A disruptive partnership

Thin film: The partnership between First Solar and GE is a complex one, but its ability to deliver truly disruptive results to the PV industry and power plant business is beginning to be spoken of more widely. There is no one key to this dynamic, but a focus on efficiency and cost is looking likely to pay off.

Issue 05-2014

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It doesn’t seem that long ago that First Solar appeared to be heading towards troubled waters. The low-power module issue was continuing to cast a shadow over its technology, it took a pivot away from capacity expansion towards shedding jobs and closing plants, and there were questions as to whether its CdTe modules would be able to compete in a low polysilicon price PV market. What a difference 18 months make.
While there are no doubt a large number of factors behind the firm’s move back from the brink, one of the most interesting developments has been the technology and commercial partnership between Tempe-based First Solar and General Electric Co. (GE), which saw the thin film manufacturer acquire GE’s CdTe technology, sign an undisclosed module supply deal, and most recently collaborate on inverter integration and PV power plant design (see pp. 48-49).
The deal between the thin film giant and diversified electricity behemoth GE involved the latter firm acquiring 1.75 million of First Solar’s common stock, instantly making it one of the company’s biggest shareholders. The deal was announced in August last year. Reaction to the partnership was cool amongst stock analysts, with Deutsche Bank particularly skeptical. The deal, wrote Deutsche Bank, “raises some questions about timing/intent, especially considering the fact that the technology portfolio is unlikely to impact efficiency until a 2017 time frame. Bulls would argue that this transaction is a stepping stonetowards a much larger longer term relationship. We believe the scope of partnership is unlikely to be any more than a few 100 megawatts of negotiated volume contracts over the next few years.” Despite this reaction, First Solar has gone on to commence 2014 with a number of announcements heralding efficiency records and a more aggressive efficiency road map. The GE CdTe technology that First Solar acquired was initially that of PrimeStar, and GE had announced plans to establish PV manufacturing facilities in the U.S. – with the firm committing to that vision as recently as August 2012. The First Solar acquisition of the PrimeStar technology effectively brought GE’s plans to pursue module manufacturing to an end, at least in the near term.
GE’s PrimeStar CdTe technology involves a close space sublimation (CSS) process, as opposed to First Solar’s vapor transport deposition (VTD). Using this deposition technology, GE had achieved a CdTe cell efficiency record of 19.6%, in 2013. First Solar has since blown past this record.

Pushing efficiency

First Solar has long been keen to highlight its cost per watt performance in comparison to crystalline silicon (c-Si) and thin film competitors. However, this strategy saw a shift with low polysilicon prices and manufacturing scale achieved by largely Chinese c-Si manufacturers eroding First Solar’s cost advantage. In 2012 First Solar announced a partnership with R&D accelerator Intermolecular, which employed R&D techniques and analysis tools that allowed it to increase the number and frequency of variables being introduced to processes, with efficiency gains being the primary goal.
“We’ve been focused on growth in the last few years. We’re now entering a time to really move the needle to accelerate performance,” Raffi Garabedian, First Solar’s CTO told GTM. The shift appears to be bearing fruit in 2014.
In February of this year, First Solar hit a world record CdTe cell efficiency record of 20.4%, as verified by NREL. This beat the GE record and was a big improvement on its previous high of 18.3% a little over 12 months earlier. CTO Garabedian pointedly remarked that the strides being made by the firm with CdTe lab efficiencies had the potential to be “industry changing.”

“We are demonstrating improvement in CdTe PV performance at a rate that dramatically outstrips the trajectory of conventional silicon technologies, which have already plateaued near their ultimate entitlements,” said Garabedian. Despite the different deposition technologies employed by First Solar and GE, the CTO pointed to the “synergy realized in our partnership with GE,” in a statement announcing the cell efficiency record.

