Antidumping cases are a complex processes involving the International Trade Administration (ITA, part of the Department of Commerce) and the International Trade Commission (ITC, an independent government body). The ITA defines the imports in question and determines whether US sales at less than “fair value” (also called “dumping”) have occurred, and if so by how much. The ITC determines whether the dumped imports in that class have been a cause of material injury to the corresponding US industry.

In parallel with the dumping investigation, there is a process to determine if imports have been subsidized by foreign governments. Either or both of these investigations could result in the imposition of tariffs on the imported products, called antidumping and countervailing duties, respectively. This process involves a significant amount of data collection and analysis, and is designed to be insulated from public pressure and political forces, but as it unfolds over the next year, there will likely be an ongoing stream of public statements, lobbying, and political commentary.

The level of tariff would be based on the results of the investigation, and is intended to be the difference between fair value and the prices each importer has charged over the period of investigation. The impact of any import tariff would clearly be an increase in the price of PV modules. One way of looking at how any such increase would affect installed system costs is to look north, to Ontario, where the provincial energy incentive policy has basically created an insulated market for manufactured solar goods. This is accomplished by local content requirements (LCRs), which must be met if projects receive the province’s feed-in tariff. These LCRs cause PV module prices to be approximately 40% higher than average prices available in the US, and installed system costs are 25-50% higher than equivalent US projects.

The effect of these price increases on demand is somewhat harder to quantify. One of the primary reasons for the uptick in solar demand seen in the past few years has clearly been the rapidly falling costs of solar PV systems. While some segments in the US are required to purchase solar PV technology regardless of the price (due to state-based renewable portfolio standards), it can certainly be said that, without increases in incentives to lessen the impact of price increases, returns on PV systems would decline drastically, thus slowing overall uptake of PV technology.

Our latest analysis shows that IRRs for solar projects in major US markets (such as California and New Jersey) are often triple those seen in Ontario. Part of this is due to the variety of incentive mechanisms in place; however, the fact that Ontario projects are 50% more expensive also eats away at IRRs. This episode is a further reminder that, even with pure economics moving in favor of PV systems, policy shifts can cause major concerns for the industry.

Polysilicon prices have a history of dramatic changes, but until recently, polysilicon prices had held up better than wafer and module prices. This encouraged continued capacity expansion despite growing concerns of over-supply throughout the supply chain. Now, sluggish end-market demand in 2011 has exacerbated the glut, and severe price erosion since mid-September suggests the poly bubble has now fully burst.

Polysilicon prices rose from around $30/Kg to well over $450/Kg during the first half of 2008, then settled into the $50-100/Kg range for the past couple of years. In Q2’11 average polysilicon spot prices were $60/Kg. During the week of November 7, Solarbuzz has confirmed several quotations from tier-two Chinese polysilicon producers for $24/Kg, while rumors on the internet have suggested prices as low as $20/Kg.

At $20-25/Kg, even tier-one polysilicon producers will struggle to cover their costs. After falling more than 90% since 2008 highs, polysilicon spot prices may already have been squeezed to near-term limits. As polysilicon prices fall below cash costs, marginal producers will reduce production and capacity expansion plans will be re-evaluated.

It is important to remember that the large majority of polysilicon for is procured through long-term contracts, so industry average polysilicon prices are significantly higher than the extremes that these spot prices imply. But spot prices are an important indicator of where supply/demand is trending.

The entire PV supply chain has struggled to digest an enormous amount of over-capacity, so prices for poly, wafer, and modules are reaching historic low levels. Module costs, which have typically accounted for up to two-thirds of installation costs, have fallen to less than half of the system price. In the future, further reduction of BOS (Balance of Systems) costs will be critical to continue to push PV costs down and competitiveness up.

The 1603 Program, part of the American Recovery and Reinvestment Act of 2009, allows upfront payments for specified energy property in lieu of tax credits. The purpose of the 1603 payment is to reimburse applicants for a portion of the cost of installing renewable energy projects used in a business at the onset of capital costs rather than postponing the payments until tax season. The grant program has served as a bridge program so that firms without tax liabilities can still create solar projects and jobs, but it is currently set to expire at the end of 2011, creating great concern in the solar industry.

