Sharp's recent purchase of U.S. developer Recurrent Energy took many by surprise, but in the end, we accepted that there must have been valid reasons for it. After all:

(a) MEMC bought SunEdison. First Solar bought NextLight. It's been the latest instance of 'Big Upstream Player acquiring U.S. Pure-Play Developer.' (That only leaves Fotowatio Renewable Ventures from amongst the pack. You have to wonder how long it will take before a company like Q-Cells, Solarworld, or REC takes the plunge.)

 (b) How else could Sharp enter the U.S. market? The company's c-Si modules are expensive compared to Chinese manufacturers and First Solar. Amorphous is less expensive, but it's possibly a harder sell, even for Sharp, given all the negative rep points it has accumulated thanks to the exit of Applied and the insolvencies of its customers (Signet, Sunfilm). There is a broad sense that the market in the U.S. has to be made; project economics for a pure-play developer, given existing prices, still are not attractive enough to stimulate hundreds of megawatts in production for a module vendor, at least not right now. Look at who's really successful here: SunPower and First Solar, both of which are downstream-integrated.  With Germany cooling down in 2011, success in Italy and the U.S. is absolutely critical. 

(c) Sharp does have a lot of capacity (870 MW by the end of 2010: 550 MW in c-Si and 320 MW of tandem-junction Si). It plans on expanding, too: it seems that Sharp believes the key to unlocking tandem-Si's cost potential is in scaling up, big time. They've always talked about building this 640 MW factory, and they've finished a fair bit of it so far. At that scale, you definitely need some control over your destiny. Mark Osborne from PV-Tech also ventured to guess that it's more important for thin-film fabs to be well-utilized than for c-Si fabs to be so, from a cost point of view. That sounds intuitively true (it's always the thin film firms talking about throughput), although the explanation is not entirely obvious to me (in-line manufacturing process for thin film vs. batch for c-Si?).

(d) There are reasons to be believe it will be successful.  As SunPower has shown, integrating downstream can improve a technology's competitiveness and overall margins, and can help to drive the market. SunPower too once bought Powerlight, and one would have to say the move has been successful. And then there is the added fact that the performance advantage of a-Si (in kWh per kW, due to a lower temperature coefficient and better low-light performance) can be hard to communicate to a buyer fixated on $/W. This looks like a natural move for a rapidly expanding amorphous silicon producer with a large corporate parent.

These are all plausible, valid arguments, and I'm sure Sharp executives made and believe them. But if an industry contact is to be believed, there were also some more pressing particularities that drove the decision. This is where First Solar comes in: apparently, Sharp had 200 MW of tandem-Si modules for the next year or so "locked away." The would-be buyer? You guessed it: Nextlight. Then one fine morning, First Solar acquires your biggest potential customer, and now you have a problem. So that's that. I'm not sure what it all means yet, but I figured the world should know.

The other thing is considering the consequences of the Nextlight deal for Recurrent. It has been mentioned in numerous circles that a number of Recurrent's projects are stuck in limbo because the project economics models that determined their bid prices assumed an unrealistically low cost of capital.  It is a safe bet that Sharp (the corporation) has access to cheaper capital. In any case, these are prospecting days in the U.S. solar development world, and people are paying primo dollar for pipeline (regardless of how much sense that makes; I hope Sharp took a long, hard look at those project bids), and this makes Recurrent look like geniuses, deservedly or not.

At the end of the day, though, I have to admit it's not really what excited me about this development. Rather, it is the fact that Sharp is making some gutsy moves -- with tandem, with Recurrent -- to drive the PV industry and market forward. I just hope the company has made the right choice in both respects.

Tags: first solar, nextlight, pv, pv manufacturing, recurrent energy, sharp solar, thin film silicon, utility scale