PV International Industry Research Final

Pusat Tenaga Malaysia

Global PV Industry Research

April 2007

Prepared by Pegasus Business and Market Advisory Sdn Bhd

16-C, Jalan SS22/25, Damansara Jaya. 47400 Petaling Jaya, Selangor D.E., Malaysia Tel: 603 – 7726 5373 Fax: 603 – 7726 5358

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CONTENTS

1. EXECUTIVE SUMMARY..........................................................................5

2. WORLD ECONOMY AND ENERGY OVERVIEW ........................................7

2.1 Overview on the World Economy..............................................................7

2.2 Overview on Fossil Fuels .........................................................................9

2.3 Overview on Electricity Generation ......................................................... 11

3. THE PV VALUE CHAIN ........................................................................14

3.1 The PV Value Chain .............................................................................. 14

3.2 Product Range..................................................................................... 18

3.3 Drivers of Growth in the PV Value Chain.................................................. 21

4. INDUSTRY TRENDS AND OUTLOOK ....................................................24

4.1 Photovoltaic Modules ............................................................................ 24

4.2 Crystalline Silicon Cells ......................................................................... 31

4.3 Polysilicon........................................................................................... 35

4.4 Thin Films........................................................................................... 41

4.5 Photovoltaic Inverters........................................................................... 45

5. DEVELOPMENTS IN DEVELOPED & EMERGING MARKETS....................49

5.1 Germany ............................................................................................ 49

5.2 Japan................................................................................................. 53

5.3 United States ...................................................................................... 58

5.4 China ................................................................................................. 63

5.5 Taiwan ............................................................................................... 67

5.6 Spain ................................................................................................. 71

5.7 South Korea........................................................................................ 75

6. MAJOR COMPANIES IN THE VALUE CHAIN .........................................80

6.1 PV Modules Assemblers ........................................................................ 80 6.1.1 Sharp ........................................................................................... 80

6.1.2 Kyocera ........................................................................................ 81

6.1.3 Sanyo........................................................................................... 82

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6.1.4 Suntech ........................................................................................ 83

6.1.5 Mitsubishi...................................................................................... 85

6.1.6 SolarWorld .................................................................................... 85

6.1.7 SOLON.......................................................................................... 86

6.1.8 Schott Solar .................................................................................. 88

6.1.9 BP Solar........................................................................................ 89

6.1.10 Isofoton ........................................................................................ 89

6.2 PV Cells Manufacturers ......................................................................... 90 6.2.1 Sharp ........................................................................................... 90

6.2.2 Q-Cells ......................................................................................... 91

6.2.3 Kyocera ........................................................................................ 93

6.2.4 Sanyo........................................................................................... 94

6.2.5 Mitsubishi...................................................................................... 95

6.2.6 Schott Solar .................................................................................. 95

6.2.7 BP Solar........................................................................................ 96

6.2.8 Suntech ........................................................................................ 97

6.2.9 Motech ......................................................................................... 98

6.2.10 SolarWorld .................................................................................... 99

6.3 Polysilicon Manufacturers .................................................................... 100 6.3.1 Hemlock ..................................................................................... 100

6.3.2 Wacker ....................................................................................... 101

6.3.3 REC............................................................................................ 102

6.3.4 Tokuyama ................................................................................... 103

6.3.5 MEMC ......................................................................................... 103

6.3.6 Mitsubishi Materials Corporation ..................................................... 104

6.4 Thin Film Manufacturers...................................................................... 105 6.4.1 United Solar Ovonic ...................................................................... 105

6.4.2 Kaneka ....................................................................................... 106

6.4.3 First Solar ................................................................................... 106

6.4.4 Mitsubishi Heavy Industries ........................................................... 107

6.5 Inverter Manufacturers ....................................................................... 108 6.5.1 SMA ........................................................................................... 108

6.5.2 Sharp ......................................................................................... 109

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6.5.3 Fronius ....................................................................................... 109

6.5.4 Xantrex....................................................................................... 110

6.5.5 Kyocera ...................................................................................... 111

6.5.6 Mastervolt ................................................................................... 111

6.5.7 Sputnik....................................................................................... 112

6.6 Others.............................................................................................. 113 6.6.1 Turnkey Providers ........................................................................ 113

6.6.2 Plastic Films ................................................................................ 114

6.6.3 PV Testers................................................................................... 115

7. CASE STUDIES .................................................................................117

7.1 Case Study on Suntech....................................................................... 117 7.1.1 Background ................................................................................. 117

7.1.2 Financial Background .................................................................... 118

7.1.3 Management and Organisation ....................................................... 119

7.1.4 Technology Developments ............................................................. 120

7.1.5 Business Developments................................................................. 122

7.1.6 Ensuring Supply of Silicon Wafers ................................................... 124

7.2 Short Case Study on Yingli Solar .......................................................... 126 7.2.1 Background ................................................................................. 126

7.2.2 Management and Organisation ....................................................... 127

7.2.3 Developments.............................................................................. 127

8. CONCLUSIONS .................................................................................130

8.1 Future Challenges .............................................................................. 130

8.2 Future Directions ............................................................................... 131

8.3 Opportunities .................................................................................... 133

9. APPENDIX........................................................................................137

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Abbreviations

AC : Alternating current

a-Si : Amorphous silicon (thin film)

c-Si : Crystalline silicon

CdTe : Cadmium telluride (thin film)

CIS : Copper indium selenide (thin film)

CIGS : Copper indium gallium selenide (thin film)

DC : Direct current

EoG : Electronic grade (silicon)

FBR : Fluidised bed reactor

GDP : Gross domestic product

mc-Si : Multi-crystalline silicon also known as poly-crystalline silicon

MG-Si : Metallurgical grade silicon

OEM : Original equipment manufacturer

PV : Photovoltaic

R&D : Research and development

sc-Si : Single-crystalline silicon also known as mono-crystalline silicon

SoG : Solar grade (silicon)

TCS : Trichlorosilane (gas) US : United States of America

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Cost of energy produced from PV is significantly high compared to electricity

produced by the utility companies. Thus growing government support for PV

in Germany, Japan and the United States will continue to be the main driver

of growth for PV. Consequently, government support in the emerging PV

markets of Western Europe (notably Spain and Italy), Korea and China will

also drive growth further in the coming years. Key programmes introduced

by various governments to stimulate demand for PV include:

Government mandated power buy back schemes from the utility

companies above the normal utility rates;

Direct government subsidies to the end-users to offset the costs of

purchase and installing the PV system;

Financing at low interest and tax incentives for purchase and

installing PV systems; and

Government mandate setting the minimum usage level for

renewable energy.

Production of PV cells and modules is estimated to increase from 1,727

MWp in 2005 to about 2,400 MWp by 2006. This report projects demand for

PV will increase by 20% annually in 2007-2010 to reach 5,000 MWp by

2010. China is becoming a leading manufacturer of PV modules with export

markets in Europe and the US.

However, increasing demand for PV in recent years and constraints in silicon

production has created global shortages of polysilicon causing prices of the

material to rise and increasing production costs. Construction of new

polysilicon plants will only begin in 2008-2009 to relieve the global

polysilicon shortage. Production of polysilicon for the PV industry is

projected to increase from 13,500 tons in 2006 to 49,300 tons by 2010.

Shortages and increasing prices of polysilicon in recent years have driven

demand for thin film modules. Thin film modules do not require polysilicon

and has a lower production cost than crystalline silicon cell modules. The

European Photovoltaic Industry Association predicts demand for thin film

modules would increase from 100 MWp in 2005 to 1,000 MWp by 2010

increasing its market share from 6% in 2005 to 20% by 2010.

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Diagram 1. Developments in the PV Value Chain

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2.1 Overview on the World Economy

Developments in the world economy. Traditionally economic

developments in the high-income countries of the US, European Union and

Japan have influenced the direction of the world economy. In recent years,

strong economic growth in China and India and their integration into the

global economy are beginning to influence the world economy. Despite

soaring global oil prices and rising interest rates in many countries across

the world, the world economy managed to sustain moderate economic

growth from 2004 to 2006. The world economy experienced a moderate

slowdown in its GDP growth from 4.1% in 2004 to 3.5% in 2005 before

regaining to 3.9% by 2006.1

Much of the world’s economic growth in 2006 occurred during the first half

of the year. However, the economies in the high-income countries of the US,

European Union and Japan began to show signs of cooling in 2006. While

GDP in the US grew marginally from 3.2% in 2005 to 3.4% in 2006, GDP

growth in Japan cooled from 2.7% to 1.4% during the period. However,

strong economic growth in China and India above 8.0% annually in 2005-

2006 minimised the impact of a cooling economy in the high-income

countries on the globally economy.

Table 2.1a. World Economic Performance – Real GDP growth (%)

1980- 2000 2005 2006e

World 3.0 3.5 3.9

High-income countries 2.9 2.7 3.1

Developing countries

Asia-Pacific

South Asia

Europe and Central Asia

Latin America and Caribbean

Middle East and North Africa

Sub-Sahara Africa

3.4

8.5

5.4

0.6

2.2

4.0

2.2

6.6

9.0

8.1

6.0

4.5

4.4

5.5

7.0

9.2

8.2

6.4

5.0

4.9

5.3

Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

1 Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

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Overall, the developing economies experienced moderate to strong

economic growth from 2004 to 2006. While the high-income countries

experienced growth of 2.7% in 2005 and 3.1% in 2006, the developing

economies in various regions across the world experienced growth of 4.4%-

9.0% in 2005 and 4.9%-9.2% in 2006. Growth has been strongest in Asia-

Pacific contributed by China’s strong economic growth followed by South

Asia from India’s economic growth. Nevertheless, the developing economies

began to show signs of cooling in the second half of 2006.2

Outlook on the world economy. In the immediate term, the economies

of the high-income countries and the developing economies would cool at a

lower rate of economic growth in 2007. Projections are the US economy

would grow from 3.4% GDP growth in 2006 to 2.7% by 2007.

Consequently, China’s economy would grow from 10.7% GDP growth in

2006 to 8.7% in 2007 as the country implements fiscal and monetary

measures to control inflation. A major impact from a slower economic

growth in the major economies is reduction in imports subsequently

affecting the world’s economic growth. However, the positive impact is it

would reduce inflationary pressure on the world economy.

In the medium term, projections are the developing economies would

continue to grow at a faster pace than the high-income countries from 2007

to 2008 and continue to do so in the next decade. Forecasts are the

economy in the high-income countries would grow by 2.4% in 2007 and

2.8% in 2008. The developing economies would grow by 4.2%-8.7% in

2007 and 4.0%-8.1% in 2008. Among the developing economies, growth

2 Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

Table 2.1b. World Economic Forecast – Real GDP growth (%)

2007f 2008f 2008-2030f

World 3.2 3.5 2.9

High-income countries 2.4 2.8 2.4

Developing countries

Asia-Pacific

South Asia

Europe and Central Asia

Latin America and Caribbean

Middle East and North Africa

Sub-Sahara Africa

6.4

8.7

7.5

5.7

4.2

4.9

5.3

6.1

8.1

7.0

5.5

4.0

4.8

5.4

4.0

5.1

4.7

2.7

3.0

3.6

3.3

Source: Global Economic Prospects, 2007, The International Bank for Reconstruction and Development/World Bank

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would be strongest in Asia-Pacific contributed by China’s strong economic

growth. China would eventually replace Germany as the world’s third largest

economy after the US and Japan within this decade and influence the world

economy through its imports and exports.2

Concerns on the direction of the world economy. Any significant

economic slowdown or recession in the US and China’s would adversely

affect the world economy. Movements in value of China’s currency follow

closely with the US dollar and currently undervalued. Thus a significant

decline in the value of the US dollar and the economies of the US and China

would adversely affect imports from these countries. This represents a

major threat to the world economy.

Another economic threat is the volatility of oil prices. Oil prices began to

show a decline from its peak (about US$75 per barrel) in 2006 but the

possibility of a return to higher oil prices remains. Geopolitical uncertainties

in Iraq and Iran would have a significant impact on the world’s oil prices.

Return to higher oil prices under a scenario of a cooling world economy in

2007 could dampen economic growth in 2008 and beyond. Furthermore,

return to higher oil prices would increase the potential for inflation.

2.2 Overview on Fossil Fuels

Developments in fossil fuels. The 10-year period prior to 2000 was a

period of low crude oil prices below US$20 per barrel. Thus, there were

limited efforts to invest in new oil wells to boost crude oil supply. Demand

for energy rose at a faster pace in 2000-2006 fuelled by economic growth in

the developing economies especially in Asia-Pacific and South Asia.

Increasing demand and tightening supplies caused a surge in oil prices from

below US$20 per barrel in 1999 to nearly US$75 per barrel by the third

quarter of 2006. Furthermore, geopolitical uncertainties in the Middle East

and adverse weather conditions affecting oilrigs on the US Gulf Coast

exacerbated the supply situation. Prices of natural gas paralleled with oil

prices from 2000 to 2006. However, thermal coal only followed suit in 2004

as an alternative to oil and natural gas to fuel the economies of China and

India.

Prices of the three fossil fuel categories began to decline by the fourth

quarter of 2006. Prices of oil declined from its peak of US$75 per barrel

during the third quarter of 2006 to as low as US$50 per barrel by the first

quarter of 2007. Factors contributing to the decline were a slowing global

economy, production from new oil wells constructed after 2000 and warmer

winters in Europe and North America.

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Energy consumption between the developed and developing

economies. World consumption of energy has been growing at an average

of 2.0% annually in recent years. The OECD countries currently consume

slightly more than half of the world’s energy but consumption has been

growing below the world’s average at 1.0% annually. Reasons for the

slower growth in consumption are slowing population growth, maturing

economy and energy conservation practices in the OECD countries.

However, energy consumption from the non-OECD countries has been

growing at a higher rate than the world’s average in recent years. Energy

Table 2.2. Regional Growth in Energy Demand

Grouping

Region

Average Annual Growth in 2003-2030

OECD North America

Europe

Asia

Total OECD

1.3%

0.7%

1.0%

1.0%

Non-OECD Europe and Eurasia

Asia-Pacific

Middle East

Africa

South and Central America

1.8%

3.7%

2.4%

2.6%

2.8%

World Average 2.0%

Source: International Energy Outlook 2006, US Department of Energy

Source: BP Statistical Review of World Energy (June 2006) and Pegasus forecast

Figure 2.2. World Fossil Fuel Prices

-

10

20

30

40

50

60

70

80

0

1

2

3

4

5

6

7

8

9

10Historical (1990-2005) & Forecast (2006-2010) at Current Prices

Crude Oil Thermal Coal Natural Gas

Figure 2.2. World Fossil Fuel Prices

-

10

20

30

40

50

60

70

80

0

1

2

3

4

5

6

7

8

9

10Historical (1990-2005) & Forecast (2006-2010) at Current Prices

Crude Oil Thermal Coal Natural Gas

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consumption among the non-OECD countries in various regions of the world

was 1.8%-3.7% fuelled by economic growth in the developing economies.

Growth in consumption has been strongest among the developing

economies especially from China and India brought about by the countries’

vibrant economic growth.

Outlook on fossil fuels. Though prices of crude oil have declined from its

peak of US$75 per barrel, analysts are in the opinion that prices of fossil

fuels in 2007 and beyond would not decline to levels prior to 2000. Energy

consumption in the developing economies especially in Asia-Pacific would

continue to outstrip consumption in the OECD countries in this decade and

the next fuelled by economic growth. The US Department of Energy predicts

that by 2015, the proportion of the world’s energy consumption from the

non-OECD countries would outstrip the OECD countries.

The oil and gas reserves of the Middle East, North Africa and Russia would

play a major role in meeting the world’s future need for energy. These

regions remain under-exploited and meeting future needs would depend on

new investments in downstream and upstream activities. Uncertainties

remain on the amount and speed of new investments to increase production

and availability for exports. Any significant shortfall in investments would

adversely affect the global energy balance and contribute towards volatility

in future energy prices.

2.3 Overview on Electricity Generation

Developments in world’s electricity generation. Worldwide electricity

generation grew from an average of 2.9% annually in 1996-2000 to 3.3%

annually in 2000-2004. From 2000 to 2004, electricity generation grew from

14,595.7 billion kWh to 16,599.1 billion kWh according to the US Energy

Information Administration (EIA).

Electricity generation in the OECD countries slowed from an

average growth of 2.3% annually in 1996-2000 to 1.4% annually in

2000-2004.

However, generation from the non-OECD countries grew at a faster

rate from an average of 4.0% annually in 1996-2000 to 6.1%

annually in 2000-2004.

As a result, the proportion of the world’s total electricity generation from the

OECD countries declined from 62.4% in 2000 to 58.0% in 2004 while the

proportion from the non-OECD countries increased from 37.6% to 42.0%

during the period.

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Gains in energy efficiency, slower population growth and a maturing

economy in most of the OECD countries have slowed growth in electricity

consumption and generation. However, stronger economic growth among

the non-OECD countries has fuelled consumption and generation of

electricity at a faster rate than the OECD countries.

Strong economic growth in the non-OECD countries of Asia created

the fastest increase in electricity consumption growing at an

average of 9.1% annually in 2000-2004. Thus, Asia’s share of the

world’s electricity generation increased from 17.0% in 2000 to

21.2% in 2004.

China was the main contributor to Asia’s growth in electricity

generation and is the world’s second largest generator of electricity

after the United States. China’s share of the world’s electricity

generation increased from 8.9% in 2000 to 12.5% in 2004.

Table 2.3a. Regional Growth in Electricity Generation

Elect. generation (bil kWh)

Average annual growth

Share of world generation

2000 2004 1996-2000

2000-2004

2000 2004

OECD

North America

Europe

Asia

OECD

4,589.4

3,040.3

1,476.3

9,106.0

4,794.4

3,250.2

1,585.9

9,630.5

2.5%

2.3%

1.7%

2.3%

1.1%

1.7%

1.8%

1.4%

31.4%

20.8%

10.1%

62.4%

28.9%

19.6%

9.6%

58.0%

Non-OECD

Europe and Eurasia

Asia

Middle East

Africa

S’th & C’trl America

Non-OECD

1,372.6

2,479.5

437.9

416.9

782.8

5,489.7

1,497.1

3,517.1

566.6

505.4

882.4

6,968.6

-0.1%

6.3%

6.5%

3.2%

4.3%

4.0%

2.2%

9.1%

6.7%

4.9%

3.0%

6.1%

9.4%

17.0%

3.0%

2.9%

5.6%

37.6%

9.0%

21.2%

3.4%

3.0%

5.3%

42.0%

World 14,595.7 16,599.1 2.9% 3.3% - -

Source: US Energy Information Administration

Outlook on worldwide electricity generation. The US EIA projects world

electricity generation to grow at an average rate of 2.8% annually between

2003 and 2030. In a maturing economy, electricity generation in the OECD

countries would grow at an average of 1.6% annually. However, stronger

economic growth in the non-OECD countries would increase generation at

an average of 4.2% annually.

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Table 2.3b. Regional Projection in Electricity Generation

Electricity generation (billion kWh)

Share of world generation

2003 2010 2030

Avg. annual growth

2003-2030 2010 2030

OECD: North America Europe Asia OECD

4,442 2,975 1,465 8,882

5,109 3,471 1,799

10,380

6,944 4,350 2,257

13,551

1.7% 1.4% 1.6%

1.6%

25.7% 17.4% 9.0%

52.2%

22.0% 13.8% 7.2%

42.9%

Non-OECD: Europe and Eurasia Asia Middle East Africa S. & C. America Non-OECD

1,377 3,014

448 408 756

6,003

1,985 5,027

738 607

1,162 9,518

3,071

10,599 1,108 1,035 2,196

18,009

3.0% 4.8% 3.4% 3.5% 4.0%

4.2%

10.0% 25.3% 3.7% 3.1% 5.8%

47.8%

9.7%

33.6% 3.5% 3.3% 7.7%

57.1%

World 14,885 19,898 31,560 2.8% - -

Source: US Energy Information Administration

The non-OECD countries of Asia would continue to show the strongest

growth though at a slower pace averaging 4.8% annually from 2003 to

2030. This would increase the Asia’s share of the world’s electricity

generation from 21.2% in 2004 to 25.3% by 2010 nearly equal to North

America’s share. China’s strong economic growth would continue to be the

main contributor in Asia increasing at an average of 4.9% annually from

2003 to 2030. Thus, China’s share of the world’s electricity generation

would increase from 12.5% in 2004 to 15.1% by 2010.

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3.1 The PV Value Chain

Activities in the value chain. Currently crystalline silicon cells account for

94% of the PV modules produced in the world. Thin films using a-Si

followed by CI(G)S and CdTe account for the remaining 6% of the modules

produced. Crystalline silicon cell modules would continue to dominate the

PV market but forecast thin films share of the module market would

increase to about 20% by 2010. The following describes the players in

value chain for the PV industry.

Producers of silicon - process and refine silicon into semiconductor

grade silicon as the feedstock.

Producers of ingots and wafers – cast silicon into ingots and

subsequently slice ingots into thin silicon wafers.

Cell producers - applies coatings and electrical contacts to the

wafers or thin films to convert it into light absorbing conductors.

Module manufacturers – frames and laminates the assembled cells

and installs the electrical contact points to produce the modules.

Component manufacturers - manufactures other electrical and non-

electrical components that make up the PV system.

Installers and system integrators - designs and installs a complete

PV system for operation.

Diagram 3.1a. Value Chain for the Photovoltaic Industry

15

Table 3.1a. The Activities of the Value Chain

Value

Chain

Description of Activity

Silicon

feedstock

Silicon is in abundance in the form of sand, quartz, granite, clay and

mica. Silicon is initially mined and then extracted to produce

metallurgical grade silicon (MG-Si) and has wide usage in the

aluminium and chemical industry. For silicon to reach semiconductor

grade for use in electronics and PV, MG-Si has to be processed into

polysilicon that forms the feedstock to produce the ingots.

There are companies specialising in recycling silicon wastes, broken

silicon wafers and off spec silicon sourced from the semiconductor and

PV industry while some cell manufacturers conduct their own recycling.

Ingots and

wafers

Wafer manufacturers receive the polysilicon feedstock and process it

into polysilicon (mc-Si) or monosilicon (sc-Si) ingots. These ingots are

then sliced or sawed into thin wafers.

Production of sc-Si ingots is through the float zone or Czochalski

process. Ingots produced through the flat zone process produces

purer sc-Si ingots than the Czochalski process.

Production of mc-Si ingots is generally through the directional

solidification or casting process. It is less costly to produce mc-Si

ingots but have a lower light conversion efficiency then sc-Si.

An alternative method is to process the polysilicon feedstock into thin

sheets or ribbons of specific length and then cut into wafers.

Cells PV cells produced from the wafers are the light absorbing materials.

Wafers produced from sawed ingots have a damaged surface and

therefore etched with an alkaline solution. Phosphorus is used to

diffuse the surface of the silicon wafer doped with boron. An anti-

reflective coating (silicon nitride or titanium dioxide) is usually applied

to increase the amount of light absorbed by the cell. The wafer is then

metallised by screen-printing (usually with a silver paste) to form grid-

like contacts on the front of the wafer. The rear of the wafer is also

screen-printed (usually with aluminium) covering the area or in a grid-

like pattern.

Many companies involved in manufacturing PV cells from wafers are

also involved in manufacturing thin film cells. Others specialises only

on manufacturing thin film cells. Production of thin film cells involves

thinly depositing light absorbing materials on low cost backing

16

Table 3.1a. The Activities of the Value Chain

Value

Chain

Description of Activity

materials such as glass, metal sheets or plastic. The most common

light absorbers used in thin films is a-Si and others include CdTe and

CI(G)S. A transparent layer of oxide (such as tin oxide) forms the front

electrical contact and a metal layer forms the rear electrical contact.

PV Modules Many PV cell manufacturers are also manufacturers of PV modules.

Manufacturing PV modules is basically an assembly process. The cells

are “stringed” to form a large circuit on a panel and framed with

aluminium. A sheet of glass (usually tempered glass) covers and

protects the panel and the panel backed with laminates, electrical

connections and fitted with junction boxes. Typical modules are flat

panels and available in various sizes. Modules are also available as

building integrated modules in the form of roof tiles, hipped roofs,

windows and walls.

Components Besides the modules, other components comprise a PV system. These

include the mounting structures to hold the PV modules, inverters to

convert direct current (DC) into alternating current (AC), power

controllers, meters, connectors, electrical cabling and battery storage

devices.

Installation The final part of the value chain involves installing the modules and its

components to form the PV system. Installation may be grid-connected

or off-grid systems. Players in this segment of the value chain range

from small local businesses to large multinational companies. Small

businesses generally install PV systems of less than 10 kWp in homes.

Some module manufacturers are also involved as systems integrators

installing larger PV systems in stadiums, commercial buildings and

power plants.

Characteristics of the value chain. The beginning of the value chain is

characterised as small number of players involved in large-scale production

of silicon. As the value chain moves downstream, the number of players in

each sector of the value chain increases and characterised with smaller

scale production capacities. Consequently, as the value chain moves

upstream, the number of players decreases and characterised with larger

scale production capacities.

17

Compared to manufacturing PV modules, manufacturing silicon requires

high investments in capital (per MWp), technological know how and large-

scale production to produce the economies of scale. As the value-chain

moves downstream, investments in capital (per MWp) reduces and smaller

scale production is feasible to achieve reasonable economies of scales - the

barrier to entry decreases downstream along the value chain. Thus, the

barrier to entry is highest to manufacture silicon with few players in the

industry while the barrier to entry to install PV systems is the lowest with

the greatest number of players.

Studies also show that profit margins are highest in the upstream activities

of the value chain and generally decline as activities move downstream. The

following are the typical profit margins across the value chain in 2005-2006:

Manufacturing polysilicon - 50%-60%;

Manufacturing wafer - 35%-40%;

Manufacturing PV cells - 25%-30%;

Manufacturing PV modules - 5%-10%;

Manufacturing inverters – 25%-30%

Diagram 3.1b. Characteristics of the value chain

18

Installing PV systems - 20%-25%;

Integration across the value chain. Very few players have integrated

across the value chain except for the larger companies. Increasing demand

for PV with constraining supply of silicon in the last three years has resulted

in some companies involved in cell and module manufacturing to move

upstream into wafer manufacturing and some into silicon production to

ensure security of supply. Moving upstream in recent years has been mostly

through acquisition, partial stake in companies or forming joint ventures PV

industry is beginning to shows signs of consolidation.

