Recent solar module production capacity has been nearly twice the demand, resulting in significant overcapacity and excessive inventories. Solar manufacturers have reduced prices to record lows, often at or below the module cost of goods sold (COGS). Companies have been hunkering down until overall market conditions improve by laying off workers or actively seek creative solutions to lower the COGS below current prices. Solar companies are seeking low-cost manufacturing locations, higher efficiency modules and higher production yields to stay afloat in this challenging period for the industry.
The COGS are expected to fall for numerous photovoltaic (PV) solar technology options over the next four years, and the rate of decline varies for different technologies based on factors such as economies of scale and raw material prices. The PV technologies with the biggest upside for future installations will likely have the steepest decrease in COGS, with copper-indium-gallium-selenide (CIGS)-based PV falling fastest followed by cadnium telluride (CdTe), crystalline silicon, thin-film silicon, according to numerous industry reports. First Solar, headquartered in Tempe, Arizona, has been the leader in CdTe for many years but has underwent growing pains in recent years due to the overall PV solar oversupply, which appears to be finally on the decline.
Much consolidation has occurred across the whole solar supply chain globally the last several years during the downturn, and many companies have been unable to cope, leading to bankruptcy or severely scaled-back business activity. One major development deterring less stout startups and smaller solar manufacturing players has been the up-and-coming threat of one of the world’s top electronic materials and device foundries ramping up for commercial production.
The Taiwan Semiconductor Manufacturing Company (TSMC) has gone solar as well, expanding out its capabilities from microchips and MEMS devices, which it has dominated. TSMC has recognized the opportunity that CIGS solar presents in the future and has achieved over 14 percent efficiency for its solar cells. Many companies in this space has begun to get cold feet, seeing how TSMC has become a giant in microchip production and expecting the same to eventually happen for CIGS and potentially other thin-film solar cells. What’s more, CIGS solar cells have been reported to reach as high as 20 percent efficiency developed by a Swiss federal research center; so the bar is only rising for this technology.
Nanosolar, a US-based roll-to-roll CIGS thin-film solar cell and module manufacturer, has confirmed that it cut its workforce this week, according to PV Magazine, citing up to a 75 percent reduction. In comparison to TSMC, Nanosolar has been shipping modules with only about 10 percent conversion efficiency, according to GTM Research. Nanosolar has its headquarters in San Jose, California, along with a 200,000 square feet solar cell printing factory and a 500,000 square feet module assembly factory in Germany. It was a rising star of the industry and received several past federal grants and visits by President Obama in support of his green energy initiatives.
Additional causalities were experienced across the global solar industry this week as well. A German module manufacturer, Centrosolar, announced it is also restructuring its business after reporting a 22 percent decline in revenue in its 2012 provisional financial results. Spanish PV solar manufacturer, Iatso, filed for insolvency yesterday. It was particularly affected by Spain’s recent reduction of renewable energy incentives. Earlier this month, the Spanish government had announced a significant cut to its feed-in-tariff program due to modifications to its consumer price index and overall budget deficit.
Many European countries (plus the US) have reduced incentives for renewable energy in recent years, as this region shrinks from its prominent role of leading the global industry. Many solar manufacturers have paid the price and gone out of business as a result, and the trend will only continue until worldwide incentives return.