Professional Documents
Culture Documents
April 2007
Prepared by
Pegasus Business and Market Advisory Sdn Bhd
16-C, Jalan SS22/25, Damansara Jaya. 47400 Petaling Jaya, Selangor D.E., Malaysia
Tel: 603 – 7726 5373 Fax: 603 – 7726 5358
CONTENTS
1. EXECUTIVE SUMMARY..........................................................................5
1
6.1.4 Suntech ........................................................................................ 83
6.1.5 Mitsubishi...................................................................................... 85
2
6.5.3 Fronius ....................................................................................... 109
6.5.4 Xantrex....................................................................................... 110
9. APPENDIX........................................................................................ 137
3
Abbreviations
AC : Alternating current
a-Si : Amorphous silicon (thin film)
c-Si : Crystalline silicon
CdTe : Cadmium telluride (thin film)
CIS : Copper indium selenide (thin film)
CIGS : Copper indium gallium selenide (thin film)
DC : Direct current
EoG : Electronic grade (silicon)
FBR : Fluidised bed reactor
GDP : Gross domestic product
mc-Si : Multi-crystalline silicon also known as poly-crystalline silicon
MG-Si : Metallurgical grade silicon
OEM : Original equipment manufacturer
PV : Photovoltaic
R&D : Research and development
sc-Si : Single-crystalline silicon also known as mono-crystalline silicon
SoG : Solar grade (silicon)
TCS : Trichlorosilane (gas)
US : United States of America
4
1
1.. E
EXXE
ECCU
UTTIIV
VEES
SUUM
MMMA
ARRY
Y
5
Diagram 1. Developments in the PV Value Chain
6
2
2.. W
WOOR
RLLD
DEEC
COON
NOOM
MYYA
ANND
DEEN
NEER
RGGY
YOOV
VEER
RVVIIE
EWW
Much of the world’s economic growth in 2006 occurred during the first half
of the year. However, the economies in the high-income countries of the US,
European Union and Japan began to show signs of cooling in 2006. While
GDP in the US grew marginally from 3.2% in 2005 to 3.4% in 2006, GDP
growth in Japan cooled from 2.7% to 1.4% during the period. However,
strong economic growth in China and India above 8.0% annually in 2005-
2006 minimised the impact of a cooling economy in the high-income
countries on the globally economy.
1
Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
7
Overall, the developing economies experienced moderate to strong
economic growth from 2004 to 2006. While the high-income countries
experienced growth of 2.7% in 2005 and 3.1% in 2006, the developing
economies in various regions across the world experienced growth of 4.4%-
9.0% in 2005 and 4.9%-9.2% in 2006. Growth has been strongest in Asia-
Pacific contributed by China’s strong economic growth followed by South
Asia from India’s economic growth. Nevertheless, the developing economies
began to show signs of cooling in the second half of 2006.2
2
Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank
8
would be strongest in Asia-Pacific contributed by China’s strong economic
growth. China would eventually replace Germany as the world’s third largest
economy after the US and Japan within this decade and influence the world
economy through its imports and exports.2
Another economic threat is the volatility of oil prices. Oil prices began to
show a decline from its peak (about US$75 per barrel) in 2006 but the
possibility of a return to higher oil prices remains. Geopolitical uncertainties
in Iraq and Iran would have a significant impact on the world’s oil prices.
Return to higher oil prices under a scenario of a cooling world economy in
2007 could dampen economic growth in 2008 and beyond. Furthermore,
return to higher oil prices would increase the potential for inflation.
Increasing demand and tightening supplies caused a surge in oil prices from
below US$20 per barrel in 1999 to nearly US$75 per barrel by the third
quarter of 2006. Furthermore, geopolitical uncertainties in the Middle East
and adverse weather conditions affecting oilrigs on the US Gulf Coast
exacerbated the supply situation. Prices of natural gas paralleled with oil
prices from 2000 to 2006. However, thermal coal only followed suit in 2004
as an alternative to oil and natural gas to fuel the economies of China and
India.
Prices of the three fossil fuel categories began to decline by the fourth
quarter of 2006. Prices of oil declined from its peak of US$75 per barrel
during the third quarter of 2006 to as low as US$50 per barrel by the first
quarter of 2007. Factors contributing to the decline were a slowing global
economy, production from new oil wells constructed after 2000 and warmer
winters in Europe and North America.
9
Figure
Figure 2.2.
2.2. World
World Fossil
FossilFuel
FuelPrices
Prices
Historical
Historical (1990-2005) & Forecast (2006-2010) atCurrent
(1990-2005) & Forecast (2006-2010) at CurrentPrices
Prices
80
80 11
00
99
70
70
88
60
60
77
50
50 66
40
40 55
30 44
30
33
20
20
22
11
00
11
-- 00
Crude
CrudeOil
Oil Thermal
ThermalCoal
Coal Natural
NaturalGas
Gas
Source: BP Statistical Review of World Energy (June 2006) and Pegasus forecast
10
consumption among the non-OECD countries in various regions of the world
was 1.8%-3.7% fuelled by economic growth in the developing economies.
Growth in consumption has been strongest among the developing
economies especially from China and India brought about by the countries’
vibrant economic growth.
Outlook on fossil fuels. Though prices of crude oil have declined from its
peak of US$75 per barrel, analysts are in the opinion that prices of fossil
fuels in 2007 and beyond would not decline to levels prior to 2000. Energy
consumption in the developing economies especially in Asia-Pacific would
continue to outstrip consumption in the OECD countries in this decade and
the next fuelled by economic growth. The US Department of Energy predicts
that by 2015, the proportion of the world’s energy consumption from the
non-OECD countries would outstrip the OECD countries.
The oil and gas reserves of the Middle East, North Africa and Russia would
play a major role in meeting the world’s future need for energy. These
regions remain under-exploited and meeting future needs would depend on
new investments in downstream and upstream activities. Uncertainties
remain on the amount and speed of new investments to increase production
and availability for exports. Any significant shortfall in investments would
adversely affect the global energy balance and contribute towards volatility
in future energy prices.
As a result, the proportion of the world’s total electricity generation from the
OECD countries declined from 62.4% in 2000 to 58.0% in 2004 while the
proportion from the non-OECD countries increased from 37.6% to 42.0%
during the period.
11
Gains in energy efficiency, slower population growth and a maturing
economy in most of the OECD countries have slowed growth in electricity
consumption and generation. However, stronger economic growth among
the non-OECD countries has fuelled consumption and generation of
electricity at a faster rate than the OECD countries.
OECD
North America 4,589.4 4,794.4 2.5% 1.1% 31.4% 28.9%
Europe 3,040.3 3,250.2 2.3% 1.7% 20.8% 19.6%
Asia 1,476.3 1,585.9 1.7% 1.8% 10.1% 9.6%
OECD 9,106.0 9,630.5 2.3% 1.4% 62.4% 58.0%
Non-OECD
Europe and Eurasia 1,372.6 1,497.1 -0.1% 2.2% 9.4% 9.0%
Asia 2,479.5 3,517.1 6.3% 9.1% 17.0% 21.2%
Middle East 437.9 566.6 6.5% 6.7% 3.0% 3.4%
Africa 416.9 505.4 3.2% 4.9% 2.9% 3.0%
S’th & C’trl America 782.8 882.4 4.3% 3.0% 5.6% 5.3%
Non-OECD 5,489.7 6,968.6 4.0% 6.1% 37.6% 42.0%
12
Table 2.3b. Regional Projection in Electricity Generation
OECD:
North America 4,442 5,109 6,944 1.7% 25.7% 22.0%
Europe 2,975 3,471 4,350 1.4% 17.4% 13.8%
Asia 1,465 1,799 2,257 1.6% 9.0% 7.2%
OECD 8,882 10,380 13,551 1.6% 52.2% 42.9%
Non-OECD:
Europe and Eurasia 1,377 1,985 3,071 3.0% 10.0% 9.7%
Asia 3,014 5,027 10,599 4.8% 25.3% 33.6%
Middle East 448 738 1,108 3.4% 3.7% 3.5%
Africa 408 607 1,035 3.5% 3.1% 3.3%
S. & C. America 756 1,162 2,196 4.0% 5.8% 7.7%
Non-OECD 6,003 9,518 18,009 4.2% 47.8% 57.1%
World 14,885 19,898 31,560 2.8% - -
Source: US Energy Information Administration
13
3
3.. T
THHE
EPPV
VVVA
ALLU
UEEC
CHHA
AIIN
N
14
Table 3.1a. The Activities of the Value Chain
Silicon Silicon is in abundance in the form of sand, quartz, granite, clay and
feedstock mica. Silicon is initially mined and then extracted to produce
metallurgical grade silicon (MG-Si) and has wide usage in the
aluminium and chemical industry. For silicon to reach semiconductor
grade for use in electronics and PV, MG-Si has to be processed into
polysilicon that forms the feedstock to produce the ingots.
Ingots and Wafer manufacturers receive the polysilicon feedstock and process it
wafers into polysilicon (mc-Si) or monosilicon (sc-Si) ingots. These ingots are
then sliced or sawed into thin wafers.
Cells PV cells produced from the wafers are the light absorbing materials.
Wafers produced from sawed ingots have a damaged surface and
therefore etched with an alkaline solution. Phosphorus is used to
diffuse the surface of the silicon wafer doped with boron. An anti-
reflective coating (silicon nitride or titanium dioxide) is usually applied
to increase the amount of light absorbed by the cell. The wafer is then
metallised by screen-printing (usually with a silver paste) to form grid-
like contacts on the front of the wafer. The rear of the wafer is also
screen-printed (usually with aluminium) covering the area or in a grid-
like pattern.
15
Table 3.1a. The Activities of the Value Chain
Installation The final part of the value chain involves installing the modules and its
components to form the PV system. Installation may be grid-connected
or off-grid systems. Players in this segment of the value chain range
from small local businesses to large multinational companies. Small
businesses generally install PV systems of less than 10 kWp in homes.
Some module manufacturers are also involved as systems integrators
installing larger PV systems in stadiums, commercial buildings and
power plants.
16
Compared to manufacturing PV modules, manufacturing silicon requires
high investments in capital (per MWp), technological know how and large-
scale production to produce the economies of scale. As the value-chain
moves downstream, investments in capital (per MWp) reduces and smaller
scale production is feasible to achieve reasonable economies of scales - the
barrier to entry decreases downstream along the value chain. Thus, the
barrier to entry is highest to manufacture silicon with few players in the
industry while the barrier to entry to install PV systems is the lowest with
the greatest number of players.
Studies also show that profit margins are highest in the upstream activities
of the value chain and generally decline as activities move downstream. The
following are the typical profit margins across the value chain in 2005-2006:
17
Installing PV systems - 20%-25%;
Integration across the value chain. Very few players have integrated
across the value chain except for the larger companies. Increasing demand
for PV with constraining supply of silicon in the last three years has resulted
in some companies involved in cell and module manufacturing to move
upstream into wafer manufacturing and some into silicon production to
ensure security of supply. Moving upstream in recent years has been mostly
through acquisition, partial stake in companies or forming joint ventures PV
industry is beginning to shows signs of consolidation.
Sharp S S S S S
Kyocera S S S S
Sanyo S S S S S
Mitsubishi S S S S
SolarWorld S S S S S
Isofoton S S S S
Q-Cells S S S
BP Solar S S S
Suntech S S S S
Motech S S
Unisolar S S
REC S S S S S
MEMC S S
Hemlock S
Wacker S
S Includes subsidiary companies and joint ventures. S Planning
18
Crystalline silicon modules. Modules are either mc-Si or sc-Si
cells produced from sawing ingots into wafers, which produces a
significant amount of waste. An alternative method to reduce waste
is to process silicon into sheets or ribbons of specific length and
then cut into wafers.
Currently crystalline silicon cells are the mainstay of most PV modules in the
market. Technically crystalline silicon is not the ideal material for a light
absorbing semiconductor but benefits from decades of R&D. Furthermore,
silicon cells are stable with good light conversion efficiencies. Crystalline
silicon cells account for 94% of the modules in the global market in 2006;
mc-Si cells produced from sawn silicon ingots account for 57% of
the modules.
19
Crystalline silicon sheets and ribbons account for 4% of the
modules.
However, thin films have yet to make any significant impact to the maturing
crystalline silicon technology. Thin films account for 6% of the modules
produced and marketed in 2006:
Thin films from a-Si are the most widely developed of the thin film
technologies and account for 4.5% of the world’s module
production.
CdTe thin films account for 1.5% and CI(G)S account for less than
0.5% of the world’s production of PV modules.
20
Table 3.2b. PV Modules and Efficiency Range
mc-Si 12%-15%
sc-Si 14%-17%
a-Si (thin film) 6%-9%
CdTe (thin film) 8%-10%
CI(G)S (thin film) 9%-11%
21
production cost through improvements in production efficiency and efficient
utilisation of silicon. This is an important driver within the value chain since
successes of companies greatly depend on their ability to reduce cost and
become more efficient. This is would be very relevant in the future in the
event of reduced government subsidies, slowdown in demand and
increasing competition. Reducing cost would also result in PV becoming
more affordable generating greater interest from the end-users.
22
Mandated power buy back schemes from the utility companies
above the normal utility rates.
23
4
4.. IIN
NDDU
USST
TRRY
YTTR
REEN
NDDS
SAAN
NDDO
OUUT
TLLO
OOOK
K
Projected market for PV modules by 2010, from various sources, range from
a conservative 5,000 MWp to an optimistic forecast of 11,000 MWp. Growth
in the global market would remain strong from 2007 to 2010 but expected
to cool as the market in Germany levels off or begins to decline. Thus, the
assumption is the market would grow at a slower pace in 2007-2010
compared to 2001-2006. Based on 20% annual growth in 2007-2010, the
global market would reach 5,000 MWp by 2010.
Figure
Figure 4.1a.
