A Stronger, More Efficient Photovoltaic Industry

Semiconductor International, April 17, 2009

The economic turmoil of the PV market in 2009 could actually turn into a more mature and orderly supply chain for the worldwide solar industry when growth returns, iSuppli predicts.

What does not kill me makes me stronger. Although 19th century German philosopher Nietzsche probably did not have our global photovoltaics (PV) market in mind when he penned those words, they are nonetheless applicable, according to the latest report from iSuppli Corp. (El Segundo, Calif.). The economic turmoil of the PV market in 2009 could actually turn into a more mature and orderly supply chain for the worldwide solar industry when growth returns, the market researcher said today.

Worldwide installations of PV systems are expected to drop 32% this year, down to 3.5 GW from 5.2 GW in 2008. With the average price per solar watt declining by 12% in 2009, global revenue generated by PV system installations will plunge 40.2% -- from $30.5B in 2008 to $18.2B in 2009.

“For years, the PV industry enjoyed vigorous double-digit annual growth in the 40% range, spurring a Wild West mentality among market participants,” said Henning Wicht, senior director and principal analyst for iSuppli. “An ever-rising flood of market participants attempted to capitalize on this growth, all hoping to claim a 10% share of market revenue by throwing more production capacity into the market. This overproduction situation, along with a decline in demand, will lead to the sharp, unprecedented fall in PV industry revenue in 2009.”

However, the 2009 PV downturn, like the PC shakeout of the mid-1980s, is likely to change the current market paradigm, cutting down on industry excesses and leading to a more mature market in 2010 and beyond, according to iSuppli’s analysis. “The number of new suppliers entering and competing in the PV supply chain will decelerate and the rate of new capacity additions will slow, bringing a better balance between supply and demand in the future,” Wicht said.

The Spain effect

Perhaps the most significant factor in PV’s slowdown this year was the government-imposed cap on feed-in tariffs in Spain, leading directly to a sharp decline in expected PV installations. Spain accounted for 50% of the world’s PV installations in 2008, caused in part by an artificial demand surge as Spain’s government prepared to lower the cap for feed-in tariffs to 500 MW. This set a well-defined deadline for growth in the Spanish market in 2009 and 2010.

Although the Spanish situation is spurring a surge in excess inventory and falling prices for solar cells and systems, this will not stimulate sufficient demand to compensate for the lost sales in 2009. Even new and upgraded incentives for solar installations from the United States and Japan — and attractive investment conditions in France, Italy, the Czech Republic, Greece and other countries — cannot compensate for the fall-out in Spain this year, iSuppli reported. The Spanish impact will continue into 2010, restraining global revenue growth to 29.2% for the year.

Of course, the PV market has not been immune to the economic woes and credit crunch faced on a global scale. “Power production investors and commercial entities are at least partially dependent upon debt financing,” Wicht noted. “Starting in the first quarter of 2009, many large and medium solar-installation projects went on hold as they awaited a thaw in bank credit flows.”

The market turnaround

The PV market is expected to turn back around after 2010, when the fundamental drivers of PV demand will reassert themselves, iSuppli said. Revenues are forecast to increase 57.8% in 2011, with similar growth rates in 2012 and 2013.

“PV remains attractive because it continues to demonstrate a favorable return on investment,” Wicht said. “Furthermore, government incentives in the form of above-market feed-in tariffs and tax breaks will remain in place, making the ROI equations viable through 2012. Cost reductions will lead to attractive ROI and payback periods even without governmental help after 2012.”

See the original article here

Bright Future for China's Solar Power Sector

Shanghai Daily, Fu Chenghao, April 19, 2009

China's aim to become a major global player in solar power has been boosted by a new subsidy program that will help cut the cost of attaching cells to rooftops and fill a manufacturing gap from declining demand from abroad.

The government announced last month that solar power attached to buildings in projects involving more than 50 kilowatts would be eligible for a subsidy of 20 yuan (US$2.90) per watt.

China is the world leader in the manufacture of photovoltaic (PV) cells, or panels that covert sunlight into electricity. The surging cost of polysilicon, a key ingredient, in recent years had forced Chinese manufacturers to rely on demand from countries that offered subsidies for solar use.