Table 3.1b. Example of Major Companies Involve in the Value Chain

Company

Silicon Ingots/ wafers

Cell production

Module assembly

Components

Installation

Sharp

Kyocera

Sanyo

Mitsubishi

SolarWorld

Isofoton

Q-Cells

BP Solar

Suntech

Motech

Unisolar

REC

MEMC

Hemlock

Wacker

Includes subsidiary companies and joint ventures. Planning

3.2 Product Range

Major categories of modules manufactured and commercially available are

crystalline silicon and thin film cell modules. Crystalline silicon cell modules

account for 94% while thin film cell modules account for 6% of the modules

produced worldwide in 2006.

19

Crystalline silicon modules. Modules are either mc-Si or sc-Si

cells produced from sawing ingots into wafers, which produces a

significant amount of waste. An alternative method to reduce waste

is to process silicon into sheets or ribbons of specific length and

then cut into wafers.

Thin film modules. These modules use non-crystalline light

absorbing materials thinly deposited on a low cost material such as

glass, stainless steel or plastic. Common thin film modules

produced and commercial available are a-Si (silicon in a different

form), CdTe and CI(G)S.

Other categories of cells include silicon powder melted on a low cost

conducting substrate but currently suffer poor uniformity and surface

roughness. Conductive polymer solar cells can be produced at low cost but

suffers degradation from ultraviolet (UV) light and therefore has a short

lifespan. Another is mc-Si thin film on glass developed by CSG Solar but

currently is not yet widely available.

Currently crystalline silicon cells are the mainstay of most PV modules in the

market. Technically crystalline silicon is not the ideal material for a light

absorbing semiconductor but benefits from decades of R&D. Furthermore,

silicon cells are stable with good light conversion efficiencies. Crystalline

silicon cells account for 94% of the modules in the global market in 2006;

mc-Si cells produced from sawn silicon ingots account for 57% of

the modules.

sc-Si cells produced from sawing high-purity single crystal boule

account for 33% of the modules.

Diagram 3.2. Categories of Cells and Modules

20

Crystalline silicon sheets and ribbons account for 4% of the

modules.

Crystalline silicon wafers account for 40%-50% of a module’s production

cost. The high cost of silicon especially in the last 3-4 years has led the

industry to seek lower cost materials and thin films shows promise. Besides

its lower cost, production allows for greater use of automation and therefore

less labour intensive. Furthermore, thin films allows for an integrated

approach to the module design.

However, thin films have yet to make any significant impact to the maturing

crystalline silicon technology. Thin films account for 6% of the modules

produced and marketed in 2006:

Thin films from a-Si are the most widely developed of the thin film

technologies and account for 4.5% of the world’s module

production.

CdTe thin films account for 1.5% and CI(G)S account for less than

0.5% of the world’s production of PV modules.

Though current technologies using thin film are potentially cheaper to

produce than crystalline silicon, thin films have lower conversion efficiency.

Furthermore, some thin films have shown degradation in efficiency over a

period by as much as 15%-35%.

Table 3.2a. Major Players in PV

Crystalline Silion

(mc-Si and sc-Si)

a-Si

Thin Film

CI(G)S

Thin Film

CdTe

Thin Film

Sharp

Kyocera

BP Solar

Q-Cells

Mitsubishi

SolarWorld

Sanyo

Schott Solar

Isofoton

Motech

Suntech

United Solar

Kaneka

Fuji Electric

Sharp

Mitsubishi

Schott Solar

Shell Solar

Showa Shell

Wurth Solar

Daystar

Nanosolar

First Solar

Antec Solar

21

Table 3.2b. PV Modules and Efficiency Range

Type of Cells/Modules Module Efficiency

mc-Si

sc-Si

a-Si (thin film)

CdTe (thin film)

CI(G)S (thin film)

12%-15%

14%-17%

6%-9%

8%-10%

9%-11%

3.3 Drivers of Growth in the PV Value Chain

PV technology initially had niche applications in space, telecommunications

and consumer electronics (e.g. calculators) and has diverse into larger scale

electricity generation. Despite PV’s strong growth in recent years, it is

starting from a small base and currently accounts for less than 1% of the

world’s electricity generation. Furthermore, cost of electricity produced from

PV is significantly high compared to conventional electricity produced by the

utility companies and other forms of renewable energy such as wind power

and biomass.

Drivers of growth in the PV value chain. Electricity produced by many

power plants across the world is very much dependent on non-renewable

fossil fuels. Higher fuel prices and political instability, war and threat of

terrorism in the oil producing countries have forced governments to

consider renewable energy to ensure security in the energy supply to

sustain economic development.

Awareness on global warming among citizens and governments in many

countries has generated interest for renewable energy. Many governments

have signed the Kyoto Protocol agreeing to reduce greenhouse emissions,

which contributes towards global warming. Furthermore, governments are

setting stricter standards on air pollution and renewable energy including PV

is an option to reduce pollution.

Escalating demand for PV and constraining supply of silicon in recent years

has constrained production of crystalline silicon based PV systems. The

result has been escalating prices across the PV value chain from production

of silicon to modules. This has generated interest to develop and

commercialise thin film technologies that uses minute amounts of silicon (a-

Si thin films) and thin films that do not use silicon (CIS, CIGS and CdTe thin

films).

Escalating demand for PV and constraining supply of silicon has also

generated interest among manufacturers across the value chain to reduce

22

production cost through improvements in production efficiency and efficient

utilisation of silicon. This is an important driver within the value chain since

successes of companies greatly depend on their ability to reduce cost and

become more efficient. This is would be very relevant in the future in the

event of reduced government subsidies, slowdown in demand and

increasing competition. Reducing cost would also result in PV becoming

more affordable generating greater interest from the end-users.

Government support for PV. Current cost to generate electricity through

PV remains very high compared to conventional electricity produced by the

utility companies and other forms of renewable energy. Thus government

support for PV through financial incentives has been a key driver leading to

increasing end-user demand and growth of the industry. Thus government

support in Germany, Japan, United States will continue to drive the PV

industry. Consequently, government support in the emerging PV markets of

Western Europe (notably Spain and Italy), China, Korea and Taiwan will

drive the future growth of the industry.

Government support programmes to generate end-user demand for PV can

be generalised into the following:

Diagram 3.3. Market Drivers for the PV Value Chain

23

Mandated power buy back schemes from the utility companies

above the normal utility rates.

Direct government subsidies to the end-users to offset the costs of

purchase and installing the PV system.

Financing at low interest and tax incentives for purchase and

installing the PV systems.

Government mandate setting the minimum usage level for

renewable energy.

Government programmes directly supporting the PV industry typically

involves financial support for industries and research institutions to conduct

R&D in PV technologies. Typically in the developing economies especially in

Asia government support includes:

Tax holidays to attract companies to invest and establish new

manufacturing facilities.

Overseas trade missions and networking between foreign and the

local industries to attract investments.

Encouraging companies to establish their manufacturing and R&D

operations in science or technology parks.

Cost to produce electricity from PV will continue to remain higher than

conventional electricity for some time. Thus government support will

continue to be the key catalyst driving the market and industry at least for

another decade.

24

444... IIINNNDDDUUUSSSTTTRRRYYY TTTRRREEENNNDDDSSS AAANNNDDD OOOUUUTTTLLLOOOOOOKKK

4.1 Photovoltaic Modules

Demand and supply growth. The market for PV modules has been

booming in the last five years growing at an average rate of nearly 43%

annually from 2001 to 2006. The market increased from 1,727 MWp in 2005

to an estimated 2,400 MWp in 2006. Driving the market worldwide are the

government supported renewable energy programmes namely in Western

Europe (particularly in Germany and Spain), Japan and the US.

Projected market for PV modules by 2010, from various sources, range from

a conservative 5,000 MWp to an optimistic forecast of 11,000 MWp. Growth

in the global market would remain strong from 2007 to 2010 but expected

to cool as the market in Germany levels off or begins to decline. Thus, the

assumption is the market would grow at a slower pace in 2007-2010

compared to 2001-2006. Based on 20% annual growth in 2007-2010, the

global market would reach 5,000 MWp by 2010.

New silicon plants from existing and new players would come into

production in 2008 and beyond, relieving the constraint and gradual

reduction in module prices by 5%-7% annually in 2008-2010. Excesses in

silicon production beyond 20% annual growth for PV in 2008-2010 would

create an oversupply of silicon. Furthermore, aggressive build-up in

Source: 1995-2005 from PV News: 2006 from Pegasus estimates

Figure 4.1a. PV Module Production and Projections (MWp)

78 89 126 155 201 288 399 560 7591,1951,727

2,400

9,220

6,855

4,977

0

2,000

4,000

6,000

8,000

10,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Prod

uctio

n in

MW

p

Historical 40% Annual Grw th 30% Annual Grw th 20% Annual Grw th

Figure 4.1a. PV Module Production and Projections (MWp)

78 89 126 155 201 288 399 560 7591,1951,727

2,400

9,220

6,855

4,977

0

2,000

4,000

6,000

8,000

10,000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Prod

uctio

n in

MW

p

Historical 40% Annual Grw th 30% Annual Grw th 20% Annual Grw th

25

production capacity for PV modules especially in China would increase the

potential to supply beyond the 20% annual growth for PV. A combination of

these two factors would cause prices of modules to decline faster than the

expected 5%-7% annually in 2008-2010 and increase demand beyond the

projected 20% annual growth for PV.

The largest market for PV in 2005 was Germany with demand increasing

from 363 MWp in 2004 to 635 MWp in 2005. Japan was the second largest

market growing from 272 MWp in 2004 to 290 MWp by 2005. The US was

the third largest market with 103 MWp installed in 2005 and Spain

contributed significantly to 20 MWp. Other significant markets in Europe

during the period included Austria (8 MWp), France (7 MWp), Italy (7 MWp)

and Switzerland (4 MWp) and Britain (3 MWp). In Asia, Korea installed 6.5

MWp and China installed 27 MWp in 2005.

Industry players. Japanese companies dominate the PV module industry

accounting for 48% of the world’s production or 833 MWp in 2005. Japan’s

Sharp, Kyocera, Sanyo, Mitsubishi and MSK together accounted for 710

MWp or 41% of the world’s production during the period. China is

increasingly making headways into the global PV module market with

production from China reaching 443 MWp or 26% of the world’s production

in 2005.

The industry scenario in the last five years has been a period of

acquisitions, joint ventures, expanding operations and players entering and

exiting the market. Shell Solar exited from manufacturing c-Si modules in

Note: Estimates from companies’ production

Figure 4.1b. Share of World PV Module Production in 2005 (MWp)

Sharp23.0%

Kyocera8.2%

Sanyo7.2%Mitsubishi

6.5%Solon3.5%

MSK3.5%

Schott Solar3%

Isofoton2.3%

Solarw att2.1%

Suntech2.9%Shell Solar

3%

BP Solar2.7%

Others32.0%

Figure 4.1b. Share of World PV Module Production in 2005 (MWp)

Sharp23.0%

Kyocera8.2%

Sanyo7.2%Mitsubishi

6.5%Solon3.5%

MSK3.5%

Schott Solar3%

Isofoton2.3%

Solarw att2.1%

Suntech2.9%Shell Solar

3%

BP Solar2.7%

Others32.0%

26

2006 to focus on thin films. During the period, Germany’s SolarWorld

acquired Shell Solar’s facilities for c-Si modules and China’s Suntech

acquired a majority stake in Japan’s MSK. Isofoton established an office in

the US in 2004 to penetrate the country’s market. Sharp and Kyocera

expanded their manufacturing operations from Japan to Britain, Czech

Republic and Mexico.

China has been significantly increasing production and production capacity

in recent years. Manufacturing modules require more labour while PV cells

and wafers require more automation. China’s advantage is its low labour

cost compared to the United States, Japan and Europe. Thus, China is able

to produce modules at a lower manufacturing cost to compete in the global

market. Chinese manufacturers have been increasing their production

capacity for c-Si modules from 1,500 MWp in 2005 to 2,800 MWp in 2006.

By 2007, China’s production capacity would increase to nearly 4,000 MWp

and further increases expected by 2010.

Product. In 2005, c-Si modules accounted for 94% of the world’s module

production - mc-Si cell modules accounted for 57%, sc-Si cell modules 33%

and c-Si ribbons/sheets 4%. Modules using mc-Si cells have lower

conversion efficiency than sc-Si modules but its market share has been

increasing over sc-Si modules with improvements in efficiency. Shortages of

silicon in recent years have created opportunities for thin films with its lower

manufacturing costs and not constrained by supplies of silicon. By 2005,

thin films using a-Si, CI(G)S and CdTe increased to 6% of the world’s

module production.

Note: Derived from various estimates

Figure 4.1c. PV Modules by Type in 2005

a-Si thin f ilm, 5%

c-Si ribbon/sheets, 4% Others, 1%

sc-Si, 33% mc-Si, 57%

Figure 4.1c. PV Modules by Type in 2005

a-Si thin f ilm, 5%

c-Si ribbon/sheets, 4% Others, 1%

sc-Si, 33% mc-Si, 57%

27

Though c-Si modules would continue to dominate the world market by

2010, projections are thin film’s share of the market would increase from

6% in 2005 to 20% by 2010. The appeal for thin film modules is it requires

little or no silicon and production costs are lower than c-Si modules.

However, thin films are hard to mass-produce cost-effectively and

efficiencies are generally lower than c-Si modules under current

technologies.

Price trend. Prices of modules across the world increased from 2004 to

2006. In Germany, prices rose sharply from 2004 to 2005 as demand for PV

in the country increased by 85% annually. The exception was Japan with

the strength of the Yen, low inflation and economies of scale in Japanese

production. Furthermore, most of the major Japanese manufacturers have

integrated across the value chain beginning from manufacturing of wafers

and ingots to modules ensuring supplies of silicon materials.

Two key factors contributed towards increasing modules prices from 2004 to

2006:

A demand exceeding supply situation for PV contributed towards

increasing prices of modules as shortages of silicon limited module

production.

Silicon accounts for 40%-50% of a module’s production cost and

with increasing demand for silicon but silicon production limited by

Note: Assumption of projection – Total module demand increasing from 759 MWp in 2003 to 4,977 MWp by 2010; Thin films increasing from 30 MWp in 2003 to 1,000 MWp by 2010 according European Photovoltaic Industry Association.

FIgure 4.1d. Share of the Module Production by Type

96% 96% 94% 94% 93% 86% 83% 80%

20%17%14%7%6%6%4%4%

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010

Crystalline silicon modules Thin f ilms

FIgure 4.1d. Share of the Module Production by Type

96% 96% 94% 94% 93% 86% 83% 80%

20%17%14%7%6%6%4%4%

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010

Crystalline silicon modules Thin f ilms

28

capacity, contract prices of silicon reached US$55 per kg by 2006

from US$25 per kg and spot prices to US$300 per kg.

Projections are world prices of modules would stabilise by 2006-2007 and

then decline 5%-7% annually from 2008 onwards as new silicon plants

begin production relieving the supply constraint. Another factor (though not

as significant) would be the gradual use of thinner silicon wafers, which

would partially reduce the manufacturing costs of modules.

Business potential and opportunities. Projected demand for PV would

grow at average of 20% annually in 2007-2010. Thus, module production

would double from 2,400 MWp in 2006 to 5,000 MWp by 2010. Based on

this projection, new PV systems installed during the period would total

15,500 MWp (see Table 4.1a). Assuming the average price of PV modules at

US$3.50 per Wp and 15,500 MWp produced ands installed in 2007-2010,

the value of the market for PV modules would total US$54.3 billion.

Acquiring even a 5% share of the market value represents a significant

business potential for many PV module manufacturers. Of significance, is

the European Union and the US are net importers of c-Si modules produced

mainly in the developing economies with their cost of production (mainly in

labour cost) such as China, the Czech Republic and Mexico.

Source: 2000-2005 from IEA; 2006-2010 forecasts by Pegasus

Figure 4.1e. Average Module Prices (per Wp)

2.00

2.50

3.00

3.50

4.00

4.50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

100

200

300

400

500

600

Germany (€) US (US$) Japan (Yen)

Figure 4.1e. Average Module Prices (per Wp)

2.00

2.50

3.00

3.50

4.00

4.50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

100

200

300

400

500

600

Germany (€) US (US$) Japan (Yen)

29

Western Europe (namely Germany and Spain), Japan and the US would

continue to be significant markets for PV in 2007-2010 driven mainly by

government supported renewable energy programmes.

The European Union initially targeted 3,000 MWp of PV by 2010 but

at current rate of installation 4,500-5,000 MWp is possible

according to various estimates. The European Renewable Energy

Council projects 41 GWp of installations by 2020 and 200 GWp by

2030.

Japan plans to install 4,800 MWp of PV by 2010 and the country’s

PV roadmap projects 30 GWp installed by 2020 and 205 GWp by

2030.

In the US, PV installations would reach 2,100 MWp by 2010 under

the various federal and state programmes for PV. The US industry

roadmap for PV projects installations to reach 36 GWp by 2020 and

200 GWp by 2030.

Significant markets in Asia that would drive demand for PV include China

and Korea. Through the countries renewable energy programme, China

plans to install 450 MWp by 2010 and Korea 1,300 MWp MWp by 2012.

The industry also represents a market potential for suppliers of materials

and components for manufacturing modules. Besides the PV cells, other key

materials and components include the frame, glass, ethyl vinyl acetate

(EVA) film, tedlar layer, interconnect, adhesive and junction box. Excluding

the PV cells, the total cost of these materials is about US$0.40 per Wp (see

table 4.1b). Thus, the market value of these materials produced for

manufacturing 15,500 MWp of modules in 2007-2010 period would amount

to US$6.2 billion.

Table 4.1a. Forecast of PV Demand (MWp) Based on Annual Growth Rates

Forecast Annual Growth

2006

2007f

2008f

2009f

2010f

Total 2007-2010

At 20% 2,400 2,880 3,456 4,147 4,977 15,460

At 30% 2,400 3,120 4,056 5,273 6,855 19,303

At 40% 2,400 3,360 4,704 6,586 9,220 23,869

30

Table 4.1b. Market Value of Materials for PV Modules in 2007-2010

Materials/ Components

Proportion of Material Cost

Material Cost US$ per Wp

Market Value (US$ million)

Glass 22% 0.09 1,364

EVA 19% 0.07 1,153

Frame 17% 0.07 1,073

Junction box 16% 0.06 998

Tedlar 15% 0.06 918

Interconnect 8% 0.03 477

Adhesive 4% 0.01 217

Total 100% 0.40 6,200

Note: Cost breakdown and total material cost sourced from GT Solar. Market valued based on market of 15,500 MWp in 2007-2010.

Market challenges. The market for PV will continue to grow and prices

reduced over time. However, PV will continue to depend on government

support in 2007-2010 as cost electricity from PV remains 5-10 times above

conventional electricity produced by the utility companies. Possibilities of

reduced government support and changes in government policies not in

favour towards PV would dampen demand. Furthermore, delays in

implementing renewable energy programmes for PV would stall demand for

PV.

Aggressive build-up in module production capacity in China could displace

many players across the world with its lower labour cost. Manufacturing PV

modules requires more labour while cells and wafers is more of an

automated process. China’s production capacity for PV modules would

increase to nearly 4,000 MWp by 2007 and further increases expected by

2010. Suntech and Tianwei Yingli New Energy Resources (Yingli Solar) in

China have already announced possibilities of increasing their plants’

production capacity to 1,000 MWp.

Many silicon manufacturers have announced plans to increase production by

2008 and beyond but the possibility of silicon shortages remains

subsequently affecting production of c-Si modules. Silicon manufacturers

remain cautious about expanding too rapidly because of the high cost of

investment in a new silicon plant. Thus, there is still the possibility of limited

silicon supply beyond 2008, which would constrain production of c-Si

modules.

31

Most of the financing for PV installations are through loans including pre-

installation in newly constructed homes in an overall home mortgage. End-

users would expect the monthly payment for their PV system to be

comparable to the amount received from the utility companies’ power

buyback schemes and savings in the electricity bill. A rise in interest rates

would increase the monthly loan payment and dampen demand for PV.

Furthermore, rise in interest rates for mortgages would dampen demand for

newly built homes with pre-installed PV.

Any external impact that would increase or decrease demand for PV

modules would have a subsequent impact across the value chain and the

overall PV industry. Production capacity from manufacturing of wafers to

modules increased tremendously from 2003 to 2006 with further increases

expected. A slowdown in demand for modules due to government policies or

action towards PV would create excess capacity across the value chain.

4.2 Crystalline Silicon Cells

Demand and supply growth. Demand for c-Si cells increases with

increasing demand for PV modules. Production of c-Si cells increased from

1,627 MWp in 2005 to an estimated 2,250 MWp in 2006. While projections

for demand and supply of modules would increase by 107% from 2006 to

2010, projections for c-Si cells would increase at slower rate by 77% during

the period. Main reason is c-Si cells compete with thin films and that

demand for thin films would increase at a faster rate than c-Si cells in 2007-

2010.

Note: Estimates derived from various sources

Figure 4.2a. Crystalline Silicon Cell Production and Projection

3,977

3,447

2,9562,680

2,250

1,6271,145

729

-

1,000

2,000

3,000

4,000

5,000

2003 2004 2005 2006 2007 2008 2009 2010

MW

p

Figure 4.2a. Crystalline Silicon Cell Production and Projection

3,977

3,447

2,9562,680

2,250

1,6271,145

729

-

1,000

2,000

3,000

4,000

5,000

2003 2004 2005 2006 2007 2008 2009 2010

MW

p

32

The market for ci-Si cells grew at an average of 46% annually from 729

MWp in 2003 to an estimated 2,250 MWp in 2006. Nevertless, demand for

c-Si cells exceeded supply but production constrained by the silicon

shortage. Though ci-Si cells would continue to dominate the market for PV

modules, its growth would slow to an average of 15% annually increasing

from 2,680 MWp in 2007 to nearly 4,000 MWp by 2010. Furthermore, its

share for the module market would decline from 94% in 2006 to 80% by

2010 overtaken by thin films.

Japan and Germany would continue to be a net exporter of c-Si cells while

the US and China a net importer in 2007-2010. Japan exports much of the

c-Si cells to supply Japanese module plants in Europe, Mexico and the US.

Germany exports its c-Si cells to supply module plants in other parts of

Europe, the US and China. China will continue to be a net importer of c-Si

cells in 2007-2010 as production capacity for PV modules would exceed c-Si

cells. In 2006, China’s total production capacity for c-Si modules was nearly

4,000 MWp while production capacity for cells was 2,000 MWp.

Industry players. Japanese and European cell manufacturers dominate

the global market. In recent years, major Chinese manufacturers have been

increasing their cell production capacity and many announced plans to

increase capacity beyond 2006. In 2005, China accounted for 9% of the

world’s production producing nearly 160 MWp. By 2006, China (excluding

Taiwan) produced an estimated 690 MWp accounting for nearly 29% of the

world’s production. However, China’s production of c-Si cells is for the

country’s domestic market.


Figure 4.2b. Share of World Silicon Cell Production in 2005 (MWp)

Sharp24.3%

Q-Cells9.4%

Kyocera8.1%

Sanyo7.0%Mitsubishi

6.4%Schott Solar5%

BP Solar4.8%

Suntech4.6%

Shell Solar3%

Others20.2%

Motech3.4%

Isofoton3.2%

Figure 4.2b. Share of World Silicon Cell Production in 2005 (MWp)

Sharp24.3%

Q-Cells9.4%

Kyocera8.1%

Sanyo7.0%Mitsubishi

6.4%Schott Solar5%

BP Solar4.8%

Suntech4.6%

Shell Solar3%

Others20.2%

Motech3.4%

Isofoton3.2%

33

Japanese companies dominate the market for c-Si cells accounting for

nearly half of the world’s production. Together Japanese companies Sharp,

Kyocera, Sanyo and Mitsubishi accounted for 46% of the world’s production

or 790 MWp in 2005. Major European companies include Q-Cells, Schott

Solar, BP Solar and Isofoton accounting for 22% of the world’s production or

nearly 390 MWp. Suntech is China leading producer of c-Si cells accounting

for nearly 5% of the world production and 44% of China’s production at 68

MWp in 2005.

Product. The three major categories of c-Si cells in production are mc-Si

(multi-crystalline), sc-Si (mono-crystalline) and c-Si ribbon/sheets. Until

recent years, sc-Si cells dominated the market but now overtaken by mc-Si

cells because of its lower costs. Though mc-Si cells have lower conversion

efficiency than sc-Si cells, its efficiency has been improving with

developments in technology. The process to saw ingots into wafers for mc-

Si and sc-Si produces silicon wastage. Technologies developed by Evergreen

Solar and Schott Solar produce mc-Si ribbons and sheets, which can be cut

rather than sawed to produce wafers and reduces wastage.

Price trends. C-Si cells account between 60% and 70% of the production

cost of a PV module. Prices of c-Si cells increased from 2003 to 2006

brought about by increasing market for PV modules subsequently creating

demand for c-Si cells but wafer production constrained by shortages of

silicon. Prices of c-Si cells would stabilise by 2006-2007 and decline from

2008 onwards with production from new silicon plants relieving the supply

constraint.

FIgure 4.2c. Type of c-Si Cells by Production in 2005

c-Si ribbon/sheets4%

sc-Si35%

mc-Si61%

FIgure 4.2c. Type of c-Si Cells by Production in 2005

c-Si ribbon/sheets4%

sc-Si35%

mc-Si61%

Note: Derived from various estimates

34

Average prices of c-Si cells would decline by 5%-7% annually from 2008 to

2010 as demand for PV cell grows by an average of 15% annually. If build-

up in c-Si cell and silicon production capacity were to continue unabated, an

oversupply situation would exist. If this were to happen, prices of c-Si cells

would decline faster than 5%-7% anticipated. On the other hand, if silicon

manufacturers were to take a more cautious approach in expanding their

production capacity and/or demand for c-Si cells were to increase beyond

15% annually, prices of c-Si cells may go on an uptrend.

Business potential and opportunities. Based on projections that demand

for c-Si cells would grow at an average of 15% annually in 2007-2010,

demand for c-Si cells would total 13,000 MWp during the four-year period.

