Post on 05-Sep-2019
Pierre Verlinden, Zhang YingBin and Feng ZhiQiang
Cost analysis of current PV production and
strategy for future silicon PV modules
Presentation to UNSW January 22nd, 2014
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
3
Company Snapshot
● Founded in 1997, in Changzhou, China
● $2,048 million 2011 net revenue2
● 22 offices worldwide
● Listed on the NYSE: TSL
● World’s largest PV manufacturing campus2
● Over 7.5 GW shipped since 20073
2012 SHIPMENTS – 1720 MW1
Est. 2013 SHIPMENTS – 2600 MW
1. Geographical breakdown, based on country record of sales, not end installation. Data as of Dec 31, 2012 2. As of February 23, 2012
3. As of January, 2014
114,500 301,819
831,901 845,136
1,857,698 2,047,902
1,296,655
1,690,000
2006 2007 2008 2009 2010 2011 2012 Est. 2013
Germany, 33.10%
Italy, 6.10%
Spain, 1.30%
Other Europe, 7.50%
China, 13%
USA, 25.50%
ROW, 13.50%
Sales 2012
REVENUES (000’s)
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
6
A Steady Growth …
Various sources: Paul Maycock’s PV News, Photon International, Navigant
0.1
1.0
10.0
100.0
1,000.0
10,000.0
100,000.0
1,000,000.0
1970 1980 1990 2000 2010 2020 2030
Ship
men
t (M
Wp
)
Year
World PV Cell Production (MWp)
Worldwide PV Production (MW)
Assuming 25% growth
30% growth
40% growth
TeraWatt/year by 2025 +/- 5?
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
1970 1980 1990 2000 2010 2020 2030
An
nu
al G
row
th
Year
5-year Compound Annual Growth
5-year annual growth
Assuming 25% growth
30% growth
40% growth
Industry History
1996 Birth of
PV Industry
42 years
of
gestation
1996-2008 PV Infancy
2008 to ??? PV
Adolescence
What are the conditions required for PV to reach adulthood?
8
5 Conditions Required for PV to reach “adulthood”
1. Cash-flow Sustainability Profitable and generate enough cash for growth
2. Subsidization-free market PV must become a “no-brainer” (an obvious choice) even
without subsidies
3. Material Sustainability No material supply issue up to TW/year level
4. Energy Sustainability PV must have a positive impact on the reduction of fossil fuel
consumption
5. Grid-management Sustainability PV must become a “Voltage source”, as well as a “Power
source”, in a smart grid environment, with efficient storage
• Every manufactured product exhibits a reduction in cost following a learning curve model
q is cumulative production
“learning by doing”
• Progress Ratio
• Learning Rate
Learning Curve Model
b
tt
q
qCC
0
0
bPR 2
PRLR 1
y = 51x-0.311
0.1
1
10
100
1 10 100 1,000 10,000 100,000 1,000,000 10,000,000
Mo
du
le A
SP (
US$2011/W
)
Cumulative Production (MW)
1975-2012 Module price in 2011 $US$ 1975
1990
2000 2003 2008
2011
Cost at 30% Gross Margin
2017 to 2019
Will ASP keep going down? Will ASP follow a parallel line? Will ASP go up?
Learning Rate = 20%
1975-2012 Module Prices ($2011)
Various sources: Paul Maycock’s PV News, Photon International, Robert Johnson, Paula Mints, Navigant, Bloomberg New Energy Finance
Silicon Feedstock Supply
Silver ?
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
12
Price, Cost and Cumulative Production
• Between 2008 and 2012, the price of PV modules has plummeted. But what really happened to the cost of manufacturing?
Year ASP (2011US$)
Cumulative Production
(GW)
Cost from Learning Curve
Model
Real Cost
Begin. 2008 4.0 13.0 100% 100%
End 2012 0.73 150.3 46.7% ?
