with R&D activities verging on the luxury status of c-Si makers priority lists, it is unclear exactly how much of the c-Si industry is participating in the drive for next-generation high-efficiency tool types. Or, when identifying those seriously investing in R&D, what commonality in approach can be found at any of their competitors.
The desire to change PV equipment and technologies is not limited to tool suppliers either. One of the most visible attempts to shift PV technology processing during 2012 was driven mainly by two of the largest wafer suppliers, ReneSola and GCL. These two wafer suppliers sought to transition the industry wafer preference to cast-mono or quasi-mono casting furnaces, and to effect an instant efficiency inflection point, upstream at the ingot/wafer stage.
However, by the end of 2012, upstream traction had mostly diminished and signs of mono-poly or poly-mono like modules were becoming much harder to spot at the tradeshows or being sold through the downstream channels. By the end of 2012, c-Si manufacturing can be seen to be mostly focused on cost-reduction and material optimization: using higher quality multi wafers, using less silver, or simply providing the necessary module power ratings to secure downstream sales. Technology change has become firmly grounded in near-term cost savings rather than introducing high-risk tool changes that would require prolonged efforts from R&D departments.
In fact, if anything, the filtering of PV technology options during 2012 has exposed the industry for a lack of R&D activity now across most of the leading PV manufacturers. In the past, this issue was somewhat brushed aside, with capacity additions being the main focus. Today however, with a strong surplus of c-Si capacity (even simply counting tier 1 capacity), the lack of strong in-house R&D activity is at risk of holding back PV manufacturing advancements once the shakeout phase is complete in 2014.
Where next for PV equipment suppliers?
2012 has totally changed the PV equipment supply landscape. From 2014 onwards, tool types and suppliers are up for grabs and what was the default route for c-Si tooling before 2012 is unlikely to be repeated again. Some previous leading tool suppliers may not survive through to the next round of PV equipment spending, some may decide that the PV industry does not offer viable revenue streams, and some may conclude that their tool types and legacy customer base is not aligned with next-generation PV technologies.
Without doubt, the PV industry needs a technology roadmap before 2014. But there is also no doubt that any roadmap tabled until now is not providing the necessary confidence to plan long term investments. A viable roadmap will only emerge when the industry truly needs this to move forward. Until now, this has not been the case. After the shakeout, it will become essential. And at this time, PV equipment suppliers will finally have a reference point that is free from customer, technology or in-house bias.
Read the full article in the January edition of pv magazine.