[pagebreak:Incentives, Tech to Spark Debate at Intersolar North America]
Solar companies and scientists are gathering in San Francisco this week for the inaugural Intersolar North America, which officially runs Tuesday through Thursday.
More than 200 exhibitors and 10,000 visitors had registered for the show by the beginning of this month.
That's far smaller than Intersolar Europe, which counted 1,053 exhibitors and 51,861 visitors this year.
"I am expecting to have a highly successful first Intersolar, but it will be a far cry from next year, when Intersolar is known," said Eicke Weber, director of the Fraunhofer Institute for Solar Energy Systems and chairman of the conference.
While he attributes the success of the German conference to the country's feed-in tariff, which has spurred an enormous amount of excitement around the solar market there, Weber said the time is right to bring the conference to the United States.
That in spite of that fact that the country has no similar federal tariff and hasn't managed to extend its renewable-energy tax incentives, set to expire at the end of this year.
"Before, our only argument was the environment, but now with oil at $140 a barrel, I think the much stronger argument will be the pocketbook," he said. "That's why I think solar energy will have a great future in the United States."
After all, he said, California and other sunny states are much better suited to solar energy than Germany, and the growth potential is huge. The United States only installed about 300 megawatts of solar power in 2007, compared to 1 gigawatt in cloudy, rainy Germany, he said.
"It's ridiculous," he said. "It's time for things to change."
Here are four of the major topics that we think companies will be hashing out at the event:
While Germany set the prices for its feed-in tariff in June, incentives in Spain and the United States remain in question, leaving the solar industry uncertain about the potential for growth next year (see Solar Firms Struggle to Forecast 2009).
Spain, the bigger market today, is considering a plan to cut its popular tariff, which pays 45 euro cents per kilowatt-hour, to 31 euro cents for rooftop systems and 29 euro cents for ground-mounted systems, with an annual 300-megawatt cap (see Spain Could Reduce Solar Subsidies by 35%). It also is considering a price of 35 euro cents per kilowatt up to a 2.26-gigawatt cap (see Spain Considers Adding a Solar Gigawatt).
Meanwhile, the U.S. Congress has in the past year repeatedly failed to pass bills that would have extended its renewable-energy tax credits for several years. The credits are set to expire at the end of this year. But a variety of states, such as California, Massachusetts and Pennsylvania, have established stronger laws to support solar and other renewable energy.
Weber, who believes a feed-in tariff is the key to replicating the rapid growth of solar in Germany, said a big question is which state will adopt the German feed-in tariff system first.
The system needs to include a good price, no cap and allow any consumer to sell power into the grid, he said. "Only if you put all this together can you repeat the German experience of the last three years," he said, adding that the conference would like to help California become the first U.S. state to adopt the tariff.
California already has passed the Global Warming Solutions Act, or Assembly Bill 32, to cut emissions to 1990 levels by 2020, and last month proposed several measures, including a greenhouse-gas-emissions cap-and-trade program, to meet that goal.
But while the current system encourages idealists who want to help save the world, it doesn't set up a system in which generators can really make money, he said.
For instance, California utilities use net meters, which run forward when a solar building uses electricity, and backward when it is producing energy. That means the best-case scenario is that the solar-power system would cancel out the owners' energy bill, but not earn money for generating excess electricity - key to attracting mainstream buyers, he said.
The key is to have a meter than measures the production of renewable-energy systems independent of the owners' consumption, he said.
"I'm amazed it's so difficult to explain in the United States that an incentive-based system is more effective than a system that relies on idealists," he said.
Weber predicts California will enact a German-like feed-in tariff within the next two years. "So many people are realizing the present system doesn't do what it's supposed to do, and now we have a second, more effective driver - the oil price," he said.
Meanwhile, New Jersey is considering ending its solar rebates in favor of an energy-credit trading system after applications overwhelmed the program (see Big Renewable-Energy Subsidies Backfire).
Click "Next" to read about another hot topic, pricing projections for solar equipment.
