Transforming the Energy Industry
On April 7th, General Electric (GE) announced that it will be getting into the photovoltaic (PV) manufacturing business in a big way. Before the end of this year, GE will start construction on a factory somewhere in the US that will be capable of cranking out 400 MW of PV panels each year. The modules it builds in that factory will be utilizing a PV material known as Cadmium-Telluride, more commonly referred to as Cd-Te (pronounced “cad-tel”). The impact of GE’s entrance into this market, along with the market trends that influenced the strategic decision, are going to have a big impact on all sub-sectors of the PV industry, but will be especially transformative in the market for distributed installations.
To understand why this announcement is so important, let’s go back to the first quarter of 2009. First Solar, the market leader for Cd-Te panels, broke the mythical $1-per-Watt production threshold. Market observers had long predicted that once that limit was breached, PV installations would become ubiquitous and every applicable rooftop would sport them, making distributed energy generation commonplace.
That didn’t happen. Instead, the vast majority of distributed systems are still being installed for at least four times the price of a First Solar module (and often much more). The thin film revolution has had a big impact on large utility-scale solar plants, but has barely been noticed by the distributed marketplace.
The main reason for that is that rooftop space is prime real estate. Once a decision has been made to put PV up there, an owner wants to maximize the return on the available roof space. Enough buyers will pay high premiums for expensive high-efficiency mono-crystalline silicon panels. That’s good enough for a trickle of installations. But for the market to turn hot, the price has to come down dramatically, while the efficiency of the modules has to increase.
To reach both of those goals, the key is making the PV films thin. Really thin. Today, an average First Solar cell has a Cd-Te layer (the active layer of the cell that actually turns photons into electrons) that’s about 3 microns thick. At that rate, there’s enough known Tellurium reserves to produce somewhere between 5 and 7 gigawatts (GW) worth of panels. Considering that First Solar is already on track to be producing 2.5 GW worth of panels by 2012, that’s not a lot of room for expansion.
The ideal thickness of a Cd-Te layer, however, is only about 200 nanometers (or 0.2 micron). In other words, the thinner the active layer gets, the more efficient it becomes. First Solar is overbuilding its PV modules today by a factor of 15 because it doesn’t yet have the ability to manufacture nano-films at the necessary speed and required level of quality-control. However, nobody doubts that they won’t figure that out over the next few years. And GE will, too. Thus, the real news about GE’s entrance into this market has as much to do with microns as it has to do with megawatts. That’s because GE’s bet on Cd-Te means that they have confidence in the availability of enough Tellurium to make all their panels. GE, like most megacorporations, doesn’t make bets. It knows there’s enough tellurium because it has probably figured out how to use a lot less of it in its modules.
There’s no way that GE would be making this investment if it knew that it could only produce its full capacity of this factory and never grow the business larger. One of the iron-clad rules of General Electric is that it never gets into a business unless it will eventually be the first or second largest player in the market. And the market, by the way, is not just for Cd-Te panels, but the entire PV industry. If Cd-Te becomes cheap and efficient enough, it will not just outperform Silicon panels, it will replace them altogether.
That means that GE has either discovered a large Tellurium deposit (very doubtful) or it has figured out a way to produce a much thinner Cd-Te layer. By itself, that’s no challenge. But to do so in a mass production environment (as opposed to doing it on a laboratory bench) is a significant feat. And, if GE has, in fact, cracked that code, it will be able to make a much cheaper PV module than its competitors. The production cost to beat is 75 cents per watt. I wouldn’t be surprised if GE, once it gets into full production at its yet-to-be-built plant, will be able to boast of 50 cents per watt. And if GE can do it, then First Solar, which has the largest Cd-Te manufacturing research department in the world, won’t be too far behind.
Even as GE and First Solar are charging ahead with cheaper panels, the Department of Energy (DOE) recently announced an even more ambitious program: to get the price of an entire PV system down to $1 per watt. Today, the best prices for installations are around $4 per watt. This includes the PV module and the other equipment (inverters, cabling, racking) and the cost of installation. The DOE program, called SunShot, plans to give grants to science and technology projects that will bring PV systems prices down by a factor of four.
What does all this mean for the distributed PV market? It means that PV, having become dramatically cheaper in the last two years, is about to get a lot cheaper. If the DOE goals are met, a business can put a 10-kW system on its roof for only $10,000. At those prices, it becomes a struggle to rationalize not putting PV on your roof.
Author's Bio: Sam Jaffe is Research Manager at IDC Energy Insights and a frequent renewable and distributed energy blogger.