Assuming an average cost of c-Si cells at US$2.70 per Wp, equates to a

market value of US$35.1 billion during the period.

China would continue to be a net importer of c-Si cells in 2007-2010.

China’s production capacity for PV modules exceeds its production capacity

for c-Si cells. Estimated that China’s production capacity for c-Si cells would

increase from 1,400 MWp in 2006 to 2,500 MWp by 2007 but capacity for

Table 4.2. Forecast for c-Si Cell Demand (MWp)

Average Annual Growth

2006

2007f

2008f

2009f

2010f

Total 2007-2010

At 15% 2,250 2,680 2,956 3,447 3,977 13,060

Note: Rough estimate based on assumption cells account for 65% of the module cost

Figure 4.2d. Estimated and Projected Cell Costs (per Wp)

1.95 1.99

2.14

2.30

2.432.45

2.342.28

1.50

1.70

1.90

2.10

2.30

2.50

2003 2004 2005 2006 2007 2008 2009 2010

US$

per

Wp

Figure 4.2d. Estimated and Projected Cell Costs (per Wp)

1.95 1.99

2.14

2.30

2.432.45

2.342.28

1.50

1.70

1.90

2.10

2.30

2.50

2003 2004 2005 2006 2007 2008 2009 2010

US$

per

Wp

35

modules would increase from 2,800 MWp to 4,000 MWp. Even with the

increase in China’s silicon production capacity, production would not be able

to meet China’s demand.

The US would also continue to be a net importer of c-Si cells as US

companies focuses technologies on thin films. The federal and various state

renewable energy programmes for PV is creating demand PV installations.

Though the US focuses on development of thin films, module-manufacturing

plants in the US would depend on substantial quantities of imported c-Si

cells for their modules.

In the technology front, successful companies are those that possess the

technology to reduce the cost c-Si cells per Wp. Cells account for 60%-70%

of the manufacturing cost of PV modules. Though cell manufacturers do not

have control on the cost of silicon, cost per Wp can be reduced through

improving the cell’s conversion efficiency, producing thinner wafers and

developing technologies that reduce silicon wastage in manufacturing

wafers.

Market challenges. The affect of a reduction in demand for PV would have

adverse consequences on c-Si cell manufacturing with the current build-up

in production capacity. Another threat is if silicon manufacturers remain

cautious in expanding silicon production while demand for PV continues to

increase. Under both scenarios, cell manufacturers would be left with idle

plant capacity and in cases of silicon shortages would be forced to obtain

their silicon at higher prices.

Silicon manufacturers are insisting on multiyear supply contracts with some

form of initial payments before delivery of their silicon and silicon wafers.

Smaller cell manufacturers or companies without sufficient financial

resources would be unable to enter into such multiyear supply agreements

and would face difficulties in obtaining the silicon material. Purchasing in the

spot market can be four to six times higher than the contract prices.

Thin films compete with c-Si and manufacturers are currently developing

technologies to improve efficiency and lower cost of manufacturing thin

films. Furthermore, thin films are not constrained by shortages of silicon

and have the potential to displace c-Si cells with its lower end-user price.

4.3 Polysilicon

Demand and supply growth. The electronics and PV industry both use

silicon wafers for their components. Until recently, c-Si cell manufacturers

could depend on recycled off spec and waste silicon wafers from the

36

electronics industry. Prior to the burst of the technology bubble in 2001,

silicon manufacturers increased their production capacity in anticipation for

increased silicon demand from the electronics industry. During the burst of

the technology bubble, silicon manufacturers experienced excess capacity

and therefore reluctant to increase capacity. With the excess capacity,

silicon manufacturers were in a position to supply their silicon to the wafer

and cell manufacturers as demand for PV grew. Silicon manufacturers were

reluctant to increase their capacity and with the electronics industry

recovering, c-Si cell manufacturers eventually faced shortages for the silicon

materials.

Driven by growing demand for PV most of the existing silicon manufacturers

are only beginning to respond by adding capacity and new industry players

entering the industry. It takes 2-3 years to construct a polysilicon plant and

most new constructions began in 2006. Thus, production from new plants

would only begin in 2008-2009 to relieve the silicon shortage. Short-term

measures undertaken by existing silicon manufacturers in 2006-2007 to

partially relieve the shortage are de-bottlenecking and expanding their

existing production lines but would not totally relieve the shortages.

Estimates indicate increases in polysilicon production for the PV industry

would begin in 2008 after a period of shortages. Production would double

from 15,900 tons in 2007 to 30,500 tons in 2008 with new plants coming

onto production. Further increases are expected with production increasing

45% to 44,100 tons in 2009 but increasing at a slower rate of 12% to

49,300 tons by 2010.

Source: Piper Jaffray

Figure 4.3a. Silicon Production for the PV Industry (tons)

49.3

44.1

30.5

15.913.5

17.621.220.7

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010

Thou

sand

s

Silic

on P

rodu

ctio

n in

Ton

s

Figure 4.3a. Silicon Production for the PV Industry (tons)

49.3

44.1

30.5

15.913.5

17.621.220.7

0

10

20

30

40

50

60

2003 2004 2005 2006 2007 2008 2009 2010

Thou

sand

s

Silic

on P

rodu

ctio

n in

Ton

s

37

Industry players. The US accounts for more than 50% of the world’s

production of polysilicon followed by Japan at 24% and Germany at 18%. In

the next few years, production from other countries such as Norway, China,

Spain and Korea will increase their share of the world’s polysilicon

production. Major polysilicon manufacturers supplying to both the

electronics and PV industry are Hemlock (US), Wacker (Germany), REC

(Norway/US), Tokuyama (Japan) and MEMC (US).

Most of the major players are insisting on multiyear supply agreements

from buyers and requiring some form of initial payments before delivery.

This is to prevent a situation experienced by the silicon manufacturers in

2001. During the period, the electronics industry forecasted strong growth

for silicon and silicon manufacturers subsequently expanded their capacity.

During the burst of the technology bubble, silicon manufacturers

experienced declining orders resulting in excess capacity and financial

losses. Interestingly, Japanese manufacturers are more cautious in

expanding their capacity compared to European and US manufacturers.

Driven by growing demand for PV, global shortage and rising prices of

polysilicon new players are beginning to enter to supply the PV industry. The

following is an overview of some of the new industry players.

Source: Prometheus Institute

Figure 4.3b. Share of World Silicon Production in 2005 (by tons)

MEMC12.1%

Others>1%

Sumitomo2.6%Mitsubishi

9.1%Tokuyama16.6%

REC16.9%

Hemlock24.6%

Wacker17.6%

Figure 4.3b. Share of World Silicon Production in 2005 (by tons)

MEMC12.1%

Others>1%

Sumitomo2.6%Mitsubishi

9.1%Tokuyama16.6%

REC16.9%

Hemlock24.6%

Wacker17.6%

38

Table 4.3. Snapshot of New Players Entering the Silicon Industry

Company Overview

DC Chemical Korea’s DC Chemical (DCC) will construct a new 3,000 tons

polysilicon plant marking its first venture into the business.

DCC will employ Siemens reactor technology and use

Trichlorosilane (TCS) as the feedstock gas. Cell manufacturer

SunPower will pay DCC US$250 million in a multi-year supply

agreement to finance construction of the silicon plant.

Hoku Scientific Hoku Scientific, a fuel cell company in Hawaii, announced it

in May 2006 it would construct a 1,500 tons polysilicon plant

at a cost of US$250 million in the state of Idaho.

Isofoton Spain’s Isofoton (cell and module manufacturer), an

Andalusian government agency and Endesa (Spanish utility

company) will build a 2,500 tons plant in Los Barrios, Spain.

Econcern Econcern announced in 2006 that it would form a joint

venture to build a polysilicon plant with a production capacity

of 2,000-3,000 tons. The new plant would be located in Saint

Auban, France, and begin production in 2008.

M.Setek M.Setek, a Japanese polysilicon wafer manufacturer will add

a silicon line to its business operations. The plant begins

production in 2007 with an initial capacity of 1,000 tons.

China Southern

Glass

China Southern Glass (CSG) announced it would invest in a

US$150 million polysilicon plant in Hubei Province. The plant

would begin production in 2008-2009 and eventually have a

production capacity of 4,000-5,000 tons.

Product. Silicon accounts for 40%-50% of the production costs of PV

modules. Growing demand for PV and shortages of silicon resulted in the

contracted selling price of the material increasing from US$25 per kg in

2003 to US$50 per kg by 2006. Thus, silicon wafer manufacturers are

developing technologies to reduce the wafer thickness. The European

Photovoltaic Industry Association predicts the average wafer thickness

would gradually reduce from 240 microns in 2005 to 150 microns by 2010.

39

Price trend. Prices of polysilicon would reach its peak by 2007 and then

decline in 2008 onwards as new polysilicon plants begin production.

However, silicon manufacturers would expand their production cautiously

and new players may abort their plans to build new plants if demand for PV

is unable to accommodate new silicon production. Furthermore, with

technologies being developed to use less silicon per Wp through thinner

wafers, silicon manufacturers would be extremely cautious in expanding

their production capacity too aggressively.

Source: European Photovoltaic Industry Association

Figure 4.3c. Projection in Silicon Usage for Wafers

7.58.08.59.0

10.011.0

12.0

14.0

150160170

180200

240

300320

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007 2008 2009 2010

gm s

ilcon

per

Wp

0

50

100

150

200

250

300

350

Waf

er th

ickn

ess

(mic

rons

)

Figure 4.3c. Projection in Silicon Usage for Wafers

7.58.08.59.0

10.011.0

12.0

14.0

150160170

180200

240

300320

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007 2008 2009 2010

gm s

ilcon

per

Wp

0

50

100

150

200

250

300

350

Waf

er th

ickn

ess

(mic

rons

)

Note: 2003-2006 from Prometheus Institute; 2007-2010 rough estimates derived from various sources

Figure 4.3d. Estimated and Projected Contracted Silicon Cost(US$ per kg)

4145

505350

45

32

24

0

10

20

30

40

50

60

70

2003 2004 2005 2006 2007 2008 2009 2010

US$

per

kg

Figure 4.3d. Estimated and Projected Contracted Silicon Cost(US$ per kg)

4145

505350

45

32

24

0

10

20

30

40

50

60

70

2003 2004 2005 2006 2007 2008 2009 2010

US$

per

kg

40

Projections are contracted prices of polysilicon would increase from US$50

per kg in 2006 and reach its peak at US$53 per kg by 2007. With new

plants coming into production in 2008, prices would begin to decline from

US$50 per to US$41 per kg by 2010. However, prices could decline more

aggressively if annual growth for PV is less than 20% anticipated in 2007-

2010. Another factor that would cause polysilicon prices to decline at faster

rate are if new polysilicon plants were to come into production too

aggressively.


for polysilicon would grow at an average of 41% annually in 2007-2010,

demand for polysilicon would total 140,000 tons during the four-year

period. Assuming an average cost of polysilicon at US$47 per kg, equates to

a market value of US$6.6 billion during the period.

Demand for PV will continue to grow in 2007-2010, though at slower pace

of 20% annually. Growth for PV subsequently creates demand for polysilicon

and therefore presents market and business opportunities for polysilicon

manufacturers to increase their production capacity.

The investment cost per MWp for a silicon production plant is higher than

wafer, cell and module manufacturing. The Siemens process to manufacture

silicon is used in 90% of silicon production worldwide. The advantage of the

Siemens process is it is a well-established process and therefore represents

low technology risk to the investors. The facility is easier to build compared

to the newer technologies and suitable for manufacturing silicon for the PV

and electronics industry. Being an established technology, there is little risk

of patent infringement.

Market challenges. New players have announced their entry into silicon

production but yet to begin construction. Furthermore, there are also

unconfirmed reports about new players intending to enter the business.

There is the possibility that some of the new players may eventually abort

their plans if there is a silicon overcapacity in 2008 and beyond. If new

plants were to come into production too aggressively beginning in 2008

creating overcapacity, silicon manufacturers could face a similar scenario

experienced during the burst of the bubble technology in 2001.

Table 4.3. Forecast for Polysilicon Demand (tons)


2006

2007f

2008f

2009f

2010f

Total 2007-2010

At 41% 13,523 15,928 30,510 44,125 49,308 139,871

41

There are about 50 companies involved in thin films and currently many are

start-ups. Thin films are gaining popularity, increasing at a faster rate of

growth and its share of the module market. Thus, there is a potential threat

with developments in technologies to mass-produce thin films at lower costs

and improve conversion efficiency displacing c-Si modules in 2007-2010.

4.4 Thin Films

Demand and supply growth. Shortages of silicon in recent years have

driven demand for thin film technologies. The appeal for thin film is it

requires little or no silicon and production at costs lower than c-Si modules.

Thin films accounted for about 6% of the PV modules in 2005 but expected

to increase its share to 15% of the market by 2010. The European

Photovoltaic Industry Association predicts demand for thin films to increase

10-fold from 100 MWp in 2005 to 1,000 MWp by 2010. Production would

increase by more than two-fold from 200 MWp in 2007 to 500 MWp in 2008

as existing players expand production capacity and start-up companies

begin production.

From 2003 to 2006, shortages of silicon materials combined with rising

prices of c-Si modules drove the market for thin films. However, the market

driver for thin films in 2007-2010 would be its lower costs and shorter

energy payback period. Advancement in conversion efficiency, longer

lifespan of thin films and its potential in building integrated PV are other

factors that would drive demand for thin films.

Source: European Photovoltaic Industry Association

Figure 4.4a. Thin Film Production and Projection (MWp)

1,000

700

500

200150

1005030

0

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007 2008 2009 2010

MW

p

Figure 4.4a. Thin Film Production and Projection (MWp)

1,000

700

500

200150

1005030

0

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007 2008 2009 2010

MW

p

42

Industry players. There are more than 50 companies mainly in Europe,

United States and Japan involved in developing thin film technologies.

These companies sector are generally small privately owned companies or

start-ups. Many of the leaders involved in manufacturing c-Si modules have

entered into thin films including Sharp, Mitsubishi Heavy Industries (MHI),

Schott Solar and Sanyo. In 2005, four companies dominated the market for

thin films which included United Solar Ovonics (US), Kaneka (Japan), First

Solar (US) and MHI (Japan) accounting for 75% of the thin film market.

Production capacity for thin films generally ranges from 25 MWp to 50 MWp

but there are already plans by United Solar and First Solar to increase

capacity by more than 200 MWp by 2010.

Venture capitalists are investing millions of dollars in thin-film start-ups

such as United Solar, Nanosolar, Miasole, Konarka and DayStar

Technologies. However, only a few companies have actually brought thin

film technology into large-scale production. While prices of silicon cell

modules have been increasing, prices of thin film modules have been

declining. First Solar claims that it had reduced the production cost of its

thin films to US$1.50 per Wp about 40%-45% less than the industry

average for c-Si modules manufactured in the US.

Product. Thin films are less subjected to cell temperatures while c-Si cells

decrease in conversion efficiency as the temperature rises. The advantage

of manufacturing thin films is it uses greater automation than

manufacturing c-Si modules. However, thin films are hard to mass-produce

cost effectively because of the difficulty of coating large surface areas.


Figure 4.4b. Share of the World Thin Film Production in 2005 (MWp)

United Solar, 22.0%

Others, 25.0%First Solar, 20.0%

Mitsubishi, 12.0%

Kaneka, 21.0%

Figure 4.4b. Share of the World Thin Film Production in 2005 (MWp)

United Solar, 22.0%

Others, 25.0%First Solar, 20.0%

Mitsubishi, 12.0%

Kaneka, 21.0%

43

Nanosolar, Honda Engineering and Sharp announced they have developed

technologies to mass produce thin films. Another disadvantage of thin films

is their lower efficiency (generally less than c-Si modules) but there are

already developments to improve efficiency.

The leader among thin films is a-Si accounting for nearly 75% of the thin

film market. These thin films use small quantities of silicon in amorphous

form deposited as thin layers. Other thin films include copper indium

selenide (CIS), copper indium gallium selenide (CIGS) and cadmium

telluride (CdTe). Among the thin films, a-Si has the lowest efficiency (6%-

9%) compared to CI(G)S (9%-11%) and CdTe (8%-10%). Main reason for

the dominance a-Si thin films is it is among the earliest thin film

technologies researched and developed. Over the medium term, CIGS thin

films are generating interest with improvements in efficiency on par with

mc-Si modules under laboratory conditions and their potential for mass

production.

Price trend. The direction on prices of thin films in 2007-2010 is

possession of technologies to mass-produce thin films cost effectively.

Nanosolar, Honda Engineering and Sharp announced they have developed

technologies to mass-produce thin films. United Solar and First Solar have

already established plans to increase their production capacity to more than

200 MWp by 2010.

Solarbuzz’s monthly survey of module prices indicates that the lowest price

of a-Si thin film module in March 2007 was 30% less than the lowest price

of a mc-Si module. This is a significant reduction from US$4.00 per Wp in

September 2006 to US$3.00 per Wp in March 2007.


for thin films would grow at an average of 67% annually in 2007-2010,

demand for thin films would total 2,400 MWp during the four-year period.

Assuming an average cost of thin films at US$2.00 per Wp, equates to a


Table 4.4. Lowest Module Prices (US$ per Wp) Comparison

Lowest Price

Modules

September

2006

March

2007

sc-Si module

mc-Si modules

a-Si thin film modules

4.15

4.05

4.00

4.24

4.32

3.00

Source: Solarbuzz

44

Thin films’ lower manufacturing cost, potential for mass production to lower

cost further and improvements in conversion efficiency (especially CIGS thin

films) offers opportunities for manufacturers to market lower cost PV

systems. Price has been and will continue to be an important determinant

for end-user acceptance of PV. Thin films’ lower prices to the end-users

represent a market potential for manufacturers and will be an important

determinant to propel its marketing.

Another potential of thin films is manufacturers are not constrained by

supply for materials used in manufacturing thin film as experienced with c-

Si modules. This provides manufacturers the flexibility to manufacture and

market thin films according to market demand.

Thin films offer applications that are not possible with flat panel c-Si

modules. Thin films provide opportunities for applications in building

integrated modules including roof tiles, windows and facades. Thin films can

be deposited on many types of surfaces such as flexible plastics, glass and

coatings on building materials to generate electricity. Thus, thin films offer

vast opportunities in various applications.

Market challenges. Shortages and rising prices of silicon materials in

recent years provided opportunities for the development thin films. New

silicon plants would come into production beginning in 2008 relieving the

silicon shortage and prices of c-Si modules would begin to decline narrowing

the gap between prices of thin film and c-Si modules. Excess capacity in the

c-Si value chain would cause prices of c-Si modules to decline faster and

retard the market potential for thin films.

Key challenges currently faced for thin films are improvements in conversion

efficiency and lowering manufacturing cost through mass production.

Current costs of thin film modules are still too high and electricity generated

more than five times the electricity rates from the utility companies. To gain

wide acceptance among end-users, the challenge is to improve thin films’

efficiency and lower manufacturing cost further.

Table 4.4. Forecast for Thin Film Demand (MWp)


2006

2007f

2008f

2009f

2010f

Total 2007-2010

67% 150 200 500 700 1,000 2,400

45

A potential risk for thin films is the toxicity of some of the chemicals used.

For example, cadmium used in CdTe thin films is toxic with adverse effects

on human and animal health. Thus, it is important for manufacturers to

establish programmes to discard thin films appropriately once they passed

their lifespan.

4.5 Photovoltaic Inverters

Demand and supply growth. The market for PV inverters is dependent on

new demand for PV and replacement of old inverters that have passed their

lifespan in existing installations.3 By capacity (Wp), the market for PV

inverters grew at an average of 45% annually from 400 MWp in 2001 to

2,600 MWp in 2006. Driven by strong demand for PV, about 90% of the

inverter capacity installed was for new installations and remaining 10%

were for replacements of old inverters. Strong demand for PV in Germany

and Spain is the main driver of growth for inverters in the European market.

Projections are the market for inverters would grow by an average of 22%

annually from 3,200 MWp in 2007 to 5,700 MWp by 2010, based on the

projection that the market for PV would grow 20% annually reaching 5,000

MWp by 2010. Demand for PV in 2007-2010 would continue to drive the

market for inverters accounting for about 90% of the installations by

capacity with remaining for replacements of old inverters.

3 Typical PV inverter has a lifespan of 5-10 years.

Figure 4.5a. PV Inverter Production and Projection (GWp)

1.91.3

0.80.6

0.40.30.20.2

2.6

3.2

3.94.7

5.7

-

1

2

3

4

5

6

7

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

GW

p

Figure 4.5a. PV Inverter Production and Projection (GWp)

1.91.3

0.80.6

0.40.30.20.2

2.6

3.2

3.94.7

5.7

-

1

2

3

4

5

6

7

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

GW

p

Note: Rough estimates based on market for PV for the year and product lifecycle of seven years.

46

Industry players. In Japan, there are nearly 20 companies involved in

manufacturing PV inverters and similar numbers in North America. While in

Europe, there are about 30 companies involved in manufacturing inverters.

The industry is characterised by a few players dominating the market.

Sharp leads the market in Japan while in North America SMA and Xantrex

leads the market. SMA, Xantrex and Fronius lead the market in Europe.

Most of the European companies involved in inverters are German, Dutch,

Austrian and Swiss companies.

SMA Technologies is a German company and leads the industry with nearly

31% share of the market with major markets in Europe and the US. Sharp

is the second largest player with its market mainly in Japan and its inverters

marketed along with its PV system. Austria’s Fronius accounts for 11% of

the market with markets mainly in Europe and the US but also has a

distribution network in Asia-Pacific. Other market leaders include Xantrex

(Canada), Kyocera (Japan), Mastervolt (Netherlands) and Sputnik

(Switzerland). These seven companies together accounted for three-

quarters of the world market in 2005.

Product. Most of the inverters currently produced and marketed are string

inverters for home PV installations ranging from 2 kWp to 10 kWp. With

increasing number of PV installations in the megawatts, several

manufacturers have developed central inverters for large installations. The

technology of the inverters varies from manufacturer to manufacturer such

as differences in size, efficiency, weight and reliability.

Figure 4.5b. Share of World Inverter Production in 2005 (MW)

SMA, 30.5%

Others, 25.2%

Sputnik, 1.9%

Mastervolt, 3.2%

Fronius, 10.7%

Xantrex, 5.0% Kyocera, 4.6%

Sharp, 18.9%

Figure 4.5b. Share of World Inverter Production in 2005 (MW)

SMA, 30.5%

Others, 25.2%

Sputnik, 1.9%

Mastervolt, 3.2%

Fronius, 10.7%

Xantrex, 5.0% Kyocera, 4.6%

Sharp, 18.9%

Note: Estimates derived from various sources

47

There is a growing trend among major manufacturers to provide additional

features in their inverters. These include remote monitoring,

communications capabilities, plug and play with the controllers and

manufacturing lighter inverters. Sharp has developed inverters for homes to

a new level with gadgetry including colour LCD screens with interactive

functions. These interactive functions include energy savings tracker, real-

time status display of energy generated, home power consumption, power

purchased and sold back to the utility company.

Price trend. Prices of inverters very much depend on the brand, technology

and features which influences the cost of manufacturing the inverters and

the price end-users are willing to pay. Inverter size also affects the end-user

price of the inverter per Wp. For example, inverters with similar features, a

3 kWp inverter is likely to cost 50% less than a 1 kWp inverter on a per Wp

basis. Another example, in the US, the price for inverters for installations

above 70 kWp is US$0.40-0.80 per Wp while for installations of less than 10

kWp the price is US$0.50-2.40.

As a guide, prices of inverters declined by 5%-7% annually from 2001 to

2006 due to increases in production volume resulting in economies of scale

in manufacturing. Increasing integration of components, reduction in

mechanical parts, increasing use of electronics and reducing the assembly

time in the manufacturing process have also reduced the production cost in

recent years. Prices of inverters will continue to decline by 5%-7% annually

in 2007-2010.


for inverters would grow at an average of 22% annually in 2007-2010,

demand for inverters would total 17,500 MWp during the four-year period.

Assuming an average cost of inverters at US$0.50 per Wp, equates to a


Table 4.5. Forecast for Thin Film Demand (MWp)


2006

2007f

2008f

2009f

2010f

Total 2007-2010

22% 2,601 3,168 3,855 4,707 5,736 17,466

Inverters have a lifespan of 5-10 years while PV modules have a lifespan of

25-30 years. Thus, inverters can be replaced 3-5 during the lifespan of a PV

system and over the longer-term, the replacement market for inverters

would be just as important as the market for new PV installations. The

proportion of inverters sold by capacity currently accounts for 10% of the

production. The proportion will gradually increase over the longer term as

48

old inverters come to the end of their lifespan and an opportunity for

manufacturers in the replacement market.

Inverters especially string inverters have gone beyond its basic function of

converting current from DC to AC. Increasing use of electronic gadgetry and

stylish designs are current trends for newer models of inverters attracting

interest and purchase from the end-users. Further interest is generated as

inverter prices decline and becomes more affordable. In general, inverters

are becoming more like consumer electronic items and market opportunities

exist for such inverters.

Market challenges. Different countries have different regulations and

standards for PV inverters.

Currently there are no European standards or regulations for

inverters. For example, in Europe, Germany permits use of

inverters without transformers but required in Spain and the United

Kingdom.4 This represents a significant barrier for manufacturers to

develop inverters specifically for each country.

Regulations for inverters in the US are more stringent than Europe.

There is a lack of uniform regulations for inverters and each state

in the US has its own regulations with different safety,

interconnection and testing requirements. Furthermore, utility

companies may also have their own regulations for inverters.

Lack of uniform standards across markets makes it difficult for

manufacturers to produce inverters with global acceptance. Thus

manufacturers prefer to focus on regional markets preventing any

economies of scale in production. Different regulations require product

modification and specification and thus manufacturers (especially smaller

companies) tend to focus on regional markets.

Reliability problems in inverters are often associated with capacitors since

they are sensitive to temperatures. R&D on capacitors for inverters is

limited and capacitors developed focuses on other segments of the

electronic industry such as consumer electronics, which accounts for a

greater proportion of the capacitors sold. Thus, inverter manufacturers

unable to do much to improve the reliability of the capacitors other than

design around the problem which increases costs.