4.1a.PV
PV Module
Module Production
Production and
and Projections
Projections (MWp)
(MWp)
10,000
10,000
9,220
9,220
8,000
8,000
6,855
6,855
MWp
ProductionininMWp
6,000
6,000 4,977
4,977
Production
4,000
4,000
2,400
2,400
1,727
1,727
1,195
1,195
2,000
2,000
560 759
759
78 89
78 126 155
89 126 201 288
155 201 399 560
288 399
00
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Historical
Historical 40%
40% Annual
AnnualGrw
Grwth
th 30%
30% Annual
AnnualGrw
Grwth
th 20%
20% Annual
AnnualGrw
Grwth
th
New silicon plants from existing and new players would come into
production in 2008 and beyond, relieving the constraint and gradual
reduction in module prices by 5%-7% annually in 2008-2010. Excesses in
silicon production beyond 20% annual growth for PV in 2008-2010 would
create an oversupply of silicon. Furthermore, aggressive build-up in
24
production capacity for PV modules especially in China would increase the
potential to supply beyond the 20% annual growth for PV. A combination of
these two factors would cause prices of modules to decline faster than the
expected 5%-7% annually in 2008-2010 and increase demand beyond the
projected 20% annual growth for PV.
The largest market for PV in 2005 was Germany with demand increasing
from 363 MWp in 2004 to 635 MWp in 2005. Japan was the second largest
market growing from 272 MWp in 2004 to 290 MWp by 2005. The US was
the third largest market with 103 MWp installed in 2005 and Spain
contributed significantly to 20 MWp. Other significant markets in Europe
during the period included Austria (8 MWp), France (7 MWp), Italy (7 MWp)
and Switzerland (4 MWp) and Britain (3 MWp). In Asia, Korea installed 6.5
MWp and China installed 27 MWp in 2005.
Figure
Figure 4.1b.
4.1b.Share
Share of
of World
World PV
PV Module
Module Production
Production in
in 2005
2005(MWp)
(MWp)
Sharp
Sharp
Others
Others 23.0%
23.0%
32.0%
32.0%
Isofoton
Isofoton Sanyo
Sanyo
2.3%
2.3% MSK
MSK Mitsubishi 7.2%
Solon Mitsubishi
Solon 7.2%
3.5%
3.5% 3.5% 6.5%
6.5% Kyocera
Kyocera
3.5%
Solarw
Solarwatt
att 8.2%
8.2%
2.1%
2.1%
Schott
Schott
BP
BPSolar
Solar Suntech Solar
Suntech Solar
2.7%
2.7% Shell 2.9%
ShellSolar
Solar 2.9% 3%
3%
3%
3%
The industry scenario in the last five years has been a period of
acquisitions, joint ventures, expanding operations and players entering and
exiting the market. Shell Solar exited from manufacturing c-Si modules in
25
2006 to focus on thin films. During the period, Germany’s SolarWorld
acquired Shell Solar’s facilities for c-Si modules and China’s Suntech
acquired a majority stake in Japan’s MSK. Isofoton established an office in
the US in 2004 to penetrate the country’s market. Sharp and Kyocera
expanded their manufacturing operations from Japan to Britain, Czech
Republic and Mexico.
Product. In 2005, c-Si modules accounted for 94% of the world’s module
production - mc-Si cell modules accounted for 57%, sc-Si cell modules 33%
and c-Si ribbons/sheets 4%. Modules using mc-Si cells have lower
conversion efficiency than sc-Si modules but its market share has been
increasing over sc-Si modules with improvements in efficiency. Shortages of
silicon in recent years have created opportunities for thin films with its lower
manufacturing costs and not constrained by supplies of silicon. By 2005,
thin films using a-Si, CI(G)S and CdTe increased to 6% of the world’s
module production.
Figure
Figure 4.1c.
4.1c.PV
PV Modules
Modules by
byType
Type in
in 2005
2005
c-Si
c-Siribbon/sheets,
ribbon/sheets,
4%
4% Others,
Others,1%
1%
a-Si
a-Sithin
thinfilm,
film,5%
5%
sc-Si, mc-Si,
mc-Si,57%
57%
sc-Si,33%
33%
26
Though c-Si modules would continue to dominate the world market by
2010, projections are thin film’s share of the market would increase from
6% in 2005 to 20% by 2010. The appeal for thin film modules is it requires
little or no silicon and production costs are lower than c-Si modules.
However, thin films are hard to mass-produce cost-effectively and
efficiencies are generally lower than c-Si modules under current
technologies.
FIgure
FIgure 4.1d.
4.1d.Share
Share of
of the
the Module
Module Production
Production by
byType
Type
4%
4% 4%
4% 6%
6% 6%
6% 7%
7% 14%
14% 17%
17% 20%
20%
100%
100%
80%
80%
60%
60%
96%
96% 96%
96% 94%
94% 94%
94% 93%
93%
40% 86%
86% 83%
83% 80%
40% 80%
20%
20%
0%
0%
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
Crystalline
Crystallinesilicon
siliconmodules
modules Thin
Thinfilms
films
Note: Assumption of projection – Total module demand increasing from 759 MWp in
2003 to 4,977 MWp by 2010; Thin films increasing from 30 MWp in 2003 to 1,000
MWp by 2010 according European Photovoltaic Industry Association.
Price trend. Prices of modules across the world increased from 2004 to
2006. In Germany, prices rose sharply from 2004 to 2005 as demand for PV
in the country increased by 85% annually. The exception was Japan with
the strength of the Yen, low inflation and economies of scale in Japanese
production. Furthermore, most of the major Japanese manufacturers have
integrated across the value chain beginning from manufacturing of wafers
and ingots to modules ensuring supplies of silicon materials.
Two key factors contributed towards increasing modules prices from 2004 to
2006:
27
capacity, contract prices of silicon reached US$55 per kg by 2006
from US$25 per kg and spot prices to US$300 per kg.
Figure
Figure 4.1e.
4.1e. Average
Average Module
Module Prices
Prices (per
(per Wp)
Wp)
4.50
4.50 600
600
500
500
4.00
4.00
400
400
3.50
3.50
300
300
3.00
3.00
200
200
2.50
2.50 100
100
2.00
2.00 00
2000
2000 2001
2001 2002
2002 2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
Germany
Germany (€)
(€) US
US(US$)
(US$) Japan
Japan(Yen)
(Yen)
28
Table 4.1a. Forecast of PV Demand (MWp) Based on Annual Growth Rates
Forecast Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
At 20% 2,400 2,880 3,456 4,147 4,977 15,460
At 30% 2,400 3,120 4,056 5,273 6,855 19,303
At 40% 2,400 3,360 4,704 6,586 9,220 23,869
Western Europe (namely Germany and Spain), Japan and the US would
continue to be significant markets for PV in 2007-2010 driven mainly by
government supported renewable energy programmes.
Significant markets in Asia that would drive demand for PV include China
and Korea. Through the countries renewable energy programme, China
plans to install 450 MWp by 2010 and Korea 1,300 MWp MWp by 2012.
29
Table 4.1b. Market Value of Materials for PV Modules in 2007-2010
Materials/ Proportion of Material Cost Market Value
Components Material Cost US$ per Wp (US$ million)
Glass 22% 0.09 1,364
EVA 19% 0.07 1,153
Frame 17% 0.07 1,073
Junction box 16% 0.06 998
Tedlar 15% 0.06 918
Interconnect 8% 0.03 477
Adhesive 4% 0.01 217
Total 100% 0.40 6,200
Note: Cost breakdown and total material cost sourced from GT Solar. Market valued
based on market of 15,500 MWp in 2007-2010.
Market challenges. The market for PV will continue to grow and prices
reduced over time. However, PV will continue to depend on government
support in 2007-2010 as cost electricity from PV remains 5-10 times above
conventional electricity produced by the utility companies. Possibilities of
reduced government support and changes in government policies not in
favour towards PV would dampen demand. Furthermore, delays in
implementing renewable energy programmes for PV would stall demand for
PV.
30
Most of the financing for PV installations are through loans including pre-
installation in newly constructed homes in an overall home mortgage. End-
users would expect the monthly payment for their PV system to be
comparable to the amount received from the utility companies’ power
buyback schemes and savings in the electricity bill. A rise in interest rates
would increase the monthly loan payment and dampen demand for PV.
Furthermore, rise in interest rates for mortgages would dampen demand for
newly built homes with pre-installed PV.
Figure
Figure 4.2a.
4.2a.Crystalline
Crystalline Silicon
Silicon Cell
CellProduction
Production and
and Projection
Projection
5,000
5,000
3,977
3,977
4,000
4,000
3,447
3,447
2,956
2,956
3,000
MWp
3,000
MWp
2,680
2,680
2,250
2,250
2,000
2,000 1,627
1,627
1,145
1,145
729
729
1,000
1,000
--
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
31
The market for ci-Si cells grew at an average of 46% annually from 729
MWp in 2003 to an estimated 2,250 MWp in 2006. Nevertless, demand for
c-Si cells exceeded supply but production constrained by the silicon
shortage. Though ci-Si cells would continue to dominate the market for PV
modules, its growth would slow to an average of 15% annually increasing
from 2,680 MWp in 2007 to nearly 4,000 MWp by 2010. Furthermore, its
share for the module market would decline from 94% in 2006 to 80% by
2010 overtaken by thin films.
Japan and Germany would continue to be a net exporter of c-Si cells while
the US and China a net importer in 2007-2010. Japan exports much of the
c-Si cells to supply Japanese module plants in Europe, Mexico and the US.
Germany exports its c-Si cells to supply module plants in other parts of
Europe, the US and China. China will continue to be a net importer of c-Si
cells in 2007-2010 as production capacity for PV modules would exceed c-Si
cells. In 2006, China’s total production capacity for c-Si modules was nearly
4,000 MWp while production capacity for cells was 2,000 MWp.
Figure
Figure 4.2b.
4.2b.Share
Share of
of World
World Silicon
Silicon Cell
CellProduction
Production in
in 2005
2005(MWp)
(MWp)
Sharp Q-Cells
Q-Cells
Sharp
24.3% 9.4%
9.4%
Others
Others 24.3%
20.2%
20.2%
Kyocera
Kyocera
8.1%
8.1%
Shell
Shell
Solar
SolarSuntech Sanyo
Sanyo
Suntech BP
BPSolar
Solar Schott
Schott Mitsubishi
Mitsubishi
3%
3% 4.6% 7.0%
7.0%
4.6% 4.8%
4.8% Solar
Solar 6.4%
6.4%
5%
5%
Isofoton
Isofoton
3.2%
3.2% Motech
Motech
3.4%
3.4%
32
Japanese companies dominate the market for c-Si cells accounting for
nearly half of the world’s production. Together Japanese companies Sharp,
Kyocera, Sanyo and Mitsubishi accounted for 46% of the world’s production
or 790 MWp in 2005. Major European companies include Q-Cells, Schott
Solar, BP Solar and Isofoton accounting for 22% of the world’s production or
nearly 390 MWp. Suntech is China leading producer of c-Si cells accounting
for nearly 5% of the world production and 44% of China’s production at 68
MWp in 2005.
Product. The three major categories of c-Si cells in production are mc-Si
(multi-crystalline), sc-Si (mono-crystalline) and c-Si ribbon/sheets. Until
recent years, sc-Si cells dominated the market but now overtaken by mc-Si
cells because of its lower costs. Though mc-Si cells have lower conversion
efficiency than sc-Si cells, its efficiency has been improving with
developments in technology. The process to saw ingots into wafers for mc-
Si and sc-Si produces silicon wastage. Technologies developed by Evergreen
Solar and Schott Solar produce mc-Si ribbons and sheets, which can be cut
rather than sawed to produce wafers and reduces wastage.
FIgure
FIgure 4.2c.
4.2c.Type
Type of
of c-Si
c-SiCells
Cells by
byProduction
Production in
in 2005
2005
c-Si
c-Siribbon/sheets
ribbon/sheets
4%
4%
sc-Si
sc-Si
35%
35%
mc-Si
mc-Si
61%
61%
Price trends. C-Si cells account between 60% and 70% of the production
cost of a PV module. Prices of c-Si cells increased from 2003 to 2006
brought about by increasing market for PV modules subsequently creating
demand for c-Si cells but wafer production constrained by shortages of
silicon. Prices of c-Si cells would stabilise by 2006-2007 and decline from
2008 onwards with production from new silicon plants relieving the supply
constraint.
33
Figure
Figure 4.2d.
4.2d.Estim
Estimated
ated and
and Projected
Projected Cell
CellCosts
Costs (per
(per Wp)
Wp)
2.50
2.50
2.45
2.45 2.43
2.43
2.30
2.30
2.34
2.34 2.30
2.28 2.30
2.28
Wp
per Wp
2.10
2.10
2.14
2.14
US$per
1.95
1.95 1.99
1.99
US$
1.90
1.90
1.70
1.70
1.50
1.50
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
Note: Rough estimate based on assumption cells account for 65% of the module cost
Average prices of c-Si cells would decline by 5%-7% annually from 2008 to
2010 as demand for PV cell grows by an average of 15% annually. If build-
up in c-Si cell and silicon production capacity were to continue unabated, an
oversupply situation would exist. If this were to happen, prices of c-Si cells
would decline faster than 5%-7% anticipated. On the other hand, if silicon
manufacturers were to take a more cautious approach in expanding their
production capacity and/or demand for c-Si cells were to increase beyond
15% annually, prices of c-Si cells may go on an uptrend.
34
modules would increase from 2,800 MWp to 4,000 MWp. Even with the
increase in China’s silicon production capacity, production would not be able
to meet China’s demand.
In the technology front, successful companies are those that possess the
technology to reduce the cost c-Si cells per Wp. Cells account for 60%-70%
of the manufacturing cost of PV modules. Though cell manufacturers do not
have control on the cost of silicon, cost per Wp can be reduced through
improving the cell’s conversion efficiency, producing thinner wafers and
developing technologies that reduce silicon wastage in manufacturing
wafers.
Thin films compete with c-Si and manufacturers are currently developing
technologies to improve efficiency and lower cost of manufacturing thin
films. Furthermore, thin films are not constrained by shortages of silicon
and have the potential to displace c-Si cells with its lower end-user price.