Δ=5 years -81.75% Ratio = 11.56 -53.3%
b
tt
q
qCC
0
0with b = -0.311
13
Manufacturing Cost of Multi-Crystalline Si PV Modules
Casting4%
Wafer17%
Cell23%Module
35%
Si 21%
2012 Multi-Si costCasting5%
Wafer15%
Cell9%
Module17%
Si 54%
2008 Multi-Si cost
-70.1%
11.70%
28.80% 32.60%
75.20%
61.60%
29.90%
51.60%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00%
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
14
Major Material Cost 2012 compared to 2008
55.60%
19.10%
28.80%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Crucible Graphite Total Casting
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
Casting
15
Major Material Cost 2012 compared to 2008
31.00%
22.60%
14.50%
32.60%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
SiC PEG Steel Wire Total Wafering
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
Wafering
16
Major Material Cost 2012 compared to 2008
105.80%
32.30% 26.90%
75.20%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Front Ag Back Ag Back Al Total Cell Process
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
Cell Processing
17
Major Material Cost 2012 compared to 2008
89.24%
57.60% 47.71% 43.89% 43.47%
61.60%
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00%
100.00%
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
Module
18
Other Major Costs: 2012 compared to 2008
65.00%
35.00% 37.00%
133.30%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
Overall Electricity Cost
Cell Fab Electricity
(MWh/MW)
Water consumption (Cb. M/MW)
Labour Cost
Cost Ratio 2012/2008
LC Model 46.7%
ASP 18.25%
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
20
1. Increase EBITDA to be able to invest for growth
2. Energy Pay-Back Time (EPBT)
Cash Flow and Energy Sustainability
(%)EBITDAACB
ASPGrowth
yearsinEPBTGrowth
_
1
*ASP = Average Sales Price ACB = Average Cost to Build EPBT = Energy Pay-Back Time EBITDA = Earning Before Interest, Tax, Depreciation and Amortization
Material Sustainability: Silver Production and Usage
10
100
1,000
10,000
100,000
2000 2005 2010 2015 2020 2025 2030
Silv
er
An
nu
al P
rod
uct
ion
an
d U
sage
(t
on
s/Ye
ar)
Year
Worldwide Annual Silver Production and Usage by Applications
Silver usage for PV (tons)
Production (tons)
Industrial Applications (incl. PV)
Photography
Jewelry
Silverware
Coins & Medals
Other
Ref: Historical data from The Silver Institute, 2013
Estimation based on 25% PV annual growth
PV uses around 29 tons +/- 5 of Silver per GW
22
Yearly chart of silver price (2000 - 2013)
At US$45 per ounce, the cost of Silver in PV represents US$0.035 to 0.049/W
Historical Price of Silver
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
24
Customer decisions will now be based on two main factors: 1. Product Reliability
2. Levelized Cost of Electricity (LCOE)
Impacted by:
a) Cost of installation, Interest rate, Operation and Maintenance, …
b) Energy Production Rate, Energy Rating kWh/(kWh/m2) or Energy efficiency
Temperature coefficients, Low-Irradiance efficiency, etc.
c) Annual performance degradation and hardware lifetime
Decision Factors: Quality and LCOE
1. Improve Product Quality 2. Innovations to reduce LCOE
INDUSTRY STRATEGY MOVING FORWARD
TOTAL COST
PRODUCED ENERGY
25
LCOE is the only Value for the customer
High Energy Production
Rate
High Reliability
Low Cost of Installation
O&M
Low LCOE and High Value for
Customers
TOTAL COST
PRODUCED ENERGY
LCOE = Levelized Cost Of Electricity
26
Cost of overall PV System
22%
9%
28%
34%
7%
PV System Cost (US$/W)
PV Modules
Inverter
Installation Labor
Cables, Racking,
DC, AC breakers, interconnection cost
PV Modules + Inverter ~ 1/3 of total cost Except for DC, AC breakers and interconnection cost, the rest of BOS cost is proportional to area, and is highly dependent on efficiency.
27
Levelized Cost Of Electricity (LCOE)
• Target of US$0.06/kWh places PV in the same league as bulk electricity production by gas-fired power plants
• The easiest way to reach this target is by improving the efficiency while we keep reducing manufacturing cost
• Even temporary cost increase combined with efficiency improvement reduces LCOE
Now
28
Levelized Cost of Electricity - What is the cost of reliability?
7
8
9
10
11
12
13
14
15
16
0.0% 0.5% 1.0% 1.5% 2.0%
LCO
E (¢
/kW
h)
Performance Degradation (%/Year)
LCOE - Phoenix, AZ - Total Installed cost US$3.46/W
5 years
10 years
15 years
20 years
25 years
30 years
29
How to combine High-Reliability and Low LCOE?
• Reliability is expensive. PV companies cannot offer the highest quality module at the lowest cost for every part of the world.
• Cost reduction may have an impact on reliability or quality.
