Solar market boom in California; Silicon
Valley centre of new PV industry?
by Edwin Koot05-07-2007
A Rotterdam, 8 May 2007
California was the world’s third largest market for solar photovoltaic
systems in 2006.
Last year 58 MW were installed. System integrators expect that this market
will grow at least by 100% in 2007. The California Solar Initiative (CSI)
program, with 3.2 billion dollar government support, could feed an even faster
growth in the years to come. What makes California interesting, besides these
incentives and the attractive irradiation, is the entrepreneurial climate.
Silicon Valley is becoming once again the centre of a booming industry based on
silicon. Only this time it is with solar energy and sometimes even without the
use of silicon. Dozens of Venture Capitalists, most of them with their roots in
software and the internet, have found their way into this renewable industry and
funded several startups, with dazzling ambitions, that are ready to provide the
global PV market with new generation and lower cost solar technology. Companies
like Nanosolar, Miasolé, Applied Materials and Sunpower are likely to play a
very important role in the global PV industry.
The Californian PV market
Over the last few years the Californian PV market showed a growth rate of
more than 40%. With the new CSI program started in 2007, it seems likely this
growth rate will increase this year. Attractive schemes introduced in Germany
and Spain have, in the past, resulted in market growth figures of 80-100% per
year in the first years. Although the incentives in California are not as
attractive as in those two countries, a growth rate higher than 40% seems more
than likely. A 'conservative' scenario of 50% year on year growth is likely to
result in total sales revenues of more than $800 million for PV systems in 2007,
rising up to $2 billion by 2010. A more progressive growth scenario of 80% per
year could even lead to sales revenues of $1 billion in 2007 up to $4.7 billion
by 2010. In the graph below the ‘conservative scenario’ of 50% per year has been
drafted, leading to around 90 MW of new installed power in 2007 up to 300 MW in
2010. In an 80% growth scenario these figures could be 105 MW in 2007 and 620 MW
in 2010. There are still some bureaucratic hurdles to be overcome in
implementation of the CSI. Therefore the results over the whole of 2007 will
provide a better indication for likely growth figures in the coming years. It
will be exciting to see whether California can hold its position as the third
largest market in the world with the currently exploding Spanish PV market.
International PV trade mission to California
From 10 to 15 June an international PV trade mission will be organized, to
learn more about business opportunities in California and to visit the new
global PV manufacturers located in the “Solar Silicon Valley” region. The
organization is in the hands of SolarPlaza.com, the global PV marketplace, which
previously organized similar tours to China, Spain, Italy and Greece. This event
will bring together PV business executives and investors from many countries.
This creates a dynamic environment and platform for high-level discussions about
new business opportunities in the rapidly growing Californian and global solar
In cooperation with the California Solar Energy Industries Association, a
special symposium on 11 June will discuss in detail the implications of the
California Solar Initiative (CSI). Major stakeholders will present their views
and experiences and discuss business opportunities. The tour will include
company visits to the ‘hottest’ PV companies in the USA, like MiaSolé, Applied
Materials and Sunpower. In another symposium, relatively young solar technology
manufacturers will be in the spotlight among other presentations. SolFocus and
Solaria will elaborate on their concentrator techniques, which lead to
substantially lower investment costs per Wattpeak. Finally this trade mission
will host a matchmaking event for Californian companies and investors with the
international delegates, with introductory presentations about the California
USA in solar spotlight
For several reasons, solar PV in the USA is in the international spotlight.
Firstly of course, there is the 3.2 billion dollar in funding for the next 11
years initiated by Arnold Schwarzenegger. This long term incentive scheme
creates a solid ground for new start-ups, and gives the green light for
investors and international PV companies.
Secondly, the USA has always been a country with high involvement of venture
capital. This business sector has long been searching for new booming industries
since the dot-com crisis. The global solar energy market and industry have shown
growth figures of over 30% for more than 5 consecutive years. And several
relatively young companies have entered the New York stock exchange and
collected serious amounts of capital. The timing of the movie and road show by
Al Gore couldn’t be better to stimulate the interest of the capital market for
The third reason is the growing interest in thin-film technology. The
enormous growth of the PV market caused a silicon shortage within the solar
industry in recent years. This led to high prices on the spot market, up to 10
times the value this industry always put in their long-term business models.
Consequently, the industry enhanced its search for technologies using less
silicon, such as thin-film, amorphous silicon cells and modules and CIGS. It
stimulated the development of thin-film, non-silicon technologies, like Cadmium
Telluride. The world’s largest manufacturer of thin-film CadTel modules is the
USA company and NY stock-listed First Solar. The company raised 300 million $ in
an IPO last November, grew 300% in production in 2006 and will extend its
production capacity with new plants in the USA, Germany and Malaysia to 200 MW.
Venture capital push
The USA has always had a strong position in research and production of
thin-film technologies. Thus it is no surprise that the venture capital firms
found their way to the start-ups in California working on this, especially those
working with alternatives for silicon feedstock. The result of all this is that
within a few years several of these start-up companies collected capital to get
started and currently are presenting amazing ambitions.
Recently, another issue focused attention on thin-film in the global market.
More and more countries are launching feed-in tariff systems to provide
incentives for large-scale solar application. Most often the tariff level has
been based on experiences with the currently-dominating crystalline module
technology. Imagine if you can build multi-megawatt solar power plants in Spain
for example, with slightly less efficient thin-film modules that are two or more
times cheaper? This would save millions of dollars and push the return on
investment way above the current 10%.