4.3 Polysilicon
Demand and supply growth. The electronics and PV industry both use
silicon wafers for their components. Until recently, c-Si cell manufacturers
could depend on recycled off spec and waste silicon wafers from the
35
electronics industry. Prior to the burst of the technology bubble in 2001,
silicon manufacturers increased their production capacity in anticipation for
increased silicon demand from the electronics industry. During the burst of
the technology bubble, silicon manufacturers experienced excess capacity
and therefore reluctant to increase capacity. With the excess capacity,
silicon manufacturers were in a position to supply their silicon to the wafer
and cell manufacturers as demand for PV grew. Silicon manufacturers were
reluctant to increase their capacity and with the electronics industry
recovering, c-Si cell manufacturers eventually faced shortages for the silicon
materials.
Figure
Figure 4.3a.
4.3a.Silicon
Silicon Production
Production for
for the
the PV
PV Industry
Industry(tons)
(tons)
60
60
Thousands
Thousands
49.3
49.3
50
50
Tons
44.1
ProductionininTons
44.1
40
40
SiliconProduction
30.5
30.5
30
30
20.7
20.7 21.2
21.2 17.6
17.6
Silicon
20
20
13.5
13.5
15.9
15.9
10
10
00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
36
Industry players. The US accounts for more than 50% of the world’s
production of polysilicon followed by Japan at 24% and Germany at 18%. In
the next few years, production from other countries such as Norway, China,
Spain and Korea will increase their share of the world’s polysilicon
production. Major polysilicon manufacturers supplying to both the
electronics and PV industry are Hemlock (US), Wacker (Germany), REC
(Norway/US), Tokuyama (Japan) and MEMC (US).
Figure
Figure 4.3b.
4.3b.Share
Share of
of World
World Silicon
Silicon Production
Production in
in 2005
2005(by
(bytons)
tons)
Sumitomo
Sumitomo
MEMC
MEMC Mitsubishi
Mitsubishi 2.6%
2.6%
12.1%
12.1% 9.1%
Tokuyama
Tokuyama 9.1% Others
Others
16.6%
16.6% >1%
>1%
REC
REC Hemlock
Hemlock
16.9%
16.9% 24.6%
24.6%
Wacker
Wacker
17.6%
17.6%
Driven by growing demand for PV, global shortage and rising prices of
polysilicon new players are beginning to enter to supply the PV industry. The
following is an overview of some of the new industry players.
37
Table 4.3. Snapshot of New Players Entering the Silicon Industry
Company Overview
DC Chemical Korea’s DC Chemical (DCC) will construct a new 3,000 tons
polysilicon plant marking its first venture into the business.
DCC will employ Siemens reactor technology and use
Trichlorosilane (TCS) as the feedstock gas. Cell manufacturer
SunPower will pay DCC US$250 million in a multi-year supply
agreement to finance construction of the silicon plant.
Hoku Scientific Hoku Scientific, a fuel cell company in Hawaii, announced it
in May 2006 it would construct a 1,500 tons polysilicon plant
at a cost of US$250 million in the state of Idaho.
Isofoton Spain’s Isofoton (cell and module manufacturer), an
Andalusian government agency and Endesa (Spanish utility
company) will build a 2,500 tons plant in Los Barrios, Spain.
Econcern Econcern announced in 2006 that it would form a joint
venture to build a polysilicon plant with a production capacity
of 2,000-3,000 tons. The new plant would be located in Saint
Auban, France, and begin production in 2008.
M.Setek M.Setek, a Japanese polysilicon wafer manufacturer will add
a silicon line to its business operations. The plant begins
production in 2007 with an initial capacity of 1,000 tons.
China Southern China Southern Glass (CSG) announced it would invest in a
Glass US$150 million polysilicon plant in Hubei Province. The plant
would begin production in 2008-2009 and eventually have a
production capacity of 4,000-5,000 tons.
38
Figure
Figure 4.3c.
4.3c. Projection
Projection in
in Silicon
Silicon Usage
Usage for
for Wafers
Wafers
16
16 350
350
320
320 300
300
14
14 300
300
(microns)
thickness (microns)
14.0
14.0
12
12 11.0
11.0 250
250
Wp
10.0
per Wp
12.0
12.0 10.0
10
10 9.0
silconper
Wafer thickness
240 8.5 8.0
8.0 7.5 200
200
200 7.5
88
gmsilcon
180
180 170
170 160 150
150
66 160
gm
Wafer
150
150
100
100
44
22 50
50
00 00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
Price trend. Prices of polysilicon would reach its peak by 2007 and then
decline in 2008 onwards as new polysilicon plants begin production.
However, silicon manufacturers would expand their production cautiously
and new players may abort their plans to build new plants if demand for PV
is unable to accommodate new silicon production. Furthermore, with
technologies being developed to use less silicon per Wp through thinner
wafers, silicon manufacturers would be extremely cautious in expanding
their production capacity too aggressively.
Figure
Figure 4.3d.
4.3d.Estim
Estimated
ated and
and Projected
Projected Contracted
Contracted Silicon
Silicon Cost
Cost
(US$
(US$per
per kg)
kg)
70
70
60
60
50
50 53
53 50
50
50
50
45
45 45
45 41
41
kg
per kg
40
40
US$per
32
32
US$
30
30 24
24
20
20
10
10
00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
Note: 2003-2006 from Prometheus Institute; 2007-2010 rough estimates derived from
various sources
39
Projections are contracted prices of polysilicon would increase from US$50
per kg in 2006 and reach its peak at US$53 per kg by 2007. With new
plants coming into production in 2008, prices would begin to decline from
US$50 per to US$41 per kg by 2010. However, prices could decline more
aggressively if annual growth for PV is less than 20% anticipated in 2007-
2010. Another factor that would cause polysilicon prices to decline at faster
rate are if new polysilicon plants were to come into production too
aggressively.
The investment cost per MWp for a silicon production plant is higher than
wafer, cell and module manufacturing. The Siemens process to manufacture
silicon is used in 90% of silicon production worldwide. The advantage of the
Siemens process is it is a well-established process and therefore represents
low technology risk to the investors. The facility is easier to build compared
to the newer technologies and suitable for manufacturing silicon for the PV
and electronics industry. Being an established technology, there is little risk
of patent infringement.
Market challenges. New players have announced their entry into silicon
production but yet to begin construction. Furthermore, there are also
unconfirmed reports about new players intending to enter the business.
There is the possibility that some of the new players may eventually abort
their plans if there is a silicon overcapacity in 2008 and beyond. If new
plants were to come into production too aggressively beginning in 2008
creating overcapacity, silicon manufacturers could face a similar scenario
experienced during the burst of the bubble technology in 2001.
40
There are about 50 companies involved in thin films and currently many are
start-ups. Thin films are gaining popularity, increasing at a faster rate of
growth and its share of the module market. Thus, there is a potential threat
with developments in technologies to mass-produce thin films at lower costs
and improve conversion efficiency displacing c-Si modules in 2007-2010.
Figure
Figure 4.4a.
4.4a. Thin
Thin Film
Film Production
Production and
and Projection
Projection (MWp)
(MWp)
1,200
1,200
1,000
1,000
1,000
1,000
800
800
700
700
MWp
MWp
600
600 500
500
400
400
200
200
200 150
150
200 100
30 50
50 100
30
00
2003
2003 2004
2004 2005
2005 2006
2006 2007
2007 2008
2008 2009
2009 2010
2010
41
Industry players. There are more than 50 companies mainly in Europe,
United States and Japan involved in developing thin film technologies.
These companies sector are generally small privately owned companies or
start-ups. Many of the leaders involved in manufacturing c-Si modules have
entered into thin films including Sharp, Mitsubishi Heavy Industries (MHI),
Schott Solar and Sanyo. In 2005, four companies dominated the market for
thin films which included United Solar Ovonics (US), Kaneka (Japan), First
Solar (US) and MHI (Japan) accounting for 75% of the thin film market.
Production capacity for thin films generally ranges from 25 MWp to 50 MWp
but there are already plans by United Solar and First Solar to increase
capacity by more than 200 MWp by 2010.
Figure
Figure 4.4b.
4.4b.Share
Share of
of the
the World
World Thin
Thin Film
Film Production
Production in
in 2005
2005(MWp)
(MWp)
Mitsubishi,
Mitsubishi,12.0%
12.0%
First
FirstSolar,
Solar,20.0%
20.0% Others,
Others,25.0%
25.0%
United
UnitedSolar,
Solar,
Kaneka, 22.0%
22.0%
Kaneka,21.0%
21.0%
Product. Thin films are less subjected to cell temperatures while c-Si cells
decrease in conversion efficiency as the temperature rises. The advantage
of manufacturing thin films is it uses greater automation than
manufacturing c-Si modules. However, thin films are hard to mass-produce
cost effectively because of the difficulty of coating large surface areas.
42
Nanosolar, Honda Engineering and Sharp announced they have developed
technologies to mass produce thin films. Another disadvantage of thin films
is their lower efficiency (generally less than c-Si modules) but there are
already developments to improve efficiency.
The leader among thin films is a-Si accounting for nearly 75% of the thin
film market. These thin films use small quantities of silicon in amorphous
form deposited as thin layers. Other thin films include copper indium
selenide (CIS), copper indium gallium selenide (CIGS) and cadmium
telluride (CdTe). Among the thin films, a-Si has the lowest efficiency (6%-
9%) compared to CI(G)S (9%-11%) and CdTe (8%-10%). Main reason for
the dominance a-Si thin films is it is among the earliest thin film
technologies researched and developed. Over the medium term, CIGS thin
films are generating interest with improvements in efficiency on par with
mc-Si modules under laboratory conditions and their potential for mass
production.
Solarbuzz’s monthly survey of module prices indicates that the lowest price
of a-Si thin film module in March 2007 was 30% less than the lowest price
of a mc-Si module. This is a significant reduction from US$4.00 per Wp in
September 2006 to US$3.00 per Wp in March 2007.
Source: Solarbuzz
43
Table 4.4. Forecast for Thin Film Demand (MWp)
Average Total
Annual 2006 2007f 2008f 2009f 2010f 2007-
Growth 2010
67% 150 200 500 700 1,000 2,400
Thin films’ lower manufacturing cost, potential for mass production to lower
cost further and improvements in conversion efficiency (especially CIGS thin
films) offers opportunities for manufacturers to market lower cost PV
systems. Price has been and will continue to be an important determinant
for end-user acceptance of PV. Thin films’ lower prices to the end-users
represent a market potential for manufacturers and will be an important
determinant to propel its marketing.
Thin films offer applications that are not possible with flat panel c-Si
modules. Thin films provide opportunities for applications in building
integrated modules including roof tiles, windows and facades. Thin films can
be deposited on many types of surfaces such as flexible plastics, glass and
coatings on building materials to generate electricity. Thus, thin films offer
vast opportunities in various applications.
Key challenges currently faced for thin films are improvements in conversion
efficiency and lowering manufacturing cost through mass production.
Current costs of thin film modules are still too high and electricity generated
more than five times the electricity rates from the utility companies. To gain
wide acceptance among end-users, the challenge is to improve thin films’
efficiency and lower manufacturing cost further.
44
A potential risk for thin films is the toxicity of some of the chemicals used.
For example, cadmium used in CdTe thin films is toxic with adverse effects
on human and animal health. Thus, it is important for manufacturers to
establish programmes to discard thin films appropriately once they passed
their lifespan.
Figure
Figure 4.5a.
4.5a.PV
PV Inverter
Inverter Production
Production and
and Projection
Projection (GWp)
(GWp)
77
66
5.7
5.7
55
4.7
4.7
3.9
3.9
44
GWp
GWp
3.2
3.2
33
2.6
2.6
1.9
1.9
22
1.3
1.3
0.8
0.8
0.6
0.6
11
0.3 0.4
0.4
0.2
0.2 0.2
0.2 0.3
--
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Note: Rough estimates based on market for PV for the year and product lifecycle of
seven years.
Projections are the market for inverters would grow by an average of 22%
annually from 3,200 MWp in 2007 to 5,700 MWp by 2010, based on the
projection that the market for PV would grow 20% annually reaching 5,000
MWp by 2010. Demand for PV in 2007-2010 would continue to drive the
market for inverters accounting for about 90% of the installations by
capacity with remaining for replacements of old inverters.
3
Typical PV inverter has a lifespan of 5-10 years.
45
Industry players. In Japan, there are nearly 20 companies involved in
manufacturing PV inverters and similar numbers in North America. While in
Europe, there are about 30 companies involved in manufacturing inverters.
The industry is characterised by a few players dominating the market.
Sharp leads the market in Japan while in North America SMA and Xantrex
leads the market. SMA, Xantrex and Fronius lead the market in Europe.
Most of the European companies involved in inverters are German, Dutch,
Austrian and Swiss companies.
Figure
Figure 4.5b.
4.5b.Share
Share of
of World
World Inverter
Inverter Production
Production in
in 2005
2005(MW)
(MW)
Mastervolt,
Mastervolt,3.2%
3.2%
Xantrex, Kyocera,
Kyocera,4.6%
4.6%
Xantrex,5.0%
5.0% Sputnik,
Sputnik,1.9%
1.9%
Fronius,
Fronius,10.7%
10.7%
Others,
Others,25.2%
25.2%
Sharp,
Sharp,18.9%
18.9%
SMA,
SMA,30.5%
30.5%
SMA Technologies is a German company and leads the industry with nearly
31% share of the market with major markets in Europe and the US. Sharp
is the second largest player with its market mainly in Japan and its inverters
marketed along with its PV system. Austria’s Fronius accounts for 11% of
the market with markets mainly in Europe and the US but also has a
distribution network in Asia-Pacific. Other market leaders include Xantrex
(Canada), Kyocera (Japan), Mastervolt (Netherlands) and Sputnik
(Switzerland). These seven companies together accounted for three-
quarters of the world market in 2005.
Product. Most of the inverters currently produced and marketed are string
inverters for home PV installations ranging from 2 kWp to 10 kWp. With
increasing number of PV installations in the megawatts, several
manufacturers have developed central inverters for large installations. The
technology of the inverters varies from manufacturer to manufacturer such
as differences in size, efficiency, weight and reliability.