But now, with a substantial increase in supply, the price of polysilicon has plummeted.

"With the bursting of the price bubble for polysilicon, the timing is right to subsidize solar power development," said Wei Qidong, secretary general of the PV industry association in Jiangsu Province. "That will encourage domestic use, create a stronger market for Chinese manufacturers and advance the nation's efforts to promote alternative, clean energy sources."

Jiangsu is China's major solar-cell manufacturing base, home to such big names such as Suntech Power Holdings Co and Canadian Solar Inc.

The 20-yuan subsidy, which equates to what's offered in California and is three times that of Japan, will cover nearly half the cost of solar power conversion, including equipment and installation, the government said.

The subsidy translates to a drop in power generation cost to about 1 yuan per kilowatt hour, only a quarter of some domestic pilot solar projects though still more than double the domestic grid prices for conventional coal-fired power.

Gao Jifan, chairman and chief executive of Trina Solar Ltd, called the subsidy plan, jointly unveiled by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development, a "precursor" of longer-term state support. He believes that the rooftop plan is a good starting point before subsidies are extended to larger utility-scale projects, which will require a tariff regime to make solar electricity commercially viable.

Germany, for example, passed a law in 2000 obligating grid operators to pay set prices, or feed-in tariffs, for renewable electricity sources. As a result, Germany has become one of the world's largest PV markets.

Tariff system

China does have a renewable energy law requiring distributors to buy renewable energy from generators, but it lacks a tariff system to boost the viability of solar power. At present, pricing is at the discretion of the National Development Reform Commission, based on the principle of reasonable cost plus reasonable return.

"If we are to have a feed-in tariff system like Europe's, it has to win approval from the National People's Congress, and that may take more time," Gao said. "So the government has decided to start up the domestic market as soon as possible by going after the rooftop market first," he said from his office in Changzhou, Jiangsu. Gao said China could account for 10 percent of the global PV market in three years to five years, up from less than 1 percent now.

The new subsidy comes as Chinese solar companies are struggling with reduced access to credit and a drop-off in demand from countries such as Spain because of the recession.

In addition to fighting climate change and boosting energy conservation, China's subsidy program is aimed at helping domestic PV makers by activating a largely untapped home market, the ministries said.

"The financial crisis is benefiting domestic PV makers because it has brought down polysilicon prices and drawn government attention to the needs of an increasingly mature industry," Wei said.

Sha Xiaolin, chairman of Qiangsheng Photovoltaic Technology Co (QS Solar), said he was optimistic about the large-scale use of solar power, saying "an energy crisis would be much more frightening than the financial crisis."

QS Solar, unlike most solar cell makers that rely on polysilicon, is developing the emerging technology of thin film. Although it has a lower conversion efficiency, thin film is cheaper and can be manufactured with higher throughput.

Investors have welcomed the government's subsidy plan, with solar stocks surging in China and the United States, where many Chinese solar companies are listed.

Shares in Hebei Province-based Tianwei Baobian Electric Co have soared 44.5 percent in Shanghai trading since the subsidy announcement. The Shanghai Composite Index rose 9.3 percent in the same period.

Analysts said the subsidy program won't necessarily have a big impact this year because it will take time to get up and running.

Based on the central government's subsidy budget of 400 million yuan on renewable energy this year, at most 20 megawatts of solar capacity could be subsidized in 2009, the China Securities Journal reported, citing Ping An Securities analyst Wang Fan.

That amount is a fifth of China's total installed solar capacity in 2007, or 5 percent of Trina Solar's planned shipment of 400MW this year.

But the domestic industry is on the verge of a big leap forward.

"I believe there will be an explosive growth in the domestic PV market, not just double-digit growth," Sha said.

See the original article here

China Takes Steps To Rebalance Its Solar Industry

Renewable Energy World, Lou Schwartz, China Strategies LLC

As Jin Baofang, the Chairman of the Board of the Jinglong Group, a Chinese solar energy company and a delegate to the National People's Congress, recently said of the relationship between the Chinese economy and the economies of large consuming nations: "when nations that are large consumers sneeze, our manufacturers immediately catch a cold."

