Question: Solar materials are becoming volume markets. Which material segments are worth exploring for large material companies?
Haacke: We segment solar material markets into active cell materials (polysilicon), connectors (metals) and PV cell packaging (mostly polymers and glass). While the first two markets have matured comparatively quickly, those for PV cell packaging are still in the earlier stages. Active PV cells or layers will always need protection from weather and the external environment. At the same time, this packaging should allow in the maximum amount of photons for electricity production. This can be achieved with the use of polymers, coatings and glass. We estimate the total market for those cell packaging materials to reach USD 7B by 2020 – this figure includes PV front covers, encapsulants and back covers. This surely constitutes an attractive market worth exploring – even for large global corporations. Some large material companies, e.g., chemical companies, are currently entering this market or are seriously considering doing so.
Question: What has changed in recent years for solar material suppliers? Can you see similar trends to the PV module industry?
Haacke: Up until three to five years ago, the solar material value chain was largely nonintegrated. For example, glass, EVA resin, polyester and Tedlar™ film, additives and coating materials were supplied by large players, but very few of them actually sold directly to PV module manufacturers and even fewer developed an intimate knowledge of the market’s requirements. Back then, PV was still in its very early stages. Small to mid-size converter companies purchased available raw materials and tailored them to the needs of the PV end market. Leading converter companies were rewarded with very high operating margins of around 30–40%. This attracted new players to the market and led to the overcapacities and subsequent margin contractions that were witnessed between 2011 and mid-2013. Among those new entrants were, and are, large material players seeking to balance their business cycles. These large players have the potential to change the rules of the game in solar materials through downstream integration – in that sense, this is similar to the PV module industry.
Question: In what respect could large integrated material suppliers affect the solar materials markets?
Haacke: Large integrated players are very different from the intermediate material converter companies by nature. The former implement integrated strategies, and design raw materials specifically for the PV end markets. They have a global reach and the financial power to extend beyond current practices of module design. They pursue a strategy of long-term value creation and devise material substitution scenarios rather than thinking only of the next quarter’s sales targets. In this way, they share many similarities with other industries such as the automotive industry. I have said it many years ago: To predict solar market developments, it is worthwhile to take a closer look at the automotive segment, in which consolidation, material substitution, and globalization are just a few very obvious parallels.
Question: Regarding material substitution, what are the most important innovation trends?
Haacke: Take PV cell packaging for example: We are mostly talking about transparent films or sheets, liquid packaging materials and a wide range of coatings and additives. Before large players started to develop an interest in this market, the PV industry had to accept materials that already existed. This was less than optimal in many cases. Today, we see more customized solutions, e.g., incorporating demands for increased system voltage and durability, and hence materials with higher electrical insulation properties. Also with PV markets entering more demanding climate zones, protection from weathering is being redefined. But this is just the beginning. Future innovation trends will take us beyond the substitution of one single component for another. At the moment, my team is looking into the complete redesign of how PV cells will be packed and protected.
Question: What could these designs look like?
Haacke: Simple, cost-effective, and providing greater protection and reliability. There is a need for fewer components, less overall material consumption and weight, lower processing costs and improved performance and durability. Before commencing the development of such a component or system however, future technical requirements need to be clearly established. This is not easy to do in the context of dynamic PV markets with uncertainties about future cell technologies and conditions of module deployment, to name but a few. The monetary value of such a new design also needs to be calculated early in the process; otherwise, it could turn out later that it was not worth the development or market introduction cost. Nevertheless, with potential markets worth USD 7B by 2020 and growing, this exercise is certainly warranted.