In 2011, I wrote about the CdTe horse race in which the three U.S. companies making cadmium telluride (CdTe) photovoltaic (PV) modules, First Solar, Abound Solar, and General Electric, jostled for position. Abound and GE were challenging the reigning champion First Solar to build the largest PV manufacturing facility in the world.
The official results of that race are in, and First Solar has beaten the competition by many lengths. Within about a year of each other, both Abound and GE Solar announced they had given up any hopes of solar panel manufacturing. On July 2, 2012, Abound Solar announced it was closing (see "The End of Abound Solar: What Have We Learned?").
On the August 6, 2013 First Solar earnings call, the company announced the purchase of all the GE Solar intellectual property, along with a relationship to purchase GE inverters, thus ending the Primestar/GE Solar story in manufacturing their own product. Our trifecta ticket wasn’t in the money, because we had the win right with First Solar, but reversed the second place and third show order. GE Solar came in second place because it obtained 1.75 million shares of First Solar stock. On the day of the announcement, FSLR was trading around $47, or $82.25 million for GE to exit.
Those who invested in Abound ended up with nothing. In fact, the Department of Energy is financially liable for Abound PV modules that are not fit for sale and reportedly has poured concrete onto them at a cost of $2.2 million. The story will not end there, as concrete-encapsulated cadmium doesn't constitute environmental stewardship. Anyone owning Abound Solar modules is now responsible for both warranty and end-of-life disposal/recycling costs.
First Solar’s February 2013 earnings call described its $1.39/watt system installed costs, which is a low-cost milestone for the PV industry. GE Solar must have realized it cannot compete with this experience and pricing; in a way, GE got off its own horse and got on First Solar’s during the race for dominance. GE is now one of the top-ten shareholders of First Solar.
April Analyst Day
At the time of that February earnings call, First Solar wasn’t answering analysts’ questions, deferring them instead to an April analyst day for answers. My perspective at that time was negative, having seen delay tactics resulting in bankruptcy, but my concerns were wrong.
The analyst day was well received and the stock shot up from where it was -- around $26 at the end of February to over $39 after the analyst meeting. First Solar announced the purchase of high-efficiency crystalline silicon PV company TetraSun at that analyst meeting, now blurring the lines between it and the other high-efficiency crystalline silicon module manufacturer, SunPower. First Solar also predicted its module cost would fall to $0.40/watt by 2017. Cost of production would be between $0.34/watt and $0.37/watt, plus $0.04/watt cost of sales. $0.04/watt is also what the company eliminated with its end-of-life recycling program, now that that responsibility has been passed on to the system owner.
No Environmental Stewardship
First Solar’s eliminating the prefunding for end-of-life recycling did not get much attention after the February earnings call, but it should have. Recycling and environmental stewardship was once a cultural touchstone for First Solar during Bruce Sohn’s tenure as president from 2007 to 2011. Asbestos manufacturing can be used as a guidepost for First Solar, in that owning the recycling might be the best long-term approach to reduced liability from manufacturing.
From the transcript of the February 2013 earnings call:
Note, regarding our module end-of-life program, beginning in the fourth quarter of 2012, we made prospective changes to our solar module collection and recycling program outside of the EU. For new contracted sales, customers as part of their overall power plant decommissioning obligation will now be responsible for ensuring modules are either recycled or responsibly disposed [of] at the end of their life.
As noted with the Abound experience, the decommissioning and recycling costs will likely far exceed what First Solar was previously prefunding. CdTe can be an expensive material to throw away. It cost the DOE at the very least $0.20/watt to encapsulate the modules in concrete (as many as 140,000 modules and $2.2 million in costs). The right (and not-very-difficult) approach is for these thin-film PV materials to be recycled and reused to produce new higher-efficiency modules, embodying a cradle-to-cradle philosophy. Maybe General Electric can do the right thing with its unused modules now that GE Solar is finished.
Photo: Crates full of broken, unusable Abound Solar modules during the company's October 2012 auction. Photo by author.
End-of-Life Costs for PV
An example of the cost for decommissioning PV systems was recently revealed by a public bid at the Sacramento Municipal Utility District in Sacramento California (SMUD). Financial experts should take note that the 1.6 megawatts of retiring PV systems cost $1 million to decommission, or $0.61/watt. This included all ground work and removal of materials to take the land back to its natural state.
This kind of activity and bid is something that hasn’t been seen previously for the PV industry, because systems are just now coming into retirement. PV is much less expensive than a nuclear power plant to decommission (another type of facility which SMUD has experience in decommissioning). Interestingly the decommissioned Rancho Seco nuclear power plant is located in the exact same place where the decommissioned PV systems were located.
There is currently very little knowledge base or experience in the salvage, decommissioning and recycling of PV systems. The SMUD cost experience can become less expensive if the industry can develop a mechanism for decommissioning and recycling both crystalline silicon and thin-film PV technologies. We have several data points: First Solar will no longer prefund $0.04/watt; SMUD spent $0.61/watt for full site rehabilitation including recycling, and DOE’s reported disposal of Abound Solar modules with concrete cost at least $0.20/watt.
The lesson from these experiences is to be conscious of cost reductions from module and system installers that have now become the responsibility of governments and the system/landowners.
Looking to the Future
First Solar continues to be a dominant player in the PV industry, winning the thin-film solar factory race against Abound Solar and GE Solar, and it has now teamed with the latter on intellectual property and inverter sales. First Solar dominates the industry with low costs for installed systems, and now joins the race for dominance in the crystalline silicon space with the purchase of TetraSun.
Environmental stewardship will need to be addressed, if not by the manufacturer, then by the communities installing these systems. There is a new race: the race to avoid paying for end-of-life costs. The loser of that race is becoming clear: the public, because we don't even know we're in the race. If only the race were for dominance in environmental responsibility.
Joseph McCabe is a solar industry expert with over twenty years in the business. He is an American Solar Energy Society Fellow and a Professional Engineer, and is internationally recognized as an expert in thin-film PV, BIPV, and new business models for the solar industry. McCabe has a master's degree in nuclear and energy engineering and a master's degree in business administration.
This piece was originally published at Alt Energy Stocks and was reprinted with permission. Joe is a Contributing Editor to Alt Energy Stocks and can be reached at energy [no space] ideas at gmail[dot]com.