The worldwide financial crisis has laid bare the unhealthy symbiotic relationship between the Chinese and Western economies. The unsustainable economic model that had Western countries (most notably the U.S.) buying cheap, labor-intensive exports from China with funds borrowed from the Chinese has collapsed. Consequently the West (and particularly the U.S.) will have to reorient its economies to produce and save more and consume less while China will have to restructure its economy so that it relies less on exports and increases domestic consumption to maintain its impressive GDP growth.

The Chinese solar power industry is a case in point, reflecting (no pun intended) China's unhealthy dependence on exports and the prospects for renewed growth as the Chinese government adjusts its model for economic growth.

In the words of Shi Dinghuan, an advisor to the State Council and Chairman of the Board of the China Renewable Energy Society, the new energy industry in China that has suffered the most from the worldwide financial crisis is China's solar industry. Through the end of 2008, China had become the world's largest producer of photovoltaic cells, but because approximately 98% of sales of PV products were exports, when financing became tight worldwide, orders for PV products from China were widely cancelled, particularly from the three largest consumers of Chinese solar power products: Spain, Germany and Japan.

The contraction and/or cancellation of orders from the West has been widely deleterious to China's solar power industry. For example, before the financial crisis of late 2008, in previous years, Wuxi's Suntech had operated at 60% capacity utilization during the winter months; since the worldwide financial crisis, Suntech has operated at capacity utilization rates one-half normal levels. The sudden drop-off in manufacturing activity in turn has forced Suntech to lay off approximately 10% of its existing workforce and not follow through on its plans to increase the company's workforce by an additional 20% or so.

Smaller PV manufacturers with fewer resources than Suntech, have been forced out of business. One need only look at the current stock prices of publicly traded Chinese solar companies and compare them to what those stocks were selling for a year or more ago, to appreciate the body blow that the Chinese solar power industry has taken of late due to its excessive dependence on foreign trade. Suntech's 52-week high was in excess of $50/share; as of March 27, 2009 a share of Suntech sold for less than $11/share.

Jin Baofang rightly points out that the root of the imbalance in the market for Chinese PV products that has come back to haunt Chinese solar manufacturers is the excessively low targets for development of China's domestic solar industry: the {Mid to Long Term Plan for Renewable Energy} sets the objective of China having a cumulative total of only 300 megawatts (MW) of installed PV power by 2010, increasing to just 1800 MW by 2020. These objectives for domestic growth of installed solar power in China are seriously out of balance with the output capacity of China's PV manufacturing industry.

Shi Dinghuan has stated that what China's solar power manufacturing industry needs is a more active set of government policies to support and subsidize the adoption of solar power domestically, along the lines of the industrial policies that have created significant growth in the Chinese wind industry (see recent article). Because the use of solar power in China has been insignificant, the potential for growth is outstanding.

Very recently the framework of such policies intended to jumpstart domestic solar power demand and turn around China's overly export-oriented PV industry has begun to emerge. In late March, the Chinese Ministry of Finance promulgated its {Interim Measures for the Administration of Government Subsidies of Building Uses of Solar Energy Photovoltaic Power} (called "Interim Measures") and the accompanying {Implementing Opinion Concerning Speeding Up the Promotion of the Use of Solar Energy PV Power in Buildings} (called "Solar-Powered Buildings Promotion Opinion"), which together provide a framework for the implementation of China's "Solar-Powered Rooftops Plan."

Initially the Solar-Powered Rooftops Plan will be a demonstration project in selected towns and counties, a formula that has been successfully used by Chinese policy-makers over the years with respect to countless initiatives. The Solar-Powered Rooftops Plan seeks to develop demonstration projects for building integrated solar power (including solar power rooftop units and PV curtain walls) in large and mid-sized cities that are relatively well developed economically. The plan also supports the development of PV systems in villages and remote areas that are outside the reach of the power grid.

