Solar: The race for the lowest cost per watt

How 3 thin-film manufacturers are nudging solar energy closer to grid parity

March 1, 2010

An overview of three innovative U.S. manufacturers—First Solar, Global Solar, and Xunlight—shows how, each using a different technology, are making significant progress towards grid parity.

Perhaps the ultimate commodity product is electricity. Almost nobody knows from whom or how their electricity is generated. They just know what it costs. As a result, in the solar energy panel manufacturing business, the product with the lowest cost per watt wins.

In this race, the ultimate goal line—from a cost viewpoint, is grid parity. This is the point at which the levelized cost of electricity produced by solar power systems is equal to the cost of electricity produced by traditional electricity types.

To achieve that goal, solar panel manufacturers are taking unprecedented steps to reduce costs by using less expensive materials, better automation and by rethinking panel composition.

So as a rule, how low must the rate be to reach grid parity? $1 per watt used to be considered an almost unobtainable goal, but given industry price-cutting due to over-supply, many believe that $1 per watt will soon be “table stakes” to compete in this market.

An overview of three innovative U.S. manufacturers—First Solar, Global Solar Energy, and Xunlight—shows how, using different technologies, each is making significant progress toward that goal.

1. First Solar: Industry Leader

First Solar Inc., with headquarters in sunny Tempe, Ariz., is the solar manufacturer that all the other thin-film manufacturers what to be when they grow up. Why? First Solar is the largest manufacturer of thin-film solar panels in the world. Moreover, its growth and ability to reduce costs are the envy of the rest of the industry. For example:

• Quarterly sales increased from $197 million in first-quarter 2008 to $481 million in third-quarter 2009.
• Module costs have dropped from $1.14 per watt in first-quarter 2008 to $0.85 per watt in third-quarter 2008. This is the lowest in the industry and the first to break the symbolic $1 per watt barrier.
• The average line run rate has improved from 45 megawatts (MW) in first-quarter 2008 to 53 MW in third-quarter 2009.

The company, formed in 1999, launched production of commercial products in 2002. First Solar launched its IPO in November 2006 (and if you had bought stock back then, you can retire today). It has more than 4,000 employees worldwide.

Very important is that First Solar is the first solar thin-film photovoltaic (PV) manufacturer to reach 1 gigawatt (GW), or 1 billion watts worth of module installations. These installations include residential rooftops, commercial building rooftops, and solar farms—on racks resting on the ground in what are called solar arrays.

Additionally, First Solar has developed the first comprehensive, prefunded module collection and recycling program in the PV industry. Said differently, First Solar has set aside funds to pick up and recycle the modules after a panel’s useful life is finished.

But is it green? First Solar claims that its panels have the smallest carbon footprint and fastest energy payback time of any PV technology on the market, when measured on a life-cycle basis.

One of the big differences between First Solar and almost all other solar panel manufacturers is that First Solar’s panels are made from cadmium telluride (CdTe). CdTe is a semiconductor compound, and the panel material is glass. Although CdTe is not as efficient as crystalline silicon, the panels are less expensive to make, thereby shortening the period of return on investment. In addition, they perform better in high temperatures because of a lower temperature coefficient. As a result, these panels are a great choice for solar power plants in locations with the most sun, such as deserts.

And in keeping with the company’s green vision, the semiconductor materials used in First Solar’s PV modules are sourced primarily from byproducts of mining operations. In other words, the solar panel-maker is converting waste products from one manufacturing process into raw material to manufacture its products.

Manufacturing CdTe Panels at First Solar

First Solar’s first and flagship manufacturing plant is in Perrysburg, Ohio.

Conventional silicon panels are made in a batch manufacturing process which typically requires making raw polysilicon into ingots into wafers into solar cells into solar modules.

In contrast, First Solar’s manufacturing process is vertically integrated (see Figure 1) and produces a complete solar module in roughly two and a half hours.

The panels themselves comprise front (substrate) and back (cover) laminated glass sheets that are heat-strengthened to withstand handling and thermally induced stresses. The laminated material used to bond the cover glass to the substrate seals the PV device from the environment.

Another key difference from conventional panels is that First Solar panels have a 2- by 4-ft.-wide substrate. Traditional solar panels’ substrate is a relatively small wafer. Being able to apply the PV material onto the larger substrate simplifies the fully integrated, continuous manufacturing process.

