Wednesday, March 3, 2010

Solar PV Materials Growth Amidst Module Price Declines

The solar photovoltaic (PV) industry will likely be affected by steep price declines again in 2010, although prices are expected to fall at a more moderate rate than in 2009, according to a leading industry analyst firm, iSuppli. This firm forecasts overall demand to increase sharply, but this depends on the German feed-in tariff subsidy that is guaranteed for only half of this year, which impacts nearly 50 percent of the current global market. Price declines for PV solar panels will likely be fueled by the emergence of more hefty competitors in the field of nearly 400 already such as: Samsung, LG Electronics, Bechtel and the Taiwan Semiconductor Manufacturing Co., among others, whom are developing or expanding solar operations.

Many solar companies were gearing up in early 2009 for potential global greenhouse gas emissions reductions treaties and American renewable energy mandates for utilities, which never materialized. iSuppli analysts have announced recently that global installed watts for PV systems will grow by 64 percent in 2010, reaching 8.3GW; thus matching 2008 growth levels before the recession and bank credit crisis took its toll. Nonetheless, they have made a reasonable assertion that the industry will see a continuation of the significant price declines that carried through 2009.

However, even though the market for PV chemicals and materials declined slightly to about $2.44B in 2009, it is expected to grow 27 percent to $3.1B in 2010, according to Linx Consulting. This firm has published a recent report entitled “Chemicals & Materials for Photovoltaic Cells and Modules 2010,” which forecasts this market to reach $14B by 2015, lowering their April 2009 estimate by $1B, likely due to the lack of binding national clean energy and carbon capping regulations in the U.S and abroad. Linx has based their upstream supply chain growth figures on end-user demand for solar power, which they predict will increase from 5.8GW currently to 38GW by 2015. The PV supplier branch of the supply chain is less affected by module price declines than PV manufacturers and enjoys less overall competition.

PV solar cells are comprised of several main categories including: crystalline silicon, amorphous silicon, tandem-junction, cadmium telluride, and copper indium gallium selenide cells and modules. Key technology areas for improving cell performance are centered around texturization, chemical cleaning, metallization, selective emitters, backsheets, frontsheets, and encapsulants. The Linx market research report focuses on all of the above issues, as well as perspectives on the levelized cost of energy as a function of module performance, including geographic adjustments such as local incentives and solar irradiance factors.

One particular company positioned to capitalize well on the solar PV materials boom is DuPont. This company has recently added to its investment in a $120M capacity expansion, announced in August 2009, for raw materials processing related to these cells, bringing the total commitment of these two phases to $295M. A primary driving force for this expansion is to deploy its industry-leading Tedlar films that serve as a critical component of solar PV backsheets, providing long-term durability and performance for solar PV modules in all-weather conditions. The manufacturing steps for Tedlar-oriented solar PV backsheet films include producing vinyl fluoride monomer, which is converted into polyvinyl fluoride polymer resins prior to extrusion into the Tedlar film. DuPont’s solar PV backsheet film line expansion will be located at their Circleville, Ohio, facility using existing and retrofitted assets; production is slated to begin in September 2011.

This expansion supports Tedlar-oriented film capacity for global demand of over 10GW of solar PV module production. DuPont expects that overall sales of its family of products into the solar PV industry will exceed $1B by 2012 based on their internal analysis of solar PV market growth over the next several years, which would accelerate demand, in particular, for Tedlar and other new materials that have increased the lifetime and efficiency of solar cells and modules previously.

Declining solar PV module prices over the last couple years and reports for continued behavior have not generated much consolidation in the solar module manufacturing arena; thus, PV solar materials providers have the opportunity to serve this market to meet increasing installation demands. Companies such as DuPont, as well as leading process equipment providers, with competitive advantages for certain critical products, will be in a good position to capitalize on this trend.

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