[pagebreak:2) Pricing] In a years-long silicon shortage, maybe it’s unfair to say that solar companies have had it easy. After all, many have had to scramble to get enough of the key ingredient. But after decades of obscurity, solar companies have certainly had a chance to shine. They have been selling as much as they have been able to produce, and the industry has been growing more than 40 percent each year.
As a result, companies have speedily increased production, leaving the industry to wonder when it will reach - and maybe cross - the border to demand. Companies and industry analysts have predicted that solar prices have been headed downward for years. The questions have always been "when?" and "how fast?"
In the last year, a few analysts have predicted the time is nearly here.
Jeremy Ball, author of the Alternative Energy Trading blog, in January predicted that solar cells and panels would be in major oversupply by the end of 2008 as companies add enormous amounts of capacity while incentives in Germany, Spain and the United States are reduced or delayed.
In a report last month, Travis Bradford, president of the Prometheus Institute, a Greentech Media partner, forecast that the silicon shortage would end this year and projected that the average price of silicon-based solar panels would reach $3.37 per watt this year and $2.71 per watt in 2009 (see New Research Predicts End to Silicon Shortage and National Semi Casts SolarMagic).
In November, he predicted that fully installed system prices would be cut in half by 2010, reaching $4 per watt (see Will Solar Production Grow Faster Than Demand? and Oversupply of Silicon to Be Worse Than Expected).
Wall Street analysts have said an upcoming oversupply will shake up the industry, and companies have been positioning themselves to survive - focusing on growing capacity, shrinking costs and buying up, and partnering with, other companies (see Solar Sector Heading for a Shakeout and Solar Temblor: 9 Big Trends).
But industry watchers have different ideas about whether a glut is coming soon or not (seePanelists Debate When the Silicon Shortage Will End and How Low Will Solar Go?).
Rob Ehrlichman, president of Sunlight Electric, a commercial solar retailer, said his company has seen equipment prices rise in the past three months and has found the supply "correspondingly tight." Prices have grown about 25 cents per direct-current watt in that time to between $3.65 per watt and $4 per watt, he said.
"I don’t think this is an indication of long-term trends, but it certainly seems counterintuitive to all these claims that the floodgates are about to open and prices will sink like stones," he said.
Pricing is difficult to predict because it depends on demand, which in turn depends on incentives, which are up in the air. Weber said a feed-in tariff in the United States, for instance, would keep prices from falling quickly.
Cost, on the other hand, is coming down. Weber said that, historically in the last 20 years, each doubling of photovoltaic production has resulted in a 20-percent reduction in cost as companies learn and improve.
"At the moment, we have fantastic margins in the industry because production costs have been decreasing following the learning curve, whereas prices have not been decreasing because of high demand," he said. "The real issue is how quickly we can produce as much PV as the market wants."
Click "Next" to read about another hot topic, metallurgical silicon.
[pagebreak:3) Metallurgical Silicon]
Even as some analysts predict that a glut of silicon may be available in the next couple of years as manufacturers rush to grow their capacity, some companies hope new technology to upgrade dirtier metallurgical-grade silicon could lower the cost for producing the precious material.
Essentially, metallurgical silicon is less conductive than semiconductor-grade silicon, but the idea is that solar equipment doesn’t require as much conductivity, said Weber, who also is a founder of CaliSolar, which in June agreed to purchase upgraded metallurgical silicon from Timminco.
By taking the more contaminated metal and cleaning it less than needed for semiconductor-grade silicon, and in fewer steps, companies can potentially reach efficiencies of as little as 0.5 percent less for a far lower cost, he said.
"Then, of course, it gets very interesting," he said.
However, some analysts have said that costs so far haven’t proven to be lower than the traditional so-called "Siemens process" of making semiconductor-grade silicon.
"We haven’t been shown any data by Timminco, any metallurgical supplier, or any customer of Timminco or any metallurgical supplier, to show the cost," Piper Jaffray analyst Jesse Pichel said in June (see Timminco Shares Down Despite Deal with Canadian Solar).