According to the company, the advantages of its manufacturing process include:

• High-throughput, automated lines—from semiconductor deposition to final assembly and test—produce in one continuous process.
• Total production capacity is more than 1.2 GW.
• The average module conversion efficiency of 11 percent in third-quarter 2009 rose from the 2003 level of about 7 percent.

First Solar has received, ISO 14001 environmental management systems certification and ISO 9001 quality management systems certification at all of its manufacturing facilities.

2. Global Solar Energy: Industry OEM

Global Solar Energy has done something that few other solar manufacturers have done—build an operational manufacturing plant that produces solar PV using copper indium gallium diselenide (CIGS).

The company was formed originally as a joint venture between Unisource (UNS) and a company called ITN to produce solar energy products. The company designed and produced a foldable solar product that could charge batteries in the field. In 2006 Unisource sold Global Solar to a European private equity firm that invests in renewable-energy companies. Solon SE, a renewable-energy company, later purchased a 19 percent stake of Global Solar Energy shares.

CIGS is a difficult PV material to work with, and few companies worldwide have been able to successfully move their technology from the laboratory to the manufacturing line. Global Solar stands out in that it has not only built one fully operational plant, it has built two plants—a 40-MW operational plant in Tucson, and a sister 35-MW plant in Germany.

Why CIGS?

If CIGS is so difficult to work with—the “diva” of PV materials, why use it? The answer goes back to the cost/efficiency paradigm challenging the solar industry. While CIGS thin-film panels are not as efficient as crystalline panels, they may cost significantly less.

Moreover, CIGS doesn’t degrade in sunlight like some other thin-film technologies do, which is rather important for a product located in high-insolation (sunlight) areas.

Last, CIGS is also a hedge against the high crystalline panel prices that occurred because of the silicon supply shortfalls of 2007 and 2008.

Manufacturing CIGS at Global Solar

To take costs out of the manufacturing process, Global Solar uses a proprietary roll-to-roll vacuum deposition process. This deposition process improves efficiency and reduces unit costs, compared to panel-by-panel deposition.

Global Solar’s rolls are 1 ft. wide by 3,000 ft. long. The roll-to-roll manufacturing technique produces cell strings, with 18 cells in each string, at 11 percent efficiency—which may be the highest CIGS efficiency that is commercially available.

Unlike many other PV producers, however, Global Solar does not assemble these cells into a solar module. Although the company is targeting the building-integrated PV market, it also provides the CIGS PV material on a flexible substrate for integration into a range of customer products. As a result, Global Solar has also become a solar original equipment manufacturer (OEM), supplying PV to companies building solar products.

The OEM Strategy

Global Solar announced in December 2009 that its PV materials would be used in panels in Tucson that would create the world’s largest solar electric array—a 750-kW system—using CIGS technology.

Solon Corp. produced and installed the PV modules that cover roughly 310,000 square feet in a ground-mounted array at Global Solar’s Tucson plant.

“Global Solar Energy is taking solar back to the building in a new way,” according to Timothy Teich, Global Solar VP sales and marketing,“Global Solar works with the world’s best and largest solar product and building material manufacturers facilitating new innovative products with its lightweight CIGS solar material. CIGS provides product manufacturers an advanced and proven solar power solution that can be designed into—and onto—next-generation solar energized products.”

For example, Global Solar is participating in asolar energy initiative projectled by Dow Building Solutions, which has been selected as a recipient of the $20 million Solar America Initiative Pathways program by the U.S. Department of Energy (DOE).

As part of the cost-share agreements, the industry-led teams will contribute more than 50 percent of the funding for these projects. These cooperative agreements are the first funding awards that were made available as part of the Solar America Initiative (SAI).

One product developed by the initiative is the Dow™ POWERHOUSE™ shingle using Global Solar’s CIGS material (see Figure 2). Dow claims that its product design reduces solar panel installation costs because conventional roofing shingles and solar-generating shingles are installed simultaneously by roofing contractors. Dow further claims that the shingles are the first-ever mass-market building-integrated PV shingles that seamlessly blend with residential asphalt rooftops while also protecting the roof.

Sound pretty nifty? Time thought so too. The magazine named the solar shingle one of “The 50 Best Inventions of 2009.”