The central feature of the Interim Measures is a financial stimulus for the Chinese solar power industry: the Ministry of Finance has earmarked a special fund to provide subsidies for PV systems that are at least 50 kilowatts (kW) in size and have 16% efficiency for mono-crystalline PV products, 14% efficiency for multi-crystalline PV products and 6% efficiency for thin-film applications; for 2009 the subsidy is now set at up to 20 Yuan/watt [US $2.93/watt]. It is estimated that the new subsidy will cover the approximate cost of the equipment or perhaps one-half to 60% of the total cost of an installed system.

With the exception of the solar power systems subsidies set out in the Interim Measures, the plan is, for the most part, merely suggestive of what needs to be done to develop a thriving solar industry in China. Though the Chinese usually do a good job in filling in the interstices of plans as time goes on, at present this plan appears improvised to address the dire condition of the Chinese PV industry.

In this sector as in countless others, the Chinese have much work ahead to reorient their industries from an excessively large reliance on foreign trade to one that is more balanced, but in order to accomplish that objective, the Chinese must create and deploy a domestic technology development, legal, marketing, administrative and human infrastructure to match the manufacturing and export prowess of the Chinese solar industry. The Interim Measures are one important, though tentative, step in that direction.

See the original article here

First Solar & Sempra to Build 48MW PV Plant

First Solar, Inc. announced yesterday the execution of an agreement to construct a 48 megawatt ground-mounted solar panel based solar farm for Sempra Generation near Boulder City, Nevada; around 40 miles southeast of Las Vegas.

First Solar (NASDAQ:FSLR) will design, engineer and construct the facility and expects to begin construction in 2009.

Once completed in 2010, the Copper Mountain Solar project will likely be the largest PV based solar farm in North America, with a solar power generation capacity of 48 MW - enough to supply more than 30,000 homes. Together with the existing 167,000 photovoltaic panels at Sempra's 10 MW facility completed late last year, the power plant will incorporate nearly 1 million solar panels.

The solar farm is largest renewable energy project so far for Sempra Generation, part of Sempra Energy (NYSE:SRE); moving the company closer to their goal of becoming the first U.S. firm to own 500 MW of solar power.

First Solar is the largest producer of solar panels in the USA, with manufacturing capacity growing more than 2,500 percent from 2004 to more than 500 megawatts in 2008. First Solar's 2009's annual production capacity is expect to exceed 1 gigawatt, the equivalent of an average-sized nuclear power plant. The company also recently announced it reduced its manufacturing cost for solar modules in the fourth quarter to USD 98 cents per watt, breaking the USD $1 per watt price barrier.

See the original article here

China's Jiangsu to Detail Solar Power Subsidy Policy

Jiangsu Province in East China is drawing up specific provisions for the implementation of national subsidy policy for solar photovoltaic (PV) projects, said Wei Qidong, secretary-general of Energy Research Association of Jiangsu Province.

This is seemed as an encouraging action to materialize China's newly issued subsidy policy on solar PV power projects, which provides 20 yuan for each watt-peak of installed solar PV power capacity.

The Ministry of Finance and Ministry of Housing and Urban-Rural Development jointly released China's version of solar roof program earlier.

The subsidy policy is aimed to build a number of demonstrative solar PV projects, mainly solar PV roof projects and PV curtains in large and midsize cities as well as off-grid solar PV power stations in rural and remote areas.

Still, industry insiders have expressed their concern on the available amount of subsidy each year given the lack of exact number of subsidy to be provided.

Wang Sicheng, an expert with solar PV industry, said that the government has to provide at least 10 billion yuan of subsidy for 500 MW of China-made solar products each year, accounting for 25 percent of national overall output in 2008.

It's hard to evaluate the impact of solar PV roof program on solar PV industry when the total subsidy amount number isn't available.

Wei said that solar product manufacturers are unlikely to enjoy subsidy on solar PV power projects and on solar PV electricity for the same time.

Overshadowing concerns on China's solar PV industry also include the sustainability of subsidy policy and possible over-crowded investment and speculation spurred by the subsidy policy.

See the original article here

Q-Cells & LDK Solar Announce Joint Venture

Editors note: This announcement from the world's largest cell producer and the world's largest wafer manufacturer is, to my knowledge, the first joint venture between any two such heavyweights in the photovoltaic industry. It represents a new approach for both firms and is further evidence that LDK Solar is committed to becoming a vertically integrated company.