SEIA put together a pan-technology coalition to advocate for an extension of the program, including the release of a new study illustrating the job creation and economic benefits of 1603. Still, many in the solar industry are pessimistic about the political situation and the possibility of an extension. While political rancor makes it a difficult time to advance legislative changes, SEIA seems somewhat optimistic about the push through for an extension. According to Manning Feraci, Vice President of Legislative Affairs at SEIA, “All good things coming out of solar will slow if 1603 is not extended.” Feraci believes that senators understand the importance of 1603 in terms of job and project creation, and right now, he believes this will serve as a vehicle to push through an extension of the program.

First off, it is important to remember that, although the US is only one country, there’s not really one overall US solar market. There are, in fact, overlapping federal, state, and even utility policies in many areas, but the US market is far more fragmented by state than traditional European markets or emerging Asian markets, which have tended to rely on just a few centrally managed government incentive programs. A company must understand their strengths before navigating the geographic diversification of markets in the US.

We’ve had very detailed conversations with various companies and explained how our research can show demand by segments, internal rates of return from specific system types, cost of PV energy, and even sortable policy trackers. Also, our ever-expanding United States Deal Tracker provides insights into project-by-project pricing, showing where the activity is and who is participating.

The prospect of power shortages is influencing manufacturing plans and supply chains for many consumer electronics products. System integrators, and EMS and OEM/ODM companies of all sizes are concerned, and they are working to secure an adequate power supply for assembly operations, including asking the government to give to priority to high-tech industries. At the same time, manufacturers are worried about their suppliers maintaining production of components.

In addition to the power shortage, the growth in power consumption exceeds the expansion of power supplies, and there are structural problems in generating power. According to government statistics, power consumption in Q1’11 grew 15% Y/Y, higher than the average during 2006-2010. Coal accounts for 77% of power generation in China; hydroelectric accounts for 20%, and nuclear and renewables make up the rest. China is trying to adjust the balance, but power shortages will be a factor for some time.

This power shortage will impact the consumer electronics and energy industries in many ways:

• Consumer electronics relies on a supply chain of component makers, system integrators, EMS/OEM/ODMs, and brands. When there are electricity shortages, large companies will have priority access, for their own needs as well as for their suppliers. Smaller companies without strong connections to major companies might not be able to sustain their business. The allocation of electricity is a political and economic issue in China, and shortages may result in a “survival of the biggest and strongest” game.
• Despite controversy, China is planning to increase the share of nuclear power. Currently there are more than 12 nuclear power plants under construction and 25 in planning. As a country injured by the pollution from coal generation, and short of hydro resources, China does not have many choices in generating power. Many in China have been advocating solar power. China is the world’s biggest solar cell manufacturer but generates only a little solar power domestically, and instead exports a large fraction to Europe.
• Green concepts will become more and more prominent and even mandatory. China has applied a series of power consumption regulations for consumer electronics products including PCs and TVs. The power shortage will push the administration to tighten rules further. Consumers will be more willing to buy green products if they face more limited power consumption. In the electronics field, this means opportunities for advanced technologies in power efficiency.
• Flat panel display and semiconductor makers will have to pay more attention to the capacity utilizations of downstream manufacturers, rather than focusing on the demand from brands. For example, we have been observing the big gap between tablet PC panel shipments and tablet PC set production; when there is ample supply of components and demand is strong, it might be the capacity of assemblers that limits the overall supply chain capacity.

For brands, China is no longer a place with unlimited manufacturing resources. Supply chain management will have to involve more than the lowest assembly cost, including who can secure the most stable electricity supply for running production lines!

Despite the extreme gravity of the situation in Northern Japan, much of Japan’s industrial heartland in the central part of the country did not suffer significant damage, and have power and water at normal levels. With the exception of M. Setek’s facilities, Japan’s solar manufacturing industry appears to be mainly intact.

