Solar Survivors: Winners and Losers in Crystalline Silicon PV

If you're a crystalline silicon-based cell or module maker, life is hard right now. Module prices have been in free fall since the fourth quarter of 2008, plummeting from $4.00/W in September to $2.25/W at present. At the same time, demand has trended sharply downwards as well during this time (so much for short-term price elasticity, right?). And that's just the beginning of their woes: year-end cell crystalline silicon capacity for 2009 is estimated at over 14 gigawatts. When one reconciles that with around 6 gigawatts or so of demand (and it remains to be seen if we'll even get there), of which 1 gigawatt or so will be installations using First Solar modules, it doesn't make for a pretty picture. And if things couldn't get any worse, many of these companies have millions in debt repayments due over the course of the next twelve months (unlike a number of thin-film firms, which are venture-funded).  

Put this all together and you have a struggle for survival of Darwinian proportions; much blood will be spilled, and not everyone will make it through to the other side. Over the next few years, the market will be increasingly restricted to only to those companies with the best products, lowest cost structures, and most successful business models. The task, then, is to identify which crystalline silicon-based technologies, business models, and companies will be in a position of strength to weather the storms versus those most likely to be at risk from the shakeout that is currently well underway in the PV industry.

This question framed the considerations of GTM Research's recently published report, Surviving the Shakeout: Winners and Losers in Crystalline Silicon PV. Aiming to comprehensively lay out what it will take for a crystalline silicon-based cell/module manufacturer to succeed over the next two years, it conducts a comparative analysis of the 50 most prominent crystalline silicon-based cell and module manufacturers in the market over eight key performance metrics, namely:

1. Degree and nature of vertical integration

2. Cost structure

3. Balance sheet strength

4. Polysilicon procurement arrangements

5. Technology differentiation

6. Manufacturing scale

7. Proximity to demand

8. Brand recognition

Figure 1: Determining Metrics for Crystalline Silicon Cell/Module Manufacturing Business Model

A quantitative assessment was carried out for each metric for each crystalline silicon cell and module manufacturer, and companies were ranked based on a weighted average calculation. Cost structure and balance sheet strength (as indicated by the larger circles in Figure 1) are considered as first-order drivers, meaning that they were weighted higher in the final assessment than other factors. To whet the appetite, below is a sample section from the report.

Technology Differentiation

As pertains to PV, the term "technology differentiation" is largely synonymous with one variable: conversion efficiency at the cell and module levels. Efficiency matters for the following reasons:

1. Gains in efficiency drive cost reductions at all steps of the manufacturing process on a dollar-per-watt basis, from the cost of the feedstock to module conversion: all else equal, higher efficiency means higher energy output for the same cost.

2. Efficiency gains also lower area-related or balance-of-system costs (i.e., wiring, foundations, labor, etc.). BOS costs scale inversely with module efficiency, since higher efficiency means fewer panels are required for the same output. Therefore, given equal module cost, higher efficiency drives a lower installed cost, and thus lower cost of electricity.

3. Efficiency becomes a key consideration when space is a constraint – meaning that in such cases, higher efficiency technologies will obtain a premium and differentiate a company's product. This is precisely the value proposition of "super mono" technologies such as SunPower's back-contact cell and Sanyo's HIT product.