4 The Netherlands and Switzerland have similar standards for inverters as Germany

49

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5.1 Germany

Germany leads the world with the highest installation capacity for PV. The

rise in installation began when Germany’s federal government introduced

the “100,000 Roofs” programme in January 1999 to stimulate demand for

PV by offering low-interest loans. The loans were initially interest free but

charged 1.9% interest from 2000 to 2003. Currently soft loans are available

through other programmes by KfW Promotional Bank. However, installations

accelerated when Germany’s introduced high buyback rates (guaranteed for

20 years) from the utility companies under the Renewable Energy Sources

Act in 2000. The Act provided preferential feed-in tariffs with a 5.0%-6.5%

annual decrease from 2005 onwards. In 2006, feed-in tariffs were €0.406

per kWh for freestanding systems while for buildings and sound barriers,

€0.4874-0.518 per kWh. Germany’s experience has convinced many

governments in Europe to adopt similar programmes to stimulate demand

for PV.

Germany held its national election in 2005 and there are concerns that

Germany would shift support for PV from a new government. This is unlikely

to happen:

Implementation of the Renewable Energy Sources Act took many

years of political debates before voted by Germany’s Bundestag

(parliament) and changing the law would require further and

lengthy political debates.

Environmental awareness, economic benefits and job creation from

the PV industry creates strong political support from German

constituencies.

The German PV industry is one of the fastest growing industries in

the country and has already invested €5 billion from 1998 to 2005

with additional investments since 2006.

Table 5.1a. PV Installation and Production in Germany

2003 2004 2005

Cumulative installation (MWp) 431 794 1,429

Source: IEA

50

Any efforts by Germany’s utility companies to persuade the

government to reduce support for PV would have negative

implications from the German public and political parties supporting

PV.

However, Germany would review its feed-in tariff in 2007, which could have

an impact on demand for PV in Germany. If new feed-in tariffs were to be

less favourable than previous feed-in tariffs, demand would soften and

reduce module prices. This would make modules become more attractive to

the end-users after experiencing years of increasing prices. According to

Photon International, demand was already softening in late 2006 when the

government-guaranteed price for PV electricity dropped 5% but prices of

modules kept on rising, reducing returns on investments to home and

business owners.

Germany accounted for 19% of the world’s production of PV cells and 16%

of the world’s production of modules in 2005. The German PV industry has

become a significant sector of the country’s economy generating about

30,000 job opportunities according to the German Solar Industry

Association (BSW). Furthermore, the industry invested about €5 billion

between 1998 and 2005 in new production capacity and R&D. Consequently,

revenue from the industry increased from €350 million in 1999 to €3.7

billion by 2005.

Considering investments made by the German industry, jobs created and

industry revenue, it is more likely that the German government will

continue with incentive schemes to stimulate demand and growth of the

industry. There are about 50 manufacturers involved across the PV value

chain in Germany from manufacturing silicon, wafers, PV cells, modules to

inverters. Besides manufacturing, the PV industry has created business

opportunities for installers of PV systems, turnkey manufacturers, wholesale

and retail distributors, architectural and engineering companies in Germany.

Table 5.1b. Production in Germany

2003 2004 2005

PV cell production (MWp)

PV module production (MWp)

100

80

190

205

332

276

Source: IEA

51

Table 5.2c. Snapshot of German Companies involved in PV

Company Overview

CSG Solar CSG Solar began manufacturing crystalline silicon on glass

(CSG) in 2006 at its plant in Thalheim and current

production capacity is 25 MWp. CSG acquired the

technology from Pacific Solar, Australia.

Solon Solon’s plants in Germany and Sweden produce only mc-Si

and sc-Si modules. Combined production capacity

increased from 90 MWp in 2005 to 110 MWp in 2006. To

ensure a reliable supply of PV cells for its modules, Solon

signed a 10-year contract with Ersol and 5-year contracts

with Q-Cells and SunPower beginning in 2006.

SolarWorld SolarWorld’s business activities in PV, including activities of

its subsidiaries and joint venture companies, range from

production of silicon to installation of modules. In 2006,

SolarWorld acquired from Shell Solar its silicon, cell and

module production facilities in the United States. As a

result, SolarWorld’s cell production capacity increased from

158 MWp in 2005 to 230 MWp in 2006 and module

capacity increased from 175 MWp to 210 MWp during the

period. Solar World manufactures mc-Si, sc-Si as well as

CIS thin film modules.

Deutsche Solar Deutsche Solar is part of the SolarWorld group and is one

of the largest producers of mc-Si and sc-Si wafers in

Europe. In 2005, the company produced 102 MWp of

silicon wafer accounting for 6% of the world’s production.

Q-Cells Q-Cells is principally involved in manufacture and

marketing of mc-Si and sc-Si cells. The company’s cell

capacity increased from 290 MWp in 2005 to 350 MWp in

2006 with further expansion to 510 MWp by 2007. The

company also has investments in CSG Solar in Germany to

produce crystalline silicon on glass modules and in EverQ

in the United States to produce cells using ribbon

technology.

Schott Solar Schott Solar manufactures mc-Si cells as well as a-Si thin

film modules. Outside of Germany, the company has

plants in the Czech Republic and the United States. From

2006 to 2007, cell production capacity would increase from

130 MWp to 170 MWp while module capacity from 80 MWp

to an estimated 110 MWp. Schott Solar will operate a new

30 MWp plant in Germany in 2007 to manufacture a-Si

thin film modules.

Solar Watt Solar Watt produces both mc-Si and s-Si cells but its plant

production capacity is relatively small, increasing from 5-6

MWp in 2005 to 11 MWp in 2006. Its module capacity is

sizable with a production capacity increasing from 60 MWp

to 100 MWp during the same period.

52

Table 5.2c. Snapshot of German Companies involved in PV

Company Overview

ErSol Solar Energy ErSol manufactures and markets mc-Si and sc-Si cells and

modules. The company plans to increase production

capacity from 45 MWp in 2005 to 220 MWp by 2009. ErSol

entered into a joint venture with China’s Shanghai Electric

Solar Energy to manufacture modules in China using cells

produced by ErSol in Germany. The company is also

diversifying into thin films.

Wacker Polysilicon Wacker is one of the largest producer and supplier of

polycrystalline silicon for the semiconductor industry and

cell manufacturing. Due to increasing demand for

polycrystalline silicon for cell manufacturing, Wacker will

increase the production capacity of its plant in Burghausen

from 5,500 tons in 2005 to 6,500 tons by 2007. Capacity

will increase further to 9,000 tons by 2009.

Production of modules requires higher use of labour compared to other

sectors of the PV value chain. Germany imports nearly 60% of the PV

modules installed in the country due to Germany’s high cost of labour. Main

imports are for modules from OEM outside Germany, produced by German

companies in lower cost producing countries such as the Czech Republic and

foreign brands. Exports account for about 10% of Germany PV production

according to the Joint Global Change Research Institute (JGCRI). However,

Germany exports about 40% of the silicon feedstock produced in the

country.

Diagram 5.2. Main Channel in Germany’s PV Value Chain

53

In reality, many German companies have invested in overseas production

facilities through their subsidiaries or joint ventures. SolarWorld has plants

in Sweden and the United States to produce PV modules. SOLON entered

into a joint venture to operate a solar grade silicon plant in France and

invested in a plant in Austria to manufacture crystalline silicon cells. Besides

Germany, Schott Solar has a plant in the United States to produce silicon

cells.

Shortage of silicon in recent years has been a major challenge and limiting

factor in the growth of the German PV industry. Nevertheless, many

German companies are already investing in new plants, expanding capacity,

developing new technologies and increasing investments outside Germany.

In addition to crystalline technologies, German companies have invested in

thin film technologies and new players CSG and Sulfurcell entered into

production in 2006.

Inverter technology has shown impressive growth in recent years and

Germany is the world’s leading producer of inverters and includes major

companies such as SMA, Fronius, Studier and Siemens. German production

of inverters grew from an estimated 590 MWp in 2005 to 910 MWp in 2005

accounting for nearly half or the world’s inverter production in 2006.

5.2 Japan

The principles of Japan’s New Energy Policy are to ensure security in energy

supply, develop a market mechanism for renewable energy and to reduce

CO2 emission. Previous programmes to promote PV in the country involved

subsidies targeting homeowners, private companies and public

organisations. Programmes targeting homeowners began with the

“Monitoring Programme for Residential PV Systems” from 1994 to 1996

followed by the “PV Systems Dissemination Programme” from 1997 to 2005.

The “Photovoltaic Power Generations Systems for Industrial and Other

Applications” programme targeted private companies and public

organisations from 1998 to 2002. PV programmes for homeowners ended

after 2005 but the government continues to provide subsidies to private

companies and public buildings for PV. Because of the various programmes,

PV installations increased to 1,422 MWp by 2005 of which nearly 80% of the

installations were in homes. The Japanese government targets to increase

PV installations in the country to 4.8 GWp by 2010.

54

Besides subsidy programmes, Japan’s Ministry for Economy, Trade and

Industry (METI) supports Japanese companies in areas of R&D, establishing

standards and accreditation systems, awareness creation and promoting

international cooperation. The New Energy Development Organisation

(NEDO) is a government body responsible for supporting the industry

through research in cell technology, advanced manufacturing technology

and developing innovative PV technologies. An important priority of NEDO is

to reduce the cost of PV cells and systems to create a mass market for PV.

Over the long term, the government anticipates the industry in Japan would

be able to sustain itself without subsidies and minimal government support.

However, the industry is in the opinion that the government would intervene

if there were any considerable slowdown in growth as the industry develops.

Japan is the world’s largest producer of PV cells and modules accounting for

46% and 44% respectively of the world’s production in 2005. PV has

become an important industry in Japan and many major PV companies such

as Sharp, Kyocera and Sanyo have vertically integrated much of their

processes across the value chain. An important element of the Japanese

industry is to develop export markets and exports currently account for

about 30% of the PV production. Japanese PV companies initially

concentrated on the domestic market but since 2002, many have expanded

or established new manufacturing operations outside Japan besides

increasing exports. Japanese manufacturing operations and exports focuses

on Europe and the United States.

Sharp, Kyocera, Sanyo and Mitsubishi are leaders in the Japanese markets.

According to Greenpeace, the industry in Japan generated more than €1.5

billion in revenue in 2005, which excludes revenue generated from

manufacturing operations outside Japan. Furthermore, the Japanese PV

Table 5.2a. PV Installation and Production in Japan

2003 2004 2005

Cumulative installation (MWp) 860 1,132 1,422

Source: IEA

Table 5.2b. PV Installation and Production in Japan

2003 2004 2005



365

402

604

590

824

773

Source: IEA

55

industry directly provides employment opportunities for nearly 9,000 people

in the country.

Table 5.2c. Snapshot of Japanese Companies involved in PV

Company Overview

Sharp Solar The company manufactures a range of mc-Si, sc-Si and a-Si

cells. Sharp Solar is the world leader in the manufacture of PV

cells and modules. Its share accounts for a quarter of the

world’s market and half of Japan’s market. Besides Japan,

Sharp also has plants manufacturing modules in the United

States and United Kingdom. Sharp intends to increase its cell

and module production capacity from 428 MWp in 2006 to

800-900 MWp by 2010.

Kyocera The Solar Energy Division of Kyocera manufactures mc-Si

cells and PV modules. Kyocera is the second largest

manufacturer of PV cells and modules in Japan. The company

has module plants in Mexico and the Czech Republic and a

partnership with China’s Tianjin Yiqing Group to manufacture

modules in Tianjin China. Cell production capacity is expected

to increase from 240 MWp in 2005 to 500 MWp by 2007.

Sanyo Sanyo manufactures a-Si and a-Si/sc-Si hybrid cells for its

modules. Besides Japan, the company has plants in Mexico

and Hungary producing modules, receiving supplies of PV

cells from its plant in Japan. Sanyo expects to increase cell

production capacity from 260 MWp in 2006 to 600 MWp by

2010.

Mitsubishi Two subsidiaries under Mitsubishi Corporation are involved in

production of PV cells and modules. Mitsubishi Electric

manufactures mc-Si cells for its modules and cell production

capacity increased from 135 MWp in 2005 to 230 MWp in

2006. Mitsubishi Heavy Industries manufactures a-Si and a-

Si/micro-Si cells for its modules and cell capacity increased

from 10 MWp in 2005 to 50 MWp in 2006. Another subsidiary,

Mitsubishi Materials manufactures mc-Si at its plant in Japan

and the United States with a combined production capacity of

2,850 tons in 2006. Mitsubishi Materials confirmed plans to

increase capacity by 300 tons at its plant in the United States.

Kaneka Kaneka manufactures a-Si/mc-Si thin film cells and modules.

The company plans to increase production capacity from 30

MWp in 2006 to 70 MWp in 2008. Kaneka also operates a PV

module plant in the Czech Republic.

56

Table 5.2c. Snapshot of Japanese Companies involved in PV

Company Overview

MSK MSK became a subsidiary company of Suntech, China, when

it acquired a majority stake in MSK in 2006. MSK focuses on

mc-Si modules and specialises in systems integration and

production of building integrated modules. Acquisition by

Suntech provides an opportunity for MSK to reduce its

production and operating costs by transferring some of its

production and back-end operations to China.

Kobe Steel

(Kobelco)

Kobe Steel’s in-house production capacity is less than 5 MWp

but has partnership with Schott Solar to import modules.

Current focus is systems integration for installations in public

and industrial buildings in Japan.

Honda Honda is a new market player in the Japanese PV industry

entering the market in 2006. The company will begin full

production from its 27.5 MWp capacity plant producing CIGS

thin films.

Tokuyama The fastest growing business of the Electronic Materials

Business of Tokuyama Corporation is manufacturing and

marketing of mc-Si to PV cell manufacturers. Due to growth

of the PV market, Tokuyama announced plans to increase

production of mc-Si at its plant in Higashi from 4,800 tons to

5,200 tons. Tokuyama also has plans to construct and

operate a 200 tons verification plant to produce mc-Si using

vapour-to-liquid deposition technology.

Sumitomo Sumitomo Titanium’s mc-Si was initially targeted for the

semiconductor industry. With growing demand for silicon from

the PV industry, Sumitomo announced its production capacity

would increase from 900 tons in 2006 to 1,300-1,400 tons by

2007.

JFE Steel (formerly

Kawasaki Steel)

JFE Steel manufactures mc-Si ingots for PV cell

manufacturers in Japan. Annual production increased from

920 tons in 2004 to 1,200 tons in 2005 equivalent to 120

MWp of PV cells. Currently pursuing technologies to develop

and produce wafers.

Sharp, Kyocera, Sanyo and Mitsubishi have vertically integrated most of

their production across the value chain. Other smaller players producing

crystalline cells and modules in Japan purchase their wafers and cells from

the major players. Nevertheless, Japan is dependent on imported silicon for

their ingots and wafers since domestic production is insufficient to meet

demand from the industry. Domestic silicon manufacturers supplying to the

PV industry include Tokuyama, Mitsubishi Materials Corporation and JFE

Steel. Sumitomo Titanium also supplies to the PV industry but supplies are

limited since the focus of its production is for the electronic industry.

57

Some smaller players in the industry import their modules. Kobe Steel has a

partnership and imports modules from Germany’s Schott Solar. Kawasaki

Heavy Industries has investments in Evergreen Solar (based in the United

States) gaining the exclusive right to sell Evergreen Solar’s modules in

Japan. Japan imports relatively small volumes of silicon wafers from

Ningjing Songgong Semiconductor in China amounting to 50-60 MWp in

2005.

In 2005, nearly 80% of the PV installations in Japan were in homes. A

unique characteristic of the Japanese market is that many Japanese PV

manufactures are also involved in PV installation or systems integration.

According to industry estimates, the value added to a PV system increases

by about 20%-30% with installation. Furthermore, Japanese module

manufacturers involved in installation also provide maintenance services.

Another unique characteristic is the strategic alliance developed between

the module manufacturers and companies involved in constructing houses.

New homes in Japan are mostly prefabricated and mass-produced. This

provides an opportunity for module manufacturers to incorporate building

integrated modules during prefabrication, significantly reducing the cost of a

PV system.

Homes account for about 80% of the PV installations in Japan and central

government PV subsidies for homes ended in October 2005. The industry is

in the opinion that demand for PV among Japanese homeowners would

continue without subsidies from the central government. However, a

number of municipal governments are offering subsidies and soft loans for

Diagram 5.2. Main Channel in the Japanese PV Value Chain

58

PV to homeowners. Many residential property developers are promoting

“zero-energy” homes integrating energy efficiency with PV. Furthermore,

modules manufacturers and property developer are actively advertising

“zero-energy” homes with PV on television. Because of increasing consumer

awareness, many homeowners associate PV with personal economic and

environmental benefits. The government has set targets to increase PV

installations by nearly 3.4 GWp from 2006 to 2010 targeting public buildings

and private companies with subsidies. The anticipated effect is reduction in

prices of PV, which would make PV more affordable to Japanese

homeowners.

5.3 United States

The PV market in the United States received a boost when President Bush

signed The Energy Policy Act in August 2005 to increase renewable energy

usage including PV in the country. The Act provided federal incentives for

residential users and businesses with a 30% tax credit for PV systems

installed during 2006-2007. The Act caps tax credits at US$2,000 for

residential users. The PV industry in the United States is seeking extension

of the tax credit after 2007.

California is currently the dominant market for PV in the United States

accounting for 73% of the grid-connected installations in the country in

2005. This has been largely due to strong programmes from California’s

state government towards renewable energy including PV. The state of New

Jersey is the second largest market accounting for 17% of the grid-

connected installations in the United States. Like California, New Jersey

provides state level programmes supporting PV but demand during the

second half of 2006 slowed due to problems in state budget and uncertainty

about the payment mechanisms.

Currently, 20 states in the United States have rebate programmes

sponsored by the state governments or utility companies. Another 17

states, including California, have set goals to increase usage of renewable

energy including PV. Projections from the US PV Industry Roadmap

anticipate installed capacity for PV would reach 200 GWp by 2030.

Table 5.3a. PV Installations in the United States

2003 2004 2005

Cumulative installation (MWp) 275 376 479

Source: IEA

59

California’s renewable energy initiative including PV began in 1996 with a

$540 million fund. In August 2006, California’s Governor Schwarzenegger

signed the “Million Solar Roofs Plan” to install one million homes in

California with at least 3 GWp of PV by 2017. Under the initiative,

California’s government would budget US$2.9 billion (€2.3 billion) in rebates

on PV installed in homes. The initiative extended the budget to as much as

US$3.4 billion (€2.7 billion) for installations in utilities owned by the

California’s municipalities. Other states such as New Jersey, New York State,

Florida, New Mexico, and Washington State are following California’s rebate

programmes as well as experimenting with new programs.

According to Solar Energy Industries Association (SEIA) of the United

States, manufacturers in the country accounted for 40% of the world’s PV

market and 100% of the domestic PV market in 1997. Since then, the

United States has lost its leading position, experiencing growing imports

from Europe, Japan and more recently China. The close proximity of Mexico

to the United States, especially California, and Mexico’s lower labour cost

has seen companies such as Kyocera and Sanyo operate plants near

Mexico’s border supplying PV to the United States. However, the US is the

world’s largest producer of crystalline silicon and will continue to be the

largest producer through 2010.

By 2005, the United States accounted for nearly 9% of the world’s

production of PV cells and 11% of the world’s production of modules.

Production of PV cells grew by 35% from 2003 to 2004 but at a slower pace

of 13% from 2004 to 2005. However, production of modules increased by

96% from 2003 to 2004 and 42% from 2004 to 2005. The US Energy

Information Administration reports there were 29 manufacturing companies

involved in PV, directly providing job opportunities for nearly 3,100 people in

2005. This excludes those involved in installation, wholesale and retail

distribution, architectural and engineering companies.

Table 5.3b. PV Production in the United States

2003 2004 2005



102

71

138

139

156

198

Source: IEA

The largest manufacturer of PV cells in the US is Germany’s SolarWorld

when it bought over Shell Solar’s mc-Si cell plant in 2005. Many major

silicon based PV manufacturing companies in the US are subsidiaries of

foreign companies such as Japan’s Sharp, Kyocera, Sanyo and Mitsubishi

Materials Corporation, SolarWorld and Schott Solar from Germany and REC

from Norway.

60

Other foreign companies have established sales offices, such as Mitsubishi

Electric from Japan, Isofoton from Spain and Suntech from China. Q-Cells, a

German company, is negotiating with potential partners in the US to

establish its markets in the country. SOLON of Germany acquired Global

Solar Energy from UniSource Energy to enter markets in south western US.

Foreign companies have also formed joint ventures or have significant stake

in US PV companies. Q-Cells invested in Soloria Corporation based in

California to develop PV using low concentration of silicon. Hemlock

Semiconductor, the world’s largest producer of crystalline silicon is a joint

venture between Dow Corning and Japanese companies Shin-Etsu Handotai

and Mitsubishi Materials Corporation.

Table 5.3c. Snapshot of US Companies involved in PV

Company and

Location

Overview

Evergreen Solar

Evergreen Solar manufactures PV modules at its plant in

Marlboro, Massachusetts, and production capacity will reach

140 MWp by 2007. The company is the majority shareholder

of joint venture company EverQ (with Q-Cells and REC) to

produce silicon ribbon solar wafers in Thalheim, Germany.

First Solar

First Solar manufactures CdTe thin film modules at its plant

in Perrysburg, Ohio, and increased production capacity from

25 MWp in 2004 to 75 MWp in 2006. A new plant located in

Oder, Germany, with an initial capacity of 100 MWp begins

operation in 2007. First Solar announced in January 2007

that it would begin construction of a module plant with a

capacity of 100 MWp in Kulim High Technology Park,

Malaysia. The plant’s operation is expected to begin in 2008.

Nanosolar Nanosolar, a company founded in 2001 began developing

technologies on CIGS thin film. The company based in Palo

Alto, California, received its first seed money from Google’s

Larry Page and Sergey Brin in 2003 and funds worth more

than US$100 million from various venture capital firms and

government grants. The company begins production in 2007

and aims to eventually increase production capacity to 430

MWp.

SunPower SunPower, based in Sunnyvale, California, is listed on

NASDAQ. The company manufactures modules and has a

silicon plant manufacturing cells with a capacity of 100 MWp.

SunPower’s A-300 cells are unique because the metal

contacts for collecting and conducting electricity are on the

cell’s back surface.

61

Table 5.3c. Snapshot of US Companies involved in PV

Company and

Location

Overview

Miasole Miasole manufactures CIGS thin film cells at its plant in

California. The company is a pre-IPO company funded by

venture capitalists and expects to list on the stock market in

2007 or 2008. Miasole began producing thin films in 2006

with an initial production capacity of 50 MWp. The company

hopes to increase capacity to 200 MWp by end of 2007.

United Solar Ovonics United Solar Ovonics manufactures a-Si thin film solar cells

in Auburn, Michigan. Production capacity increased from 25

MWp in 2005 to 50 MWp in 2006. In 2005, the company

signed an MOU with China’s Tianjin Jinneng Investment

Company to form a joint venture to operate a 25 MWp a-Si

plant in Tianjin, China. In 2007, the company begins

operating a 50 MWp plant in Greenville, Michigan.

Hemlock

Semiconductor

Formed a joint venture with Dow Corning, Shin-Etsu

Handotai and Mitsubishi Materials to produce mc-Si in

Hemlock, Michigan. Capacity will increase from 10,000 tons

in 2006 to 14,500 tons in 2008 and further to 19,000 tons

by 2009.

MEMC Electronic

Materials

MEMC manufactures mc-Si wafers and granules at is plant in

St. Peters, Missouri. MEMC plans to increase its capacity of

mc-Si production from 4,000 tons to 8,000 tons by 2008.

MEMC signed a 10-year agreement to supply mc-Si to

Suntech’s plant in China beginning in 2007.

Hoku Scientific Based in Hawaii, Hoku is a new player in the PV industry.

The company will operate a module plant in the state of

Idaho beginning in 2007. The company also plans to operate

a plant manufacturing mc-Si in 2008 with an initial capacity

of 1,500 tons

The US is self sufficient in crystalline silicon with three of the world’s major

producers (Hemlock, REC and MEMC) located in the country. According to

the US Energy and Information Administration (EIA), imports into the

United States include PV cells mainly from Japan for US subsidiaries of

Japanese companies. The US imports modules mainly from China and from

Mexico, where two Japanese companies have manufacturing operations

near the US border. Imports of modules from Europe are likely to increase

in the near future as European PV manufacturers establish distribution

networks and regional offices in the US. In 2005, 78% of US exports of PV

were modules of which nearly 90% of the modules were exported were to

Europe mainly Germany. Other markets for US PV exports were Canada,

Mexico and re-export trade through Hong Kong and Singapore. According to

the EIA, 40% of the modules exported were thin film modules.

62

Many US PV manufacturers have expanded production but growth has been

most aggressive outside the US. SunPower based in California tripled its

production capacity in the Philippines while First Solar will invest in a new

PV module plant at Kulim High Technology Park in Malaysia. Evergreen

entered into a joint venture with Q-Cells and REC to manufacture wafers,

cells and modules in Thalheim, Germany.

While US companies lag behind in crystalline cells and modules, it is

becoming a leader in thin film technology. Thin films accounted for one-fifth

of the PV production in the US in 2005. New players are entering the market

for thin films supported by the capital markets and venture capitalists.

Evergreen, SunPower and United Solar Ovonics raised funds for expansion

through the capital market. Nanosolar, Konarka, HelioVolt and Miasole

received significant funds from venture capitals. Furthermore, companies

such as First Solar have expanded production of thin films into Germany to

be close to their customers.

The United States faces a major challenge to successfully implement PV in

the country. The United States does not have a national standard to allow

PV to connect to the grid. Different states have different technical and legal

requirements making it difficult for manufacturers to market a standard PV

system for the United States. The PV industry in the United States is

currently proposing an interconnection standard.

Diagram 5.3. Main Channel in the US PV Value Chain

63

5.4 China

In 2005, about 50% of the PV installations in China have been mostly for

government electrification programmes in remote villages where nearly 30

million households have no access to the electricity grid. About 50% of the

PV installations are small off-grid installations in homes, community centres,

in PV-wind hybrid systems and water pumps. About 35% are for industrial

applications such as communication systems, 10% in consumer products

and only 5% are grid-connected installations.