• The three largest polysilicon producers in Japan are Tokuyama, Mitsubishi and M. Setek:
  • Tokuyama’s facilities are in Yamaguchi prefecture in the western part of the country.
  • Mitsubishi’s plant is in Yokaichi in Mie Prefecture in middle of Japan.
  • However, M. Setek’s factory is in Soma Fukushima, an area hard hit by the disaster.
• The largest wafer producers in Japan are Kyocera and TKX. Both companies’ facilities are in Kansai in central Japan. M. Setek is the third-largest PV wafer focused maker, and its factory is also in Fukushima.
• The three largest cell makers are Sharp, Kyocera and Sanyo. All three companies have their main facilities in Kansai or close by in the middle of Japan.

M. Setek, which is now owned by AUO, announced that it is stopping production at its Fukushima plants. Its facilities were not damaged by the tsunami, but are stopping operation due to lack of electricity and water. AUO stated that production would resume in about a week.

M. Setek’s customers will likely be inconvenienced. And the entire Japanese economy will be limping along for a while, which may cause some minor shipment and short-term pricing issues for PV components. Even so, Solarbuzz does not expect Japan’s tragedy to have any major impact on the PV supply chain, since Japan now accounts for less than 10% of worldwide polysilicon, wafer and cell production capacity. Solarbuzz is forecasting that manufacturing capacity will be more than sufficient supply in all upstream segments, which should absorb any supply constraints.

However, Japan’s disaster could have much broader implications on the debate about how to balance renewable, nuclear and conventional energy sources. How much influence it might have will, unfortunately, probably be tied to how serious the situation is with the damaged reactors. Pictures of citizens being checked for radiation, and the struggle by technicians to keep the reactors from melting down amidst explosions is certainly not good public relations for the nuclear power industry. There is no silver lining in this horrific situation. But Japan’s disaster may become an important point in the debate on the true cost of various electricity generating technologies. It may help swing the pendulum further away from nuclear and more towards solar and other renewables.

As originally featured on PV-Tech.org on November 17, 2010, our analysis reveals that Applied Materials (AMAT) has just reached a significant landmark. They are the first equipment supplier to reach and exceed the US$1 billion barrier for PV-specific trended Trailing Twelve Month (TTM) tool revenues. This is based on AMAT FY2010 results, which reported fourth-quarter net sales within its Energy & Environmental Services (EES) segment (includes PV tool revenues) of US$606 million. In spite of the dwindling backlog and subsequent discontinuation of one of its flagship PV-specific products, AMAT’s PV revenues have stabilized at, and then considerably exceeded, the US$1 billion trended TTM level.

When AMAT unveiled its ‘Going Solar’ initiative in September 2006, revenue targets for 2010 were to be enabled by turn-key a-Si/µc-Si SunFab production lines, outputting Gen 8.5 panels with manufacturing costs at 70¢/W, module ASPs at the US$1/W level, and tandem-junction cells with 11% efficiency. AMAT’s initial goal for PV tool revenues by 2010 was considered by many analysts as somewhat conservative.

The subsequent revenue recognized by AMAT, following SunFab deliveries, provided a highly effective means of rapidly gaining PV equipment market share. As a result, this propelled AMAT to become the leading PV equipment supplier overnight in terms of revenue terms, and all within just two years of its ‘Going Solar’ initiative.

Further, during this period, AMAT also became a key player within the c-Si equipment supply chain by embarking upon an acquisition-based strategy. This included HCT Shaping Systems in June 2007 and then Baccini in November 2007. This strategy helped create a more balanced product portfolio and positions AMAT well for periods of strong c-Si growth.

SunFab lines are no longer a part of AMAT’s PV product portfolio. Yet AMAT has just become the first equipment supplier to break the US$1 billion barrier for trended TTM PV segment revenues. In contrast to its original thin-film dominated revenue targets, AMAT’s PV revenues have seen increasing contributions from process tools that trace their origins back to HCT and Baccini. In addition, many external factors have stimulated AMAT’s trended TTM PV revenues.

Looking forward to 2011, AMAT will start the year with a PV Served Addressable Market (SAM) considerably lower than 12 months ago, mainly because the company discontinued selling SunFab products to new customers in July 2010. Furthermore, c-Si tool suppliers collectively are facing a new year with a forecast of flat to negative revenue growth rates for c-Si equipment spending (as outlined in the recent PV Equipment Quarterly).

