It has been a tough few years for PV equipment suppliers. This may come as a surprise to few in the industry, but there are signs that the cycle of low, or no, equipment investment is coming to an end and that orders books are beginning to fill.
This is true of the thin film equipment market segment as well as the crystalline (c-Si) segment, although the nature of the equipment supply process differs between the technologies.
The thin film equipment suppliers in some ways didnt see the boom that the c-Si guys saw, explains NPD Solarbuzzs senior analyst Finlay Colville, but in hindsight that turned out to be positive for them because they didnt see the bust. Colville says that if a thin film equipment supplier has been closely aligned to a major player, read: surviving, thin film producer then its had relatively reliable, repeatable business. And by big players, there really are only two remaining.
The pillars keep on
Americas First Solar (CdTe) and Japans Solar Frontier (CIGS) remain far-and-away the major thin film producers. According to figures from industry analysts IHS, the two companies produced well over one-third of the thin film modules that were installed in 2013, making them the pillars of the producer segment. That proportion will have only increased in 2014 as some manufacturers exited the market.
The third major thin film producer is Italys 3Sun (a-Si). Sharp exited its joint venture and purchase obligations pertaining to 3Sun in July of this year, leaving Enel Green Power to operate the fab and utilize the module output in its projects in various markets. IHS upstream analyst Stefan de Haan says that these three major producers will definitely be the source of thin film tool orders in the near term.
Interest in thin film is increasing again after the recovery of the upstream PV supply chain, but we dont yet see a strong rise in orders, says de Haan. The development of thin film as a whole still largely depends on two companies [First Solar and Solar Frontier]. While First Solar suddenly and dramatically turned from its production expansion plans in 2012, it is now back on the path of capacity increases, and that means tool orders. In its Q3 2014 reporting, CEO Jim Hughes confirmed that the firm is set to increase its CdTe production capacity by up to 46% in 2015. Its not a mystery to everybody that the step-down of the investment tax credit in the U.S. market at the end of 2016 continues to pull demand forward, explained CEO Hughes at the companys Q3 2014 earnings call. We want to maximize our ability to capture that demand. First Solar is adding capacity at its U.S. and Malaysian operations. At its Perrysberg, Ohio, fab, the company is adding two new lines. Last month, First Solar held an open day and advertised for 120 new manufacturing staff to facilitate the production expansion. For First Solars tool suppliers, however, there will not likely be big tool orders coming from this capacity expansion, and certainly not in terms of new lines. The Tempe, Arizona-based producer plans to add to its capacity by using existing tooling to expand its U.S. fab, presumably through utilizing 100 MW of tools shuttered in 2012 at its European fab, in Frankfurt (Oder) in Germanys east. For the 360 MW of capacity it is adding at its major module production operations in Kulim, Malaysia, First Solar is also restarting old lines. Restarting shuttered production certainly comes with its own challenges, and equipment suppliers will likely play a supporting role.
An increase in MW output from First Solars lines will come in some part from increasing conversion efficiency of its modules. As of Q4 2014, the average efficiency of its CdTe modules will be 14.4%: lower than previously advised but still an indication of the success with its technology that it has achieved in recent times. Part of its recent module efficiency gains have come from the application of anti-reflective coating to the glass in its FS Series 4 module.
Solar Frontiers blueprint fab
Across to Japan, Solar Frontier is also adding capacity. On the back of a domestic PV boom, the CIGS manufacturer has brought its output up through restarting its older 60 MW Miyazaki No.2 fab, and through tweaking processes at its 900 MW Kunitomi fab to increase throughput and continue to grow conversion efficiencies. 12 months ago, it announced the construction of a new fab to add to step up these efforts.
The 150 MW fab, located in Tohoku, may seem a relatively cautious capacity add when compared to the GW expansions of some Chinese c-Si producers, but Solar Frontier reports that it will act as a blueprint for further fabs potentially outside of Japan. The results of its feasibility study into constructing a fab in Buffalo, New York, should be known soon, having commenced in April. The MENA region has long been of interest to Solar Frontier so it too could be a location for future manufacturing.