China plans to increase PV installations to 450 MWp by 2010 and 4-8 GWp

by 2020. From 2006 to 2011, China’s government aims to install 265 MWp

to nearly 2 million households in the remote villages and further 1,700 MWp

by 2020. In addition, the government would support 50 MWp in rooftop

installations, 8 MWp installation in the Gansu desert and a 20 MWp power

plant in the Gobi Desert. These “Rooftop” programmes involved government

subsidies for purchase of PV systems. In 2006, the Shenzhen municipal

government implemented laws requiring PV installations in newly

constructed buildings. Shanghai’s municipal government initially proposed

the “100,000 Rooftop” in 2005 to install 300 MWp by 2015. However, the

plan is under review and instead the municipal government targets to install

7 to 10 MW of PV by 2010, partly through installations on 10 buildings

yearly.

China’s Renewable Energy Law came into effect in January 2006 as the

country’s framework to increase renewable energy to 15% of the energy

consumed by 2020. However, the Law lacks clear regulations to implement

and enforce renewable energy programmes in China including PV. The Law

mentions power buyback or feed-in tariffs for PV but deemed too costly

according to China’s Director of Renewable Energy.

Development of China’s PV industry since 2004 has less to do from

demands from the domestic market but more from its export markets.

China exports more than 90% of the modules produced in the country. Main

export markets are Germany, United States, Japan and recently Spain.

From 2003 to 2005, production of PV cells increased 10-fold from 14 MWp

to 156 MWp and similarly for modules from 45 MWp to 443 MWp. Thus,

Table 5.4a PV Installations in China

2003 2004 2005

Cumulative installation (MWp) 55 65 92

Source: Research China

64

China accounted for 9% of the world’s production of PV cells and 25% of the

world’s production of PV modules during the period. Production of PV cells is

estimated to have increased to 690 MWp and modules to 1,200 MWp by

2006.

During the supply bottleneck of 2004-2005, German companies turned to

China for supplies of PV products but many factories and the products

produced failed to meet international quality standards and certifications.

However, the scenario has since changed and many larger Chinese PV

manufacturers have become more professional and their products

internationally certified. There are nearly 25 cell manufacturers and 130

panel manufacturers in China. However, most of the manufacturers are

small companies with relatively small production capacities.

Suntech Power, Baoding Tianwei Yingli New Energy Resources,

Nanjing PV-Tech, JinAo Solar and Jiangsu Shunfeng Photovoltaic

Technology together account for 61% of China’s total cell

production capacity and 60% or the production volume in 2006.

Suntech Power, Kyocera (Tianjin), Ningbao Solar, Yingli New Energy

Resources and Yunnan Tianda Photovoltaic together accounted for

29% of China’s module production capacity and 27% of the

production volume in 2006.

Table 5.4c. Snapshot of Chinese Companies involved in PV

Company Overview

Baoding Tian

Wei Yingli New

Energy

Resources

Yingli is another market leader in China and involved in

manufacturing mc-Si wafers, cells and modules. The

company’s plant is located in Baoding National High-New

Tech Industrial Development Zone in Baoding, Heibei

province. From 2006 to 2007, Yingli’s cell production

capacity is expected to increase from 90 MWp to 400

MWp while module capacity is expected to increase from

100 MWp to 200 MWp.

Table 5.4b. PV Production in China

2003 2004 2005



14

45

50

180

156

443

Source: CNF

65


Company Overview

Suntech Power Suntech is China’s leading manufacturer of PV cells and

modules and among the world leaders. The company

manufactures both mc-Si and sc-Si cells. In 2006,

Suntech acquired a 66.6% stake in Japan’s MSK (a

leading Japanese module manufacturer) and the

remaining stake acquired by the end of 2007. Listed on

the New York Stock Exchange (NYSE), Suntech exports

nearly 80% of its production manly to Western Europe

and the United States. From 2006 to 2007, cell

production capacity will increase from 270 MWp to 300-

390 MWp and module capacity from 470 MWp to 600

MWp.

Nanjing PV

Tech

Nanjing PV Tech only began production in 2005 and

currently manufactures only mc-Si and sc-Si cells. The

company is a joint venture between the Chinese

Electrical Equipment Group and the Australian

Photovoltaic Research Centre. Cell production capacity

increased from 32 MWp in 2005 to 180 MWp in 2006

and expected to increase further to 300 MWp by 2007.

Nanjing PV Tech supplies most of its cells to the

domestic market.

Kyocera

(Tianjin) Solar

Energy

Kyocera (Tianjin) Solar Energy is a joint venture

between Kyocera of Japan and the Tianjin Yiqing Group

of China. Its plant, located in Tianjin, only manufactures

mc-Si and sc-Si PV modules mainly for the domestic

market. Production capacity increased from 120 MWp in

2004 to 240 MWp in 2005. Kyocera (Tianjin) has yet to

announce any plans to increase production capacity.

Jiangsu

Linyang

Solarfun

The company currently manufactures mc-Si and sc-Si PV

cells and modules at its plant in Qidong, Jiangsu

Province, and also developing technologies to develop

film cells. Cell production capacity will increase from 20

MWp in 2005 to 120 MWp by 2007 while module

capacity will increase from 50 MWp to 80 MWp during

the period. Solarfun’s products are mostly exported to

Europe, namely Germany followed by Spain and Italy.

Its parent company Solarfun Power Holdings listed on

NASDAQ in 2006.

Jiannxi LDK

Solar Hi-Tech

LDK Solar is a new company under the Liouxin Group,

which manufactures protective and electrical

equipments. GT Equipment signed an agreement with

LDK Solar in 2005 for a turnkey project producing silicon

wafers. The agreement also includes increasing the

production capacity to 1,000 MWp by 2010.

66


Company Overview

Ningbo Solar

Electric Power

Ningbo Solar Energy Power manufactures both mc-Si

and sc-Si PV cells and modules at its plant. From 2005

to 2006, cell production capacity increased from 20 MWp

to 35 MWp while module capacity increased from 60

MWp to 70 MWp.

ReneSola The company, listed on London’s AIM stock market in

2006, is principally involved in recycling waste silicon to

producer wafers. ReneSola increased production of

silicon wafers to 400 tons in 2006 and expects to

increase production to 800 tons by 2007. ReneSola has

a three-year supply contract with Taiwan’s Motech and a

two-year contract with China’s Jiangsu Linyang Solarfun

beginning in 2007.

Lower investment and production cost is China’s competitive edge driven by

growing global demand as well as the entrepreneurial spirit of Chinese

businesses. China’s government supports funding in R&D for PV (estimated

at €12-13 million from 2006 to 2010) through the National Development

and Reform Commission and the Ministry of Science and Technology.

However, most of the current key production lines are from Germany and

the United States.

Production of modules uses more labour and does not require the same

level of technical expertise compared to other manufacturing processes in

the value chain. Thus, China’s low labour cost has led the country to

become a leading producer and exporter of modules. China’s production of

silicon is limited and depends almost entirely on imports. The global

shortage of silicon in recent years has been the main obstacle to the

industry’s growth in recent years. Thus, China also has to rely on imported

wafers and cells to complement local production.

67

China’s silicon industry is limited in production capacity. The local industry

supplies electronic grade silicon mainly to the semiconductor industry and

only 30-40 tons (equivalent to about 3 MWp) is available for the PV

industry. Plans are underway in Leshan, Sichaun province, and Luoyang,

Henan province, to increase capacity to 1,500 tons by 2009-2010. Despite

efforts to increase local production, China will continue to be dependent on

imported silicon since the silicon industry requires a high level of technology

and capital investment. Furthermore, the high technology used to produce

silicon is proprietary-owned by major multinationals.

From 2005 to 2006, the production capacity for PV cells increased from 360

MWp to an estimated 1,350 MWp but wafer capacity increased from 72

MWp to an estimated 250. Thus, China’s production of wafers would be

unable to meet domestic demand and would continue to rely on imports. To

ensure security in supplies for silicon and wafers, most major manufacturers

in China have signed medium to long-term supply agreements with

multinational companies.

5.5 Taiwan

In 2000, Taiwan’s Industrial Technology Research Institute (ITRI)

implemented a five-year programme sponsored by the Energy Commission

(now known as the Energy Bureau under the Ministry of Economic Affairs).

The programme involved conducting research on thin film PV technology

and demonstration projects on commercial, industrial and educational

facilities. The grid-connected PV installations are less than 10 kWp and

Diagram 5.4. Main Channel in China’s PV Value Chain

68

subsidised at about US$5,000 per kWp. Total installations in Taiwan, being

mainly small-scale demonstrations projects, reached only 1.0 MWp in 2005.

Table 5.5a. PV Installations in Taiwan

2003 2004 2005

Cumulative installation (MWp) 0.3 0.5 1.0

Source: Energy Bureau, Ministry of Economic Affairs (Taiwan)

In 2005, Taiwan adopted an energy policy to meet the conditions of the

Kyoto Protocol. Taiwan has set a goal for renewable energy including PV to

account for 10% of the island’s power generation capacity by 2020. The

Bureau of Energy is encouraging municipalities to install PV systems,

provide subsidies for home installations and construction PV power

generating facilities in remote areas such as mountain villages and islands

off Taiwan. The Kaohsiung City Stadium will install a 1 MWp PV system to be

ready for the Eighth World Games in 2009.

The Ministry of Economic Affairs has identified PV as a potential industry for

the island and strong growth potential in the global markets. Taiwan

prevails in high technology industries especially in semiconductors and flat

panel LCD. However, in recent years development in these industries have

slowed and subjected to global economic cycles. The Ministry is in the

opinion renewable energy is less affected by economic cycles as countries

adopt strategies to reduce their carbon emission and seek greater access to

renewable energy.

The PV industry in Taiwan is relatively new and at an infancy stage

compared to Japan, Germany and the United States. The most prominent

Taiwanese industry player is Motech and was the world’s ninth largest

producer of PV cells in 2005. Motech produced 60 MWp of PV cells

accounting for 3% of the world’s PV cell production during the period. With

a current small market for PV and no significant manufacturer for PV

modules in Taiwan, Motech exports most of Taiwan’s production.

Table 5.5b. PV Production in Taiwan

2003 2004 2005



30

<1

45

<1

80

<1

Source: Energy Bureau (Taiwan), Motech and E-Ton Solar production estimates

Taiwan has nearly 30 industry players involved in PV but many are new

entrants into the industry. However, a few players currently dominate the

industry and mostly concentrated in cell and wafer manufacturing. In cell

69

manufacturing Motech is the industry leader followed by E-Ton Solar Tech

and new players include DelSolar, Gintech Corporation and Mosel Vitelic.

Among the industry players for silicon ingots and wafers are Tatung and

Sino American Silicon Products.

Table 5.5c. Snapshot of Taiwanese Companies involved in PV

Company Overview

Motech Solar Motech manufactures poly-crystalline silicon cells at its plant

located in Tainan Science Industrial Park. Production capacity

increased from 60 MWp in 2005 to 200 MWp in 2006. Motech

signed a three-year contract with China’s Renesolar and a

five-year contract with Renewable Energy Corporation to

supply its cells beginning in 2007.

E-Ton Solar Tech E-Ton Solar Tech, established in 2001, manufactures mc-Si

and sc-Si cells at its plant located in Tainan. The company

increased its production capacity from 60 MWp in 2005, 100

MWp in 2006 and to 200 MWp by 2007. The company

announced in February 2007 that it had signed a technical

cooperation agreement with the University of New South

Wales, Australia, to develop high-efficiency cells.

DelSolar DelSolar is part of Taiwan’s Delta Group, which produces a

wide range of electronic products including electronic devices,

optoelectronics and networking. DelSolar entered into the PV

industry in 2005 producing mc-Si and sc-Si cells at its plant

located in Hsin Chu Science Park with an initial production

capacity of 25 MWp in 2005. The company expanded

production capacity to 50 MWp in 2006 and will expand

further to 100 MWp by 2007.

Sino American

Silicon Products

Established in 1998, Sino American Silicon Products

specialises in manufacturing silicon ingots and wafers in

Taiwan. The company has an alliance with Topsil

Semiconductor Materials based in Denmark. The company

supplies its products both in the domestic and international

markets including China, Japan, Europe and the US.

Green Energy

Technology and San

Chih Semiconductor

Green Energy Technology is a new subsidiary company of

Tatung Company, a major manufacturer of consumer

electrical and electronic products in Taiwan. Green Energy

began operations in 2005 producing silicon wafers. Another

subsidiary of Tatung is San Chih Semiconductor which began

operations in 1975 producing silicon wafers for the

electronics industry but has diversified silicon wafer

production for the PV industry. Production is for both

domestic and export markets.

70

Table 5.5c. Snapshot of Taiwanese Companies involved in PV

Company Overview

Gintech Corporation Gintech is a new entrant into Taiwan’s PV industry and

established in 2005. The company manufactures mc-Si and

sc-Si cells and has production capacity of 48 MWp. The

company will shift production to a new plant at Hsin Chu

Science Park and capacity will reach 300 MWp by 2009.

Mosel Vitelic Mosel Vitelic is a manufacturer of DRAM (dynamic random

access memory) used in integrated circuits. In 2006, Mosel

Vitelic announced it would enter into manufacturing silicon

wafers in 2007 and RFID (radio frequency identification

devices) in 2008. The company would eventually cease

manufacturing DRAM because of the competitiveness of the

market and shift production to wafers and RFID, which the

company believes has greater growth potential.

The Ministry of Economic Affairs recognises that Taiwan’s industry weakness

in PV is the lack of integration in the value chain. Taiwan does not have an

established industry for silicon production, ingot and wafer fabrication,

manufacturing modules and even thin film technology. However, the

Ministry recognises that Taiwan’s strength and experience in the

semiconductor industry puts it at an advantage to develop the island’s PV

industry. Known as the “Motech Effect”, many Taiwanese companies have

therefore shown interest to enter the industry.

Diagram 5.5. Main Channel in Taiwan’s PV Value Chain

71

Taiwan’s government has proposed to inject nearly US$200 million in the

next 10 years to develop the PV industry. The Bureau of Energy has planned

the following strategies to develop the industry:

Assist Taiwanese PV companies to gain access to supplies of silicon

and encourage foreign silicon suppliers to set up factories on the

island.

Provide subsidies to companies developing high-efficiency and low-

cost silicon cells and support development of next-generation PV

cells.

Assist the industry to develop test and inspection techniques for

photovoltaic modules, photovoltaic area networks and photovoltaic

production equipments.

Besides these, the government has sent trade missions outside Taiwan to

attract foreign companies to invest and set up manufacturing plants on the

island.

The Industrial Development Bureau (IDB) under the Ministry of Economic

Affairs is responsible for developing the PV industry in Taiwan. Realising the

infancy of the industry, the “Solar Photovoltaic Materials Industry Promotion

Plan" takes effect in 2007 to assist Taiwanese companies to learn about key

materials used in PV. Under the Plan, IDB will assist in attracting foreign

companies to Taiwan and companies such as Tokuyama and REC have

expressed interest to work with Taiwanese companies. Other areas under

the plan include assisting in import of key materials such as silicon, liquid

silver, aluminium, low-iron glass and module packaging materials. Other

areas include assisting in product development with potential Taiwanese

companies such as Formosa Plastics, Tatung and Taipower.

In March 2006, ITRI signed a contract with TÜV Rheinland Group, Germany,

to install Taiwan's first photovoltaic module testing laboratory. The testing

laboratory would provide the necessary certification for Taiwanese

companies to export their modules. In July 2006, the Ministry of Economic

Affairs announced that it would build a silicon plant to supply much needed

silicon to develop the PV industry. The plant would begin operation in 2008

with an initial capacity of 300 tons, increasing to 1,000 tons by 2010.

5.6 Spain

The development of the PV market and industry in Spain from 2000 to 2005

was a result of the Renewable Energy Promotion Plan. Under the plan, Spain

72

targeted to install 150 MWp of PV from 2000 to 2010 through various

incentives and funding. These included funding for R&D to improve

technologies in PV, public subsidies and tax incentives for installing PV

systems, and feed-in tariffs at €0.40 for installation below 5 kWp and €0.20

for installations above 5 kWp. PV installations in homes reached nearly

2,000 by 2005 and mostly less than 5 kWp.

Table 5.6a. PV Installations in Spain

2003 2004 2005


Source: IEA

In August 2005, the Spanish government implemented the Renewable

Energy Plan (2005-2010) which superseded the Renewable Energy

Promotion Plan. The new plan revised total PV installations from 150 MWp

to 400 MWp by 2010. The Renewable Energy Plan eliminated subsidies and

focussed on encouraging PV installations through attractive feed-in tariffs.

Spain’s experience with subsidies created much time-consuming

bureaucracy and complications. The Spanish government was in the opinion

that feed-in tariffs was sufficient to support demand for grid-connected PV

in the country. However, subsidies would continue for non grid-connected

installations in remote places too far away from the grid.

From 1999 to 2005, Spain received nearly €290 million in investments for

the PV industry. Spain has relatively fewer manufacturing companies

involved in PV unlike Germany, Japan, US and China. The only cell and

module manufacturers are Isofoton and BP Solar España, while smaller but

significant players include Artersa and Siliken which only manufactures PV

modules.

Table 5.6b. PV Production in Spain

2003 2004 2005



40

50

72

67

70

69

Source: IEA

Due to Spain’s small market in 2000-2005, the industry depended on

exports mainly to Germany. Isofoton mentioned in its 2005 annual report

that it exported nearly 80% of its production. However, with the

implementation of Spain’s Renewable Energy Plan, exports now account for

65% of its production. By 2005, the PV industry in Spain provided 4,900 job

opportunities in manufacturing, installation, wholesale and retail

distribution, and turnkey manufacturing. Job creation in the Spanish PV

73

industry will increase further by 6,000-7,000 by 2010 from various sources.

With the revised PV installations from 150 MWP to 400 MWP by 2010, PV

cell and module manufacturers are already doubling their production

capacity. Furthermore, Spain will have its own silicon plant by 2009 with a

production capacity of 2,500 tons.

Spain’s PV industry began when Isofoton became a commercial spin off

from technologies developed by the Madrid University of Polytechnic’s

production of bifocal PV cells from silicon wafer. The University fabricated PV

panels including cells in-house, proving Spanish technological and

engineering capabilities in PV. The university continues to conduct research

on PV technologies in collaboration with Spanish PV companies. Areas of

research include production technologies on thinner PV cells’ improvements

in cell conversion efficiency and testing new materials for PV cells; and

substrate production technologies for PV cells.

Currently Isofoton is the leading Spanish player in the local industry. The

number of local manufacturers in Spain is few but the PV industry in the

country is near vertical integration from wafer to module manufacturing and

installation. By 2009, Spain will have its own silicon plant with an initial

production capacity of 2,500 tons completing the vertical integration across

the value chain. The vertical integration is largely due to Isofoton’s position

in the country, which includes a silicon plant by 2009.

Table 5.6c. Snapshot of Spanish Companies involved in PV

Company Overview

Isofoton Isofoton is Spain’s largest manufacturer of silicon cells and PV

modules. The company manufactures sc-Si cells and modules

at its plant in Malaga. Isofoton plans to increase cell and

module production capacity from 90 MWp in 2005 to 160

MWp by 2007. Isofoton will operate a silicon plant (Silicio

Energia) by 2009 with an initial capacity of 2,500 tons.

BP Solar España Part of the BP Solar Group based in the United Kingdom. BP

Solar España manufactures mc-Si cells and modules.

Depending on the availability of silicon, BP Solar España

intends to increase its cell production capacity from 70 MWp

in 2006 to 200 MWp by 2008.

Atersa Atersa began its business in 1979 and manufactures both mc-

Si and sc-Si modules. It is also involved in turnkey

installations and production of machineries for modules. The

company increased capacity from 6 MWp in 2005 to 18 MWp

in 2006 and will increase further to 25 MWp by 2007.

74

Table 5.6c. Snapshot of Spanish Companies involved in PV

Company Overview

Siliken Siliken manufactures mc-Si and sc-Si PV modules besides

manufacturing equipments for module manufacturing plants.

Besides flat panel modules, Siliken also manufactures custom

made building integrated modules. The company increased

capacity from 10MWp in 2005 to 25 MWp in 2006 and will

increase further to 40 MWp by 2007.

Isofoton and BP Solar España currently manufacture only sc-Si cells.

Production from BP Solar España is for its module manufacturing while

Isofoton supplies some of its sc-Si cells to module manufacturers in Spain.

Artesa and Siliken, which only manufactures modules, manufactures both

mc-Si and sc-Si modules and therefore have to import mc-Si cells. Imports

are generally multi-year supply agreements. For example, Q-Cells entered

into a supply agreement with Atersa to supply 73 MWp of PV cells from

2006 to 2009.

Among the Spanish PV manufacturers, Isofoton has aggressively ventured

into the international markets. Isofoton’s main export is Germany but

beginning to enter into new markets and establish regional offices. The

company entered the Italian market in 2003, the US in 2005 and China in

2006. Isofoton is also involved in rural electrification projects in the

developing countries with offices in Ecuador (South American market),

Senegal (West African market) and in Morocco.

Diagram 5.6. Main Channel in Spain’s PV Value Chain

75

Current feed-in tariffs for PV in Spain are more attractive than Germany’s

tariffs and are the driver of growth for the PV market and industry in Spain

since 2006. For PV systems less than 100 kWp, the tariff is 575% above the

average electricity tariffs (determined by the energy authorities) for 25

years after commissioning and 460% thereafter. For PV systems above 100

kWp, the tariff is 300% above the average electricity tariffs for 25 years and

240% thereafter. Current tariffs have created attention and strong interest

among private investors for large-scale installations.

The government periodically reviews and revise feed-in tariffs. Though the

industry is in the opinion that tariffs would reduce in the next review, they

believe it would remain attractive to investors. The incentives have also

attracted foreign module manufacturers and system integrators to enter the

Spanish market and bid for large scale PV installation projects.

China’s Suntech will supply 23.2 MWp of modules to Atersa for the

Photovoltaic Grid Connection Park in the Extremadura region of

Spain beginning in the middle of 2007.

Globalia Corporacion Empresarial, an energy company based in

Madird, has invested in a 60 MWp solar farm that will begin

operations in the second quarter of 2007.

Germany’s City Solar won a contract to construct a 2 MWp solar

farm in the Spanish province of Alicante for a group of 200

individual investors.

Acciona Solar won a contract to construct a 2.4 MWp solar farm

belonging to a group of 280 individual investors in Castejon,

Navarre, at a cost of US$23 million.

The industry in Spain is in the opinion that the country would reach its

target of 400 MWp before 2010. However, the government may revise and

increase its target for PV installation by 2010 and could reach as high as

1,100 MWp according to Spain’s photovoltaic association. However,

application for permits for installing PV systems is bureaucratic and done

only by Spanish companies. If too slow, it may remain an obstacle for Spain

to achieve its target of 400 MWp by 2010.

5.7 South Korea

Korea’s revised 10-year “National Plan for Energy Technology Development”

targets renewable energy to account for 3% of the total electricity

generation capacity by 2006 and 5 % by 2012. The Ministry of Commerce,

76

Industry and Energy (MOCIE) through Korea Energy Management

Corporation (KEMCO) manages Korea’s renewable energy plan including PV,

hydrogen fuel cells and wind power for development and promotion. US$2.4

billion has been budgeted under the 10-year plan to develop and promote

the local PV industry. The Ministry is in the opinion the local PV industry has

strong export potential and aims for Korea to achieve 10% of the global

market for PV by 2012 employing nearly 50,000 people.

The Ministry targets for the country to achieve 1.3 GWp in PV installation

capacity by 2012. The plan targets to install 100,000 homes through a

“Rooftop” programme and 70,000 commercial and public buildings with PV

systems by 2012. Support programmes from the Ministry include

demonstration projects to raise public awareness on PV; feed-in tariff

guaranteed for 15 years, and requirement for new public buildings over

3,000 square metres be installed with renewable energy facilities

representing 5% of the building’s construction budget.

There are doubts among some industry members whether Korea would

achieve its target of 1.3 GWp by 2012 with PV installations in country

totalling only 15 MWp in 2005. Some industry players mentioned there is a

lack of promotion to generate interest from consumers and private

companies to drive demand for PV. Another obstacle to drive demand is the

bureaucracy causing delays or long waiting period for approvals to install PV.

Estimates from industry sources indicate total PV installations in Korea may

have reached only 25-35 MWp in 2006. An estimated 3,000 homes and 300

buildings were installed with PV in 2006 ranging from 3 kWp to 400 kWp

installations. However, some industry players mentioned the government is

taking efforts to improve the bureaucratic process to quicken application.

MOCIE and the Ministry of Science and Technology (MOST) support R&D

programmes on PV in Korea. KEMCO and MOCIE have contracted the Korean

Photovoltaic Development Organisation (KPDO) and Korea University to

manage R&D projects on PV including demonstration projects with the

industry, with other Korean universities and national research institutes.

Current R&D objectives are on developing technologies to commercially

mass produce PV products and reduce production costs. The government

targets to reduce cost of producing PV modules from US$3.3 per Wp in

Table 5.7a. PV Installations in South Korea

2003 2004 2005


Source: IEA

77

2006 to US$1.9 per Wp by 2010. R&D on cell materials focuses on

crystalline silicon targeting to improve cell efficiency from 15% in 2006 to

18% by 2010.

Korea is a new player in the global PV industry with few manufacturers

involved in PV, lagging behind China and Taiwan. Furthermore, most

manufacturers entered the industry between 2003 and 2005 and

characterised with small production capacities or running pilot plants. Many

manufacturers entered the industry at a time of increasing shortages of

silicon and foreign silicon suppliers requiring multiyear supply agreements.

Additionally, the industry has not yet vertically integrated with

manufacturing concentrated on PV cells and modules. Unlike Korea’s

electronic and electrical industry, Korean PV manufacturers have yet to

establish an international network for exports.

The most prominent players in the Korean PV industry are Kyungdong

Photovoltaic Energy and Hyundai Heavy Industries with significant

production capacities. DC Chemical will operate a plant producing silicon to

supply the domestic and export markets when it begins operation in 2008.

LG Group intends to enter the PV industry and there are possibilities that

Samsung may follow suit in the near future.

Table 5.7c. Snapshot of South Korean Companies involved in PV

Company Overview

Neskor Solar

Company

Neskor Solar manufactures sc-Si cells at its plant in Incheon.