Revenue upside may be available to many c-Si tool suppliers through technical advances. Ultimately, however, AMAT remains larger in terms of market capitalization. The company also has a broader global reach with more experience in capital equipment tool supply than any other equipment company serving the PV industry today. Maintaining PV revenues at the US$1 billion TTM level remains a distinct possibility, but one that probably depends on AMAT increasing the size of its PV SAM through 2H’11. The impact of strong PV equipment spending for c-Si expansions during 2010 can now be seen as a key factor behind AMAT maintaining TTM revenues close to the US$1 billion level, while at the same time compensating for the decline in thin-film SunFab revenues.

This week saw two deals involving Asian manufacturers investing in venture-backed Silicon Valley companies that have been developing advanced materials applicable to displays and solar cells, among other applications. Both of these companies have been in business for a decade or more, raised tens of millions of dollars, and amassed large patent portfolios, and have also lived through the “hype cycle” surrounding the printable electronics and nanomaterials segments.

On August 9, Teijin Limited announced that it had acquired NanoGram, which has been developing silicon-based nanoparticle technology. Teijin said that the investment will facilitate its entry into the market for flexible devices developed with silicon-on-plastic technologies, which can be integrated with Teijin’s materials such as polycarbonate resin, polyester resin and bioplastics. Teijin intends to mass produce these materials for use in printable electronics, and said it would provide samples of silicon inks to makers of TFT LCDs, solar cells and other devices. Since February, 2009, Teijin had been working with NanoGram on the optimization of silicon nanoparticles and inks and to develop processing technology to sinter silicon nanoparticle film at a relatively low temperature of below 200ºC. This technology could enable the use of printing techniques to create TFT arrays on plastic or other substrates, which could be used in active matrix displays (OLED, LCD, electrophoretic) and thin-film solar cells.

On August 10, Nanosys and Samsung Electronics announced a strategic alliance and licensing arrangement for development of commercial applications of nano-architected materials for the electronics and thin film solar markets. Under the terms of the deal, Samsung Electronics will contribute funding and resources to co-develop products using Nanosys technologies, in addition to $15 million equity investment from Samsung Venture Investment Corporation. As we covered recently in The Emitter, Nanosys has developed quantum dots, nanometer-scale crystals made from semiconductor materials, which can be tuned to absorb and emit light selectively. Nanosys has been working with LG Innotek to use its material to convert blue LED light to red and green, enabling simpler and more efficient LCD backlights. The company has also pursued applications in solar cells and energy storage.

The acquisition of NanoGram could enable Teijin to integrate downstream, providing higher value to their polyester films and plastics, and to take a leadership position in the emerging area of plastic electronics. Samsung Electronics’ investment in Nanosys could have broader implications: Not only is the company a leading producer of TFT LCDs and AMOLED displays, but it has been moving into solar energy, as well as batteries (via its sister company Samsung SDI). In 2008, Samsung Electronics acquired Clairvoyante, another venture-backed IP company, which had developed the PenTile display pixel architecture; Samsung is using PenTile in its AMOLED displays and kept on key staff, which now operates as a R&D arm called Nouvoyance. It will be interesting to see how Samsung moves forward with Nanosys—and how LG reacts to its investment.

We look forward to hearing more about these deals, particularly from Jason Hartlove, Nanosys’ CEO, who will be presenting at the DisplaySearch Emerging Display Technologies Conference, August 19 in San Jose.

Applied Materials has more experience depositing high quality silicon thin films on large glass substrates than any other company in the world, based on its PECVD tools for the production of TFT LCDs. So it seemed to offer a credible solution to the desire to add solar cell capacity despite the silicon shortage over the past few years: the SunFab™ turn-key Thin Film Si (TF Si) line, which could produce the biggest solar modules in the world. But Applied Materials struggled to sign up customers, and on July 21, announced it was discontinuing sales of its SunFab lines to new customers.

