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Business Opportunity Focus
By Industry Sector
excerpts from downloads
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USA
Once the leader in PV development, the US has since dropped to third in terms of installed PV capacity, largely due to the lack of an integrated federal policy. Within the US, only California has seen strong sustained development and currently accounts for over 80% of the country’s total installed capacity. Although a federal policy is currently in place (the 1997 Million Solar Roof Initiative), a lack of funding behind the scheme has limited its impact. Growth has thus been driven by state support mechanisms. 2001 data highlighted the mismatch between state and federal support, with only US$66m out of the total PV budget of US$470m for that year coming from federal sources. At present, 32 States currently offer net-metering schemes and a number have implemented Renewable Portfolio Standards. As at the end of 2004, over 300MW of PV had been installed in the country |
Silicon suppliers
Silicon is the second most plentiful element in the Earth’s crust, found in both quartz and sand. Despite its abundance, silicon is both expensive (high energy costs) and complex to process. Metallurgical silicon, manufactured from quartz through a carbon thermal process, is purified to create either electronic grade (EG) or solar grade (SoG) silicon. The former requires a greater level of purification than the latter. While the solar industry has historically relied on top-and-tails and other off-cuts from the semiconductor industry, a combination of the semiconductor industry’s recovery and the solar industry’s growth is putting pressure on the availability of supply. As a result, silicon manufacturers are currently in a strong position in the overall PV value chain.
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Wafer manufacturers
Required in the production of crystalline silicon PV cells, wafer manufacturers grow ingots (both mono and polycrystalline) from silicon feedstock. For monocrystalline ingots using the traditional Czochralski approach, the silicon feedstock is placed into a quartz crucible, which is melted at high temperature. A seed crystal is then dipped into the molten silicon and extracted under constant rotation. For the simpler production of polycrystalline ingots, the silicon is melted in the crucible and then directionally solidified in a carefully controlled thermal environment. Once the ingot has been produced, the silicon is sawed into blocks and then wafers using specialised wire saws. Such a process can waste up to half of the material in saw slurry. Key to cutting costs is the development of thinner wafers, while maintaining structural strength. Although both the emergence of thin-film technologies and an increased move to insourcing suggests that independent wafer manufacturers are unlikely to experience the same rate of long-term growth as the overall solar industry, it remains a high value added part of the solar value chain.
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Solar cell manufacturers
Between 1995 and 2004, global solar cell production has increased by a CAGR of 34%. Of the top 25 cell manufacturers in 2004, based on production volume, 17 were domiciled in the three key solar markets of Japan, Germany and the US (6 were Japanese (including the top 2), 6 were German and 5 were American).
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Module manufacturers
According to Photon Magazine, 78 different manufacturers (including integrated cell manufacturers) were producing modules in 2004. Of the top twenty-five module producers, 11 are pure-plays in this area (though only two in the top ten). For those manufacturers, the constrained supply of cells creates a reasonable short-term barrier to entry if supply contracts can be obtained. Whether this barrier to entry remains in place longer-term is, however, debatable.
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Systems Integrators
The final stage of the PV value chain is the systems integrators, who source and distribute the various components and oversee a solar project’s implementation. Such companies require lower levels of capital employed than companies positioned further up the value chain, which reduces the level of funding needed to match industry growth. As with the module manufacturers, the barriers to entry in this area are currently reasonably high as supply of cells is constrained. As a result, those companies with supply contracts are benefiting. Longer-term, however, we question whether this area will enjoy the same barriers to entry as the industry matures and the supply imbalance is corrected.
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