Thin film solar cells have always lagged the dominant solar cell technology on efficiency but beat it on price. Now it looks like thin film solar companies may have to match the efficiency of polycrystalline silicon just to stay alive.
There has been a spate of efficiency advances announced by upstart companies with thin-film solar technology, reflecting the large investments made in the field over the past decade. Last week, Stion announced that its solar modules, or panels, can convert 13.4 percent of sunlight into electrical energy. Miasole, which makes flexible solar cells from a combination of copper, indium, gallium, and selenide (CIGS), last month claimed the world record thin-film efficiency with 15.5 percent.
Improving cell efficiency is one of the most powerful levers thin film solar companies have in competing on price per watt against polycrystalline silicon panel manufacturers–and pushing down the price for solar, in general. Commodity silicon panels have an efficiency in the range 15 percent. Thin film solar panels can be substantially less efficient, but because the cost of materials is so much lower, they can come in cheaper per watt.
Or at least that used to be case. Now, the dramatic drop-off in solar prices, caused by a glut in polycrystalline silicon, is forcing thin-film solar companies to become both cheaper and more efficient.
“You no loner have this huge differential of cost of manufacturing between thin film and crystalline silicon,” says MJ Shiao, a solar analyst at GTM Research. “The cost advantage has been almost completely wiped out.”
First Solar, long considered the runaway cost leader, said in first quarter this year its cost of manufacturing is 73 cents. Now, Chinese silicon panel manufacturers are nearly at that cost and are targeting even lower by the end of the year, Shiao says. Prices for panels have dropped about 50 percent in the last year and don’t show signs of letting up.
Does that mean all those thin-film solar startups founded by Silicon Valley venture capitalists in 2000s will go bust? Well, some already have–notably Solyndra–and others are struggling. Global Solar, another CIGS manufacturer, today announced it is shutting down its Berlin factory due to “high inventories, collapsing prices and significant reductions to European feed-in tariffs.”
The key to survival is making real progress on the technology–improving cell and panel efficiency–while stockpiling enough cash to weather out the supply glut. Abound Solar, which received a Department of Energy loan guarantee to build a factory, earlier this year closed one production line to focus on making its next-generation product, a clear example of a company seeking to preserve cash, Shiao said.
So while the technical progress on thin-film solar technology has been impressive, it’s ultimately the market dynamics that will determine how far thin film will get. Market share of thin film solar has actually declined in the past three years, according to GTM Research.
“When demand for solar picks up in new regions and a lot of the uncompetitive silicon companies exit because of the huge oversupply, we might have price stability and there may be more breathing room for thin film companies,” Shiao said. “I’m cautiously optimistic, especially for the technology leaders.”
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