Modules

Laboratory efficiencies may be well and good, but what happens on modules is what really counts in PV. Here too, First Solar has been making gains in 2014. With the ink barely dry on the cell efficiency record announcement, First Solar announced a 17% champion module in March, an increase of 0.9% on its previous module record in the time frame of a little more than one year. The module was produced at the firm’s Ohio facilities, on commercial production equipment, First Solar claimed. “We can take CdTe innovation from the lab to production faster and more reliably than other technologies due to our robust, adaptable manufacturing processes and the accommodating nature of CdTe material technology,” Garabedian enthused.
Looking towards First Solar’s efficiency road map, this too has kicked up in the wake of the cell and module record setting results. The most modern lines, or lead lines, are set to produce modules with efficiencies between 15.6% and 15.8% by the end of 2015. This will increase to 17.7% and 18.4% by 2017, according to the enhanced road map.
As of Q4 2013, First Solar was achieving module efficiencies of between 13.4 and 13.9% – with the higher efficiency being achieved on best or lead lines. Modules with these efficiencies were rolling out of fabs running at 83% utilization.
It’s perhaps worth noting here that rapid transferal of laboratory production methods to scale production was a factor thought by some to be behind the low-power module (LPM) that caused First Solar such headaches in 2011 and 2012. The damage to the First Solar brand because of the faulty LPMs was significant. By mid 2012, warranty costs incurred by First Solar were beginning to be a cause for concern, approaching $250 million, with the LPM issue not the only driver. The performance of its modules in hot climates was also driving warranty claims and undermining claims the company had made that thin film modules were superior to c-Si ones in hot, and crucially sunbelt, markets.
The issue of warranty claims due to sub-par manufacturing would no doubt be something that Garabedian and the First Solar management would be cognizant of, but the efficiency acceleration seen by First Solar of late has been turning heads. As can clearly be seen, and observed by GTM Research, the kick-up of efficiency First Solar has achieved, partly through its GE partnership and Intermolecular collaboration, will have it rivaling the middle ranking Chinese c-Si manufacturers. GTM Research’s Shyam Mehta has been following the thin film PV sector for some time and has recently acquired the title Lead Upstream Analyst. Last month he wrote that while solar companies often provide ambitious guidance, First Solar has consistently overshot guidance, giving reason to believe it is capable of delivering on its revised-upwards efficiency path.
“First Solar’s updated module efficiency road map is particularly impressive and is the fulcrum upon which successful execution of its aggressive targets rests,” said Mehta.

Cost remains king

Few doubt that efficiency gains are an effective way of bringing down cost per watt in PV. However, during the period of PV oversupply experienced so intensely in 2012 and early 2013, doubts began to grow as to whether First Solar could compete with Chinese c-Si rivals.
First Solar’s focus on its project development business may have bought the company time to ride out these difficult days, but it now appears that as a manufacturer, the cost road map is looking more competitive.
In its 2014 communications, First Solar has spelt out the goal of $1.00 per watt (€0.72) total system cost by the end of 2017, a drop of over one third on its 2013 costs. Sub $1.00/W system costs is a milestone not only for the U.S. producer, but for the PV industry as a whole.
Behind these cost decreases, balance of system costs will be a driver, but also playing a role will be pure module costs. The goal here is $0.37/W (€0.27) by the end of 2017, which GTM analyst Mehta remarks will make it competitive with c-Si. Manufacturing cost reductions, as set out at First Solar’s analyst day in March, will come from full plant utilization and a 15% line run increase.
First Solar’s stock has been on the increase over the last 12 months, no doubt pleasing investors who stuck with the firm in darker times. And the hype behind the company is beginning to build, perhaps on the back of its GE partnership but more so on its focus on its core competencies of driving out cost and achieving efficiency gains. With indications now that polysilicon prices have bottomed out and may be set to rebound in 2014, some industry observers are becoming bullish as to the manufacturer and PV power plant builder’s future. And in a sign that its achievements are beginning to cut through, the word of the moment, “disruptive,” is beginning to be used.
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TetraSun development

In April of last year, First Solar announced that it had acquired TetraSun, a c-Si cell startup. TetraSun technology allows large format (156 mm) n-type cells to be produced at, First Solar claims, low cost. TetraSun can produce cells with an efficiency of upwards of 21%.
TetraSun was acquired from company management and JX Nippon Oil & Energy, with the Japanese company apparently entering into discussions with First Solar to distribute the cells and modules First Solar produces in Japan.
The deal sparked speculation that First Solar had made the move primarily to allow it to enter the booming Japanese market, where its modules were thought to be forbidden – due to the presence of cadmium. However, First Solar’s investment and forays into Japan, last year and continuing this year, show that cadmium may not be the barrier it was first thought to be.
Where TetraSun cells, assembled into modules, really point to an area of growth for First Solar is that it allows the company to enter the high efficiency PV market, essentially the rooftop and distributed market. Here it will compete with Panasonic and SunPower – previously not considered rivals due to their vastly different products.
First Solar is a CdTe specialist, so the move into c-Si production will present many challenges. The company still hopes to commence commercial production of its TetraSun modules later this year. GTM Research’s Shyam Mehta said that one of the challenges First Solar will have to overcome is the copper metallization process used by TetraSun. “There are multiple barriers associated with copper as a metallization solution, and thus far, little progress has been made at the commercial level.”
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