Certainly, the rapid drop in c-Si module prices in the past two years significantly eroded the competitiveness of TF Si, but there probably were other contributing factors as well:

• Regardless of module costs, the competitiveness of TF Si at less than 10% conversion efficiency is severely compromised by high Balance of Systems (BOS) costs. And although some customers were using a tandem junction process, module efficiencies were probably 8.5% at best. Movement up the efficiency curve was too slow to keep up with rapidly changing end market dynamics.
• Typically, AMAT LCD CVD users are able to start up a new fab in 4-7 months, but according to the Quarterly PV Cell Capacity Database & Trends Report, the fastest SunFab early adopter to reach mass production was 17 months. And by that time, it was already into the 2H’08. If the product had been more mature when sales began, there may have been room to both start generating cash flow and work costs down.
• The most successful solar cell makers develop their technology in conjunction with their product portfolio and target markets. They work with equipment makers to help them fulfill their roadmap. That is one way they can differentiate their business. Most of the SunFab customers were not top-tier solar cell manufacturers. AMAT was driving the roadmap on technology, and customers were left with little flexibility in their business strategy as the market has shifted.

Are these issues an indictment for the rest of thin TF Si? The continuous price declines in c-Si modules are surely a challenge for all TF Si producers. But we still believe some producers have viable high efficiency multi-junction TF Si roadmaps that may keep them competitive. Oerlikon Solar continues to present impressive $0.70/W costs for turn-key lines that will ship by the end of 2010. And all TF Si companies continue to emphasize the potential for higher energy output in hot and low light operating environments; potentially making the technology more productive than c-Si in some applications.

Applied is exiting the turn-key business, but still has strong ambitions to make its Environmental Solutions division, including solar, a pillar of its future growth strategy. The company will continue to offer its c-Si equipment as well as individual TF tools and support existing customers. The top 20 solar cell manufacturers don’t typically buy off the shelf turn-key solutions anyway and we see a growing trend for all makers to pick and choose individual tools for their specific needs. Although the scale may be smaller compared to big turn-key orders, AMAT is expected to do just fine selling individual PV process tools, like its industry leading Baccini screen-printers, which are seeing renewed market demand within emerging c-Si high-efficiency and selective emitter concepts for back-end metallization pattern alignment.

On June 29, Solarbuzz revised its 2010 demand forecast up nearly 40% to 15.2 GW. The worldwide PV market is now expected to more than double in size this year! The solar industry is in the midst of yet another tremendous up cycle. Excitement about end market demand was clearly evident on the floor of PVJapan 2010, held in Yokohama from June 30 through July 2. But optimistic PV supply chain companies are anything but complacent.

With severe competition in all segments, PVJapan exhibitors were eagerly touting the improvements they are continuously making to their products. Solar cell manufacturing equipment is one area where makers continue to dramatically increase productivity. Crystalline silicon diffusion furnaces and turn-key a-Si thin film fabs are two examples from PVJapan that illustrated this trend.

Koyo Thermo Systems introduced its new in-line diffusion furnace that offers substantially increased productivity over its batch tool. Having worked closely with Sharp for many years, Koyo has more than 30 years of experience in manufacturing diffusion furnaces. The diffusion furnace market is cycling around $200 million per year, and with its new in-line high productivity tool, Koyo hopes to increase its share, particularly in the high capacity growth regions of Taiwan and China.

Even though silicon prices haven fallen significantly in the past two years and interest in new a-Si fabs has waned, Tokyo Electron (TEL)—Oerlikon Solar’s exclusive sales representative in parts of Asia—provided a very upbeat outlook for the future prospects of thin film Si during the Manufacturing Equipment Technical Seminar.

TEL’s optimism is based on their belief that a-Si TF offers more energy yield than other PV cell technologies in some applications. Oerlikon has also increased throughput by 50%, reduced module costs by 50% and doubled their capacity output in just the past two years.

 As exhibited at PVJapan, equipment makers are constantly pushing the productivity envelope to make continuous and substantial improvements. This increases competitiveness, but at the same time, it means that solar cell manufacturers are able to produce more with fewer machines and smaller investments, which is one important reason why solar module costs and prices continue to fall. Thankfully, lower prices make PV generated electricity cheaper and that pushes demand. Greater demand will require more and more manufacturing facilities to be built.