Cell production is for the domestic market. The company

began production in 2003 and has a production capacity of

less than 1 MWp.

Photon

Semiconductor &

Energy

Photon Semiconductor & Energy manufactures sc-Si cells and

modules. The company began manufacturing in 2003 with an

initial production capacity of 0.3 MWp and increased to 31

MWp in 2005.

Hae Sung Solar Hae Sung Solar is a manufacturer of small size PV modules

including lighting modules. The company’s plant is located in

Yong Tang Dong which has a production capacity of less than

5 MWp.

Table 5.7b. PV Installations and production in South Korea

2003 2004 2005



0.5

3

1

3

3

9

Source: IEA and industry estimates

78

Table 5.7c. Snapshot of South Korean Companies involved in PV

Company Overview

Symphony Energy Symphony Energy began operations in 2004 and has its plant

at Gwangsan and a sales office in Seoul. The company

manufactures mc-Si and sc-Si modules mainly for the

domestic market. The plant’s production capacity is 10 MWp.

Unison Unison is one of Korea's largest suppliers of wind energy

systems. Unison entered into the PV business in 2005 and

operates a 15 MWp module plant.

Hyundai Heavy

Industries

The Electro Electric Systems Division of Hyundai Heavy

Industries is involved in a diverse range of heavy industries

including shipbuilding, high-speed railway systems and

energy. The company initial operated a pilot mc-Si module

plant with a production capacity of 10 MWp. By late 2005,

Hyundai increased its production capacity to 200 MWp.

Kyungdong

Photovoltaic Energy

Kyungdong Photovoltaic Energy (KPE) is part of the Kyung

Dong group involved in a wide range of manufacturing

activities. KPE manufactures mc-Si cells and modules

including standalone systems such as for telecommunication

systems. The company’s plant is located at Science-Based

Industrial Park in Changwon and has a production capacity of

40 MWp.

DC Chemicals DC Chemicals produces a wide range of chemicals including

basic chemicals, fine chemicals and petrochemicals. The

company will begin operating a silicon plant in 2008 with a

production capacity of 4,000 tons. The company already has

a multi-year supply contract with companies in the US and

China.

Until 2008 when DC chemical operates its silicon plant, the Korean industry

would have to depend on imports. Consequently, Korean module

manufacturers have to depend on imported cells for their modules. Due to

limited production of modules in Korea, nearly all of the modules

manufactured in Korea are for the domestic market. Most of the large-scale

installations in Korea are imported modules.

79

Hyundai Heavy Industries is making inroads into the Korean PV industry. Its

entry into the industry in Korea began with a 10 MWp mc-Si pilot module

plant. Hyundai’s strategy is to integrate across the value chain including

manufacturing of silicon, wafers, cells, module and system integration.

Initial focus of Hyundai’s development was on manufacturing modules and

system integration and Hyundai may enter into cell manufacturing by 2009.

Other areas of developments include manufacturing of inverters.

LG Chem and Samsung are potentials for the Korean PV industry given their

expertise in OLED display screens. LG Chem installed a pilot 5 MWp module

plant in 2005 and plans to increase capacity to 50 MWp by 2007 and 100

MWp by 2010. LG Silitron is involved in wafer manufacturing for the

electronic industry and may enter into wafer manufacturing for the PV

industry.

Diagram 5.7. Main Channel in Korea’s PV Value Chain

80

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6.1 PV Modules Assemblers

6.1.1 Sharp

Company : Sharp Corporation

Division : Sharp Solar Systems Group

Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japan

Tel : +81 74563 3579

Fax : +81 74562 8253

Website : http://sharp-world.com/solar/index.html

Sharp Solar is the world’s leading manufacturer of PV modules accounting

for nearly 23% of the world’s market in 2005. During the year, Sharp

shipped 428 MWp of modules from its plants in Japan, United States and

the United Kingdom. Sharp manufactures a range of mc-Si, sc-Si and a-Si

thin film modules. Currently, mc-Si and sc-Si modules account for about

99% of its shipments.

Three of Sharp’s module assembly plants are in Japan at Katsuragi City in

Nara Prefecture, Yaita City in Tochigi Prefecture and Yao City in Osaka

Prefecture. Realising the growing potential for PV outside of Japan namely in

Western Europe and the United States, Sharp expanded its manufacturing

operation into the region beginning in 2003. Sharp operated its first

overseas plant in Memphis, Tennessee, in the United States in 2003. Its

second overseas plants in Wrexham, United Kingdom began operations in

2004.

The combined production capacity from Sharp’s five plants was 500 MWp in

2005 increasing to 600 MWp by 2006. Over the longer-term, Sharp intends

to increase its capacity to 1,000 MWp by 2010.

Besides the conventional flat panel modules, Sharp manufactures building

integrated modules including roof tile, steel roof and hipped roof integrated

modules. Other modules produced include for space applications, LED-glass

integrated a-Si modules and for large industrial installations. Sharp

introduced its a-Si/micro-Si thin film modules in November 2006 intended

for industrial and commercial installations.

81

The Japanese housing market has been the main driver for Sharp’s business

growth in Japan. Thus, Sharp works closely with leading residential property

developers to provide system integration services. With the Japanese

government’s policy to increase PV installations in industrial and commercial

buildings, Sharp is increasing its market focus in these sectors. Sharp views

government subsidies and mandatory power buy-back programmes by

utility companies in Western Europe and the United States as potential

opportunities for growth.

6.1.2 Kyocera

Company : Kyocera Corporation

Division : Solar Energy Division

Address : 6 Tobadono-cho, Takeda, Fushimi-ku, Kyoto 607-8161, Japan

Tel : +81 75604 3476

Fax : +81 75604 3475

Website :

:

http://global.kyocera.com/prdct/solar/index.html

http://www.kyocerasolar.com

Kyocera ranked second after Sharp accounting for 8% of the world’s

shipment of PV modules and 17% of the Japanese market in 2005.

Shipment of its modules increased from 105 MWp in 2004 to 142 MWp in

2005. Kyocera markets both mc-Si and sc-Si modules.

Kyocera has two module assembly plants in Japan located at Yukaichi City in

Shiga Prefecture and Ise City in Mie Prefecture focussing supply on the

Japanese market. Taking opportunities on the growing markets outside

Japan, Kyocera expanded its manufacturing operations outside the country.

The company formed a partnership with China’s Tianjin Yiqing

Group to operate a plant in Tianjin, China, focussing supply on

China’s domestic market. The plant began its operation in 2003

with an initial capacity of 30 MWp and later increased to 40 MWp in

2004.

Kyocera’s second overseas plant began operations in Tijuana,

Mexico, in 2004, with an initial of 36 MWp. Production from Tijuana

are mainly to markets in the US namely California taking advantage

of the lower manufacturing cost in Mexico and its close proximity to

California.

The third overseas plant located at Kazan in the Czech Republic

opened in 2005 with an initial capacity of 24 MWp. The plant in

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Kazan supplies to the West European markets and takes advantage

of the lower manufacturing cost in the Czech Republic.

Kyocera’s combined production capacity from its plants increased from 240

MWp in 2005 and expects to increase further to 500 MWp by 2007.

Besides the conventional flat panel, Kyocera also manufactures building

integrated modules including roofs, hipped roof, balconies and walls. Other

modules marketed include for industrial and commercial buildings. Kyocera

also manufactures see-through modules and frameless edge covered

modules. In 2005, Kyocera introduced “off the shelf” or standard packages

for medium size installations ranging from 10 kWp to 13 kWp. The company

introduced six types of systems for installations on tilted and flat roofs.

During the year, Kyocera also introduced its stain proof PV modules

designed to remove dust on the glass panels with rainwater.

Kyocera markets its modules through its authorised dealers, contractors,

industrial users and OEM. Besides more efficient delivery of supply, Kyocera

is in the opinion that operating plants outside of Japan optimises the

company’s effort to develop modules customised to the needs of its

markets.

6.1.3 Sanyo

Company : Sanyo Solar Industries Co. Ltd

Address : 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570, Japan

Tel : +81 6900 1246

Fax : +81 6900 9305

Website : http://www.sanyo.com/industrial/solar/

Sanyo accounted for 7% of the world’s PV module production in 2005 and

shipment doubled from 65 MWp in 2004 to 125 MWp in 2005. Its modules

range from sc-Si, a-Si and modules using a hybrid of a-Si and sc-Si (hetero-

junction with intrinsic thin layer or HIT) cells. Sanyo is one of the world’s

largest manufacturers of modules using a-Si thin films.

Sanyo has four module assembly plants in Japan at Sumoto City in Hyogo

Prefecture, Kaizuka City in Osaka Prefecture, Oizumi City in Gunma

Prefecture and Kitakata City in Fukushima Prefecture. The plant at Kitakata

City produces modules using a-Si thin film cells. In January 2007, Sanyo

announced that it would construct a new assembly plant for modules in

Shiga Prefecture at a cost of US$16.6 million.

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Sanyo’s overseas plants are in Monterrey, Mexico, and Dorog, Hungary,

leveraging on the lower manufacturing cost in these countries. The two

plants in Mexico and Hungary use a-Si/sc-Si hybrid HIT cells for their

modules. Production from the plant in Monterrey focuses supplies to

markets in the United States namely California due to its close proximity.

Production from Sanyo’s plant in Dorog supplies markets in Western Europe.

Sanyo’s production capacity from its plants totalled 160 MWp in 2005.

Sanyo will increase capacity to 250 MWp in 2007 and further to 600 MWp by

2010.

Besides flat panels, Sanyo manufactures building integrated modules

including roof tiles and see-through but are mainly for the Japanese

markets. Sanyo’s modules using the hybrid a-Si/sc-Si (HIT) cells use less

space per kWp and therefore suitable for installations in small areas.

Furthermore, the modules are lighter and therefore suitable for large-scale

horizontal installations and as roofing tiles.

Sanyo is working closely with residential property developers in Japan such

as Daiwa House, Mitsui Homes, Sanyo Homes and local builders to promote

its HIT roofing tiles. In the United States, Sanyo is increasing marketing

focus on California with the introduction of the “One Million Roofs Plan” to

install 3 GWp of PV modules in California by 2018. In Western Europe, focus

is on countries that have introduced incentives for installing PV and

implemented mandatory power buy-back schemes from the utility

companies.

6.1.4 Suntech

Company : Suntech Power Holdings Co., Ltd.

Address : 17-6 ChangJiang South Road, New District, Wuxi, Jiangsu 214028, China

Tel : +86 (510) 8531 5000

Fax : +86 (510) 8534 5049

Website : http://www.suntech-power.com

Suntech is a relative newcomer in the PV business but has acquired a

significant market share in the global market within a relatively short

period. Suntech has its beginnings in China when it began to manufacture

PV modules in September 2002 and currently the largest module

manufacturer in China. In December 2005, Suntech listed on the New York

Stock Exchange (NYSE).

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In 2005, Suntech accounted for only 3% of the world’s module shipment at

50 MWp and shipment doubled to 114 MWp by 2006. Suntech acquired a

66.6% stake in MSK of Japan in 2006 and would acquire the remaining

shares by late 2007. In February 2007, Suntech announced shipments from

these two plants totalled 158-159 MWp in 2006. At an estimated world

production of modules at 2,400 MWp in 2006, combined shipment from

Suntech and MSK would account for nearly 7% of the global share during

the period.

Some of the production from MSK’s plants would shift to Suntech’s plant in

China beginning in 2007 to leverage on the lower manufacturing cost in the

country. Consequently, MSK would focus on developing, manufacturing and

marketing higher-valued building integrated modules and Suntech would

tap on MSK’s expertise in systems integration.

Suntech’s plant in China located in Wuxi in Jiangsu Province

produces both mc-Si and sc-Si modules. Production capacity began

with 15 MWp in 2002 and increased 10-fold to 150 MWp in 2005

and further to 270 MWp by 2006.

MSK’s plants in Japan are in Saku City in Nagano Prefecture,

Ohmuta City in Fukouka Prefecture and in Sihikari City on the

island of Hokkaido. The Japanese plants also produce mc-Si and sc-

Si modules and their combined capacity increased from 100 MWp in

2003 to 200 MWp in 2004.

Suntech will increase its combined production capacity from 470 MWp in

2006 to 600 MWp by 2007 and plans further increase to reach 1,000 MWp

by 2010.

Currently Suntech exports nearly 80% of its production in China mainly to

Western Europe and the United States. Over the longer term, Suntech

expects to ship 50% of its production in China to the domestic market.

Acquisition of MSK provides Suntech an opportunity to enter the Japanese

market, which it considers a difficult market to penetrate for non-Japanese

module manufacturers. Besides Suntech’s own offices in Western Europe

and the United States, the company would leverage on MSK’s network in

Western Europe through its office in London and agencies across Europe.

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6.1.5 Mitsubishi

Company : Mitsubishi Electric Corporation

Division : Mitsubishi Electric Nakatsugawa Works

Address : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan

Tel : +81 57366 2125

Fax : +81 57362 0038

Website : http://global.mitsubishielectric.com/bu/solar/index.html

Mitsubishi Electric Corporation (MEC) manufactures mc-Si PV modules with

shipment amounting to 100 MWp in 2005. MEC currently assembles all its

modules at its two plants in Japan at Iida City in Nagano Prefecture and at

Nagaokakyo City in Kyoto Prefecture. MEC has no immediate plans to

expand production outside Japan. Production capacity from MEC’s two

plants increased from 135 MWp in 2005 to 230 MWp in 2006.

MEC initially focussed on the Japanese market namely on residential

buildings and expanded into the overseas markets in 2002. In Western

Europe, MEC initially focussed on the German market and currently

expanding its markets in Spain and Italy. In the United States, MEC targets

markets, which have introduced incentives and power buy-back schemes

from the utility companies. MEC introduced its lead-free solder modules in

2006 for markets in Western Europe and the United States. In China, MEC is

involved in rural electrification projects but views growth potential once

China successfully implements its policies and schemes to increase PV

usage in the urban areas such as Shanghai. Over the longer term, MEC

intends to increase its shipment of modules from 100 MWp in 2005 to 300

MWp by 2010.

6.1.6 SolarWorld

Company : SolarWorld AG

Address : Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany

Tel : +49 22855 9200

Fax : +49 228559 2099

Website : http://www.solarworld.de

SolarWorld had its beginnings in 1998 as a dealer of components for PV

systems to company covering the whole value chain. Prior to 2006,

SolarWorld was a small player in the world module market compared to

giants such as Sharp, Kyocera and Sanyo. Production increased from 30

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MWp in 2004 to 44 MWp in 2005 accounting for only 3.5% of the world’s

shipment in 2005.

In early 2006, Shell Solar sold its facilities including R&D centres in the

United States and Germany to SolarWorld. With the acquisition, the

estimated total shipment of PV modules from the plants owned by

SolarWorld and those previously owned by Shell Solar was 128 MWp in

2006. With an estimated world production of PV modules at 2,400 MWp in

2006, shipments from the plants would account for 5% of the world’s

module shipment during the period.

SolarWorld assembles both mc-Si and Sc-Si modules. An estimated 63% of

its module production is in Germany and 37% in the United States.

Its modules plants in Europe are in Freiberg, Germany, and

Gällivare, Sweden. The combined capacity of these two plants

reached 52 MWp by 2005.

In the United States, its plant in Camarillo, California, produces

both sc-Si and CIS thin film modules.

Total capacity increased to an estimated 175 MWp in 2006 mainly due to

SolarWorld’s acquisition of Shell Solar’s module plant in the United States.

Capacity would increase further to an estimated 225 MWp by 2007 with

doubling of the production capacity of its plant in Camarillo to 100 MWp.

SolarWorld’s traditional market in Europe is Germany. Spain and Italy

represents its other core markets in Europe with incentives and power buy-

back schemes implemented by the country’s governments. Its plant in

Sweden focuses on supplies to the Scandinavian countries but also supplies

to other markets. The United States is a new and potential market for

SolarWorld thus the reason for increasing its Camirillo plant capacity to 100

MWp by 2007. By then, the Camarillo plant would be one of the largest if

not the largest module plant in the United States.

6.1.7 SOLON

Company : SOLON AG

Address : Ederstraße 16, D-12059 Berlin, Germany

Tel : +49 308187 9100

Fax : +49 308187 9110

Website : http://www.solon-pv.com/english/index.html

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SOLON’s is the world’s tenth largest manufacturer of PV modules but unlike

its competitors previously focussed on manufacturing modules in the value

chain. This put SOLON at risk in security of supplies for silicon cells for its

PV modules. Thus, SOLON is diversifying is business activities across the

value chain to ensure security of its supplies.

SOLON entered into a joint venture with Dutch company Econcern

to operate a solar grade silicon plant in France. The plant would be

operational by the end of 2008 with an initial capacity to produce

more than 3,000 tons.

Solon has also invested in a plant to manufacture crystalline silicon

cells in Austria. The plant would begin operations in early 2008 with

an initial capacity of 20 MWp.

In the immediate term, Solon signed three long-term supply contracts for

PV cells in 2005 with Ersol for 10 years, Q-Cells and SunPower for five

years.

SOLON’s module assembly plants in Germany are located in Berlin and

Griefswald producing mc-Si and sc-Si modules. In 2006, SOLON acquired

S.E. Project Srl, an Italian manufacturer and distributor of PV modules. S.E.

Project is significant player in the Italian market for PV and the acquisition

included a module plant with a capacity of 10 MWp.

Combined production capacity from SOLON’s plants increased from 40 MWp

in 2004 to an estimated 110 MWp in 2006. Consequently, production

increased from 34 MWp to an estimated 90 MWp during the period. At an

estimated world production of 2,400 MWp, SOLON would account for nearly

4% of the world’s shipment of PV modules in 2006.

SOLON traditional market is Germany and main market outside the country

is Spain where it has several supply contracts. SOLON is increasing its

market presence in Italy, United States and Australia.

SOLON’s acquisition of S.E. Project is to increase its stake in the

Italian market at an early stage to tap on the opportunity when

Italy introduces its power buy-back scheme for solar generated

electricity.

In early 2006, SOLON acquired Global Solar Energy based in the

United States from UniSource Energy. The acquisition provided an

opportunity for SOLON to tap on Global Solar Energy’s network in

southwestern United States to market its modules.

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In January 2007, SOLON announced its planned investment and

strategic partnership with Australia’s CBD Energy, a turnkey

contractor for CO2-free power plant projects in Australia.

6.1.8 Schott Solar

Company : Schott Solar GmbH

Address : Carl-Zeiss-Str. 4, 63755 Alzenau, Germany

Tel : +49 (0) 6023 9105

Fax : +49 (0) 60239 11700

Website : http://www.schott.com/photovoltaic/english/index.html

Schott Solar, based in Alzenau in Germany, is a subsidiary company of

Schott AG. Schott Solar produces mc-Si and a-Si thin film modules.

Production from Schott Solar’s plants increased from 32 MWp in 2004 to 57

MWp in 2005 accounting for slightly more than 3% of the world’s shipment

during the period. In addition to the 57 MWp produced, Schott Solar also

outsourced 28 MWp of production to OEM. Estimates are that production

from its plants have increased by 44% from 2005 to 82 MWp in 2006.

Schott Solar currently has four plants assembling PV modules. Two plants

are located in Germany at Alzenau and Putzbrunn, another in the Czech

Republic at Valasskenezirici and another in the United States at Billerica in

the state of Massachusetts. Besides, its in Putzbrunn has 3 MWp facility to

produce a-Si thin film modules. Furthermore, Schott Solar will operate a

new a-Si 30 MWp plant in Jena, Germany, by late 2007.

Total production capacity increased from 32 MWp in 2004 to 82 MWp in

2005 and remained at that level in 2006. The new plant in Jena would

increase production capacity to 112 MWp by late 2007.

Schott Solar’s module plant in the Czech Republic leverages on the country’s

lower cost of production and modules from the plant are destined mainly to

the West European markets. The plant in Alzenau supplies not only markets

in Europe but also markets in Asia and Africa. The plant in Billerica supplies

the South American markets besides North America.

In November 2006, Schott Solar announced the possibility of closing its

plant in Billerica. The main reason was its inability to obtain sufficient supply

of silicon for its silicon cells rather than changes in demand for PV in the

United States. If the plant closes, Schott Solar would make efforts to sell

the plant to another company with sufficient supply of silicon. In such as

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scenario, Schott Solar would then import modules from its plants in Europe

into the United States.

6.1.9 BP Solar

Company : BP PLC

Division : BP Alternative Energy (BP Solar)

Address : Building B Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN, United Kingdom

Tel : +44 (0) 19 3276 2000

Fax : +44 (0) 19 3277 4372

Website : http://www.bpsolar.com

BP Solar shipped 46 MWp from its plants in 2005 accounting for slightly less

than 3% of the world’s shipment during the period. BP Solar produces mc-Si

and sc-Si modules. BP Solar also outsourced an estimated 44 MWp to OEM

in 2005.

BP Solar has module assembly plants across four continents. These include

plants in Madrid (Spain), Sydney (Australia), Fredericks in the state of

Maryland (United States) and a joint venture plant with the Tata Group in

Bangalore (India). The plant in Australia with a capacity of 40 MWp in 2006

is the largest module assembly plant in the southern hemisphere. BP Solar

plans to increase the combined production capacity of its plants to 200 MWp

by the end of 2008. BP also has ventures with local partners in Saudi

Arabia, South Africa, Thailand and Indonesia.

BP Solar exited from the thin film business to concentrate on silicon-based

cells for its modules. Nevertheless, R&D in thin film technologies would

continue to be a long-term strategy for future possibilities.

6.1.10 Isofoton

Company : Isofoton SA

Address : Calle Montalbán, No. 9, 28014 – Madrid, Spain

Tel : +34 91 414 7800

Fax : +34 91 414 7900

Website : http://www.isofoton.com

Isofoton began as a commercial spin-off from R&D activities by Spain’s

Madrid University of Polytechnic in developing technologies for production of

bifocal PV cells from silicon wafer. In 1997, Grupo Bergé became Isofoton’s

new owner and began strengthening Isofoton’s commercial activities

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including developing new technologies, increasing production capacity and

expanding markets. Isofoton is among the leading manufacturer of PV

modules in Europe and the leader in Spain. The company shipped 40 MWp

sc-Si cell modules in 2005 and accounted for slightly more than 2% of the

world’s module shipment during the period. Estimates shipment increased

to 56-60 MWp in 2006.

Current production of modules is at its new plant located in the Andalucia

Technology Park in Malaga, Spain, which began operations in 2005. It is also

the site for its R&D activities and production of sc-Si cells. With the shift to

the new plant, production capacity increased from 60 MWp in 2004 to 90

MWp in 2005. Capacity further increased to an estimated 130 MWp in 2006

and plans to increase capacity to 200 MWp by 2008.

Exports traditionally accounted for about 80% of Isofoton’s production of

modules but now account for about 65% since the introduction of Spain’s

Renewable Energy Plan in 2005. Current main export market in Europe is

Germany and establishing new markets. Isofoton formally entered the

Italian market in 2003 and established subsidiary company Isofoton Italy.

The following year, Isofoton entered the market in the United States and

established Isofoton North America. China is a new and strategic market for

Isofoton and established Isofoton China in 2006 with its new office located

in Beijing.

Isofoton also has subsidiary companies in the developing countries involved

in rural electrification projects. Isoequinnocial based in Quito, Ecuador,

represents Isofoton’s business in Latin America namely Ecuador, Columbia,

Panama, Peru and Venzuela. Isofoton established Isofoton Maroc in 2005 in

Morocco after it won an international bid for a rural electrification project in

the country. Another subsidiary Isofoton West Africa established in Senegal

in 2005 serves the West Africa market.

6.2 PV Cells Manufacturers

6.2.1 Sharp


Division : Sharp Solar Solar Systems Group

Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japanu

Tel : +81 74563 3579

Fax : +81 74562 8253


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Sharp leads the world in production of PV cells accounting for 24% of the

world’s shipment in 2005. Cell production increased from 324 MWp in 2004

to 428 MWp in 2005. Types of PV cells currently manufactured include mc-

Si, sc-Si and a-Si cells. Sharp sources the wafers to produce the cells from

its own wafer plant and purchases from external wafer manufacturers.

Sharp’s mc-Si and sc-Si cell plant is located in Japan at Katsuragi City in

Nara Prefecture. In 2005, Sharp expanded production of its plant to include

a 15 MWp thin film production facility. All the production from the plant in

Katsuragi City is for its module assembly plants located in Japan, United

States and the United Kingdom.

Production capacity reached 500 MWp in 2006. In February 2007, Sharp

announced that is would increase the cell production capacity of its plant in

Katsuragi City to 710 MWp by 2007. It had earlier announced in October

2006 that capacity would increase to 600 MWp by 2007. New subsidies and

power buy-back schemes from utility companies for PV in Europe and the

United States led Sharp to increase its production capacity. By 2010, Sharp

plans to increase its cell production capacity further to 800-900 MWp.

Sharp announced that it would enter into the upstream activities of the

value chain and invest in a silicon plant to boost its cell capacity. The silicon

plant would have an initial annual capacity of 1,000 tons, equivalent to 110

MWp of cell capacity. The plant would recycle semiconductor silicon scrap

into solar grade polysilicon.

In the technology front, Sharp is developing technologies to reduce cell

thickness from 200 microns to 180 microns as well as improving the

efficiency. Sharp is also developing super efficient thin-film multi-junction

solar cells. In November 2006, Sharp announced it would introduce a new

thin film consisting of an upper amorphous layer and a lower

microcrystalline silicon layer with a conversion efficiency of 8.5% and

targeted for modules in industrial and commercial installations.

6.2.2 Q-Cells

Company : Q-Cells AG

Address : Guardianstrasse 16, 06766 Thalheim, Germany

Tel : +49 (0) 34946 6860

Fax : +49 (0) 349466 8610

Website : http://www.q-cells.com

Q-Cells is principally involved in production of mc-Si and sc-Si cells and

supplying to the module manufacturers. Production of PV cells from Q-Cells

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increased by two-folds from 76 MWp in 2004 to 166 MWp in 2005

accounting for 9% of the world’s shipment in 2005. Estimated production in

2006 was 240 MWp. Q-Cell produces both mc-Si and sc-Si for its customers.

Q-Cells cell production plant is located in Thalheim, Germany. The plant’s

production capacity increased from 170 MWp in 2004 to 290 MWP in 2005.