46
There is a growing trend among major manufacturers to provide additional
features in their inverters. These include remote monitoring,
communications capabilities, plug and play with the controllers and
manufacturing lighter inverters. Sharp has developed inverters for homes to
a new level with gadgetry including colour LCD screens with interactive
functions. These interactive functions include energy savings tracker, real-
time status display of energy generated, home power consumption, power
purchased and sold back to the utility company.
Price trend. Prices of inverters very much depend on the brand, technology
and features which influences the cost of manufacturing the inverters and
the price end-users are willing to pay. Inverter size also affects the end-user
price of the inverter per Wp. For example, inverters with similar features, a
3 kWp inverter is likely to cost 50% less than a 1 kWp inverter on a per Wp
basis. Another example, in the US, the price for inverters for installations
above 70 kWp is US$0.40-0.80 per Wp while for installations of less than 10
kWp the price is US$0.50-2.40.
47
old inverters come to the end of their lifespan and an opportunity for
manufacturers in the replacement market.
Inverters especially string inverters have gone beyond its basic function of
converting current from DC to AC. Increasing use of electronic gadgetry and
stylish designs are current trends for newer models of inverters attracting
interest and purchase from the end-users. Further interest is generated as
inverter prices decline and becomes more affordable. In general, inverters
are becoming more like consumer electronic items and market opportunities
exist for such inverters.
4
The Netherlands and Switzerland have similar standards for inverters as Germany
48
5
5.. D
DEEV
VEELLO
OPPM
MEEN
NTTS
S IIN
NDDE
EVVE
ELLO
OPPE
EDD&
&EEM
MEER
RGGIIN
NGGM
MAAR
RKKE
ETTS
S
5.1 Germany
Germany leads the world with the highest installation capacity for PV. The
rise in installation began when Germany’s federal government introduced
the “100,000 Roofs” programme in January 1999 to stimulate demand for
PV by offering low-interest loans. The loans were initially interest free but
charged 1.9% interest from 2000 to 2003. Currently soft loans are available
through other programmes by KfW Promotional Bank. However, installations
accelerated when Germany’s introduced high buyback rates (guaranteed for
20 years) from the utility companies under the Renewable Energy Sources
Act in 2000. The Act provided preferential feed-in tariffs with a 5.0%-6.5%
annual decrease from 2005 onwards. In 2006, feed-in tariffs were €0.406
per kWh for freestanding systems while for buildings and sound barriers,
€0.4874-0.518 per kWh. Germany’s experience has convinced many
governments in Europe to adopt similar programmes to stimulate demand
for PV.
Source: IEA
Germany held its national election in 2005 and there are concerns that
Germany would shift support for PV from a new government. This is unlikely
to happen:
49
Any efforts by Germany’s utility companies to persuade the
government to reduce support for PV would have negative
implications from the German public and political parties supporting
PV.
However, Germany would review its feed-in tariff in 2007, which could have
an impact on demand for PV in Germany. If new feed-in tariffs were to be
less favourable than previous feed-in tariffs, demand would soften and
reduce module prices. This would make modules become more attractive to
the end-users after experiencing years of increasing prices. According to
Photon International, demand was already softening in late 2006 when the
government-guaranteed price for PV electricity dropped 5% but prices of
modules kept on rising, reducing returns on investments to home and
business owners.
Germany accounted for 19% of the world’s production of PV cells and 16%
of the world’s production of modules in 2005. The German PV industry has
become a significant sector of the country’s economy generating about
30,000 job opportunities according to the German Solar Industry
Association (BSW). Furthermore, the industry invested about €5 billion
between 1998 and 2005 in new production capacity and R&D. Consequently,
revenue from the industry increased from €350 million in 1999 to €3.7
billion by 2005.
Source: IEA
50
Table 5.2c. Snapshot of German Companies involved in PV
Company Overview
CSG Solar CSG Solar began manufacturing crystalline silicon on glass
(CSG) in 2006 at its plant in Thalheim and current
production capacity is 25 MWp. CSG acquired the
technology from Pacific Solar, Australia.
Solon Solon’s plants in Germany and Sweden produce only mc-Si
and sc-Si modules. Combined production capacity
increased from 90 MWp in 2005 to 110 MWp in 2006. To
ensure a reliable supply of PV cells for its modules, Solon
signed a 10-year contract with Ersol and 5-year contracts
with Q-Cells and SunPower beginning in 2006.
SolarWorld SolarWorld’s business activities in PV, including activities of
its subsidiaries and joint venture companies, range from
production of silicon to installation of modules. In 2006,
SolarWorld acquired from Shell Solar its silicon, cell and
module production facilities in the United States. As a
result, SolarWorld’s cell production capacity increased from
158 MWp in 2005 to 230 MWp in 2006 and module
capacity increased from 175 MWp to 210 MWp during the
period. Solar World manufactures mc-Si, sc-Si as well as
CIS thin film modules.
Deutsche Solar Deutsche Solar is part of the SolarWorld group and is one
of the largest producers of mc-Si and sc-Si wafers in
Europe. In 2005, the company produced 102 MWp of
silicon wafer accounting for 6% of the world’s production.
Q-Cells Q-Cells is principally involved in manufacture and
marketing of mc-Si and sc-Si cells. The company’s cell
capacity increased from 290 MWp in 2005 to 350 MWp in
2006 with further expansion to 510 MWp by 2007. The
company also has investments in CSG Solar in Germany to
produce crystalline silicon on glass modules and in EverQ
in the United States to produce cells using ribbon
technology.
Schott Solar Schott Solar manufactures mc-Si cells as well as a-Si thin
film modules. Outside of Germany, the company has
plants in the Czech Republic and the United States. From
2006 to 2007, cell production capacity would increase from
130 MWp to 170 MWp while module capacity from 80 MWp
to an estimated 110 MWp. Schott Solar will operate a new
30 MWp plant in Germany in 2007 to manufacture a-Si
thin film modules.
Solar Watt Solar Watt produces both mc-Si and s-Si cells but its plant
production capacity is relatively small, increasing from 5-6
MWp in 2005 to 11 MWp in 2006. Its module capacity is
sizable with a production capacity increasing from 60 MWp
to 100 MWp during the same period.
51
Table 5.2c. Snapshot of German Companies involved in PV
Company Overview
ErSol Solar Energy ErSol manufactures and markets mc-Si and sc-Si cells and
modules. The company plans to increase production
capacity from 45 MWp in 2005 to 220 MWp by 2009. ErSol
entered into a joint venture with China’s Shanghai Electric
Solar Energy to manufacture modules in China using cells
produced by ErSol in Germany. The company is also
diversifying into thin films.
Wacker Polysilicon Wacker is one of the largest producer and supplier of
polycrystalline silicon for the semiconductor industry and
cell manufacturing. Due to increasing demand for
polycrystalline silicon for cell manufacturing, Wacker will
increase the production capacity of its plant in Burghausen
from 5,500 tons in 2005 to 6,500 tons by 2007. Capacity
will increase further to 9,000 tons by 2009.
52
In reality, many German companies have invested in overseas production
facilities through their subsidiaries or joint ventures. SolarWorld has plants
in Sweden and the United States to produce PV modules. SOLON entered
into a joint venture to operate a solar grade silicon plant in France and
invested in a plant in Austria to manufacture crystalline silicon cells. Besides
Germany, Schott Solar has a plant in the United States to produce silicon
cells.
Shortage of silicon in recent years has been a major challenge and limiting
factor in the growth of the German PV industry. Nevertheless, many
German companies are already investing in new plants, expanding capacity,
developing new technologies and increasing investments outside Germany.
In addition to crystalline technologies, German companies have invested in
thin film technologies and new players CSG and Sulfurcell entered into
production in 2006.
5.2 Japan
The principles of Japan’s New Energy Policy are to ensure security in energy
supply, develop a market mechanism for renewable energy and to reduce
CO2 emission. Previous programmes to promote PV in the country involved
subsidies targeting homeowners, private companies and public
organisations. Programmes targeting homeowners began with the
“Monitoring Programme for Residential PV Systems” from 1994 to 1996
followed by the “PV Systems Dissemination Programme” from 1997 to 2005.
The “Photovoltaic Power Generations Systems for Industrial and Other
Applications” programme targeted private companies and public
organisations from 1998 to 2002. PV programmes for homeowners ended
after 2005 but the government continues to provide subsidies to private
companies and public buildings for PV. Because of the various programmes,
PV installations increased to 1,422 MWp by 2005 of which nearly 80% of the
installations were in homes. The Japanese government targets to increase
PV installations in the country to 4.8 GWp by 2010.
53
Table 5.2a. PV Installation and Production in Japan
Source: IEA
Japan is the world’s largest producer of PV cells and modules accounting for
46% and 44% respectively of the world’s production in 2005. PV has
become an important industry in Japan and many major PV companies such
as Sharp, Kyocera and Sanyo have vertically integrated much of their
processes across the value chain. An important element of the Japanese
industry is to develop export markets and exports currently account for
about 30% of the PV production. Japanese PV companies initially
concentrated on the domestic market but since 2002, many have expanded
or established new manufacturing operations outside Japan besides
increasing exports. Japanese manufacturing operations and exports focuses
on Europe and the United States.
Source: IEA
Sharp, Kyocera, Sanyo and Mitsubishi are leaders in the Japanese markets.
According to Greenpeace, the industry in Japan generated more than €1.5
billion in revenue in 2005, which excludes revenue generated from
manufacturing operations outside Japan. Furthermore, the Japanese PV
54
industry directly provides employment opportunities for nearly 9,000 people
in the country.
55
Table 5.2c. Snapshot of Japanese Companies involved in PV
Company Overview
MSK MSK became a subsidiary company of Suntech, China, when
it acquired a majority stake in MSK in 2006. MSK focuses on
mc-Si modules and specialises in systems integration and
production of building integrated modules. Acquisition by
Suntech provides an opportunity for MSK to reduce its
production and operating costs by transferring some of its
production and back-end operations to China.
Kobe Steel Kobe Steel’s in-house production capacity is less than 5 MWp
(Kobelco) but has partnership with Schott Solar to import modules.
Current focus is systems integration for installations in public
and industrial buildings in Japan.
Honda Honda is a new market player in the Japanese PV industry
entering the market in 2006. The company will begin full
production from its 27.5 MWp capacity plant producing CIGS
thin films.
Tokuyama The fastest growing business of the Electronic Materials
Business of Tokuyama Corporation is manufacturing and
marketing of mc-Si to PV cell manufacturers. Due to growth
of the PV market, Tokuyama announced plans to increase
production of mc-Si at its plant in Higashi from 4,800 tons to
5,200 tons. Tokuyama also has plans to construct and
operate a 200 tons verification plant to produce mc-Si using
vapour-to-liquid deposition technology.
Sumitomo Sumitomo Titanium’s mc-Si was initially targeted for the
semiconductor industry. With growing demand for silicon from
the PV industry, Sumitomo announced its production capacity
would increase from 900 tons in 2006 to 1,300-1,400 tons by
2007.
JFE Steel (formerly JFE Steel manufactures mc-Si ingots for PV cell
Kawasaki Steel) manufacturers in Japan. Annual production increased from
920 tons in 2004 to 1,200 tons in 2005 equivalent to 120
MWp of PV cells. Currently pursuing technologies to develop
and produce wafers.
56
Diagram 5.2. Main Channel in the Japanese PV Value Chain
Some smaller players in the industry import their modules. Kobe Steel has a
partnership and imports modules from Germany’s Schott Solar. Kawasaki
Heavy Industries has investments in Evergreen Solar (based in the United
States) gaining the exclusive right to sell Evergreen Solar’s modules in
Japan. Japan imports relatively small volumes of silicon wafers from
Ningjing Songgong Semiconductor in China amounting to 50-60 MWp in
2005.
Homes account for about 80% of the PV installations in Japan and central
government PV subsidies for homes ended in October 2005. The industry is
in the opinion that demand for PV among Japanese homeowners would
continue without subsidies from the central government. However, a
number of municipal governments are offering subsidies and soft loans for
57
PV to homeowners. Many residential property developers are promoting
“zero-energy” homes integrating energy efficiency with PV. Furthermore,
modules manufacturers and property developer are actively advertising
“zero-energy” homes with PV on television. Because of increasing consumer
awareness, many homeowners associate PV with personal economic and
environmental benefits. The government has set targets to increase PV
installations by nearly 3.4 GWp from 2006 to 2010 targeting public buildings
and private companies with subsidies. The anticipated effect is reduction in
prices of PV, which would make PV more affordable to Japanese
homeowners.
Source: IEA
58
California’s renewable energy initiative including PV began in 1996 with a
$540 million fund. In August 2006, California’s Governor Schwarzenegger
signed the “Million Solar Roofs Plan” to install one million homes in
California with at least 3 GWp of PV by 2017. Under the initiative,
California’s government would budget US$2.9 billion (€2.3 billion) in rebates
on PV installed in homes. The initiative extended the budget to as much as
US$3.4 billion (€2.7 billion) for installations in utilities owned by the
California’s municipalities. Other states such as New Jersey, New York State,
Florida, New Mexico, and Washington State are following California’s rebate
programmes as well as experimenting with new programs.
Source: IEA
59
Other foreign companies have established sales offices, such as Mitsubishi
Electric from Japan, Isofoton from Spain and Suntech from China. Q-Cells, a
German company, is negotiating with potential partners in the US to
establish its markets in the country. SOLON of Germany acquired Global
Solar Energy from UniSource Energy to enter markets in south western US.
Foreign companies have also formed joint ventures or have significant stake
in US PV companies. Q-Cells invested in Soloria Corporation based in
California to develop PV using low concentration of silicon. Hemlock
Semiconductor, the world’s largest producer of crystalline silicon is a joint
venture between Dow Corning and Japanese companies Shin-Etsu Handotai
and Mitsubishi Materials Corporation.