Q-Cells SE and LDK Solar Co., Ltd., today announced the formation of a joint venture focusing on large PV systems and market development in Europe and China. Given their complementary core business models and regional market expertise, the two companies intend to take advantage of value chain optimization and integrated cost reduction.

A joint project pipeline is already in place and the first 40MW project has commenced. The projects of the joint venture will utilize 100% solar wafers from LDK Solar and 100% solar cells from Q-Cells. The joint venture is already in discussions with potential buyers of the first turn-key project, which will be in Europe, and is in the planning stages for future joint projects in the emerging Chinese market.

The partnership between the two companies in the area of PV systems is not intended to be exclusive, but rather to focus on developing specific projects of mutual benefit, with the shared goal of accelerating the move to grid parity.

“We are very pleased to announce this joint venture and further expand our relationship with LDK Solar.” commented Anton Milner, CEO of Q-Cells SE. “This joint venture will strengthen our position in the crucial business area of large-scale PV power plants.”

"We look forward to the many new opportunities that will emerge as a result of our partnership with Q-Cells," stated Xiaofeng Peng, Chairman and CEO of LDK Solar. “As leaders of the solar industry, we are excited to announce this joint venture for exploring and developing new business.”

See the press release here

Albuquerque's Mayor Details New Energy Projects

New Mexico Business Weekly/Megan Kamerick/April 7, 2009

The city of Albuquerque is getting $5.1 million in energy efficiency block grants, much more than the $3.2 million officials originally anticipated.

The funds, from the American Recovery and Reinvestment Act, or ARRA, will be used for solar installations at city-owned parking facilities, the purchase of 20 to 25 hybrid vehicles, such as Honda Civic Hybrids and Ford Escape Hybrids, and new “cool roofs” for city buildings that will allow the installation of photovoltaic systems.

The list of projects came from an energy task force of business and government leaders convened to prioritize the spending of the ARRA funds. At a news conference, Mayor Martin Chávez referred to the team good-naturedly as a collection of “geeks and nerds, but very attractive ones.”

Chávez made the announcement beneath one of the oldest solar arrays in the city, installed by Sacred Power Co. for the Indian Pueblo Cultural Center in 1999. Sacred Power’s founders were part of the task force.

Of the funds, $2.75 million will go toward solar installations on four city multi-level parking structures that are good candidates for solar systems. The average structure has a monthly energy bill in excess of $3,000, said John Soladay, director of environmental health for the city. A 10-kilowatt photovoltaic system, the minimum design size for such a structure, would bring cost savings of about $4,788 annually. Initial estimates suggest the city can install 150kW on the structures, which could save between $75,000 and $100,000 annually in energy costs.

The parking structures also would have sites to allow people to charge electric vehicles and hybrid electric vehicles, including the general public and city officials, who will be driving new hybrid vehicles that will be purchased with $750,000 of the block grant funds.

About $1.5 million will be used to re-roof a number of city facilities that currently are not engineered to hold new photovoltaic systems. This will prepare the buildings for the installation of thin-film PV systems.

Soladay said between 30 and 50 structures could be re-roofed, representing between 125,000 and 150,000 square feet. Bids are out now to find qualifying vendors, he said, who should be selected within the next 90 days.

The next step would be to get funding for the PV systems, and the city could pursue the many competitive grants in the ARRA funds for that purpose. It could also use Clean Renewable Energy Bonds or seek a partnership agreement with a power services company to achieve that next step.

More than 500kW of installation is possible in the next 18 to 24 months, according to city officials, with an annual energy cost savings of between $350,000 and $500,000.

Chávez said the city will try to buy the solar technology locally, but that will be dependent on federal regulations. There are at least four companies up and running or opening soon here that manufacture solar components: Advent Solar, Emcore, SkyFuel and Schott Solar (which is building a plant at Mesa del Sol).

The $5.1 million is formula-based funding under ARRA. There is a whole wave of competitive grant funds that the city plans to pursue, Chávez said, and it will look for partnerships in the private sector to land that money.

See the original article here