Nanosolar, Google and a top-3 position in 2007
Take Nanosolar, founded in 2002 and backed by investors like the founders of
Google. Its approach is to develop and produce thin-film solar cells 10 times
less costly, focusing on roll-printing of Copper Indium Gallium Selenium (CIGS)
technology. This thin-film technology is still playing a minor role in the
global PV market. But the guys at Nanosolar have high ambitions. In 2006 they
received 75 million dollars of new capital, one of the highest ‘clean
technology’ investments that year. Their aim is to realize 430 MW of cell
production capacity by 2007 at locations in the USA and Germany. This quantity
would have ranked Nanosolar in the top three largest cell manufacturers
worldwide in 2006. According to CEO Martin Roscheisen, their technology will
deliver cells that cost five times less than conventional crystalline silicon
More CIGS technology
Also on the way to deliver cost-effective solar CIGS technology is MiaSolé in
Santa Clara, California. The company raised 16 million dollars of investments in
2005, started production in the last quarter of 2006 and aims to have a
production capacity of 200 MW by the end of 2007. Unlike crystalline silicon
solar cells, CIGS cells can be printed on flexible sheets of foil or other
material. According to David Pearce, CEO of MiaSolé, his company will produce
both glass-based and flexible modules.
Underlining the MiaSolé ambitions is that several blog sites published the
rumour that they are planning an IPO within 18 months. More recently, completely
new companies like Solyndra and Solopower raised 79 and 10 million dollars
respectively to fund their CIGS manufacturing plans. Are these companies the
only ones working on this technology? No, they are in good company with DayStar
Technologies, Global Solar, Honda Motor Company, Würth in Germany and last but
not least Shell Solar. It is Shell’s only activity in solar energy after selling
their crystalline solar business to the German company Solar World.
Booming business for equipment manufacturer Applied Materials
The dazzling ambitions of the new manufacturers offer beautiful business
opportunities for thin-film production equipment manufacturers. The Californian
rising star in this field is Applied Materials, a leading semiconductor
equipment manufacturer, which has set a target of $500 million for their PV
business in 2010. It has already sold several production lines to major existing
and new thin-film module manufacturers. Among their customers are the world’s
second largest cell manufacturer, Q-Cells, and the newly established company
Sunfilm. The latter is backed by investors Good Energies and NorSun AG, both
very familiar in the solar industry. The lines will be able to produce the
world’s first 5.7m2 tandem thin-film photovoltaic modules on glass substrate.
Recently also, the new Spanish module manufacturer T-Solar Global S.A. ordered
such a production line. These large modules will be 4 times bigger than today’s
largest solar panels. T-Solar rated the production capacity as 40 MW. Applied
Materials has found customers all over the world. One of the world’s largest
companies in CD-manufacturing, Moser Baer India Ltd., selected Applied Materials
to supply a similar production line of 40 MW capacity. With their extensive
experience in high volume manufacturing, Moser Baer India expects it can drive
down the cost for modules substantially. Applied Materials expects it will be
able to produce equipment for CIGS-technology in the near future, which could
bring them more customers closer to their base.
Are only start-ups looking at thin-film technology? Absolutely not. The major
brands in the market like Q-cells, Suntech Power, Sharp, etc, have all initiated
research and production initiatives in the thin-film technology area.
Is the recent growth of thin-film technology an unexpected phenomenon?
Not really. More than a decade ago, top researchers and scientists predicted
that, whatever will be done to make crystalline silicon solar cells cheaper,
such as increasing production volumes and improving efficiency, it will never
reach the low-cost production level possible with fully automated production
using thin-film technologies. The obvious reasons lie in the level of
automation, energy and feed-stock needed. The industry focuses on bringing the
cost down in order to achieve “grid parity” for end users, with the production
cost of a solar kWh being equal to current market prices on the grid. Such a
market will no longer be dependent on government support. Then the market
potential will be beyond imagination. Some experts believe “grid parity” in
certain market segments can be reached within 5 years. A challengingly short
period for such a dynamic industry.
Will all of this mean the end of crystalline silicon technology? Certainly
not. At the moment, more than 90% of all solar modules sold worldwide are based
on this still developing and dominant technology. Efficiencies are constantly
improved, the global production scale and (research) infrastructure is enormous.
This technology is preferred for several applications and the price of
solar-grade silicon is likely to drop next year due to massive new investments
by the industry.
Look at the unprecedented growth of SunPower Corporation, realizing a
three-fold increase in their revenues for 2006, up to $236.5 million from $78.7
million in 2005. SunPower is famous for its high-efficiency back-contact
crystalline silicon solar cells with an efficiency currently rated at 22%. The
cells and modules have a uniquely attractive, all-black appearance and the
efficiency is the highest commercially available in the global market. Sunpower
will expand its production capacity to 207 MW in 2008, almost double the size of
2007. SunPower took over PowerLight last year, a leading global provider of
large-scale solar power systems, with over 100 megawatts installed, which will
give a poll position in the growing Californian PV market.
With the above observations, it can be concluded that the USA is on its way
back to the frontline of the global PV industry and market developments. With
new upcoming markets not only in California, but also in other US states and
countries like Spain, Italy and Greece, a further growth of the global PV market
of at least 30% per year for the coming years seems likely, with next-generation
solar technologies and an expected rapidly growing domestic market. This will
create room for a range of (new) technologies and new companies, creating
winners and no losers. Only some winners will win a little bit more.
More information about the international PV trade mission to California
Contact: Edwin Koot, email@example.com