60
Table 5.3c. Snapshot of US Companies involved in PV
Company and Overview
Location
Miasole Miasole manufactures CIGS thin film cells at its plant in
California. The company is a pre-IPO company funded by
venture capitalists and expects to list on the stock market in
2007 or 2008. Miasole began producing thin films in 2006
with an initial production capacity of 50 MWp. The company
hopes to increase capacity to 200 MWp by end of 2007.
United Solar Ovonics United Solar Ovonics manufactures a-Si thin film solar cells
in Auburn, Michigan. Production capacity increased from 25
MWp in 2005 to 50 MWp in 2006. In 2005, the company
signed an MOU with China’s Tianjin Jinneng Investment
Company to form a joint venture to operate a 25 MWp a-Si
plant in Tianjin, China. In 2007, the company begins
operating a 50 MWp plant in Greenville, Michigan.
Hemlock Formed a joint venture with Dow Corning, Shin-Etsu
Semiconductor Handotai and Mitsubishi Materials to produce mc-Si in
Hemlock, Michigan. Capacity will increase from 10,000 tons
in 2006 to 14,500 tons in 2008 and further to 19,000 tons
by 2009.
MEMC Electronic MEMC manufactures mc-Si wafers and granules at is plant in
Materials St. Peters, Missouri. MEMC plans to increase its capacity of
mc-Si production from 4,000 tons to 8,000 tons by 2008.
MEMC signed a 10-year agreement to supply mc-Si to
Suntech’s plant in China beginning in 2007.
Hoku Scientific Based in Hawaii, Hoku is a new player in the PV industry.
The company will operate a module plant in the state of
Idaho beginning in 2007. The company also plans to operate
a plant manufacturing mc-Si in 2008 with an initial capacity
of 1,500 tons
The US is self sufficient in crystalline silicon with three of the world’s major
producers (Hemlock, REC and MEMC) located in the country. According to
the US Energy and Information Administration (EIA), imports into the
United States include PV cells mainly from Japan for US subsidiaries of
Japanese companies. The US imports modules mainly from China and from
Mexico, where two Japanese companies have manufacturing operations
near the US border. Imports of modules from Europe are likely to increase
in the near future as European PV manufacturers establish distribution
networks and regional offices in the US. In 2005, 78% of US exports of PV
were modules of which nearly 90% of the modules were exported were to
Europe mainly Germany. Other markets for US PV exports were Canada,
Mexico and re-export trade through Hong Kong and Singapore. According to
the EIA, 40% of the modules exported were thin film modules.
61
Diagram 5.3. Main Channel in the US PV Value Chain
62
5.4 China
In 2005, about 50% of the PV installations in China have been mostly for
government electrification programmes in remote villages where nearly 30
million households have no access to the electricity grid. About 50% of the
PV installations are small off-grid installations in homes, community centres,
in PV-wind hybrid systems and water pumps. About 35% are for industrial
applications such as communication systems, 10% in consumer products
and only 5% are grid-connected installations.
China plans to increase PV installations to 450 MWp by 2010 and 4-8 GWp
by 2020. From 2006 to 2011, China’s government aims to install 265 MWp
to nearly 2 million households in the remote villages and further 1,700 MWp
by 2020. In addition, the government would support 50 MWp in rooftop
installations, 8 MWp installation in the Gansu desert and a 20 MWp power
plant in the Gobi Desert. These “Rooftop” programmes involved government
subsidies for purchase of PV systems. In 2006, the Shenzhen municipal
government implemented laws requiring PV installations in newly
constructed buildings. Shanghai’s municipal government initially proposed
the “100,000 Rooftop” in 2005 to install 300 MWp by 2015. However, the
plan is under review and instead the municipal government targets to install
7 to 10 MW of PV by 2010, partly through installations on 10 buildings
yearly.
China’s Renewable Energy Law came into effect in January 2006 as the
country’s framework to increase renewable energy to 15% of the energy
consumed by 2020. However, the Law lacks clear regulations to implement
and enforce renewable energy programmes in China including PV. The Law
mentions power buyback or feed-in tariffs for PV but deemed too costly
according to China’s Director of Renewable Energy.
63
China accounted for 9% of the world’s production of PV cells and 25% of the
world’s production of PV modules during the period. Production of PV cells is
estimated to have increased to 690 MWp and modules to 1,200 MWp by
2006.
64
Table 5.4c. Snapshot of Chinese Companies involved in PV
Company Overview
Suntech Power Suntech is China’s leading manufacturer of PV cells and
modules and among the world leaders. The company
manufactures both mc-Si and sc-Si cells. In 2006,
Suntech acquired a 66.6% stake in Japan’s MSK (a
leading Japanese module manufacturer) and the
remaining stake acquired by the end of 2007. Listed on
the New York Stock Exchange (NYSE), Suntech exports
nearly 80% of its production manly to Western Europe
and the United States. From 2006 to 2007, cell
production capacity will increase from 270 MWp to 300-
390 MWp and module capacity from 470 MWp to 600
MWp.
Nanjing PV Nanjing PV Tech only began production in 2005 and
Tech currently manufactures only mc-Si and sc-Si cells. The
company is a joint venture between the Chinese
Electrical Equipment Group and the Australian
Photovoltaic Research Centre. Cell production capacity
increased from 32 MWp in 2005 to 180 MWp in 2006
and expected to increase further to 300 MWp by 2007.
Nanjing PV Tech supplies most of its cells to the
domestic market.
Kyocera Kyocera (Tianjin) Solar Energy is a joint venture
(Tianjin) Solar between Kyocera of Japan and the Tianjin Yiqing Group
Energy of China. Its plant, located in Tianjin, only manufactures
mc-Si and sc-Si PV modules mainly for the domestic
market. Production capacity increased from 120 MWp in
2004 to 240 MWp in 2005. Kyocera (Tianjin) has yet to
announce any plans to increase production capacity.
Jiangsu The company currently manufactures mc-Si and sc-Si PV
Linyang cells and modules at its plant in Qidong, Jiangsu
Solarfun Province, and also developing technologies to develop
film cells. Cell production capacity will increase from 20
MWp in 2005 to 120 MWp by 2007 while module
capacity will increase from 50 MWp to 80 MWp during
the period. Solarfun’s products are mostly exported to
Europe, namely Germany followed by Spain and Italy.
Its parent company Solarfun Power Holdings listed on
NASDAQ in 2006.
Jiannxi LDK LDK Solar is a new company under the Liouxin Group,
Solar Hi-Tech which manufactures protective and electrical
equipments. GT Equipment signed an agreement with
LDK Solar in 2005 for a turnkey project producing silicon
wafers. The agreement also includes increasing the
production capacity to 1,000 MWp by 2010.
65
Table 5.4c. Snapshot of Chinese Companies involved in PV
Company Overview
Ningbo Solar Ningbo Solar Energy Power manufactures both mc-Si
Electric Power and sc-Si PV cells and modules at its plant. From 2005
to 2006, cell production capacity increased from 20 MWp
to 35 MWp while module capacity increased from 60
MWp to 70 MWp.
ReneSola The company, listed on London’s AIM stock market in
2006, is principally involved in recycling waste silicon to
producer wafers. ReneSola increased production of
silicon wafers to 400 tons in 2006 and expects to
increase production to 800 tons by 2007. ReneSola has
a three-year supply contract with Taiwan’s Motech and a
two-year contract with China’s Jiangsu Linyang Solarfun
beginning in 2007.
Production of modules uses more labour and does not require the same
level of technical expertise compared to other manufacturing processes in
the value chain. Thus, China’s low labour cost has led the country to
become a leading producer and exporter of modules. China’s production of
silicon is limited and depends almost entirely on imports. The global
shortage of silicon in recent years has been the main obstacle to the
industry’s growth in recent years. Thus, China also has to rely on imported
wafers and cells to complement local production.
66
Diagram 5.4. Main Channel in China’s PV Value Chain
From 2005 to 2006, the production capacity for PV cells increased from 360
MWp to an estimated 1,350 MWp but wafer capacity increased from 72
MWp to an estimated 250. Thus, China’s production of wafers would be
unable to meet domestic demand and would continue to rely on imports. To
ensure security in supplies for silicon and wafers, most major manufacturers
in China have signed medium to long-term supply agreements with
multinational companies.
5.5 Taiwan
In 2000, Taiwan’s Industrial Technology Research Institute (ITRI)
implemented a five-year programme sponsored by the Energy Commission
(now known as the Energy Bureau under the Ministry of Economic Affairs).
The programme involved conducting research on thin film PV technology
and demonstration projects on commercial, industrial and educational
facilities. The grid-connected PV installations are less than 10 kWp and
67
subsidised at about US$5,000 per kWp. Total installations in Taiwan, being
mainly small-scale demonstrations projects, reached only 1.0 MWp in 2005.
Source: Energy Bureau (Taiwan), Motech and E-Ton Solar production estimates
Taiwan has nearly 30 industry players involved in PV but many are new
entrants into the industry. However, a few players currently dominate the
industry and mostly concentrated in cell and wafer manufacturing. In cell
68
manufacturing Motech is the industry leader followed by E-Ton Solar Tech
and new players include DelSolar, Gintech Corporation and Mosel Vitelic.
Among the industry players for silicon ingots and wafers are Tatung and
Sino American Silicon Products.
69
Table 5.5c. Snapshot of Taiwanese Companies involved in PV
Company Overview
Gintech Corporation Gintech is a new entrant into Taiwan’s PV industry and
established in 2005. The company manufactures mc-Si and
sc-Si cells and has production capacity of 48 MWp. The
company will shift production to a new plant at Hsin Chu
Science Park and capacity will reach 300 MWp by 2009.
Mosel Vitelic Mosel Vitelic is a manufacturer of DRAM (dynamic random
access memory) used in integrated circuits. In 2006, Mosel
Vitelic announced it would enter into manufacturing silicon
wafers in 2007 and RFID (radio frequency identification
devices) in 2008. The company would eventually cease
manufacturing DRAM because of the competitiveness of the
market and shift production to wafers and RFID, which the
company believes has greater growth potential.
70
Taiwan’s government has proposed to inject nearly US$200 million in the
next 10 years to develop the PV industry. The Bureau of Energy has planned
the following strategies to develop the industry:
Besides these, the government has sent trade missions outside Taiwan to
attract foreign companies to invest and set up manufacturing plants on the
island.
In March 2006, ITRI signed a contract with TÜV Rheinland Group, Germany,
to install Taiwan's first photovoltaic module testing laboratory. The testing
laboratory would provide the necessary certification for Taiwanese
companies to export their modules. In July 2006, the Ministry of Economic
Affairs announced that it would build a silicon plant to supply much needed
silicon to develop the PV industry. The plant would begin operation in 2008
with an initial capacity of 300 tons, increasing to 1,000 tons by 2010.
5.6 Spain
The development of the PV market and industry in Spain from 2000 to 2005
was a result of the Renewable Energy Promotion Plan. Under the plan, Spain
71
targeted to install 150 MWp of PV from 2000 to 2010 through various
incentives and funding. These included funding for R&D to improve
technologies in PV, public subsidies and tax incentives for installing PV
systems, and feed-in tariffs at €0.40 for installation below 5 kWp and €0.20
for installations above 5 kWp. PV installations in homes reached nearly
2,000 by 2005 and mostly less than 5 kWp.
From 1999 to 2005, Spain received nearly €290 million in investments for
the PV industry. Spain has relatively fewer manufacturing companies
involved in PV unlike Germany, Japan, US and China. The only cell and
module manufacturers are Isofoton and BP Solar España, while smaller but
significant players include Artersa and Siliken which only manufactures PV
modules.
Source: IEA
72
industry will increase further by 6,000-7,000 by 2010 from various sources.
With the revised PV installations from 150 MWP to 400 MWP by 2010, PV
cell and module manufacturers are already doubling their production
capacity. Furthermore, Spain will have its own silicon plant by 2009 with a
production capacity of 2,500 tons.
Currently Isofoton is the leading Spanish player in the local industry. The
number of local manufacturers in Spain is few but the PV industry in the
country is near vertical integration from wafer to module manufacturing and
installation. By 2009, Spain will have its own silicon plant with an initial
production capacity of 2,500 tons completing the vertical integration across
the value chain. The vertical integration is largely due to Isofoton’s position
in the country, which includes a silicon plant by 2009.
73
Table 5.6c. Snapshot of Spanish Companies involved in PV
Company Overview
Siliken Siliken manufactures mc-Si and sc-Si PV modules besides
manufacturing equipments for module manufacturing plants.
Besides flat panel modules, Siliken also manufactures custom
made building integrated modules. The company increased
capacity from 10MWp in 2005 to 25 MWp in 2006 and will
increase further to 40 MWp by 2007.
74
Current feed-in tariffs for PV in Spain are more attractive than Germany’s
tariffs and are the driver of growth for the PV market and industry in Spain
since 2006. For PV systems less than 100 kWp, the tariff is 575% above the
average electricity tariffs (determined by the energy authorities) for 25
years after commissioning and 460% thereafter. For PV systems above 100
kWp, the tariff is 300% above the average electricity tariffs for 25 years and
240% thereafter. Current tariffs have created attention and strong interest
among private investors for large-scale installations.
The government periodically reviews and revise feed-in tariffs. Though the
industry is in the opinion that tariffs would reduce in the next review, they
believe it would remain attractive to investors. The incentives have also
attracted foreign module manufacturers and system integrators to enter the
Spanish market and bid for large scale PV installation projects.
China’s Suntech will supply 23.2 MWp of modules to Atersa for the
Photovoltaic Grid Connection Park in the Extremadura region of
Spain beginning in the middle of 2007.
The industry in Spain is in the opinion that the country would reach its
target of 400 MWp before 2010. However, the government may revise and
increase its target for PV installation by 2010 and could reach as high as
1,100 MWp according to Spain’s photovoltaic association. However,
application for permits for installing PV systems is bureaucratic and done
only by Spanish companies. If too slow, it may remain an obstacle for Spain
to achieve its target of 400 MWp by 2010.
