Just in April 2011, GE (NYSE: GE) was the builder of the largest solar factory in the US with plans for 400MW of thin-film module production based on the CdTe technology. Today those plans got cut short and the company has reported returning to the research lab to come up with better module efficiency than originally planned, putting construction on hold for at least 18 months.
According to GE, in 2014 the company will resume factory development with plans to build modules which will be expected to reach 15%, up from the current 13% conversion. Based on this announcement, chances are we will never hear about it again. The truth is that by 2014 modules made from polysilicon will be reaching levels of 17 to 19% conversion; moreover, this will be at prices that will match or be even lower than any thin-film manufacturer. In recent research some of the analysts expect c-Si modules to sell in 2015 at $0.50 per watt on average, with cost expectations in the area of $0.40 per watt. While there is no doubt that CdTe manufacturing offered low-cost production in the past, the question is whether it can offer it with the advantage over polysilicon in the future.
Certainly today this is not the case. Chinese manufacturers speak about all-in costs below $0.60 per watt; this is below the most efficient thin-film production cost. Things can only get worse from here. At an expected module average conversion of 18% in 2015, c-Si module will be 20% more efficient than any CdTe module, including one from First Solar (NASDAQ: FSLR). The company in their recent Q1 presentation provided investors with a 5-year plan including an objective to reach 15% efficiency. However, FSLR’s plan sees this conversion in 2016. So with the estimated cost production of $0.40 per watt for poly modules, the CdTe module would have to drop to $0.32 per watt just to match the conversion curve and get the same gross margin. In order for the project to match the actual output, its scale would have to physically be 20% larger. Including documented degradation of CdTe panels, the cost associated with added land (up to 30%) and extra maintenance, it would make the venture certainly more expensive, giving less return to the plant owner. So the answer is a clear “no.”
It is an unfortunate coincidence that during the same week when GE had pulled the plug on the CdTe module factory, Abound Solar filed for bankruptcy. In reality Abound was destined to lose, given its small scale and lack of any technological advantage in the same CdTe peer group with the likes of First Solar and GE.
Abound had left a trail of projects in India with no upkeep for developers in this country. India, in order to support the national solar program, created a domestic content requirement for polysilicon products, but strangely not for thin-film, essentially giving an advantage to the US firms. While domestic manufacturers have no ability to sustain increasing national demand, in light of the Abound failure and the new information on high temperature degradation affecting CdTe modules, Indian Mission is faced with a dilemma when assessing the future of the program. Every now and then voices are raised to emulate the form of the US duties on Chinese products, but India needs to be considerate of the repercussions not only to the national trade – China is the second-largest trade partner – but also to its internal objectives regarding solar energy goals.
The trouble with poor conversion is not only related to CdTe modules, but to the entire thin-film family. The issues are also worldwide. The Chinese company Trony Solar had warned investors about continued losses into 2012; this amorphous-silicon, thin-film company was halted on the Hong Kong stock exchange due to accounting concerns on top of operational hurdles. Taiwanese Auria Solar Co. stopped trading as it failed to submit financial reports on time. In March the company was asking the government for help to roll over its loans, faced with millions in losses. At various times during the last twelve months Suntech Solar (NYSE:STP), LDK Solar (NYSE: LDK), and Taiwanese Green Tech Energy had all stopped their thin-film development.
GE is probably just the first of the conglomerates to start the trend. South Koreans had pulled the plug on their polysilicon expansion last year, finding it impossible to cope with the glut and ASP, firstly, and unable to compete on costs against the Chinese, secondly. The low cost of thin-film offered LG, Hyundai and Samsung a chance to keep their presence and reasonable participation in the market. Perhaps now will be the time to exit the industry, since the conditions are no longer there, and the future of thin-film seems “thin” in comparison to polysilicon based products.