Construction on the Tohoku fab itself is nearing completion. Last month Solar Frontier reported that construction and fit-out is progressing on schedule, and is set to be completed in March 2015. The MP4 Tohoku fab represents the evolution of Solar Frontiers production processes and the producer expects CIGS modules with a conversion efficiency of 15% to roll off of its lines. The Tohoku Plant manufacturing process [employs improvements in] the formation of the CIGS absorption layer (the heart of CIS thin-film modules), the patterning process, and electrode formation, said Satoru Kuriyagawa, Solar Frontiers CTO.
On the back of these process improvements, Solar Frontier expects the fabs capex and opex efficiency to increase by one third. While Solar Frontier does not publically release production cost figures, IHS estimates it currently to be running at around $0.80/W, although Solar Frontier says it is lower. If it can achieve the cost reduction it targets, the MP4 could deliver production cost-per-watt in the region of $0.54/W, which would be a competitive figure, given Solar Frontiers modules light soaking boost, low light performance, and particularly when coupled with advantageous temperature coefficient.
As with First Solar, Solar Frontier does not publically discuss which firms supply the production tools it uses. Superficially, this may seem somewhat coy, in that there is only a relatively small pool of suppliers that could be retrofitting and restarting First Solar lines or delivering equipment to Solar Frontiers MP4 Tohoku fab. However, NPD Solarbuzzs Finlay Colville counsels caution in rushing to make assumptions, as tool suppliers to firms such as the two thin film pillars have long development histories with the companies running back over decades.
What differentiates four companies from the rest of the solar industry is the fact that those companies First Solar, Solar Frontier, Panasonic (Sanyo), and SunPower have been developing their technology and processes in-house, in different iterations of their company names, for 15 to 20 years, explains Colville. At that point, there wasnt a standard production tool anywhere in the solar industry. Those four companies had to build and develop their own technologies from scratch. That required them to build up extremely competent and professional relationships with whomever was a supplier of materials and equipment, or they simply wouldnt have survived. Turning then to the equipment suppliers themselves, in particular those that manufacturer process tooling unique to thin film manufacturers, NPDs Colville says the major suppliers to the most prominent manufacturers include Singulus, Von Ardenne, Ulvac, Centrotherm, Smit Ovens, and LPKF.
New iteration deposition tool
Germanys Von Ardenne has been involved in thin film equipment supply, in the words of Ulf Seyfert, the head of research and innovation at the company, more or less from the beginning. Seyfert reports that supplying the thin film segment has been an extremely important part of the Dresden-based companys growth since 2002.
I think there was a mixture between being at the right time, with the right product, and to the right customer even if the customer did not know that it would grow so fast as it has now achieved, says Seyfert. We also grew in the same way, but we could not actively influence the technology behind thin film PV. Von Ardenne supplies its GC60V vertical coating system to the thin film segment, a deposition tool that can be used to apply precursor, back, and front contact layers for thin film modules. Its Pinar magnetron is the technology used for the deposition, with its VA process gas flow system allowing the deposition process to be fine-tuned and regulated. The GC60V is a vertical deposition process, which prevents contaminates from lodging on a module, contaminating the active, barrier or back or front contact layers.
Von Ardennes PIAnova is the latest iteration of its thin film deposition tooling, and employs some learnings from Von Ardennes glass coating tool supply business. The PIAnova is a horizontal process, and given the increased size of the PIAnovas chambers, up to six modules can pass through each of the deposition chambers at any one time. This, of course, is dependent on the modules size, but smaller thin film module sizes can deliver significant throughput increases.
The development process that Von Ardenne goes through in partnership with its customers is revealing as to how the thin film equipment supply space functions. While Von Ardenne actively develops new front and back contacting technologies and recipes, it deliberately avoids working on the active CIGS or CdTe layers.