75
Industry and Energy (MOCIE) through Korea Energy Management
Corporation (KEMCO) manages Korea’s renewable energy plan including PV,
hydrogen fuel cells and wind power for development and promotion. US$2.4
billion has been budgeted under the 10-year plan to develop and promote
the local PV industry. The Ministry is in the opinion the local PV industry has
strong export potential and aims for Korea to achieve 10% of the global
market for PV by 2012 employing nearly 50,000 people.
The Ministry targets for the country to achieve 1.3 GWp in PV installation
capacity by 2012. The plan targets to install 100,000 homes through a
“Rooftop” programme and 70,000 commercial and public buildings with PV
systems by 2012. Support programmes from the Ministry include
demonstration projects to raise public awareness on PV; feed-in tariff
guaranteed for 15 years, and requirement for new public buildings over
3,000 square metres be installed with renewable energy facilities
representing 5% of the building’s construction budget.
There are doubts among some industry members whether Korea would
achieve its target of 1.3 GWp by 2012 with PV installations in country
totalling only 15 MWp in 2005. Some industry players mentioned there is a
lack of promotion to generate interest from consumers and private
companies to drive demand for PV. Another obstacle to drive demand is the
bureaucracy causing delays or long waiting period for approvals to install PV.
Estimates from industry sources indicate total PV installations in Korea may
have reached only 25-35 MWp in 2006. An estimated 3,000 homes and 300
buildings were installed with PV in 2006 ranging from 3 kWp to 400 kWp
installations. However, some industry players mentioned the government is
taking efforts to improve the bureaucratic process to quicken application.
MOCIE and the Ministry of Science and Technology (MOST) support R&D
programmes on PV in Korea. KEMCO and MOCIE have contracted the Korean
Photovoltaic Development Organisation (KPDO) and Korea University to
manage R&D projects on PV including demonstration projects with the
industry, with other Korean universities and national research institutes.
Current R&D objectives are on developing technologies to commercially
mass produce PV products and reduce production costs. The government
targets to reduce cost of producing PV modules from US$3.3 per Wp in
76
2006 to US$1.9 per Wp by 2010. R&D on cell materials focuses on
crystalline silicon targeting to improve cell efficiency from 15% in 2006 to
18% by 2010.
77
Table 5.7c. Snapshot of South Korean Companies involved in PV
Company Overview
Symphony Energy Symphony Energy began operations in 2004 and has its plant
at Gwangsan and a sales office in Seoul. The company
manufactures mc-Si and sc-Si modules mainly for the
domestic market. The plant’s production capacity is 10 MWp.
Unison Unison is one of Korea's largest suppliers of wind energy
systems. Unison entered into the PV business in 2005 and
operates a 15 MWp module plant.
Hyundai Heavy The Electro Electric Systems Division of Hyundai Heavy
Industries Industries is involved in a diverse range of heavy industries
including shipbuilding, high-speed railway systems and
energy. The company initial operated a pilot mc-Si module
plant with a production capacity of 10 MWp. By late 2005,
Hyundai increased its production capacity to 200 MWp.
Kyungdong Kyungdong Photovoltaic Energy (KPE) is part of the Kyung
Photovoltaic Energy Dong group involved in a wide range of manufacturing
activities. KPE manufactures mc-Si cells and modules
including standalone systems such as for telecommunication
systems. The company’s plant is located at Science-Based
Industrial Park in Changwon and has a production capacity of
40 MWp.
DC Chemicals DC Chemicals produces a wide range of chemicals including
basic chemicals, fine chemicals and petrochemicals. The
company will begin operating a silicon plant in 2008 with a
production capacity of 4,000 tons. The company already has
a multi-year supply contract with companies in the US and
China.
Until 2008 when DC chemical operates its silicon plant, the Korean industry
would have to depend on imports. Consequently, Korean module
manufacturers have to depend on imported cells for their modules. Due to
limited production of modules in Korea, nearly all of the modules
manufactured in Korea are for the domestic market. Most of the large-scale
installations in Korea are imported modules.
78
Diagram 5.7. Main Channel in Korea’s PV Value Chain
Hyundai Heavy Industries is making inroads into the Korean PV industry. Its
entry into the industry in Korea began with a 10 MWp mc-Si pilot module
plant. Hyundai’s strategy is to integrate across the value chain including
manufacturing of silicon, wafers, cells, module and system integration.
Initial focus of Hyundai’s development was on manufacturing modules and
system integration and Hyundai may enter into cell manufacturing by 2009.
Other areas of developments include manufacturing of inverters.
LG Chem and Samsung are potentials for the Korean PV industry given their
expertise in OLED display screens. LG Chem installed a pilot 5 MWp module
plant in 2005 and plans to increase capacity to 50 MWp by 2007 and 100
MWp by 2010. LG Silitron is involved in wafer manufacturing for the
electronic industry and may enter into wafer manufacturing for the PV
industry.
79
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6.1.1 Sharp
The combined production capacity from Sharp’s five plants was 500 MWp in
2005 increasing to 600 MWp by 2006. Over the longer-term, Sharp intends
to increase its capacity to 1,000 MWp by 2010.
80
The Japanese housing market has been the main driver for Sharp’s business
growth in Japan. Thus, Sharp works closely with leading residential property
developers to provide system integration services. With the Japanese
government’s policy to increase PV installations in industrial and commercial
buildings, Sharp is increasing its market focus in these sectors. Sharp views
government subsidies and mandatory power buy-back programmes by
utility companies in Western Europe and the United States as potential
opportunities for growth.
6.1.2 Kyocera
Kyocera has two module assembly plants in Japan located at Yukaichi City in
Shiga Prefecture and Ise City in Mie Prefecture focussing supply on the
Japanese market. Taking opportunities on the growing markets outside
Japan, Kyocera expanded its manufacturing operations outside the country.
81
Kazan supplies to the West European markets and takes advantage
of the lower manufacturing cost in the Czech Republic.
Kyocera’s combined production capacity from its plants increased from 240
MWp in 2005 and expects to increase further to 500 MWp by 2007.
6.1.3 Sanyo
Sanyo has four module assembly plants in Japan at Sumoto City in Hyogo
Prefecture, Kaizuka City in Osaka Prefecture, Oizumi City in Gunma
Prefecture and Kitakata City in Fukushima Prefecture. The plant at Kitakata
City produces modules using a-Si thin film cells. In January 2007, Sanyo
announced that it would construct a new assembly plant for modules in
Shiga Prefecture at a cost of US$16.6 million.
82
Sanyo’s overseas plants are in Monterrey, Mexico, and Dorog, Hungary,
leveraging on the lower manufacturing cost in these countries. The two
plants in Mexico and Hungary use a-Si/sc-Si hybrid HIT cells for their
modules. Production from the plant in Monterrey focuses supplies to
markets in the United States namely California due to its close proximity.
Production from Sanyo’s plant in Dorog supplies markets in Western Europe.
Sanyo’s production capacity from its plants totalled 160 MWp in 2005.
Sanyo will increase capacity to 250 MWp in 2007 and further to 600 MWp by
2010.
6.1.4 Suntech
83
In 2005, Suntech accounted for only 3% of the world’s module shipment at
50 MWp and shipment doubled to 114 MWp by 2006. Suntech acquired a
66.6% stake in MSK of Japan in 2006 and would acquire the remaining
shares by late 2007. In February 2007, Suntech announced shipments from
these two plants totalled 158-159 MWp in 2006. At an estimated world
production of modules at 2,400 MWp in 2006, combined shipment from
Suntech and MSK would account for nearly 7% of the global share during
the period.
Some of the production from MSK’s plants would shift to Suntech’s plant in
China beginning in 2007 to leverage on the lower manufacturing cost in the
country. Consequently, MSK would focus on developing, manufacturing and
marketing higher-valued building integrated modules and Suntech would
tap on MSK’s expertise in systems integration.
Suntech will increase its combined production capacity from 470 MWp in
2006 to 600 MWp by 2007 and plans further increase to reach 1,000 MWp
by 2010.
84
6.1.5 Mitsubishi
6.1.6 SolarWorld
Company : SolarWorld AG
Address : Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany
Tel : +49 22855 9200
Fax : +49 228559 2099
Website : http://www.solarworld.de
85
MWp in 2004 to 44 MWp in 2005 accounting for only 3.5% of the world’s
shipment in 2005.
In early 2006, Shell Solar sold its facilities including R&D centres in the
United States and Germany to SolarWorld. With the acquisition, the
estimated total shipment of PV modules from the plants owned by
SolarWorld and those previously owned by Shell Solar was 128 MWp in
2006. With an estimated world production of PV modules at 2,400 MWp in
2006, shipments from the plants would account for 5% of the world’s
module shipment during the period.
6.1.7 SOLON
Company : SOLON AG
Address : Ederstraße 16, D-12059 Berlin, Germany
Tel : +49 308187 9100
Fax : +49 308187 9110
Website : http://www.solon-pv.com/english/index.html
86
SOLON’s is the world’s tenth largest manufacturer of PV modules but unlike
its competitors previously focussed on manufacturing modules in the value
chain. This put SOLON at risk in security of supplies for silicon cells for its
PV modules. Thus, SOLON is diversifying is business activities across the
value chain to ensure security of its supplies.
In the immediate term, Solon signed three long-term supply contracts for
PV cells in 2005 with Ersol for 10 years, Q-Cells and SunPower for five
years.
SOLON traditional market is Germany and main market outside the country
is Spain where it has several supply contracts. SOLON is increasing its
market presence in Italy, United States and Australia.
87
In January 2007, SOLON announced its planned investment and
strategic partnership with Australia’s CBD Energy, a turnkey
contractor for CO2-free power plant projects in Australia.
Schott Solar currently has four plants assembling PV modules. Two plants
are located in Germany at Alzenau and Putzbrunn, another in the Czech
Republic at Valasskenezirici and another in the United States at Billerica in
the state of Massachusetts. Besides, its in Putzbrunn has 3 MWp facility to
produce a-Si thin film modules. Furthermore, Schott Solar will operate a
new a-Si 30 MWp plant in Jena, Germany, by late 2007.
Schott Solar’s module plant in the Czech Republic leverages on the country’s
lower cost of production and modules from the plant are destined mainly to
the West European markets. The plant in Alzenau supplies not only markets
in Europe but also markets in Asia and Africa. The plant in Billerica supplies
the South American markets besides North America.
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scenario, Schott Solar would then import modules from its plants in Europe
into the United States.
6.1.9 BP Solar
Company : BP PLC
Division : BP Alternative Energy (BP Solar)
Address : Building B Chertsey Road, Sunbury on Thames,
Middlesex, TW16 7LN, United Kingdom
Tel : +44 (0) 19 3276 2000
Fax : +44 (0) 19 3277 4372
Website : http://www.bpsolar.com
BP Solar shipped 46 MWp from its plants in 2005 accounting for slightly less
than 3% of the world’s shipment during the period. BP Solar produces mc-Si
and sc-Si modules. BP Solar also outsourced an estimated 44 MWp to OEM
in 2005.
BP Solar has module assembly plants across four continents. These include
plants in Madrid (Spain), Sydney (Australia), Fredericks in the state of
Maryland (United States) and a joint venture plant with the Tata Group in
Bangalore (India). The plant in Australia with a capacity of 40 MWp in 2006
is the largest module assembly plant in the southern hemisphere. BP Solar
plans to increase the combined production capacity of its plants to 200 MWp
by the end of 2008. BP also has ventures with local partners in Saudi
Arabia, South Africa, Thailand and Indonesia.
6.1.10 Isofoton
Company : Isofoton SA
Address : Calle Montalbán, No. 9, 28014 – Madrid, Spain
Tel : +34 91 414 7800
Fax : +34 91 414 7900
Website : http://www.isofoton.com
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including developing new technologies, increasing production capacity and
expanding markets. Isofoton is among the leading manufacturer of PV
modules in Europe and the leader in Spain. The company shipped 40 MWp
sc-Si cell modules in 2005 and accounted for slightly more than 2% of the
world’s module shipment during the period. Estimates shipment increased
to 56-60 MWp in 2006.
6.2.1 Sharp
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Sharp leads the world in production of PV cells accounting for 24% of the
world’s shipment in 2005. Cell production increased from 324 MWp in 2004
to 428 MWp in 2005. Types of PV cells currently manufactured include mc-
Si, sc-Si and a-Si cells. Sharp sources the wafers to produce the cells from
its own wafer plant and purchases from external wafer manufacturers.
Sharp’s mc-Si and sc-Si cell plant is located in Japan at Katsuragi City in
Nara Prefecture. In 2005, Sharp expanded production of its plant to include
a 15 MWp thin film production facility. All the production from the plant in
Katsuragi City is for its module assembly plants located in Japan, United
States and the United Kingdom.
Sharp announced that it would enter into the upstream activities of the
value chain and invest in a silicon plant to boost its cell capacity. The silicon
plant would have an initial annual capacity of 1,000 tons, equivalent to 110
MWp of cell capacity. The plant would recycle semiconductor silicon scrap
into solar grade polysilicon.
6.2.2 Q-Cells
Company : Q-Cells AG
Address : Guardianstrasse 16, 06766 Thalheim, Germany
Tel : +49 (0) 34946 6860
Fax : +49 (0) 349466 8610
Website : http://www.q-cells.com
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increased by two-folds from 76 MWp in 2004 to 166 MWp in 2005
accounting for 9% of the world’s shipment in 2005. Estimated production in
2006 was 240 MWp. Q-Cell produces both mc-Si and sc-Si for its customers.
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Asia Limited in Hong Kong to handle its business across East Asia and India.
In the United States, Q-Cells is negotiating with potential North American
partners and through its relationship with its US based joint venture partner
Evergreen Solar in EverQ.
6.2.3 Kyocera
R&D on its mc-Si cells currently focuses on increasing cell efficiency and
developing technologies to lower the production cost by reducing the cell
thickness and developing cells with large a surface area. Kyocera achieved
significant success in improving the conversion efficiency of its cells in the
last 20 years. For 15cm x 15cm mc-Si cells, efficiency improved from 14.5%
in 1989 to 17.7% by 2005. By October 2006, Kyocera introduced it new
15cm x 15cm cells with an efficiency of 18.5% developed using the
company’s proprietary “d.Blue” process, which maximises sunlight collection
by reducing reflectivity.