Global Solar is producing PV material at two operational plants and uses those lines to produce portable solar chargers, building integrated PV, and CIGS thin-film material for use in other manufacturers’ products like the Dow POWERHOUSE shingle. This may be just the beginning of inventive solar materials made for the so-called “building envelope.”

3. Xunlight: Solar in the Heartland

Xunlight Corp. is a classic venture capital-backed start-up company in Toledo, Ohio— “The Glass City”—with very close ties to the University of Toledo.

For Xunlight, funding has come from a variety of sources:

• $40 million came from institutional investments: Emerald Technology Ventures, Trident Capital, NGP Energy Technology Partners, and Rabo Ventures.
• $13 million of R&D funding is from the U.S. DOE, U.S. Department of Commerce, and the Ohio Department of Development (ODOD) and more than $11 million in loans came from the state of Ohio to develop its products and manufacturing process.
• Most recently a $34.5 million tax credit was awarded the company as part of the American Recovery and Reinvestment Act.

The company employs more than 100. It was established in 2002 to commercialize solar technology that was developed by co-founder Deng in his University of Toledo Thin Film Silicon Photovoltaic Laboratory.

The company also benefits from the state government of Ohio’s strategy to nurture the solar industry and takes advantage of the state’s expertise in glass manufacturing as a result of supplying the automotive industry.

From a marketing standpoint, Xunlight is targeting large commercial rooftops with building integrated PV applications and is also looking at landfill applications.

Xunlight’s Unique Manufacturing Process

For starters, Xunlight Corp.’s academic partner, Dr. Xunming Deng, maintains the world record for efficiency of single-junction amorphous silicon solar cells.

In addition, Xunlight has completed the installation of its first 25-MW, roll-to-roll, plasma-enhanced chemical vapor deposition (PECVD) solar cell production line (see Figure 3). In this manufacturing process, solar cell alloys are deposited on a thin stainless steel substrate and then encapsulated in flexible lamination polymers to complete the module design.

In the short-term, the PV material will be made of triple-junction amorphous silicon (a-Si) and amorphous silicon germanium (a-SiGe) thin-film solar cells. In the future, Xunlight will also add nanocrystalline silicon (nc-Si) to its product line

Why triple-junction? To boost the efficiency over single- or dual-junction technologies by capturing energy from a wider spectrum of light.

Xunlight’s roll-to-roll manufacturing process boosts productivity and line rate. The metal foil roll on which the PV material is deposited is very thin—only 5 mil. thick—and 3 ft. wide by 1 mile long.

As the metal foil is unrolled, the PECVD systems and a magnetron sputter deposition system apply a chemical compound, creating high-quality solar cells.

Once the solar cells are created, the mile-long roll then moves to the module manufacturing stage, where individual modules are fabricated into finished product. During this process, the solar cells are laser-cut to specification, wired, encapsulated, and packaged, which ultimately results in durable, flexible, lightweight, and powerful solar modules.

Xunlight reports that it has built its own 200-ft.-long machines to handle the mile-long rolls.

Todd Abraham, Assistant to the CEO at Xunlight Corp., summed up the company’s progress saying, “Xunlight has reached significant engineering and manufacturing milestones in the last year, and we are now poised to transition to the high-production volume, commercialization stage in our company’s life cycle.”

Solar Isn’t Cheap … Yet

According to the National Renewable Energy Laboratory, average rooftop solar costs currently are $0.20- to $0.25 per kilowatt hour (wholesale) and vary greatly depending on the insolation of the specific location. That’s significantly higher than the average commercial rate paid almost everywhere.

In parts of California, however, given local incentives and great solar insolation, you may be able to get a better price with solar. Federal and state tax incentives lower the cost as well. Local integrators can help companies learn how to capitalize on them.

2009 Average Retail Price of Electricity to Consumers by End-Use, (cents per kilowatt-hour)
State	Residential	Commercial	Industrial
California	15.05	13.73	10.46
Georgia	10.04	8.89	6.13
Illinois	11.25	8.31	7.53
New York	17.80	15.40	9.71
Ohio	10.61	9.59	6.69

Source: U.S. DOE Energy Information Administration (EIA)

All three U.S. solar manufacturers are taking costs out of the manufacturing process and segmenting the market in rather different ways. Once they reach the goal line of grid parity, all manufacturers and consumers will benefit substantially—with a stronger U.S. manufacturing base, a more decentralized electrical grid, less dependence on fossil fuels, and a significant contribution to the fight against climate change.