Our own development is focused on the contact layer. That means that our equipment can be used for active layer deposition, but not with our own technology development, says Seyfert. It means in that case we are working very closely with our module manufacturer, and they provide the machine specifications based on their own development. Seyfert says that the PIAnova can be used for both CIGS and CdTe deposition, making it more flexible than the vertical GC60V.
Seyfert says that Von Ardenne has not received orders for this new phase of capacity adds, but that enquiries are growing in what he describes as the phase in front of investment.
The thin film dark horse
While the near-term future of the thin film pillars appears as certain as any companys can be in the moveable feast that is the PV industry, a more recent thin film arrival in Hanergy presents more questions than it is answering. Hanergy is one of Chinas largest private companies, and has created its reputation and sizeable revenue through hydropower dam construction and operation.
In PV, Hanergy has made headlines through a series of CIGS acquisitions in Solibro, Global Solar, and MiaSolé. Most recently, it acquired gallium arsenide (GaAs) startup Alta Devices.
In recent months, Hanergy has shown modules utilizing each of these producers processes at major solar trade shows, including the recent SPI, yet questions remain as to whether its aspirations within PV are genuine, let alone whether they will result in significant tool orders from the major suppliers.
Hanergy has published ambitions to construct a towering 5.25 GW of manufacturing capacity with the various technologies it has acquired.
Such volume would require tool orders the like of which have not been seem since the major c-Si capacity adds in 2009 through 2012. Hanergy has also announced plans to increase its armorphous silicon module production to 4.75 GW in a combination of a-Si/a-SiGe.
Further complicating the matter, Hanergy has its own subsidiary tool supplier in Apollo PV. In a blog post published in November 2013, NPD Solarbuzzs Colville noted that the CIGS capacity expansions alone would amount to $8.6 billion in tool orders.
Even a small portion of this $8.6 billion being recognized as PV equipment revenues by Apollo would probably be enough to keep Hanergy (or more specifically its Apollo PV equipment segment) as the leading PV equipment supplier (by PV tool revenue recognition) as far out as 2015, wrote Colville.
But where is the output? Hanergy announced that some 1.7 GW of amorphous silicon tooling has been shipped. However, its shipment data reveals 145 MW of shipments in 2013, according to IHS. Of its CIGS operations, Colville confirms that shipments have continued from the existing manufacturing capacity of Solibro, but little in addition to that.
And there are more questions. Apollo has no track record as a CIGS tool supplier representing significant risk, in Colvilles words. It was also the intended supplier of Hanergy for a-Si/a-SiGe processes, in its initial multi-GW plans for the technology. But little shipment volume supports the big talk.
Hanergy has gained considerable publicity through its acquisitions and in its investment in product placement advertising in films such as Transformers 3 and Transcendence but investment in tooling may be another matter. One tool supplier, talking under the condition of anonymity, reported that it had been in discussions with Hanergy for over a year, but now considers that time wasted and Hanergys plans amount to nothing but hot air. Hanergy declined to be interviewed by pv magazine saying: At this time [Hanergy is] not able to comment directly on our specific business development strategies or production plans.
Supplying the dark horse
In saying all of this, in June Germanys Singulus Technologies announced a 15 million order (US$18.8 million) from Hanergy for CIGS production tooling. The deal sees Singulus supplying its Tenuis II buffer layer deposition tool to Hanergys equipment subsidiary Apollo. Singulus reports that the sale is the first stage of a major project. The Tenuis tool carries out the deposition of the crucial buffer layer, often zinc oxide (ZnO) but in this case cadmium sulfide (CdS), which protects the CIGS semiconductor stack. Singulus claims that its Tenuis II buffer layer tool can coat two substrates on one side simultaneously, and that its machine reduces the floor space required for the buffer process. It reports that the Tenuis II alsoreduces the time required to deposit the buffer layer, through a new approach to dosing and temperature control.