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6.2.4 Sanyo
Production of Sanyo’s a-Si/sc-Si hybrid HIT cells are its plant in Kisuki-Cho
in Shimane Prefecture and Kaizuka City in Osaka Prefecture. Sanyo
produces its a-Si cells at its semi-conductor division at Kaitaka City in
Fukushima.
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terminate the agreement if Hoku were unsuccessful in raising capital to
build the plant within six months of the contract.
6.2.5 Mitsubishi
MEC manufactures its mc-Si cells at its plant in Iida City in Nagano
Prefecture. Production capacity increased from 90 MWp in 2004 to 135 MWp
in 2005. Capacity increased further to 230 MWp in 2006 and plans to
increase capacity to 300 MWp by 2010. MEC began to supply part its cell
production as an OEM to Ebara Corporation in 2005.
Schott Solar produces mc-Si cells for PV modules and to a lesser a-Si thin
film cells. Production increased from 70 MWp in 2004 to 90 MWp in 2005
accounting for 5% of the world’s shipment of PV cells in 2005. Schott
Solar’s module plants consume 60% of the production while the remaining
40% supplied to other module assemblers. Estimated production in 2006
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was about 110 MWp. Schott Solar’s sources its supply of wafers from its
own internal production (produced 39 MWp in 2005) and from other wafer
manufacturers.
6.2.7 BP Solar
Company : BP PLC
Division : BP Alternative Energy (BP Solar)
Address : Building B Chertsey Road, Sunbury on Thames,
Middlesex, TW16 7LN, United Kingdom
Tel : +44 (0) 19 3276 2000
Fax : +44 (0) 19 3277 4372
Website : http://www.bpsolar.com
Production of silicon cells from BP Solar’s five plants across the world
accounted for 5% of the world’s shipment in 2005 increasing from 85 MWp
in 2004 to 90 MWp in 2005. BP Solar exited from production of thin films in
2003 to focus R&D and production on mc-Si and sc-Si cells.
BP Solar has four PV cell plants across the world including Madrid (Spain),
Sydney (Australia), Fredericks (United States) and a joint venture plant in
Bangalore (India). The combined production capacity of the plants increased
from nearly 140 MWp in 2005 to 200 MWp by 2006. In November 2006, BP
Solar announced it would increase the production of its plant in Fredericks
to 150 MWp by the end of 2008. Depending on the availability of silicon BP
Solar in Spain intends to increase its cell production capacity from 70 MWp
in 2006 to 200 MWp by 2008. The plant would also increase its wafer
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manufacturing capacity and integrate its warehousing and shipping facilities
to a single site at Fredericks. The plant would continue to supply
polycrystalline wafers to its plant in Australia and joint venture plant in
India for cell production.
6.2.8 Suntech
The production plant for silicon cells is in Wuxi in Jiangsu Province, China.
Production capacity at the plant increased from 60 MWp in 2004 to 270
MWp in 2005. Suntech expects to increase capacity to 420 MWp by the end
of 2007 and may increase capacity by as much as 1,000 MWp by 2010. The
company entered into an agreement with China’s Louyang Silicon Company
in 2006 to establish a joint venture company (Louyang Silicon) operating a
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PV cell and module plant in Louyang, China, with an initial capacity of 30
MWp.
6.2.9 Motech
Motech is Taiwan’s largest PV cell manufacturer and entered into the PV cell
business in 2000. Production of PV cells from its plant in Taiwan was just 3.5
MWp in 2001. Since then, production has increased from 35 MWp in 2004 to
60 MWp in 2005 accounting for 3% of the world’s shipment of PV cells in
2005. Motech manufactures both mc-Si and sc-Si PV cells which it supplies
to modules assemblers. The company trades publicly on Taiwan’s Over-the-
Counter (OTC) market of the Taiwan Stock Exchange.
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to 1,000 MWp by 2010. The company would achieve this by operating its
own silicon wafer plant.
6.2.10 SolarWorld
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plant in Hillsboro would begin operation in 2007 and eventually have a
production capacity of 500 MWp by 2009.
Besides markets in Europe and the United States, SolarWorld has also set
its sights in China’s market, which it views as a potential high growth
market for PV. SolarWorld and its subsidiary Deutsch Solar has entered into
an agreement to supply silicon wafers to Suntech for manufacturing of its
PV cells.
6.3.1 Hemlock
Hemlock’s main raw material (silicon) comes from Dow Corning’s mining
operations in South America and the United States. Hemlock uses the
Siemens reactors and trichlorosilane gas to produce polysilicon.
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expansion plan to increase the production capacity of its plant. Capacity
increased from 7,700 tons in 2005 to 10,000 tons in 2006. By 2008,
Hemlock intends to increase its production capacity to 14,500 tons and
finally reach 19,000 tons by 2009. However, expansion in 2008 and 2009
would depend on buyers agreeing to sign long-term supply contracts with
Hemlock. Such contracts would involve fixed prices for polysilicon and
upfront payments to finance the expansion of the plant’s production
capacity.
6.3.2 Wacker
Wacker’s plant in Bughausen and obtains key raw material to produce the
silicon from its mine located in Stetten, Germany. The plant currently uses
the Siemens reactor to produce the polysilicon. Wacker currently has two
pilot reactors using the fluidised bed reactor (FBR) to produce solar silicon.
With strong demand growth for PV and its plant running at full capacity in
2005 and 2006, Wacker will increase capacity by 4,500 tons from 5,500
tons in 2006 to 9,000 tons by 2007. Much of the polysilicon scheduled
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coming into production from the 4,500 tons expansion have been already
assigned to Wacker’s customers under a multi-year supply agreement
involving prepayments. Plans are to increase capacity further in stages to
reach 14,500 tons by the end of 2009. According to the company, its
expansion plans are progressing as scheduled.
6.3.3 REC
The head office of REC Silicon AS is in Norway and the parent company of
REC Silicon Inc. based in the United States. REC has two plants producing
polysilicon and both plants are located in the United States. REC was the
third largest producer of polysilicon in 2005 with a production capacity of
5,300 tons. REC operates a plant in Moses Lake in the state of Washington
and in 2005 acquired a polysilicon plant in Butte in the state of Montana
from Advanced Silicon Materials.
REC has expanded its business vertically in the value chain from production
of polysilicon to wafer manufacturing, cell production, module assembly to
system integration. REC also has a shareholding in CSG Solar (production of
crystalline silicon on glass modules) based in Germany and EverQ
(production of cells using ribbon technology) based in the United States.
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6.3.4 Tokuyama
6.3.5 MEMC
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its two plants totalled 3,800 tons in 2005 accounting for 12% of the world’s
production capacity for polysilicon. MEMC uses both the Siemens and FBR
technologies to produce polysilicon. Besides the silicon feedstock, MEMC
also produces and supplies silicon wafers for PV cell manufacturers.
Capacity of its Pasadena plant was 2,700 tons and its Merano plant 1,100
tons in 2005. Its Pasedena plant mainly supplies to markets in the United
States while its Merano plant supplies mainly to markets in Western Europe.
Besides the traditional “chunk” silicon, MEMC is the only company producing
granular polysilicon on an industrial scale. Granular polysilicon has cost and
productivity advantages over the traditional “chunk” polysilicon. Some cell
manufacturers prefer granular polysilicon over “chunk silicon” since it allows
production of PV cells using the string Ribbon technology. Currently REC and
Wacker have pilot plants for producing granular silicon.
MEMC plans to increase the production capacity of its Merano plant from
1,100 tons in 2005 to 1,600 tons by 2007. Its Pasadena plant would double
in capacity from 2,700 tons in 2005 to 6,400 tons by 2008. Thus, total
capacity would reach 8,000 tons by 2008 from 3,800 tons in 2005. MEMC
also plans to build a third plant but has yet to announce the location of the
plant, start of construction and the plant capacity. If the third plant were to
operate before the decade, then capacity would reach beyond the 8,000
tons.
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Its plant in Japan is in Yokkaichi and the United States in Mobile in the state
of Alabama and the combined plant capacity was 2,850 tons in 2005.
Capacity at the Yokkaichi plant was 1,600 tons and Mobile plant was 1,250
tons during the period. Sumitomo Mitsubishi Silicon Corporation (SUMCO)
manufactures mc-Si and sc-Si solar cells. Due to strong demand for
polysilicon from one of MMC’s major customers, SUMCO, capacity at the two
plants will increase from 2,850 tons in 2005 to 3,200 by 2008. The capacity
at the Yokkaichi plant will increase from 1,600 tons to 1,800 tons while the
Mobile plant will increase from 1,250 tons to 1,500 tons during the period.
United Solar Ovonic accounted for 22% of the world’s production of thin
films in 2005 establishing it as the world’s largest producer. The company
based in the US has it’s headquarter in Auburn Hills, Michigan, is a wholly
owned subsidiary of Energy Conversion Devices (ECD Ovonics) with over
500 employees. United Solar Ovonic manufactures triple junction a-Si thin
films with an annual production capacity of 28 MWp in 2005. The company
manufactures and markets flexible thin film, peel-and-stick solar laminates
that can be integrated with roofs and also supplies OEM laminates to major
roofing manufacturers worldwide.
United Solar plans to increase its annual production capacity to 300 MWp by
2010. Its second plant located in Auburn Hills with a production capacity of
30 MWp became operational in December 2006. The third plant located in
Greenville, Michigan, with an annual capacity of 60 MWp will begin
operations in 2007. The company expects to operate its fourth plant in
Greenville with a capacity of 60 MWp in 2008.
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6.4.2 Kaneka
Kaneka initially produced a-Si thin films cells for the electronic consumer
market, which it has since discontinued. In 1999, the company began
manufacturing thin films cells for power generation with the construction of
a new plant in Toyooka City, Hyogo Prefecture, and Otsu City, Shiga
Prefecture. Currently Kaneka manufactures thin films for rooftop
applications for the Japanese market and has close association with major
residential property developers such as PanaHome Corporation. Other
products produce using thin films include see through windows and heater
integrated PV modules for melting snow.
First Solar accounted for 20% of the world’s production of thin films and the
third world’s largest producer in 2005. Shipment from First Solar increased
from 6 MWp in 2004 to nearly 20 MWp in 2005. The company is a US based
company with it’s headquarter in Phoenix, Arizona. First Solar is one of the
few companies in the world manufacturing CdTe thin films and currently the
world’s largest producer of the thin film. The company currently operates a
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75 MWp plant in Perrysburg, Ohio, and a second plant in Frankfurt,
Germany, would begin operations expectedly in the second half of 2007.
Since 2000, MHI and New Energy and Industrial Technology Development
Organization (NEDO) have been jointly developing a tandem-type thin film
cell to improve film efficiency to 12%. The cell consists of a layer of a-Si and
a microcrystalline-Si layer developed using high-speed thin film deposition
technology. The technology allows the cells to absorb a broader range of
light (from ultraviolet to infrared) thus improving the efficiency. Another
area is film cells that provide stable efficiency throughout the 20-25 year
lifetime of a module.
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6.5 Inverter Manufacturers
6.5.1 SMA
SMA’s target market in Asia is Korea and China and has offices in these
countries. In the fourth quarter of 2006, after inspection and auditing of
SMA’s plant in Germany, Korea’s KEMCO certified SMA’s products for use in
Korea. In Korea, SMA will market inverters for installations in homes from
2.5 kWp upwards and central inverters up to 1 MWp. SMA has no immediate
plans to enter the Japanese market since there are already established
players in the country.
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6.5.2 Sharp
Sharp accounted for nearly 19% of the world’s inverter market in 2005. In
Japan, Sharp accounted for 65% of the market since installations of Sharp’s
PV modules are often with its inverters and other brands of modules. Except
the US, Sharp’ does not promote and market its inverters in Europe since
European players dominate the market and well established.
6.5.3 Fronius
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subsidiary company based in Brighton, Michigan, established in 2002.
Fronius also has a network of distributors across Europe, US and Asia-
Pacific. Fronius has nearly 1,700 people employed worldwide including 40 in
the US.
Its main markets are Europe accounting for 16% of the market and the US
accounting for 6% of the market in 2005. In Europe, the main market is
Germany and Spain becoming an increasingly important market while Korea
has longer-term potential.
6.5.4 Xantrex
Major clients for Xantrex’s inverters include Schott Solar, BP Solar and
Kyocera. More than 100 MW of Xantrex’s inverters have been sold in the US
market by May 2006 and nearly 30 MW were sold in 2005. Xantrex’s plants
in the US manufacturing power related electronic products include Arlington,
Livermore, Elkhart and in Spain in Barcelona.
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operate a plant manufacturing PV and wind power electronic products
exclusively for the renewable energy market in China.
6.5.5 Kyocera
6.5.6 Mastervolt
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Germany, US, Spain, France, Barcelona and China besides its head office in
Amsterdam.
The company’s Soladin inverter models for homes are plug and play to the
controllers and fitted with a communications port for remote monitoring.
Mastervolt claims its Sumaster model performs at full power at high
temperatures of 40 degrees Celsius, due to force cooling and therefore
suited for installations in hot temperatures.
6.5.7 Sputnik
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6.6 Others
Spire has been involved in the PV industry since 1980 and a leading supplier
of a wide range equipments and machineries for manufacturing in PV
products besides providing turnkey projects. Based in Massachusetts, US,
Spire claims more than 150 customers across the world using technologies
developed by the company. Spire’s equipments, machineries and services
range from manufacturing silicon wafers, PV cells to modules from a
production line of 5 MWp to 100 MWp. Spire also provides its clients the
technology to manufacture building integrated modules. Areas of services
include initial training at its facility in Massachusetts and then at the client’s
plant. The company can also source supply for its clients, materials for
manufacturing including PV cells and encapsulation materials. Spire
provides training for its clients’ engineers and operators at its facility in
Massachusetts and at the client’s plant.