According to Elkem, a large silicon manufacturer in Norway, the process requires 10 times less energy than the Siemens process and claims go from no production of upgraded metallurgical silicon now to 6,000 tons in 2009.
An announcement isn’t the same as actual production, Weber admitted, but if manufacturers follow through on their plans, they could potentially change the industry’s silicon - and cost - landscape.
"My expectation is that this costs cheaper to produce, uses less energy and can be produced much more quickly," he said. "My vision is that the production of PV in the next few years will be 10 times what we have today, and we simply cannot build these refineries for silicon quickly enough. It’s too much investment money."
The technology has attracted plenty of believers and skeptics both. Timminco sued Lawrence Asset Management for libel after a fund manager called the company "virtually worthless," and its subsidiary, Becancour Silicon, allegedly asked a scientific silicon conference to bar short-seller advocate Manuel Asensio from attending after he repeatedly criticized the company in his research notes (see Timminco Sues for Libel, Scientific Debate Gets Complicated and this Stockwatch post).
In May, Timminco said that an independent review by Photon Consulting had verified its claims. It also announced a silicon-supply deal with Canadian Solar last month and one with Solar Power Industries the previous month.
CaliSolar CEO Roy Johnson is scheduled to give an overview of developments in the upgraded metallurgical silicon market at Intersolar on Tuesday.
Click "Next" to read about another hot topic, thin-film solar.
[pagebreak:4) Thin Film] With Wall Street darling First Solar (NSDQ: FSLR) reaching a 52-week high of $317 per share in May and remaining above $240 per share through the beginning of July, it’s no wonder thin-film solar is getting plenty of attention.
More than 100 thin-film companies are vying for a slice of the market, according to a Lux Research report, which forecast that thin-film solar will occupy 28 percent of the solar market by 2012 and generate $19.7 billion in sales.
Last month, Bradford forecasted that thin-film solar production would grow from 1 gigawatt this year to more than 9 gigawatts in 2012 (see Thin Film Solar Has Bright Future).
Cadmium-telluride films, led by First Solar, make up the largest portion of the thin-film market. But other technologies, including copper-indium-gallium-diselenide and amorphous silicon, hope to give the company a run for its money.
Miasolé, which plans to begin producing CIGS cells next year, reportedly is raising between $200 million and $220 million, according to VentureWire (via VentureBeat). Nanosolar,HelioVolt and Global Solar Energy, among others, also are pursuing the technology (seeFunding Roundup: Slow IPOs, Big Ambitions, Miasole Clears the Air, Q&A: Miasole CEO on Catching Up With First Solar, Global Solar Strings Thin-Film Market Together, Competition for First Solar?, HelioVolt on Nanosolar’s Heels, Nanosolar Begins Production and HelioVolt Gets More Cash For Thin Solar).
Semiconductor-equipment manufacturers Oerlikon Corp. and Applied Materials (NSDQ: AMAT) have received the most attention of the amorphous-silicon-equipment developers. In June, Oerlikon Solar sued Sunfilm, an Applied Materials customer, for alleged patent infringement.
While the lawsuit didn’t target Applied Materials directly, it could potentially shake up the thin-film subsector if it ends up discouraging amorphous-silicon competitors.
In a sign that it is taking the suit seriously, Applied Materials responded to the lawsuit last month, saying it believes the SunFab thin-film line it sold to Sunfilm doesn’t infringe on Oerlikon’s patent because the technology is different. It added that separate groups also have challenged the validity of Oerlikon’s patent.
Michael Rogol, managing director at Photon Consulting, said the lawsuit underlines a new risk to Applied Materials’ customers.
"Applied Materials is trying to sell micromorph equipment, and this is a suit designed to say that the process of micromorph equipment is not their intellectual property," he said. "I think this is a pretty direct attack on AMAT’s thin-film micromorph equipment business plan."
This type of legal suit seems to be fairly standard in the semiconductor-equipment industry, he added.
"As processes for new equipment are first sold," he said, "there is often a pattern of back-and-forth lawsuits as the various equipment vendors try to stake out their intellectual property claims.