Watch for falling solar margins, says report

A new report is bullish about cost savings and efficiencies in the solar photovoltaic market in the near future, though it warns that those savings will come largely at the expense of margin.

And while its market share predictions forecast continued dominance by silicon technologies in the short term, the future is up for grabs to anyone—including the smallest startups today, its authors say.

PV Technology, Performance, and Manufacturing Cost 2006, a 50-plus page report with 40 charts and tables, was published today by the non-profit Prometheus Institute for Sustainable Development based on work licensed from consultant PV Energy Systems.

In it, authors Paul Maycock of PV Energy and Travis Bradford of Prometheus, with a combined 50+ years in the PV industry, publish market data from major manufacturers by region and technology, and make predictions about the future.

The authors predict up to a 50% drop in the manufacturing cost of PV components by 2015, after analysis of silicon shortages, laboratory vs. production conditions and emerging technologies.

Yet Bradford, in an interview with the Cleantech Group, stressed that silicon supply issues like increased efficiencies, thinner wafers and more silicon plants coming online on 2008 and 2009 won't necessarily themselves drive a commensurate drop in PV module prices.

"At the end of the day, the amount of silicon in a final product is less than 20% of the expense of a module."

Bradford suggested much of the price reduction will come from manufacturers' profit margins. "Really, the problem is that profit margins have dramatically expanded all throughout the supply chain."

The report makes estimates of the market share various technologies, such as thin film and others, might expect in the next 10 years.

"The traditional wisdom back in the mid nineties was that thin films were going to take silicon by storm and put crystalline silicon out of business. Today, crystalline is still 94% of the global market. We predict that by 2010 thin films will gain somewhere between 10-20% of the global market."

Bradford cited the lower-than-silicon price expectation for thin film, as well as the additional material required for a thin film-based module, as factors impeding its wider market acceptance within the next five years. But beyond that, he said, the future was open to anyone.

"It's fairly straightforward to author a 5 year forecast for this industry. After 5 years, there are so many companies investing in thin film that disruption could happen."

Vendors to watch, according to Bradford, include:

• United Solar Ovonic (Uni-Solar), for doing a good job of integrating into building components, despite having "probably the most inefficient material on the market"
• "Anyone doing high speed roll to roll", including Nanosolar for "having good PR, though they're a little way from commercial scale product," and
• Crystalline silicon on glass approaches as employed by CSG Solar (working with Q-Cells) and Suntech in China. Bradford suggested this could end up being a "very workable product, as it has all the benefits of crystalline silicon without the weight."

The report addresses the performance of PV technologies and offers analysis, efficiencies and cost projections of the dominant technologies used in the photovoltaic (PV) industry today, including monocrystalline PV, multicrystalline PV, silicon ribbon and sheet, amorphous silicon, Copper Indium Diselenide (CIS)/Copper Indium Gallium Diselenide (CIGS) and concentrator cells.

With innovations happening all over the industry, and breakthroughs in organics, plastics, nanotech and other fronts, Bradford suggested that "it's going to be an interesting next five years."

The report is $1,200 USD.

For more information:

http://www.prometheus.org/technologycost

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