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Company : Energo Solar SA
Address : Rue del la Criox d’Or 19/A, CH-1024 Geneva,
Switzerland
Tel : +361 411 3838
Fax : +361 411 3839
Website : http://www.energosolar.com
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Company : Bridgestone Corporation
Address : 10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340,
Japan
Tel : +81 03 3567 0111
Fax : +81 03 3567 4615
Website : http://www.bridgestone.co.jp/english
6.6.3 PV Testers
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Spire also supplies PV testers to its clients besides machineries, equipments
and providing turnkey projects for manufacturing PV products. For PV
modules, the company supplies equipments to tests the electrical
performance of modules up to 200 cm x 137 cm and up to 162 cm x 102
cm. Another is to test performance high voltage isolation to ensure that the
cell circuit do not leak electrical currents onto the exposed module surfaces.
Spire also supplies a portable array tester to measure and record the
current and voltage characteristics of the PV modules.
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7.1.1 Background
Suntech Power Holdings Co., Ltd, is a company established in China with its
head office in Wuxi, Jiangsu. Suntech is primarily involved in the design,
development, manufacture and marketing of PV cells and modules. Suntech
was officially set-up in September 2001 and began manufacturing
operations in September 2002. The company is currently the leading PV cell
and module manufacturer in China and among the global leaders. Besides
China, major markets for Suntech include Japan, Europe and the United
States. Suntech acquired a two-third equity interest in MSK Corporation of
Japan in Q3 2006 and expected to increase its interest further by the end of
2007.
Dr. Zhengrong Shi is the founder of Suntech and serves as the company’s
Chairman as well as its CEO. Dr Shi studied optical science and laser physics
in China before pursuing a PhD in electrical engineering from the University
of New South Wales (UNSW), Australia. After graduating, he led the Thin
Film Solar Cells Research at UNSW from 1992 to 1995 and later joined as
director of Pacific Solar Pty Ltd in 1995. Dr Shi (now an Australian citizen)
then returned to China in 2001 to establish Suntech in the country.
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Chinese government supports the PV industry in China through funding of
R&D activities. Another positive factor is China’s lower manufacturing and
other investment incentives.
In December 2005, Suntech listed on the New York Stock Exchange (NYSE)
through an initial public offering (IPO). Since listing, Suntech has shown
strong continuous growth and financial performance. Revenue grew by
165% from US$85.29 million in 2004 to US$226.00 million in 2005 while
net income grew by 55% from US$19.76 million to US$30.63 million.
Suntech maintained a reasonable gross profit between 29% and 30%
during the period.
A major challenge faced by Suntech has been the increasing prices and
global shortages of silicon in recent years. The shortage has limited Suntech
from realising its production potential, often forcing it to purchase silicon in
the spot market at prices higher than silicon purchased through multiyear
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supply agreements. Higher selling prices of silicon forced Suntech to
increase the selling prices of its cells and modules in recent years, which
threatens its margins. Competition from other manufacturers in China limits
how much Suntech can increase its prices. Furthermore, Suntech preferred
to pay more for its silicon in recent years than have idle capacity.
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responsible for managing the day-to-day operations of the company. Mr
Artes brings to Suntech 30 years of international experience in
manufacturing and sales. Mr Weiguo Zhang is serves as the Director as well
the Vice General Manager and has years of experience in investments. Dr
Stuart Wenham joined in July 2005 as the Chief Technical Officer (CTO) and
was formerly the co-director of research at Pacific Solar in Australia.
Suntech manufactures a range of mc-Si and sc-Si PV cells and modules for
grid and off-grid applications used in the residential, commercial, industrial
120
and public utility sectors. One of Suntech’s key business objectives is to be
the “lowest cost per watt” provider of PV products in the industry. The
management of Suntech is in the opinion that the long-term growth of the
industry and its business would have to depend less on government
incentives. Thus, prices of its PV products would have to decline to create
demand and stimulate business growth.
To achieve this, Suntech would have to reduce the manufacturing cost of its
PV cells and modules through improved technologies. Suntech allocated
nearly US$20 million in 2006-2007 for R&D and exploring new technologies.
Of the amount, US$10 million were for R&D in increasing the conversion
efficiency of its PV cells.
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the limitation of the standard screen painting process used in the industry
to produce PV cells.
This allowed Suntech to increase the conversion efficiency of its solar grade
mono-crystalline silicon cells by as much as 18% compared to the industry’s
14%-15% and targets to achieve 20% conversion efficiency by 2008. Even
with lower grade silicon wafers, the technology has the longer-term
potential to increase the conversion efficiency up to 17%.5 This enables
Suntech to utilise lower grade silicon wafers (that otherwise would be
treated as rejects) and reduce the manufacturing cost of its PV cells (per
watt peak).
Suntech has been increasing its cell production and capacity annually since
it began operations in 2002. However, its share of the production and
capacity in China began to show a decline in 2005 brought about by other
manufacturers in China increasing their cell production and capacity. In the
immediate term, Suntech expects to increase its production capacity to 420
MWp and production to 280 MWp by the end of 2007. According to Dr Shi,
Suntech may increase its cells production capacity to 1,000 MWp by 2010
depending on the growth of the global PV market.
5
Suntech increased the conversion efficiency of its poly-silicon cells from 15.2% to 15.4% by the Q1. 2006
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Table 7.1.5a. Suntech’s PV Cell Production in China
2002 2003 2004 2005 2006e
Suntech has been increasing its PV module production and capacity annually
since 2002 to keep up with demand from its overseas clients. One of
Suntech’s major clients is Solarworld, which it supplies as an OEM and in
2006 agreed to supply 24 MWp of PV modules. Like its cell production
capacity, Suntech may increase its module production capacity to 1,000
MWp by 2010.
Suntech exports nearly 80% of its production while the remaining 20% is
for its domestic market. However, the company expects the domestic
market will eventually account for 50% of its production as China embarks
to increase usage of renewable energy to account for 15% of the country’s
electricity generating capacity by 2020. Suntech major export markets are
in Europe, US and Japan. Major markets in Europe are Germany and Spain
and to a lesser extent Italy. Suntech, as with most export oriented
manufacturing businesses in China, has the advantage of lower
manufacturing and operating cost to compete in the international markets.
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Besides, depending on distributors, Suntech recently established
Suntech America and Suntech Europe as part of its long-term
strategy to market its PV cells and modules.
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meet Suntech’s supply requirements. MEMC would also receive
warrants to purchase a 4.9% equity stake in Suntech.
125
Besides improving long-term supplies of silicon wafers, Dr Shi expects
immediate cost savings in 2007 with purchases of the wafers below the spot
market prices. This would contribute towards improvements in the profit
margins. Having long-term supply contracts augurs well for Suntech with its
aggressive strategy to increase production capacity from 270 MWp in 2006
to 660-720 MWp by 2007.
7.2.1 Background
Company : Baoding Tian Wei Yingli New Energy Resources Co., Ltd.
Address : No. 3055 Fuxing Middle Road, Baoding National New
High-Tech Industrial Development Zone, Baoding,
Heibei, China
Tel : +86 312 8929 700
Fax : +86 312 315 1881
Website : http://www.yinglisolar.com
Baoding Tien Wei Yingli New Energy Resources (Yingli Solar) is another
major manufacturer of PV products in China. The company’s headquarter is
located at the Baoding National New High-Tech Industrial Development Zone
in Baoding, Heibei Province. The company began in June 2002 when it
initially assembled modules and has since integrated across value chain
manufacturing mc-Si silicon ingots, wafers and cells for production of its PV
modules.
The General Manager and founder of Yingli Solar is Mr Liangsheng Miao who
has a master’s degree in business administration from Beijing University.
Unlike Dr Shi from Suntech, Mr Miao had only 2-3 years in the PV industry
before establishing Yingli Solar in 2002. Yingli Solar’s success in recent
years is a result of Mr Miao’s entrepreneurial spirit rather technical
qualification. Mr. Miao is also the Executive Director of China’s Photovoltaic
Committee of the China Renewable Energies Association.
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involved in installation and systems integration for grid and off-grid PV
systems.
Yingli Solar’s employees have been increasing since it began operations. The
number of employees increased from 300 in 2003 to more than 1,000 by
the end of 2006. Nearly 85% of the employees are involved in
manufacturing wafers, cells and modules. Production of modules, which
requires greater use of labour than manufacturing wafers and cells, account
for nearly half of the employees involved in manufacturing.
7.2.3 Developments
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production capacity to 600 MWp also provides Yingli Solar the economies of
scale and in a position to reduce its production cost.
Capacity (MWp) 6 10 60 90
Yingli Solar exports nearly 90% of its production of modules and current
main market is Germany and Spain but yet to make any significant entry for
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its modules into the US market. Exports are through its European
distributors usually through a supply agreement under negotiated prices.
For example, Maaß Regenerative Energien has a supply agreement with
Yingli Solar to receive over 160 MWp of modules from 2006 to 2010.
Another is Phönix Sonnenstrom purchasing 6 MWp in 2006 and 143 MWp by
2010. Yingli sells its production outside the supply agreement to potential
buyers at market prices.
A significant milestone for Yingli Solar is its expected listing on the stock
exchange through a public listing. Initially intending to list on NASDAQ in
the US, the company eventually decided to list on the New York Stock
Exchange. One of the major reasons for Yingli Solar’s listing is to obtain
capital for its plant expansion. Expectations are the company would list on
the New York Stock Exchange sometime in 2007.
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There is already build-up in production capacity across the value chain and
further capacity would come online in 2007-2010. Reduction in government
support for renewable energy programmes would create excess or idle
capacity in the value chain.
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Wafer manufacturers are at risk in securing silicon supply especially
smaller manufacturers who are unable to enter into long-term
supply agreements with the silicon manufacturers. Another risk is
the market moving away from silicon based PV resulting in idle
machineries.
Reducing the cost of PV. The challenge for the PV industry is to reduce
the cost of PV systems to the level that it no longer requires government
support. The system price has to be in the range of at least US$3 per Wp to
achieve a significant market and US$1 per Wp to create a mass market.
Current cost of PV system ranges from US$7 to US$10 per Wp and would
to decline beginning in 2008 to US$3.50 per Wp earliest by 2015 according
to some sources. Thus, at least from 2007 to 2015, PV systems would have
to depend on government support to sustain the PV industry and market.
The potential may lie with thin films from improvements in technology to
mass produce thin films cheaply. The US Department of Energy cost goal for
thin films is about US$0.33 per Wp based on a module efficiency goal of
15%. At such price, it is possible for a PV system to cost below US$3 per
Wp. Though possible, it may not occur by the end of the decade until
further improvements in thin film technology.
131
Shortage of silicon will continue until 2008 when new polysilicon plants
begin operations. The polysilicon industry will also see new players entering
the industry attracted by high profit margins created by the shortages. The
trend within the polysilicon industry is to enter into multiyear supply
agreements requiring initial payments from their customers. This puts
smaller manufacturers purchasing smaller quantities of polysilicon at a
disadvantage since they are often unable to commit to multiyear supply
agreements.
132
With the industry consolidation and increasing production capacity, the
industry is gradually developing into a mass production industry improving
the economies of scale. With economies of scale, manufacturers will be able
to use their cost advantage to drive prices downwards generating greater
end-user interest and purchase for PV. With price decreases from large-
scale production, PV modules will gradually come into a commodity product.
Thin films have vast applications not possible with flat panel c-Si modules.
Thin films provide opportunities for applications in building integrated
modules including roof tiles, windows and facades. Thin films can be
deposited on many types of surfaces and therefore has potential in flexible
plastics, glass and coatings on building materials to generate electricity.
8.3 Opportunities
Business potential. Projected demand for PV would grow at average of
20% annually in 2007-2010. Though at slower pace growth, the PV market
still represents enormous potential for manufacturers. The following table
133
summarises the market value of the various segments of the value chain
over a four-year period in 2007-2010.
Market Value in
Product Total Demand in Unit Cost 2007-2010
2007-2010 (US$) (US$ billion)
134
manufacturers intending to export modules into China. The European Union
and the US are net importers of PV modules and are potential markets for
exporters.
Inverters have gone beyond its basic function of converting current from DC
to AC and there is trend for electronic gadgetry and stylish designs in
inverters. Inverters are becoming more like consumer electronics and a
potential for manufacturers to develop consumer appeal for their products.
135
to the industries and strong physical infrastructure. Developing countries
such as the Czech Republic, Mexico and Poland have successfully attracted
foreign companies to invest offering similar incentives. First Solar’s plan to
establish a 100 MWp thin film manufacturing plant in Malaysia was also a
result of such attractions.
136
9
9.. A
APPP
PEEN
NDDIIX
X
4. The Chinese Silicon Photovoltaic Industry and Market, 2006, Nicoletta Marigo,
Centre for Environmental Policy, Imperial College London
5. Pessimistic vs Policy Driven Market Scenarios towards 2010 in Europe and
Globally, December 2005, European Photovoltaic Industry Association
6. Solar Generation, September 2006, Greenpeace and European Photovoltaic
Industry Association
7. Photovoltaic in Germany, Market and Industry Development, 2006, Germany
Solar Industry Association
8. Future State of the PV Industry, 2006, M. Morgan, W Coleman, Y Yudi, S Yin
and C Casillas
9. Pessimistic vs Policy Driven Market Scenario toward 2010 in Europe and
Globally, December 2005, European Photovoltaic Industry Association
10. Solar Electricity in 2010, 2001, European Photovoltaic Industry Association
11. Solar Photovoltaic Market, Cost and Trends in the EU, September 2006, IEEJ
12. A Vision for Photovoltaic Technology, 2005, European Commission
137
23. Kyocera - http://global.kyocera.com/prdct/solar/index.html
24. Sanyo - http://www.sanyo.com/industrial/solar/
25. Suntech - http://www.suntech-power.com
26. SolarWorld - http://www.solarworld.de
27. SOLON - http://www.solon-pv.com/english/index.html
28. Schott Solar - http://www.schott.com/photovoltaic/english/index.html
29. Isofoton - http://www.isofoton.com
30. BP Solar - http://www.bpsolar.com
138