|
Technical and Business Focus
Reference Documents for Further Information
context for excerpts |
Executive Summary (excerpt)
Technology investments by the U.S. government Dept. of Energy, National Renewable Energy Lab (NREL) and others over the past 30 years have positioned the Solar Energy industry to undergo an inflection. The technology is now very close to good enough. The key issue is cost. Like the DRAM industry of the middle 1980’s, we will see large companies invest around $0.5 B in capital to create large, optimized and automated factories that will achieve dramatically lower costs for solar panels. These lower costs will finally enable solar energy to compete economically with the cost of producing electricity by conventional means, enabling the market to explode. We have created a design for a “Solar City” factory that will produce 2.1 – 3.6 GW of solar panels per year—100x the volume of a typical, thin-film, solar panel manufacturer in 2004, and about 4x the volume of the entire solar panel industry in 2004.
We have shown that with a reasonable selection of materials, and conservative assumptions, this “Solar City” can hit a price target of $1.00 per watt (6.5x - 8.5x lower than prices in 2004) as the total price for a complete and installed solar energy system.
This breakthrough in the price of solar energy comes without the need for any significant new invention. It comes entirely from the design of a large factory and the cost savings inherent in operating at such a large manufacturing scale. At the price of $1.00 per watt for a complete and installed system, the payback time in states like California is under 5 years. Therefore, we expect the demand for solar energy systems to explode. At this price, there will be demand for small solar energy systems installed on residential rooftops (4 - 6kW each), much larger systems on commercial rooftops (0.5 MW each) and even larger systems for the regional and wholesale generation of electricity at competitive regional and wholesale rates (10 – 100 MW each). Eventually, we envision hundreds of these “Solar City” factories distributed across the U.S. and around the world to serve local markets. We detail the design principals for creating a “Solar City” factory that is large enough to obtain dramatic breakthroughs in manufacturing costs, small enough to be affordable in capital cost, and small enough to be well matched to the needs of local markets. We then detail the design of the 5 sub-factories that make up the “Solar City”. Inputs to the “Solar City” are raw materials in bulk form that are easy and inexpensive to transport. Outputs are finished solar panel products (with multiple PV modules), ready for simple installation. All intermediary steps are on-site. Finally, we have developed a list of key technical challenges that must be addressed to make this possible. The challenges appear to be solvable, but will require focused R&D investments in these areas over the next few years.
|
|
Silicon suppliers: As the provider of the PV industry’s core base material, silicon suppliers are benefiting from the growth in solar power. Current supply shortages are improving pricing power, though capacity constraints should be largely resolved by 2007/08. Given the long lead-time required to change production levels, industry profitability is likely to remain cyclical in the long-term. The emergence of a second endmarket for poly-silicon in solar power (along with the semiconductor industry) should, however, reduce some of this volatility.
|
Renewable Energy Corporation of Norway and Moses Lake and Butte
www.rec-pv.com |
|
Wafer manufacturers: This is a core value-added process within the crystalline silicon PV market, with high technology content and good barriers to entry. Given the expected emergence of thin-film technologies in the years ahead, the growth in the independent wafer industry’s available end-market is likely to be below that of the overall PV industry. Growth for pure-play wafer manufacturers may also be reduced if the level of vertical integration in the industry increases.
|
Cell manufacturers: This is arguably the most interesting stage of the solar industry, which may explain why virtually all of the conglomerates present in the industry have exposure to this area. In addition to incorporating a good level of value added in the production process, the cell manufacturing industry does not have the growth limitations of the wafer-manufacturing sector. While cell manufacturing in itself is a fairly standard procedure across the industry, comparative advantage is created by both a company’s scale, level and quality of automation, average cell efficiency as well as consistency (i.e. standard deviation) of cell efficiency. Given that a module’s efficiency is set by the quality of its weakest cell, consistency of a cell manufacturer’s product is extremely important.The largest specific risk for cell manufacturer is probably technology change – a company focused on just one technology type could lose out if a breakthrough occurs in another technology form. |
|
Module manufacturers: As with wafer manufacturers, module manufacturers are typically only required in the crystalline silicon PV market. The manufacturing process tends to be labour-intensive, which suggests that those manufacturers located in high cost countries may struggle longer-term against low-cost competitors. Given supply shortages along the value chain, barriers to entry are relatively high at present, with those module manufacturers having access to cell supply contracts at an advantage. This value-added is likely to decline, as supply issues are resolved.
|
|
Systems integrators: Such businesses act as final stage contractors and distributors. The advantage of systems integrators is the low level of capital employed in their business model and the reasonable barrier to entry created by current supply restrictions. The key value-added is the strength of client and supplier relationships. As the lack of supply corrects and the industry grows, mainstream-contracting firms may look to enter this space, which could put pressure on current incumbents.
|
|
|
