Applied has ‘a long way to go’ in smart grid tech

Applied Materials CEO Mike Splinter said today he’d like to see the company leverage its semiconductor and solar expertise to move into the smart grid. But don’t look for that technology anytime soon, he said.

“I’m trying to encourage people to come up with good ideas, but there’s a long way to go with that,” Splinter said at the Dow Jones Alternative Energy Conference in Redwood City, Calif.

Instead, the Santa Clara-based equipment manufacturer is continuing its push in the solar sector, a move that began in 2006 with the acquisition of Applied Films, a thin-film equipment manufacturer. The economic downturn is continuing to make it difficult to finance solar projects or manufacturing lines, directly cutting into Applied’s sales in the solar sector, Splinter said.

“Our business is going to grow, but not as fast as we thought it would,” Splinter said.

Splinter forecast that capital will “certainly be available by 2011,” so in the interim Applied (Nasdq:AMAT) is focused on working with utilities to help them understand the role of solar farms other, non-rooftop applications. The company is also working with glass companies on coating technologies that could improve energy efficiency.

But the solar market isn’t developing quickly enough in part because the state and federal governments in the U.S. are not being aggressive enough with renewable portfolio standards, he said (see Obama administration could fast track cap-and-trade, RPS in '09).

Aggressive RPS could provide the opportunity for the solar industry to follow Moore’s law of progress, Splinter said. Splinter estimated a cost reduction of 20 percent to 30 percent for solar every time the volume doubles. In 2008, installed solar grew 5.5 gigawatts, up from 2.4 GW in 2007 (see Spain leads 2008 solar market).

The RPS proposed by U.S. President Barack Obama calls for 10 percent renewables by 2012 and 25 percent by 2025, and the current RPS proposal in Congress calls for 6 percent by 2012 and 25 percent by 2025—goals that just aren’t aggressive enough, Splinter said.

“If you have to do something by 2025, what would you do tomorrow? Absolutely nothing,” he said. “We need very aggressive intermediate goals every two years … or very little will happen in the U.S. in the next five years or so, until it’s really urgent.”

Other countries, such as China, are embracing the impact that Moore’s law could have on solar prices. The Chinese government recently announced new solar subsidies that could halve the per-watt cost of installed solar (see New solar subsidies in China set to reduce installed cost by half).

“Almost no clean energy has been deployed in China. That’s all going to change, but what you see there is just a willingness to invest,” Splinter said. “There’s a willingness to invest and a belief that they can drive the cost down.” (see ENN Solar makes supersized thin film on first Applied line in China).

Chinese solar companies have been hit hard by the economic downturn, with Splinter estimating that half have closed because of the decline in prices and increased competition (see Yingli, Longjitaih partner on new 600MW solar cell maker).

Still, China is doing a better job at securing its place in the new clean energy economy than the United States, Splinter said.

“We haven’t really become the masters of our energy supply, we’ve just switched sources to Germany and China,” Splinter said.