Capacity increased to 350 MWp by 2006 and estimates capacity would

increase to 510-530 MWp by end of 2007.

Besides developing technologies to produce thinner wafers, Q-Cells has

several investments to tap on new technologies to reduce cost and improve

cell efficiency.

The company formed a joint venture with Evergreen Solar (United

States) and REC (Norway) to operate a plant producing wafers,

cells and assembling modules. The venture named EverQ has its

plant in Thalheim, which began operations in April 2006 with an

initial capacity of 30 MWp. EverQ uses string ribbon technology for

wafer production and reduces wastage compared to the

conventional method of slicing silicon into wafers.

Q-Cells also has a stake in CSG Solar to develop and commercialise

crystalline silicon on glass technology developed by Australia’s

Pacific Solar. The technology involves a silicon layer of only 1.5

micron deposited on a glass substrate and provides considerable

potential in reducing cost. CSG Solar’s 25 MWp plant based in

Thalheim began operations in early 2006.

Another investment is in Swiss-based VHF Technologies which Q-

Cells has a 23.4% stake. VHF Technologies is commercialising a

technology for applying a-Si on flexible plastic to produce flexible

PV modules. Q-Cells sees potential for such modules in building

integrated PV.

Soloria Corporation based in Freemont in California has developed a

new form of low-concentration solar PV technology that uses less

silicon material thereby reducing the cost of production. Soloria

intends to go into full-scale production by 2008.

In 2005, exports accounted for 37% and markets to module assemblers in

Germany accounted for 63% of the shipment from Q-Cells’ plant in

Thalheim. Q-Cells current marketing strategy is to increase exports to 50%

of its production by 2008. In the immediate term, targeted markets are

Southern Europe namely Spain; East Asia namely China, Japan and South

Korea; and North America namely California. Q-Cells established Q-Cells

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Asia Limited in Hong Kong to handle its business across East Asia and India.

In the United States, Q-Cells is negotiating with potential North American

partners and through its relationship with its US based joint venture partner

Evergreen Solar in EverQ.

6.2.3 Kyocera




Tel : +81 75604 3476

Fax : +81 75604 3475

Website :

:



Kyocera ranked third in production of PV cells in 2005, accounting for nearly

8% of the world’s shipment in 2005. Cell production increased from 105

MWp in 2004 to 142 MWp in 2005. Current PV cells manufactured by

Kyocera are mc-Si cells and sources wafers for its cells from its own wafer

plant.

Kyocera’s cell plant is located in Yukaichi City in Shiga Prefecture, Japan.

Kyocera will increase capacity at the plant from 240 MWp in 2005 to 500

MWp by 2007 to meet the growing demand for cells from its module

assembly plants in Japan, China, Mexico and the Czech Republic.

R&D on its mc-Si cells currently focuses on increasing cell efficiency and

developing technologies to lower the production cost by reducing the cell

thickness and developing cells with large a surface area. Kyocera achieved

significant success in improving the conversion efficiency of its cells in the

last 20 years. For 15cm x 15cm mc-Si cells, efficiency improved from 14.5%

in 1989 to 17.7% by 2005. By October 2006, Kyocera introduced it new

15cm x 15cm cells with an efficiency of 18.5% developed using the

company’s proprietary “d.Blue” process, which maximises sunlight collection

by reducing reflectivity.

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6.2.4 Sanyo

Company : Sanyo Solar Industries Co. Ltd

Address : 1-1 Dainichi-Higashimachi, Moriguchi City, Osaka 570, Japan

Tel : +81 6900 1246

Fax : +81 6900 9305

Website : http://www.sanyo.com/industrial/solar/

Production of cells from Sanyo’s plants accounted for 7% of the world’s

shipment in 2005. Cell production from Sanyo’s plants doubled from 65

MWp in 2004 to 125 MWp in 2005. Current cells produced are sc-Si, a-Si

and a-Si/sc-Si hybrid HIT (hetro-junction with intrinsic thin layer) cells.

Sanyo sources the wafers for sc-Si from its wafer plant in the United States

(Sanyo Solar USA) and other wafer manufacturers. Monosilane and TCO

(transparent conducting oxide) substrate used to produce a-Si are

externally sourced.

Production of Sanyo’s a-Si/sc-Si hybrid HIT cells are its plant in Kisuki-Cho

in Shimane Prefecture and Kaizuka City in Osaka Prefecture. Sanyo

produces its a-Si cells at its semi-conductor division at Kaitaka City in

Fukushima.

Sanyo’s production strategy is to the production of its hybrid cells. Sanyo

announced in October 2006 that it would invest more than US$350 to

increase the production capacity of its plants over the next five years.

Production capacity would increase from 160 MWp in 2005, 260 MWp in

2007 and 350 MWp by 2008. Capacity may reach 600 MWp by 2010

depending on the global demand for its PV modules.

Sanyo’s strategy in the technology front is to increase the efficiency of its a-

Si/sc-Si hybrid HIT cells to 22% by 2010. The hybrid cell is a combination of

sc-Si cells surrounded by a-Si cells and the process to produce the cells

makes it possible to produce thin cells with a thickness of 200 microns. The

hybrid cells are sensitive to low levels of light and have a higher level of

efficiency at high temperatures than conventional silicon cells.

Sanyo entered a seven-year contract beginning in January 2009 with Hoku

Scientific in the United States to ensure security of supply of polysilicon for

its wafers. The contract provides for delivery of polysilicon to Sanyo at

predetermined volume and price each year. Without a polysilicon plant,

Hoku would seek financing to build a 2,000 tons plant (equivalent to 220

MWp of cell capacity). Under the contract, both parties have the right to

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terminate the agreement if Hoku were unsuccessful in raising capital to

build the plant within six months of the contract.

6.2.5 Mitsubishi

Company : Mitsubishi Electric Corporation

Division : Mitsubishi Electric Nakatsugawa Works

Address : 1-3, Komaba-cho, Nakatsugawa-shi, Gifu-ken, Japan

Tel : +81 57366 2125

Fax : +81 57362 0038

Website : http://global.mitsubishielectric.com/bu/solar/index.html

Mitsubishi Electrical Corporation (MEC) produces mc-Si cells. From 2004 to

2005, shipment from MEC increased from 75 MWp to 100 MWp 2005

accounting for 6% of the world’s cell production during the period. MEC

sources its wafer for its cells from wafer manufacturers.

MEC manufactures its mc-Si cells at its plant in Iida City in Nagano

Prefecture. Production capacity increased from 90 MWp in 2004 to 135 MWp

in 2005. Capacity increased further to 230 MWp in 2006 and plans to

increase capacity to 300 MWp by 2010. MEC began to supply part its cell

production as an OEM to Ebara Corporation in 2005.

In September 2006, MEC announced it had successfully increased the size

of its mc-Si cells from 15 cm to 15.6 cm improving the efficiency of its mc-

Si 185 kWp modules by 9% compared to previous similar models. Output

improved further by increasing the distance between cells and placing a film

in the spaces to reflect light to the cells.

6.2.6 Schott Solar

Company : Schott Solar GmbH

Address : Carl-Zeiss-Str. 4, 63755 Alzenau, Germany

Tel : +49 (0) 6023 9105

Fax : +49 (0) 60239 11700

Website : http://www.schott.com/photovoltaic/english/index.html

Schott Solar produces mc-Si cells for PV modules and to a lesser a-Si thin

film cells. Production increased from 70 MWp in 2004 to 90 MWp in 2005

accounting for 5% of the world’s shipment of PV cells in 2005. Schott

Solar’s module plants consume 60% of the production while the remaining

40% supplied to other module assemblers. Estimated production in 2006

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was about 110 MWp. Schott Solar’s sources its supply of wafers from its

own internal production (produced 39 MWp in 2005) and from other wafer

manufacturers.

Schott Solar’s plants in Alzenau (Germany) and in Billerica (United States)

produces silicon cells while its plant in Putzbrunn (Germany) produces a-Si

thin films cells. The plants in Germany accounts for about 85% of Schott

Solar’s total cell production while the plant in the United States accounts for

15%. Schott Solar announced in November 2006, its Billerica plant faced

difficulties in obtaining supply of silicon for its cell production. Thus, the

plant may close if it is unable to obtain sufficient supply to run its

production through 2007.

Cell production capacity increased from 60 MWp in 2004 to 130 MWp in

2005 and remained at the level in 2006. Like many manufacturers in the PV

industry, Schott Solar faces difficulties in identifying adequate sources of

silicon for its cell production. Depending on the supply situation for silicon,

production capacity may increase to 160-180 MWp by 2007. Schott Solar

has the ability to increase production capacity by up to 50 MWp with six

months.

6.2.7 BP Solar

Company : BP PLC

Division : BP Alternative Energy (BP Solar)

Address : Building B Chertsey Road, Sunbury on Thames, Middlesex, TW16 7LN, United Kingdom

Tel : +44 (0) 19 3276 2000

Fax : +44 (0) 19 3277 4372

Website : http://www.bpsolar.com

Production of silicon cells from BP Solar’s five plants across the world

accounted for 5% of the world’s shipment in 2005 increasing from 85 MWp

in 2004 to 90 MWp in 2005. BP Solar exited from production of thin films in

2003 to focus R&D and production on mc-Si and sc-Si cells.

BP Solar has four PV cell plants across the world including Madrid (Spain),

Sydney (Australia), Fredericks (United States) and a joint venture plant in

Bangalore (India). The combined production capacity of the plants increased

from nearly 140 MWp in 2005 to 200 MWp by 2006. In November 2006, BP

Solar announced it would increase the production of its plant in Fredericks

to 150 MWp by the end of 2008. Depending on the availability of silicon BP

Solar in Spain intends to increase its cell production capacity from 70 MWp

in 2006 to 200 MWp by 2008. The plant would also increase its wafer

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manufacturing capacity and integrate its warehousing and shipping facilities

to a single site at Fredericks. The plant would continue to supply

polycrystalline wafers to its plant in Australia and joint venture plant in

India for cell production.

BP Solar’s strategy in the technology front is to improve the conversion

efficiency of its mc-Si cells to close the efficiency gap between mc-Si and

sc-Si cells. The objective is to offer mc-Si cells with the efficiency of sc-Si

cells at a lower cost than sc-Si cells. As a result, BP Solar unveiled its

Mono2 prototype mc-Si modules in October 2006. The process developed by

BP Solar to produce the cells involves a printing process whereby the cells

produce 2% more energy than the conventional printing process.

BP Solar claims to have secured sufficient supplies of silicon feedstock to

cover its growth in the next few years. This involved negotiating with its

feedstock suppliers with long-term supply agreements. In October 2006, BP

Solar signed a six-year agreement with REC to deliver polycrystalline

wafers.

6.2.8 Suntech



Tel : +86 (510) 8531 5000

Fax : +86 (510) 8534 5049

Website : http://www.suntech-power.com

Suntech has risen within a relatively short period to become an industry

leader in production of PV cells in China. Cell production from Suntech’s

plant increased from 30 MWp in 2004 to 68 MWp in 2005 accounting for 4%

of the world’s shipment in 2005. During the year, nearly 75% of the cell

production from Suntech’s plant was for its own modules and 25% to other

module assemblers. Estimated production of PV cells in 2006 was 135 MWp

and Suntech expects production to increase to 280 MWp by 2007. The

company’s production includes mc-Si and sc-Si cells and undertaking

research to develop thin film cells.

The production plant for silicon cells is in Wuxi in Jiangsu Province, China.

Production capacity at the plant increased from 60 MWp in 2004 to 270

MWp in 2005. Suntech expects to increase capacity to 420 MWp by the end

of 2007 and may increase capacity by as much as 1,000 MWp by 2010. The

company entered into an agreement with China’s Louyang Silicon Company

in 2006 to establish a joint venture company (Louyang Silicon) operating a

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PV cell and module plant in Louyang, China, with an initial capacity of 30

MWp.

To ensure sufficient supply of silicon wafer, Suntech entered short to long-

term supply agreement with Chinese and foreign wafer manufacturers.

These include supply agreements with SolarWorld and its subsidiary

Deutsche Solar (Germany), MEMC Electronic Materials (Germany/United

States), Renewable Energy Corporation (Norway), Sunlight Group (United

States), LDK Hi-tech (China), Baoding Yingli New Energy Company (China)

and Shanghai Cotonsech Solar Technology (China). These supply

agreements ensures Suntech’s growth in the next five years.

Suntech’s strategy in technology development is to reduce the cost of

manufacturing and improve the conversion efficiency of its PV cells. It has

achieved in reducing cell thickness to 210 microns and developing

technologies to reduce cell thickness further to 180 microns and

subsequently to 150 microns. Suntech claims to have increased the

conversion efficiency of its mc-Si cells to 15.4% and sc-Si cells to 18.0% for

its pilot production and targets 20.0 efficiency by 2008.

6.2.9 Motech

Company : Motech Industries, Inc.

Division : Motech Solar

Address : Tainan Science-Base Industrial Park No. 3, Da-Shun 9th Road, Hsin-Shi, Tainan 74145, Taiwan

Tel : +886 6 505 0789

Fax : +886 6 505 1789

Website : http://www.motech.com.tw

Motech is Taiwan’s largest PV cell manufacturer and entered into the PV cell

business in 2000. Production of PV cells from its plant in Taiwan was just 3.5

MWp in 2001. Since then, production has increased from 35 MWp in 2004 to

60 MWp in 2005 accounting for 3% of the world’s shipment of PV cells in

2005. Motech manufactures both mc-Si and sc-Si PV cells which it supplies

to modules assemblers. The company trades publicly on Taiwan’s Over-the-

Counter (OTC) market of the Taiwan Stock Exchange.

Motech’s PV cell plant in Taiwan is located at the Tainan Science-Base

Industrial Park in Tainan. Production began in 2001 initially producing mc-Si

cells and later in 2003 to include sc-Si cells. Production capacity increased

from 35 MWp in 2004 to 60 MWp in 2005. Capacity increased to 200 MWp

by 2006 but could have increased to 240 MWp if not for the global

constraint for silicon wafers. Motech intends to increase production capacity

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to 1,000 MWp by 2010. The company would achieve this by operating its

own silicon wafer plant.

Motech and MEMC Electronics Materials negotiated in mid-2006 to jointly

build and operate a silicon wafer plant in Taiwan but did not materialise into

any agreement. In February 2007, Motech announced it would build a plant

producing silicon wafer in Kunshan, China. The capacity had yet to be

determined (in February 2007) but Moetch expects the new plant to begin

operating in 2008. Silicon wafer produced from the plant would be shipped

to other cell manufacturers included Motech’s plant in Taiwan. To ensure

delivery of silicon wafers in the immediate term, Motech has signed supply

agreements with wafer manufacturers. Motech signed a supply agreement

with ReneSola in late 2006 supplying most of Motech’s requirement in 2007.

Motech has achieved considerable success in improving the efficiency of its

PV cells. The conversion efficiency of its mc-Si cells improved from 14.5% in

2003 to 15.5% by 2005. Consequently, the efficiency of its sc-Si cells

improved from 15.5% from 2003 to 16.5% by 2005.

6.2.10 SolarWorld

Company : Solar World AG

Address : Kurt-Schumacher-Str. 12-14, 53113 Bonn, Germany

Tel : +49 22855 9200

Fax : +49 228559 2099

Website : http://www.solarworld.de

SolarWorld accounted for only 2% of the world’s shipment of PV cells in

2005 at 38 MWp. SolarWorld acquired Shell Solar’s cell production plants in

2006. Combined cell production from SolarWorld’s plant and those

previously owned by Shell Solar resulted in shipment estimated at 110 MWp

in 2006. This would account for nearly 5% of the world’s shipment of PV

cells in 2006 estimated at 2,400 MWp. SolarWorld’s main product line is mc-

Si and sc-Si cells but also produces CIS thin film cells.

The company’s cell plants are located in Freiberg (Germany), Gelsenkirchen

(Germany) and Camarillo (United States). The plant in Gelsenkirchen

produces mc-Si cells while the plant in Camarillo produces sc-Si and CIS

thin film cells. SolarWorld’s combined plant capacity increased from 30 MWp

in 2004 to 60 MWp in 2005. With the acquisition, capacity increased to 160

MWp in 2006. SolarWorld announced that it would increase the combined

production capacity of its plants exceeding 1,000 MWp by 2010. This

included a new plant in Hillsboro in the state Oregon, United States. The

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plant in Hillsboro would begin operation in 2007 and eventually have a

production capacity of 500 MWp by 2009.

To ensure security of supply of silicon wafers, SolarWorld operates a silicon

wafer plant in Freiberg and a new plant in Hillsboro. Each of the wafer

plants would have the capacity to produce silicon wafers equivalent to 500

MWp of PV cells by 2009. SolarWorld has formed a joint venture with Dutch

company Scheuten Solarholding to operate a plant in Saxony, Germany,

with a capacity of 1,000 tons producing solar grade polysilicon. SolarWorld

together with chemical group Degussa will operate a joint venture plant

(Joint Solar Silicon) in Rhienfelden, Germany, to produce solar grade

polysilicon.

Besides markets in Europe and the United States, SolarWorld has also set

its sights in China’s market, which it views as a potential high growth

market for PV. SolarWorld and its subsidiary Deutsch Solar has entered into

an agreement to supply silicon wafers to Suntech for manufacturing of its

PV cells.

6.3 Polysilicon Manufacturers

6.3.1 Hemlock

Company : Hemlock Semiconductor Corporation

Address : 12334 Geddes Rd., Hemlock, Michigan 48626, United States of America

Tel : +1 (989) 642 5201

Fax : -

Website : http://www.hscpoly.com/

Hemlock Semiconductor is a joint venture between Dow Corning (63%),

Shin-Etsu Handotai (25%) and Mitsubishi Materials Corporation (12%).

Hemlock’s plant is located in the state of Michigan, United States, is the

world’s largest producer of polysilicon accounting for nearly 25% of the

world’s production capacity in 2005. About 40% of Hemlock customers are

from the PV industry and 60% from the semiconductor industry.

Hemlock’s main raw material (silicon) comes from Dow Corning’s mining

operations in South America and the United States. Hemlock uses the

Siemens reactors and trichlorosilane gas to produce polysilicon.

Current production of polysilicon is exclusively from Hemlock’s plant in the

United States. In 2006, Hemlock began on a US$400-US$500 million

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expansion plan to increase the production capacity of its plant. Capacity

increased from 7,700 tons in 2005 to 10,000 tons in 2006. By 2008,

Hemlock intends to increase its production capacity to 14,500 tons and

finally reach 19,000 tons by 2009. However, expansion in 2008 and 2009

would depend on buyers agreeing to sign long-term supply contracts with

Hemlock. Such contracts would involve fixed prices for polysilicon and

upfront payments to finance the expansion of the plant’s production

capacity.

Besides expansion of its plant in Hemlock, the company is also searching

and evaluating for a second production site outside the United States. The

second production site would begin operations with the next five years. Key

considerations for the location are costs of energy, tax incentives, incentive

schemes to attract production, cost of labour, cost of land and physical

infrastructure. Possible location could be within Asia according to some

industry sources considering the growing potential for PV in the region

especially China.

6.3.2 Wacker

Company : Wacker Chemie AG

Division : Wacker Polysilicon

Address : Hanna-Seidel-Platz 4, 81737 Munich, Germany

Tel : +49 896 2790

Fax : +49 896 27979 1770

Website : http://www.wacker.com/cms/en/home/index.jsp

Wacker Polysilicon is a division of Germany’s Wacker Chemie a diversified

chemical company with polysilicon as one of its key business areas. Its

polysilicon plant is located in Burhausen, Germany, and polysilicon

production experienced growth of 12% from 2004 to 2005 and sales

reaching nearly €290 million in 2005. The plant is the world’s second largest

polysilicon plant with a production capacity of 5,500 tons in 2005. The plant

shipped nearly 40% of the production to the PV industry during the year.

Wacker’s plant in Bughausen and obtains key raw material to produce the

silicon from its mine located in Stetten, Germany. The plant currently uses

the Siemens reactor to produce the polysilicon. Wacker currently has two

pilot reactors using the fluidised bed reactor (FBR) to produce solar silicon.

With strong demand growth for PV and its plant running at full capacity in

2005 and 2006, Wacker will increase capacity by 4,500 tons from 5,500

tons in 2006 to 9,000 tons by 2007. Much of the polysilicon scheduled

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coming into production from the 4,500 tons expansion have been already

assigned to Wacker’s customers under a multi-year supply agreement

involving prepayments. Plans are to increase capacity further in stages to

reach 14,500 tons by the end of 2009. According to the company, its

expansion plans are progressing as scheduled.

6.3.3 REC

Company : REC Silicon AS (Norway)/REC Silicon Inc. (US)

Address : 3322 Road "N" N.E., Moses Lake, WA 98837, United States of America

Tel : +1 509 765 2106

Fax : +1 509 766 9325

Website : http://www.recgroup.com

The head office of REC Silicon AS is in Norway and the parent company of

REC Silicon Inc. based in the United States. REC has two plants producing

polysilicon and both plants are located in the United States. REC was the

third largest producer of polysilicon in 2005 with a production capacity of

5,300 tons. REC operates a plant in Moses Lake in the state of Washington

and in 2005 acquired a polysilicon plant in Butte in the state of Montana

from Advanced Silicon Materials.

REC has expanded its business vertically in the value chain from production

of polysilicon to wafer manufacturing, cell production, module assembly to

system integration. REC also has a shareholding in CSG Solar (production of

crystalline silicon on glass modules) based in Germany and EverQ

(production of cells using ribbon technology) based in the United States.

REC’s key strategic objective is to reduce production cost and increase

production capacity. This strategy involves gradually phasing out production

of electronic grade polysilicon (as its contracts with manufacturers in

semiconductor industry ends) and freeing production towards solar grade

polysilicon. This simplifies production, creates economies of scale and

subsequently reduces costs. Besides the Siemens reactors already installed

in existing facilities, REC will use fluidised bed reactors (FBR), which

produces polysilicon at lower production costs, at its new facilities.

Besides additional capacity and de-bottlenecking in existing plants, a new

6,500 TONS polysilicon plant in Moses Lake is currently under construction

at a cost of US$600 million. The new plant adjacent to its existing plant in

Moses Lake will use the FBR process to produce polysilicon. Production will

begin in 2008 and become fully operational by 2009. By 2010, capacity

would double to more than 13,000 tons from 5,300 tons in 2005.

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6.3.4 Tokuyama

Company : Tokuyama Corporation

Division : Electronic Materials Business, Silicon Business Division

Address : Shibuya Konno Bldg., 3-1, Shibuya 3-chome, Shibuya-ku, Tokyo 150-8383, Japan

Tel : +81 3 3499 8937

Fax : +81 3 3499 8967

Website : http://www.tokuyama.co.jp/eng/

The main product of the Electronic Materials Business of Tokuyama is

polycrystalline silicon. Tokuyama’s plant is located in Shunan City in

Yamaguchi Prefecture, Japan, and the largest manufacturer of polysilicon in

Japan. The plant uses the Siemens reactor and production capacity in 2005

was 5,200 tons. During the year, Tokuyama supplied 25% of the production

to the cell manufacturers and 75% to the semi-conductor industry.

In February 2005, Tokuyama began construction of a pilot 200 tons plant to

produce polysilicon specifically for the PV industry. The process uses the

vapour liquid deposition (VLD) technology and has a higher efficiency over

technologies using the Siemens reactor. The process under evaluation and if

successful would come into commercial production in 2008.

A new polysilicon plant is currently under production at a cost of US$385

million. The new plant located in Shunan City would have a production

capacity of 3,000 tons when it begins operation in 2009. This would

increase capacity to 8,200 tons by 2009. However, Tokuyama would

continue to supply the main share of the additional production to the semi-

conductor industry and supply only 500 tons for the PV industry.

6.3.5 MEMC

Company : MEMC Electronic Materials, Inc.

Address : 501 Pearl Drive (City of O'Fallon), St.Peters, Missouri, 63376, United States of America

Tel : +1 636 474 5000

Fax : +1 636-474-5158

Website : http://www.memc.com

Monsanto Electronic Materials Company (MEMC) is a subsidiary of Monsanto

Chemical Company and headquartered in St. Peters in the state of Missouri,

United States. MEMC has a polysilicon plant located in Pasedena in the state

of Texas, United States, and another in Merano, Italy. Production capacity at

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its two plants totalled 3,800 tons in 2005 accounting for 12% of the world’s

production capacity for polysilicon. MEMC uses both the Siemens and FBR

technologies to produce polysilicon. Besides the silicon feedstock, MEMC

also produces and supplies silicon wafers for PV cell manufacturers.

Capacity of its Pasadena plant was 2,700 tons and its Merano plant 1,100

tons in 2005. Its Pasedena plant mainly supplies to markets in the United

States while its Merano plant supplies mainly to markets in Western Europe.

Besides the traditional “chunk” silicon, MEMC is the only company producing

granular polysilicon on an industrial scale. Granular polysilicon has cost and

productivity advantages over the traditional “chunk” polysilicon. Some cell

manufacturers prefer granular polysilicon over “chunk silicon” since it allows

production of PV cells using the string Ribbon technology. Currently REC and

Wacker have pilot plants for producing granular silicon.

MEMC plans to increase the production capacity of its Merano plant from

1,100 tons in 2005 to 1,600 tons by 2007. Its Pasadena plant would double

in capacity from 2,700 tons in 2005 to 6,400 tons by 2008. Thus, total

capacity would reach 8,000 tons by 2008 from 3,800 tons in 2005. MEMC

also plans to build a third plant but has yet to announce the location of the

plant, start of construction and the plant capacity. If the third plant were to

operate before the decade, then capacity would reach beyond the 8,000

tons.

6.3.6 Mitsubishi Materials Corporation

Company : Mitsubishi Materials Corporation

Division : Electronic Materials and Components Business

Address : 5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo 100-8117 Japan

Tel : +81 3 5252 5206

Fax : +81 3 5252 5272

Website : http://www.mmc.co.jp/english/index.html

http://www.mpsac.com/

Mitsubishi Materials Corporation (MMC) is part of Japan’s Mitsubishi group.

MMC has a polysilicon plant in Japan and another in the United States. The

production capacity at these two plants totalled 2,850 tons in 2005

accounting for 9% of the world’s production capacity of polysilicon. MMC

uses the Siemens reactor to produce polysilicon. Currently MMC supplies

about 90% of the production to semiconductor manufacturers and only 10%

to PV cell manufacturers.