• But the PV industry can: Offer a highly reliable product that is adapted to a
particular climate,
Design a cell that has a better energy efficiency at a typical irradiance,
Optimize reliability and the energy production rate for each typical climate,
Focus on reduction of LCOE instead of $/Watt
Educate
30
Irradiance profile for 4 different climates
• Total Irradiation – Temperate (Berlin) 1130 kWh/m2
– Desert (Alice Springs) 2420 kWh/m2
– Tropical (Singapore) 1625 kWh/m2
– Mountain (Lhasa ) 2370 kWh/m2
31
Definition of Particular Climates
50th Percentile Irradiance (W/m2)
Rel
ativ
e H
um
idit
y R
H%
Desert Regions (Sunny & Dry)
Tropical Regions (Hot & Humid,
Sunny in winter, cloudy in summer)
Temperate Regions (Cloudy & Cold)
Mountain Regions (Sunny & Cold, High UV, Snow,
Freeze)
Cold Hot
32
Smart PV: a way to reduce LCOE with Power Optimizer
Active Energy Management Enhanced Commissioning Predictive Failure Analysis Panel-Level Monitoring
Power Optimization MPPT per Panel 3.2% more energy on day 1 Mitigate system aging Improved Roof Utilization
Module Integrated Smart-Curve Technology Located within J-box
Safety Module level off-switch Fire safety Arc-fault detection Theft prevention
Up to 20% Additional Energy
TOTAL COST
PRODUCED ENERGY
33
20.54% Mono-Si Solar cell in Pilot Production
Higher Efficiency
Less Area
Less installation cost
Less O&M cost
Lower Temperature coefficient
Lower LCOE
34
Double Glass : The Most Durable Module
More Reliable Performance • No PID • Less degradation after Thermal Cycling, Humidity Freeze, Damp Heat
More Durable • No “snail tracks” • No delamination or degradation of backsheet • No yellowing
Faster, Lower-cost of Installation • Frameless modules do not require grounding, leading to faster installation and lower component and labor costs • Less soiling
Sleek, Clean Appearance - Frameless design for more seamless array appearance
Greater Inventory Flexibility - Certified to 1000V for both UL and IEC
Enhanced Safety - UL and IEC Fire Class A certified
Electrical and Mechanical Characteristics •PMAX 240-255W •15.1% efficiency •60 cells •IEC1000V, UL1000V Dual Rated
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
8018
4543 3529 2982 2870
0
2000
4000
6000
8000
10000
2008 2009 2010 2011 2012
Water consumption (m3/MW)
Energy Sustainability
801
569
360 282 277
0
200
400
600
800
1000
2008 2009 2010 2011 2012
Electricity Consumption (MWh/MW)
320.1
242.2 239.4
0
100
200
300
400
2010 2011 2012
Carbon emission (Ton/MW)
#1 in SVTC Solar Scorecard in 2012 and 2013 for
Responsible Manufacturing
37
Low Carbon Footprint and Short Energy Pay-back Time
• The British Standards Institution (BSI) verified Trina's low carbon footprint of 781.8kg per KW produced for the entire module manufacturing process from raw material acquisition to packaging as environmentally friendly according to PAS 2050 and ISO 14067 standards
• Over 25 years of operation, that is less than 19g of CO2 per kWh (Assuming 1600 kWh/kW/year in sunny area)
1000 900
580
85 25 21 19 15 0
200 400 600 800
1000 1200
1. Trina Solar: A Global Solar Player
2. Where is the PV Industry going?
3. Cost Reduction Analysis
4. Future Challenges
5. Opportunities and Strategies
6. Sustainability
7. Conclusions
39
Conclusions
1. The “Great Price Decline” of PV is over. Recovery will take time.
2. Between 2008 and 2012, ASP has dropped by 81.75%, while manufacturing cost has dropped by 70.1%, mostly driven by Si price. Non-Si Cost has dropped by 48.4% only. Learning Curve Model predicted a Cost reduction by 53.3%.
3. Major Cost reductions have been achieved in some areas: Silicon feedstock, casting, wafering, Back-side electrode (Al and Ag)
4. Minor Cost reductions have been achieved in: Cell Processing and Module Assembly
5. Cost increases have been observed in: Labour and Front Ag
40
Conclusions (2)
6. Challenges for the PV Industry: Regain Profitability and Increase Gross Margin
Sustainable Growth
Enough Gross Margin to grow
Low EPBT
Develop Ag-free cell process to avoid the next Supply Constrained Market
7. Opportunities Focus on Reliability and LCOE
Develop highly reliable products with high Energy performance for particular climates and particular regions
8. Reducing the Energy Payback Time and Carbon footprint are key to a sustainable PV industry
www.trinasolar.com
CHINA
SINGAPORE
JAPAN
CANADA
CHILE
U.S.A.
U.K.
GERMANY
FRANCE
ITALY
SPAIN SWITZERLAND
AUSTRALIA