The Tenuis II equipment is likely to supply the glass substrate production processes of Hanergy subsidiary Solibro, which Colville says has been running constantly for a number of years, and shipping steadily to the end market. By contrast, Colville notes that there have been no significant volume shipments recorded for Hanergys flexible substrate CIGS subsidiaries, Global Solar and MiaSolé.
Singulus has been cooperating with Solibro for a long time on the development of efficient CIGS production equipment, says Singulus CEO Stefan Rinck. At the moment, we are working with Hanergy on the detailed design of the factory and our machine and we are happy with the progress we achieved. Singulus supplies inline sputtering systems and evaporation machines, selenization equipment, and wet chemical processing tools for CIGS module production.
Hanergy has published the achievement of a 21% 1 cm-squared CIGS solar cell, in a result verified by Fraunhofer ISE. We are also cooperating with Hanergy on further improvements in the production process, says Rinck.
Aside from the major producers, and aspirant in the form of Hanergy, there are a number of smaller thin film producers that report they are currently ramping production. These include the U.S. operations of Stion and Taiwans TSMC, with the latter manufacturing the formers technology under license.
Stion reports that it is ramping up its 150 MW nameplate fab in Hattiesburg, Mississippi. Frank Yang, the companys VP of business development, says that around 90% of the tooling for the fab has been delivered, with the remainder to be installed by mid-2015. Stion is producing 5 MW/month at the fab, with the company aiming to double that on delivery of the final tools.
We are working today on making some incremental expansions to our factory in Mississippi with our lead equipment supplier out of Korea, says Stions Yang. We are evaluating a number of options to continue to grow the capacity out of Mississippi and in different line configurations and scales. South Koreas Avaco is supplying the sputtering and atomic layer deposition equipment to Stion, with Avaco itself having taken a $130 million stake in the U.S. firm back in 2011. Frank Yang says that Avaco is a strategic partner of Stions, with the two firms collaborating on process development. Avaco has also announced CIGS production supply deals in China, although it did not name the manufacturer.
Ultimately, while Stions technology is proprietary, the manufacturing platform is relatively standard, says Yang. So the way we view our relationship with Avaco is that we are going to continue to drive the cost and performance of those tools by working with a supplier that has extremely strong technical capabilities. 140 to 150 W modules are currently rolling off Stions production lines, with efficiencies of around 13 to 14%. Yang says that around 80% of Stions output is currently supplying U.S. projects and distributors, no doubt aided by the anti-dumping duties applied to Chinese c-Si suppliers to the market. Production costs, at around half the rate it will be producing when at full scale, stand at around $1/W.
With its current scale it will be difficult [for Stion] to survive, says de Haan. The recent price increase in the U.S. due to the trade case will help manufacturers there temporarily, but the critical point is to keep up with the continuous cost reduction of the crystalline world. These smaller manufacturers need strong partners to get into volumes. Colville concurs. There is still a lot of small thin film companies or R&D operations that are ambitious with their targets. Looking at it from the outside, the quick conclusion is that everything else has to be high risk. That is because you have the benefit of hindsight now having seen 10 years in which only two thin film companies managed to survive out of over 100, he says.
Taiwanese producer TSMC is currently ramping production at its fab, constructed in 2011 and sized for GW-scale module manufacture. TSMCs Marc Spaulding reports that TSMC Solars production is running at 6.5 MW/month and average module wattage of 154 to 155 W.
It is clear that there are significant opportunities for thin film equipment suppliers on the immediate horizon. In saying that, however, major orders have not yet arrived and some companies have suffered through many years of largely empty order books. Those in possession of diversified supply strategies have been able to survive the drought better than those more exclusively reliant on PV. Singulus Stefan Rinck sums up the mood well. The PV investment train is starting slowly and it will take quite some time to see a good number of large investments, he concludes. But we are hopeful that 2015 will present to us a better picture.
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