China: thin-film PV operations increase

Thin-film photovoltaic (PV) operations are continuously being set up across China, indicating active development in this sector, which is foreseen to provide affordable solar power and be used widely …

Thin-film photovoltaic (PV) operations are continuously being set up across China, indicating active development in this sector, which is foreseen to provide affordable solar power and be used widely in the future. Most experts believe that incredible price increases of polysilicon in 2008 pushed up the price advantage of thin film, spurring Chinese manufacturers to adjust their product mix. As domestic polysilicon price rose, the production cost of silicon-based solar cell modules in 2008 was at some point 4-5 times higher than that of thin film modules, Jiang Qian, principal energy analyst at Shenzhen Zhongzhe Investment Consulting Co., said. Despite the fact that China“s polysilicon price slumped from USD 480 per kilo in 2008 to USD 60 per kilo now, thin-film producers still enjoy price advantage as its production cost is 20% less than that of silicon modules, added Jiang. The production cost of thin-film is now expected to continue decreasing, as Chinese producers are now placing more resources into R&D and partnering with manufacturing equipment suppliers. Our production cost of each watt of thin film is about CNY 8, said Liyou Yang, CEO of Astronergy Solar. But in 2011 or 2012, we can cut the production cost to about CNY 4 per watt, by technology improvements and developing a domestic supply chain to reduce the cost of raw materials and equipment. According to Yang, Astronergy Solar plans to increase its annual thin-film capacity from its present 30 MW to around 1,000 MW in the next three years, to capitalize on this declining production cost. Numerous Chinese PV producers are also starting to concentrate on the thin-film sector. In November 2009, Jiangsu-based Best Solar High-Tech Co., Ltd. set up two production lines with a total capacity of 130 MW of thin film. The increasing demand in thin film is also due to its technical advantages, which include tolerance to harsh environment, improved performance in lower light conditions and flexibility, compared to its thick-film counterparts and is thus attracting Chinese PV manufacturers. Hebei-based Baoding Tianwei Group Co., Ltd., a silicon module producer, set up its first thin-film subsidiary in 2008 and recently signed a three-year contract with Thai Green Energy Co., Ltd., for the supply of more than 70 MW of thin film for the Southeast Asia market. Chinese market growth is also contributing to the sales of thin-films and, according to Dr. Yang of Astronergy, the Chinese market is expected to account for one third of the total thin-film sales in 2012, the US and Europe accounting for a third each. In the domestic Chinese market, thin film is well suited to large-scale solar farm projects in China“s five north-western provinces and Inner Mongolia, because of their enormous quantity of available land and harsh climate conditions, said Jiang Qian, Zhongzhe Investment Consulting“s analyst. Demand for thin film will also increase with the development of China“s Building Integrated Photovoltaics (BIPV) projects, according to Zhang Shuai, analyst at Chengdu-based Sinolink Securities Co., Ltd. In fact, thin film has been used for the 58 sq.m. sunroof and 265 sq.m. curved building wall of Astronergy“s 2-MW PV project in Hangzhou. Top thin-film producer US First Solar has a gross margin of 50.9% in the third quarter of 2009, compared to 23.8% of Shenzhen Topray Solar Co., Ltd., a top Chinese thin-film producer that has self-developed 70% of its production equipment. Other thin film producers that fail to develop their own production equipment may, however, face a worse situation. In fact, the majority of China“s thin-film manufacturers must buy their equipment from companies such as US Applied Materials, Switzerland“s Oerlikon and Japan“s Ulvac Inc., which means that their initial investments are ten times higher than that of silicon module producers, according to Sinolink Securities“s analyst Zhang. Moreover, Chinese thin-film producers depend considerably on foreign suppliers, which could potentially cause a supply shortage in materials such as those for targets, conductive glass and silane gas, said Zhang. According to his research, Germany“s Heraeus supplied over 60% of China“s target materials in 2008, while Japan“s NSG Group and US AFG Industries, Inc. hold a large market share of conductive glass in China.