Oerlikon aims to streamline thin-film solar

Nearly a billion dollars in equity has poured into thin-film solar startups this year from investors betting the technology is the fastest solar solution to achieve cost-parity with energy derived from fossil fuels.

But while many of those companies are still working to get proprietary manufacturing techniques off the ground, a few manufacturers such as Switzerland's Oerlikon Solar (VTX: OERL.VX) and Santa Clara, Calif.'s Applied Materials (NASDAQ: AMAT) are selling turn-key production lines for amorphous thin-film silicon panels that mimic the low-cost mass production that fueled the growth of the semiconductor industry.

The value of manufacturing equipment purchased by thin-film photovoltaic and organic PV firms is projected to grow from $450 million in 2008 to $4.8 billion in 2015, according to a new report from research firm NanoMarkets.

Oerlikon Solar, a division of OC Oerlikon, generated more than CHF 300 million ($279 million) in sales in 2007 and is projecting CHF 700 million in 2008 and CHF 1 billion in 2009 (see Oerlikon introduces new thin film solar equipment). The company's production lines have produced 400,000 modules through customers including CMC Magnetics subsidiary Sunwell in Taiwan, Schott Solar and Ersol Thin Film. Oerlikon has also signed a contract to license its technology to China's Chint Solar.

With a goal of thin-film solar being cost-competitive by 2010, Oerlikon launched a new production line for micromorph tandem cells in September 2007 that boasts more than 10-percent efficiency. Oerlikon is currently constructing a new factory in Singapore expected to go online in 2009, and the company expects to increase the number of employees from 650 today to 1,000 in 2009.

CEO Jeannine Sargent spoke to the Cleantech Group about what the next few years has in store for the solar market.

There's continued uncertainty of the federal income tax credit for solar in the U.S. (see U.S. House backs cleantech bill). How does that affect Oerlikon’s outlook for a billion Swiss francs in sales in 2009?

The numbers I’m giving you are somewhat independent of the federal ITC. We are in belief the U.S. government will renew a form of the investment tax credit, however, that’s not relevant to the current volume of sales. We see that as an accelerator to our projections.

If you look at the renewable portfolio standards, there are significant requirements across many of the states that require you to have a certain percentage of renewable energy, and in certain states a certain percentage must be solar, so that’s what many of these investments are based on.

What about the shrinking feed-in tariffs in countries such as Spain or Germany (see Solar PV still going through growing pains)?

From a thin-film perspective, we’re somewhat independent of some of the tariffs because the price performance of thin film is such that you’re making profits even with the adjustment in some of the feed-in tariffs. It’s likely to be a bigger issue in the crystalline silicon market.

One of the drivers of thin-film technology over crystalline solar has been that its materials cost less because thin film uses less silicon (see China solar industry faces rising silicon costs). What happens to thin film if the projections are realized that the price of silicon decreases in 2009 because of added supply?

Currently, in our models we assume and forecast a significant reduction in silicon prices, even with our growth rates. If for some reason crystalline silicon does not do that, it will cause a significant increase in demand for our products, above already what we’re anticipating.

The price is $150 to $300 for a kilogram of polysilicon today. Our model assumes it will be $45 to $60, and even at $45 per kilogram thin-film outperforms crystalline solar on cost efficiency. If polysilicon were to be free, you’d still have a better cost effectiveness.

How is that possible?

You’re saving on operations and maintenance and you’re getting more generated kilowatt hours. Thin-film is more efficient because it performs better in diffused light, i.e. clouds that you would see in Germany, also at higher temperatures, such as you would find in a desert like Arizona.

With your expansion into Singapore, headquarters in Switzerland and growing presence in the U.S., how will Oerlikon deploy its resources to capitalize on the global market?

We’re seeing growth markets in Asia. Europe is the majority of the market now, but Asia is quickly catching up and will surpass that in the next year or two, and you see North America catching up too. For us in Oerkilon, Asia will be the larger market, in effect Asia will manufacture the model and export them to the U.S. or Europe.

We’re building a hub in Singapore. The majority of our installations are in Taiwan, and next year that will be split between Taiwan and China. I expect Korea is becoming interested; they’re probably a 2010 event, and Malaysia is starting to come online.

Thin-film developers including Nanosolar and Miasole have raised nearly a billion dollars in the past year (see Nanosolar grabs $300 million for utility solar). What does this infusion of capital into thin-film solar mean in the bigger scope of the cleantech industry?

I think you're seeing a trend that shows there's viability in solar, from producers of manufacturing lines to model manufacturers. That utility companies such as PG&E are getting involved and making commitments to solar PV and thin film is a shift, so I think we're beginning to see the start of an inflection change, in the U.S. in particular (see PG&E mega solar deal sparks industry).

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