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Its plant in Japan is in Yokkaichi and the United States in Mobile in the state

of Alabama and the combined plant capacity was 2,850 tons in 2005.

Capacity at the Yokkaichi plant was 1,600 tons and Mobile plant was 1,250

tons during the period. Sumitomo Mitsubishi Silicon Corporation (SUMCO)

manufactures mc-Si and sc-Si solar cells. Due to strong demand for

polysilicon from one of MMC’s major customers, SUMCO, capacity at the two

plants will increase from 2,850 tons in 2005 to 3,200 by 2008. The capacity

at the Yokkaichi plant will increase from 1,600 tons to 1,800 tons while the

Mobile plant will increase from 1,250 tons to 1,500 tons during the period.

6.4 Thin Film Manufacturers

6.4.1 United Solar Ovonic

Company : United Solar Ovonic LLC

Address : 3800 Lapeer Road, Auburn Hills, Michigan 48326, United States of America

Tel : +1 248 475 0100

Fax : +1 248 364 0510

Website : http://www.uni-solar.com

United Solar Ovonic accounted for 22% of the world’s production of thin

films in 2005 establishing it as the world’s largest producer. The company

based in the US has it’s headquarter in Auburn Hills, Michigan, is a wholly

owned subsidiary of Energy Conversion Devices (ECD Ovonics) with over

500 employees. United Solar Ovonic manufactures triple junction a-Si thin

films with an annual production capacity of 28 MWp in 2005. The company

manufactures and markets flexible thin film, peel-and-stick solar laminates

that can be integrated with roofs and also supplies OEM laminates to major

roofing manufacturers worldwide.

United Solar plans to increase its annual production capacity to 300 MWp by

2010. Its second plant located in Auburn Hills with a production capacity of

30 MWp became operational in December 2006. The third plant located in

Greenville, Michigan, with an annual capacity of 60 MWp will begin

operations in 2007. The company expects to operate its fourth plant in

Greenville with a capacity of 60 MWp in 2008.

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6.4.2 Kaneka

Company : Kaneka Corporation

Division : Kaneka Silicon PV

Address : 3-2-4, Nakanoshima, Kita-ku, Osaka 530-8288, Japan

Tel : +81 6 6226 5315

Fax : +81 6 6226 5144

Website : http://www.pv.kaneka.co.jp

Kaneka initially produced a-Si thin films cells for the electronic consumer

market, which it has since discontinued. In 1999, the company began

manufacturing thin films cells for power generation with the construction of

a new plant in Toyooka City, Hyogo Prefecture, and Otsu City, Shiga

Prefecture. Currently Kaneka manufactures thin films for rooftop

applications for the Japanese market and has close association with major

residential property developers such as PanaHome Corporation. Other

products produce using thin films include see through windows and heater

integrated PV modules for melting snow.

Production of Kaneka’s thin films increased from 20 MWp in 2004 to 21

MWp in 2005. Production capacity at its plant in Japan increased from 24

MWp in 2005 to 30 MWp by December 2006. The company will increase

capacity further to 55 MWp by July 2007 and 70 MWp by 2008. Kaneka

began to develop the European market in 2002 and has a 10 MWp module

manufacturing plant in Olumouc, Czech Republic. The European plant

currently supplies thin film modules to the European markets and plans to

increase its capacity as its markets in Europe develops.

6.4.3 First Solar

Company : First Solar inc.

Address : 4050 E. Cotton Centre #6-68, Phoenix, Arizona 85040, United States of America

Tel : +1 602 414 9300

Fax : +1 602 414 9400

Website : http://www.firstsolar.com

First Solar accounted for 20% of the world’s production of thin films and the

third world’s largest producer in 2005. Shipment from First Solar increased

from 6 MWp in 2004 to nearly 20 MWp in 2005. The company is a US based

company with it’s headquarter in Phoenix, Arizona. First Solar is one of the

few companies in the world manufacturing CdTe thin films and currently the

world’s largest producer of the thin film. The company currently operates a

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75 MWp plant in Perrysburg, Ohio, and a second plant in Frankfurt,

Germany, would begin operations expectedly in the second half of 2007.

In January 2007, First Solar announced it would expand production with a

new plant located in Malaysia at Kulim High Technology Park. Construction

of the new plant begins in 2007 and production expected to begin in the

second half of 2008 at an estimated cost of US$150 million. Capacity would

be fully ramped to 100 MWp when it begins operations, employing nearly

500 people. Lower operating cost, infrastructure and 15-year corporate tax

holiday were the main reasons attracting First Solar to invest in Malaysia.

6.4.4 Mitsubishi Heavy Industries

Company : Mitsubishi Heavy Industries Ltd

Division : Solar Cell Power System Group

Address : 3-1, Minatomirai 3-chome, Nishi-ku, Yokohama 220-8401, Japan

Tel : +81 45224 9595

Fax : +81 45224 9264

Website : http://www.mhi.co.jp/power/e_a-si/index.html

Mitsubishi Heavy Industries (MHI) accounted for 12% of the world’s

production of thin films in 2005 producing 12 MWp during the period. MHI

manufactures a-Si thin film cells at its plant in Isahaya City in Nagasaki

Prefecture. In February 2007, MHI announced that it would begin

construction of a new plant at its Nagasaki shipyard. Production capacity

increased from 10 MWp in 2005 to 50 MWp in 2006 and may increase to

300 MWp by 2016 depending on world demand for thin films.

Since 2000, MHI and New Energy and Industrial Technology Development

Organization (NEDO) have been jointly developing a tandem-type thin film

cell to improve film efficiency to 12%. The cell consists of a layer of a-Si and

a microcrystalline-Si layer developed using high-speed thin film deposition

technology. The technology allows the cells to absorb a broader range of

light (from ultraviolet to infrared) thus improving the efficiency. Another

area is film cells that provide stable efficiency throughout the 20-25 year

lifetime of a module.

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6.5 Inverter Manufacturers

6.5.1 SMA

Company : SMA Technologie AG

Division : Solar Technology

Address : Hannoversche Strasse 1-5, 34266 Niestetal, Germany

Tel : +49 561 9522 0

Fax : +49 561 9522 100

Website : http://www2.sma.de/en/home/index.html

http://www.sma-america.com

SMA Technologies established in 1981 is a commercial spin off R&D

activities in computer-based controlled systems from Kassel University,

Germany. SMA is the world’s leading manufacturer of PV inverters

accounting for nearly 31% of the world’s PV inverter shipment in 2005. Its

main market is Europe accounting for 42% of the market and the US

accounting for 41% of the market. Sales reached €172 million in 2005

according to a statement from SMA. The company has its headquarter in

Niestetal, Germany, employing more than 1,000 people in Germany and its

subsidiaries worldwide including US, China, Korea, Italy, Spain and France.

Product development and manufacturing are at SMA’s plant in Niestetal.

SMA focuses on developing a range of inverters for rooftop mounted PV

installations. Marketed under the Sunny Boy range, these inverters are

transformerless and have a high efficiency of 98%. SMA also markets a

range of central inverters for 100 kWp to 1 MWp installations for large open

space systems or PV power stations.

SMA’s target market in Asia is Korea and China and has offices in these

countries. In the fourth quarter of 2006, after inspection and auditing of

SMA’s plant in Germany, Korea’s KEMCO certified SMA’s products for use in

Korea. In Korea, SMA will market inverters for installations in homes from

2.5 kWp upwards and central inverters up to 1 MWp. SMA has no immediate

plans to enter the Japanese market since there are already established

players in the country.

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6.5.2 Sharp


Division : Sharp Solar Solar Systems Group

Address : 282-1 Hajikami, Shinjo-cho, Kita-Katsuragi-gun, Nara Prefecture 639-2198, Japanu

Tel : +81 74563 3579

Fax : +81 74562 8253


Sharp accounted for nearly 19% of the world’s inverter market in 2005. In

Japan, Sharp accounted for 65% of the market since installations of Sharp’s

PV modules are often with its inverters and other brands of modules. Except

the US, Sharp’ does not promote and market its inverters in Europe since

European players dominate the market and well established.

In Japan, inverters are a mature market and the Japanese government no

long supports or funds R&D for PV inverters. To increase its market share

for inverters in the Japanese market, Sharp introduced a new line of

gadgetry Sunvista inverters for the residential market featuring colour LCD

screens with interactive functions. These include an energy savings tracker

enabling users to set targeted power consumption, real-time status display

of energy generated by the PV modules, home power consumption, power

purchased from the utility and sold back to the utility company.

Sharp jointly developed with Daihen Corporation central inverters intended

for commercial users and utilities in large-scale PV power-generating

systems from 100 kWp to 1 MWp. Design and manufacture of these large

inverters are only on an order basis and have an efficiency of 95%.

6.5.3 Fronius

Company : Fronius International GmbH

Division : Solar Electronics Division

Address : Günter Fronius Straß1, 4600 Wels, Austria

Tel : + 43 (0) 7242/241 0

Fax : +43 (0) 7242/241 0

Website :

:

http://www.fronius.com

http://www.fronius-usa.com/

Fronius has been involved in solar electronic devices since 1992 an

accounted for nearly 11% of the world’s inverter market in 2005. The

company is Austrian based with its head office is in Wels, Austria, and a US

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subsidiary company based in Brighton, Michigan, established in 2002.

Fronius also has a network of distributors across Europe, US and Asia-

Pacific. Fronius has nearly 1,700 people employed worldwide including 40 in

the US.

Its main markets are Europe accounting for 16% of the market and the US

accounting for 6% of the market in 2005. In Europe, the main market is

Germany and Spain becoming an increasingly important market while Korea

has longer-term potential.

Production capacity tripled from 70 MWp in 2003 to 200 MWp in 2005.

Fronius has one of the lightest inverters in the US market making its easier

for installers to mount on the wall. The IG inverter, for the European market

has a plug-n-play function between the inverter and controller. Inverters

have a standard 5-year warranty and extendable to 10 years for a premium.

Fronius provides a 20-year service guarantee for its central inverters to its

service partners.

6.5.4 Xantrex

Company : Xantrex Technology Inc.

Address : 8999 Nelson Way, Burnaby, British Columbia, Canada V5A 4B5

Tel : +6 04 422 8595

Fax : +6 04 420 1591

Website : http://www.xantrex.com

Xantrex is a Canadian company with a head office in Vancouver, British

Columbia. Xantrex accounted for 5% of the world’s PV inverter market in

2005 and main markets are the US followed by Europe. The company leads

after SMA in the US accounting for 16% of the market share and 5% in the

European inverter market. In 2005, Xantrex opened a sales office in Beijing,

China, to expand its market in the country. Besides inverters, Xantrex also

manufactures other power related electronic products.

Major clients for Xantrex’s inverters include Schott Solar, BP Solar and

Kyocera. More than 100 MW of Xantrex’s inverters have been sold in the US

market by May 2006 and nearly 30 MW were sold in 2005. Xantrex’s plants

in the US manufacturing power related electronic products include Arlington,

Livermore, Elkhart and in Spain in Barcelona.

In March 2007, Xantrex announced that it had entered into an agreement

with China’s Shanghai Power Transmission & Distribution to form a joint

venture with an initial investment of US$10 million. The joint venture would

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operate a plant manufacturing PV and wind power electronic products

exclusively for the renewable energy market in China.

6.5.5 Kyocera




Tel : +81 75604 3476

Fax : +81 75604 3475

Website :

:



Like Sharp, Kyocera also manufactures inverters besides PV cells and

modules. In 2005, Kyocera accounted for 4.6% of the world’s market for

inverters. However, Kyocera’s inverters are exclusively for the Japanese

market for installations with Kyocera’s PV modules. Kyocera accounts for

17% of the Japanese market for inverters. Main market for Kyocera’s

inverters in Japan is the residential market for 3-5 kWp module

installations. Other inverters manufactured for the Japanese market are for

10-100 kWp module installations for public and industrial facilities.

Kyocera’s R&D centre for manufacturing inverters is in Sakura City, Chiba

Prefecture, a short distance from Tokyo. Current development is producing

more compact and lighter weight inverters. In the last three years, cost of

producing inverters has been declining by 3%-5% annually.

6.5.6 Mastervolt

Company : Mastervolt International BV

Address : Snijdersbergweg 93, 1105AN - Amsterdam, Noord Holland, The Netherlands

Tel : +31 20 3422100

Fax : ++31 20 6971006

Website : http://www.mastervolt.com

Founded in 1991, Mastervolt is Dutch company and manufactures a range of

power related electronic equipments besides PV inverters. In 2005, PV

inverters from Mastervolt accounted for 3.2% of the world market and its

sales concentrated in Europe. In Europe, its main markets are in Germany

and Spain. Mastervolt has nearly 120 employees in six countries including

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Germany, US, Spain, France, Barcelona and China besides its head office in

Amsterdam.

Mastervolt increased the production capacity of its inverters from 45 MW in

2005 to 100 MW by the end of 2006. This would position Mastervolt to ship

over 40,000 inverters annually. The company currently outsource

manufacturing of inverters to Nedap Power Supplies in the Netherlands and

the increase in capacity was from another plant in Poland managed by an

unnamed associate of Nedap Power Supplies. In the future, all production of

inverters will relocate from the Netherlands to Poland.

The company’s Soladin inverter models for homes are plug and play to the

controllers and fitted with a communications port for remote monitoring.

Mastervolt claims its Sumaster model performs at full power at high

temperatures of 40 degrees Celsius, due to force cooling and therefore

suited for installations in hot temperatures.

6.5.7 Sputnik

Company : Sputnik Engineering AG

Address : Höheweg 85, CH-2502 Biel, Switzerland

Tel : +41 32 346 56 00

Fax : +41 32 346 56 09

Website : http://www.solarmax.com

Sputnik Engineering based in Biel, Switzerland, specialises in grid-connected

PV inverters including string inverters for homes and central inverters for PV

power stations. Established in 1991, Sputnik accounted for 1.9% of the

world’s market for PV inverters in 2005 with sales concentrated in Europe.

The company has nearly 90 full time employees in Switzerland and offices in

Germany and Spain.

Sputnik is expecting to increase its sales of inverters to 180 MW by the end

of 2007. Germany would continue to be Sputnik’s main market in the

immediate future and expect sales in Spain to increase from 20 MW in 2006

to 60 MW by the end of 2007. During the period, it expects sales to increase

sales in Italy from 1 MW to 6 MW and in France 1 to 6 MW. By 2008,

Sputnik is expecting to increase sales further to 250 MW.

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6.6 Others

6.6.1 Turnkey Providers

Company : Spire Corporation

Address : One Patriot Park Bedford, Massachusetts 01730, United States of America

Tel : +361 411 3838

Fax : +361 411 3839

Website : http://www.spiresolar.com

Spire has been involved in the PV industry since 1980 and a leading supplier

of a wide range equipments and machineries for manufacturing in PV

products besides providing turnkey projects. Based in Massachusetts, US,

Spire claims more than 150 customers across the world using technologies

developed by the company. Spire’s equipments, machineries and services

range from manufacturing silicon wafers, PV cells to modules from a

production line of 5 MWp to 100 MWp. Spire also provides its clients the

technology to manufacture building integrated modules. Areas of services

include initial training at its facility in Massachusetts and then at the client’s

plant. The company can also source supply for its clients, materials for

manufacturing including PV cells and encapsulation materials. Spire

provides training for its clients’ engineers and operators at its facility in

Massachusetts and at the client’s plant.

Company : GT Solar Inc

Address : 243 Daniel Webster Highway, Merrimack, New Hampshire 03054, United States of America

Tel : +1 603 883 5200

Fax : +1 603 595 6993

Website : http://www.gtsolar.com

Based in Merrimack, US, GT Solar began its business in 1994. GT Solar

supplies equipments and machineries as well as provide turnkey projects in

manufacturing PV. Its turnkey projects, equipments and machineries include

manufacturing in wafers, cells and modules. In 2006, GT Solar entered into

production of polysilicon, supplying Siemens-type reactors. Other areas of

services include consultation and engineering services.

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Company : Energo Solar SA

Address : Rue del la Criox d’Or 19/A, CH-1024 Geneva, Switzerland

Tel : +361 411 3838

Fax : +361 411 3839

Website : http://www.energosolar.com

EnergoSolar based in Geneva, Switzerland, specialises in equipments,

machineries and turnkey projects for production of a-Si thin film modules.

Besides, the company offers maintenance, service and spare parts and

technological upgrades. The company claims its technology can mass-

produce thin films at a production cost of €1 per Wp. Production capacity

begins at 6 MWp and expandable in 6 MWp increments. Furthermore, the

technology to produce thin films does not require high purity clean rooms

and uses less energy than production of crystalline cells. The company also

provides consulting services to acquire the necessary raw materials, factory

layout, materials handling, technical support, maintenance and training of

for the clients’ engineers and operators.

6.6.2 Plastic Films

Company : Etimex Technical Components GmbH

Division : Vistasolar

Address : Industriestrasse 3, D-89165 Dietenheim, Germany

Tel : +49 (0) 7347 670

Fax : +49 (0) 7347 67209

Website : http://www.etimex.de

Etimex Technical Components is a company based in Dietenheim, Germany.

The company specialises in plastics for food and pharmaceutical packaging

as well as plastic films for the PV industry. The company produces films,

under the VISTASOLAR brand, for encapsulating PV cells for manufacturing

modules. Since 1980, Etimex has been producing standard and premium

EVA (ethyl vinyl acetate) films for encapsulating cells. In 2004, Etimex

introduced TPU (thermoplastic polyurethane) films for encapsulating cells,

which has better toughness, flexibility, chemical resistance, adhesive

characteristics and optical properties.

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Company : Bridgestone Corporation

Address : 10-1, Kyobashi 1-chome, Chuo-ku, Tokyo 104-8340, Japan

Tel : +81 03 3567 0111

Fax : +81 03 3567 4615

Website : http://www.bridgestone.co.jp/english

Bridgestone is a Japanese company with its head office in Tokyo. The

company manufactures rubber-based products, high purity fine ceramics,

silicon wafers for the semiconductor industry and EVA films for PV modules.

Bridgestone currently manufactures EVA films at its Iwata plant and in

2006, its production capacity was 400-500 tons a month. Due to increasing

demand from module manufacturers, Bridgestone will increase production

capacity to 800-1,000 tons a month with an additional calendar machine.

Bridgestone invested nearly Yen 1.2 billion (US$10.2 million) and expect the

expanded production to begin by the end of 2007.

Company : Coveme SPA

Address : Via Emilia, 288, 40068 San Lazzaro di Savena/Bologna, Italy

Tel : +86 769 8828 8636

Fax : +86 769 88280962

Website : http://www.coveme.com

Coveme is an Italian company based in Bologna (northern Italy) with more

than 30 years in manufacturing high performance films and papers. For the

PV industry, the company manufactures high performance laminates for

back-end protection of PV modules. Its production plant is in Gorzia

(northern Italy) and has five production lines to produce 4,000 tons of film,

paper, and laminates annually. The plant has the ability to produce

laminates from 12 to 500 microns.

6.6.3 PV Testers

Company : Spire Corporation

Address : One Patriot Park Bedford, Boston, Massachusetts 01730, United States of America

Tel : +361 411 3838

Fax : +361 411 3839

Website : http://www.spiresolar.com

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Spire also supplies PV testers to its clients besides machineries, equipments

and providing turnkey projects for manufacturing PV products. For PV

modules, the company supplies equipments to tests the electrical

performance of modules up to 200 cm x 137 cm and up to 162 cm x 102

cm. Another is to test performance high voltage isolation to ensure that the

cell circuit do not leak electrical currents onto the exposed module surfaces.

Spire also supplies a portable array tester to measure and record the

current and voltage characteristics of the PV modules.

Company : Energy Equipment Testing Services Ltd

Address : Unit 2, Glan-y-Llyn Industrial Estate, Taffs Well, CF15 7JD, Wales, United Kingdom

Tel : +44 (0) 29 2082 0910

Fax : +44 (0) 29 2082 0911

Website : http://www.eets.co.uk

Energy Equipment Testing Services (EETS) based in Wales, United Kingdom,

is a provider of equipments and services for companies involved in

renewable energy including PV. Its module testers measure the current-

voltage characteristics of PV modules up to 1.5x1.5 metres and a computer-

based system, which acquires the performance data of the modules. The

company also supplies cell testers to test the electrical performance of PV

cells under simulated sunlight. Another is a portable array tester to measure

and record the current and voltage characteristics of the PV modules.

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7.1 Case Study on Suntech

7.1.1 Background



Tel : +86 (510) 8531 5000

Fax : +86 (510) 8534 5049

Website : www.suntech-power.com

Suntech Power Holdings Co., Ltd, is a company established in China with its

head office in Wuxi, Jiangsu. Suntech is primarily involved in the design,

development, manufacture and marketing of PV cells and modules. Suntech

was officially set-up in September 2001 and began manufacturing

operations in September 2002. The company is currently the leading PV cell

and module manufacturer in China and among the global leaders. Besides

China, major markets for Suntech include Japan, Europe and the United

States. Suntech acquired a two-third equity interest in MSK Corporation of

Japan in Q3 2006 and expected to increase its interest further by the end of

2007.

Dr. Zhengrong Shi is the founder of Suntech and serves as the company’s

Chairman as well as its CEO. Dr Shi studied optical science and laser physics

in China before pursuing a PhD in electrical engineering from the University

of New South Wales (UNSW), Australia. After graduating, he led the Thin

Film Solar Cells Research at UNSW from 1992 to 1995 and later joined as

director of Pacific Solar Pty Ltd in 1995. Dr Shi (now an Australian citizen)

then returned to China in 2001 to establish Suntech in the country.

Funds from the Australian government for R&D in PV technology mostly

target Australian universities. However, government support to

commercialise and developed a PV industry in Australia is limited or in most

cases unavailable. Thus technologies developed by UNSW (well known for

its research and teaching facilities in PV) are often commercially acquired by

foreign companies. Dr Shi took the opportunity to start a PV business in

China when the Chinese government offered about US$6 million (€4.5

million) to setup a manufacturing operation in China. Furthermore, the

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Chinese government supports the PV industry in China through funding of

R&D activities. Another positive factor is China’s lower manufacturing and

other investment incentives.

Suntech’s strategic objectives since it began operations in 2002 have been

to consistently reduce production cost, ensure supply of silicon, expand

production capacity and acquired of MSK. These have been the key factors

leading to Suntech’s success and in the global PV industry. The following

diagram describes Suntech’s key objectives and their strategies.

7.1.2 Financial Background

In December 2005, Suntech listed on the New York Stock Exchange (NYSE)

through an initial public offering (IPO). Since listing, Suntech has shown

strong continuous growth and financial performance. Revenue grew by

165% from US$85.29 million in 2004 to US$226.00 million in 2005 while

net income grew by 55% from US$19.76 million to US$30.63 million.

Suntech maintained a reasonable gross profit between 29% and 30%

during the period.

A major challenge faced by Suntech has been the increasing prices and

global shortages of silicon in recent years. The shortage has limited Suntech

from realising its production potential, often forcing it to purchase silicon in

the spot market at prices higher than silicon purchased through multiyear

Diagram 7.1.1. Suntech’s Strategic Objectives

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supply agreements. Higher selling prices of silicon forced Suntech to

increase the selling prices of its cells and modules in recent years, which

threatens its margins. Competition from other manufacturers in China limits

how much Suntech can increase its prices. Furthermore, Suntech preferred

to pay more for its silicon in recent years than have idle capacity.

Suntech’s financial performance remained strong in each quarter from Q1

2006 to Q3 2006. Revenue increased by 81.3% from US$89.89 million in

Q1 2006 to US$162.97 million in Q3 2006. However, net income increased

at a slower pace of growth by 48.7% from US$19.32 million to US$28.73

million mainly from an increased in operating expenses and rise in cost of

silicon though it had increased the selling price of PV cells and modules.

Consequently, gross profits declined from 30.1% in Q1 2006 to 22.8% in Q3

2006. According to Suntech’s Q3 2006 financial report, 26.8% of its revenue

was from sales of PV cells, 72.7% from modules and 0.5% from system

integration services. Suntech’s expects its Q4 2006 revenue to be between

US$166 million and US$170 million.

Table 7.1.2b. Suntech’s Financial Performance (US$ million)*

2004

2005

Q1

2006

Q2

2006

Q3

2006

Revenue (US$) 85.29 226.00 89.89 128.15 162.97

Gross profit (US$) 25.11 68.56 27.05 36.12 37.23

Gross profit 29.4% 30.3% 30.1% 28.2% 22.8%

Operating income (US$) 20.01 42.66 20.06 28.19 25.25

Net income 19.76 30.63 19.32 26.54 28.73

Source: Suntech’s financial reports; *Financial results from MSK not included.

7.1.3 Management and Organisation

As Suntech’s Chairman and CEO, Dr Shi decides on the company’s business

directions as well as leading and overseeing the company. Mr Graham Artes

joined Suntech as its Chief Operating Officer (COO) in September 2005 and

Table 7.1.2a. Average Selling Price of Suntech’s PV products*

Q1

2005

Q3

2005

Q1

2006

Q3

2006

PV cells (US$ per Wp) 2.63 3.10 3.05 3.34

PV modules (US$ per Wp) 3.29 3.34 3.65 3.86

Source: Suntech’s financial reports; Note:*Prices from MSK not included in the average selling price

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responsible for managing the day-to-day operations of the company. Mr

Artes brings to Suntech 30 years of international experience in

manufacturing and sales. Mr Weiguo Zhang is serves as the Director as well

the Vice General Manager and has years of experience in investments. Dr

Stuart Wenham joined in July 2005 as the Chief Technical Officer (CTO) and

was formerly the co-director of research at Pacific Solar in Australia.

The management of Suntech places a high level of importance on R&D to

advance Suntech’s business growth. The board directors include Dr Shi, Dr

Wenham and Dr Jiangjia Ji who all have considerable R&D experience in PV

technologies. Besides, Dr Tihu Wang joined in April 2006 as the Vice-

General Manager for R&D bringing 23 years experience leading and

conducting research in silicon materials. Mr Yichuan Wan joined in

December 2002 as the Manager for PV Cell Research and Development

bringing his experience in developing and manufacturing PV products. Mr

Guangchun Zan joined in November 2005 as the Deputy Research Director

of R&D and has considerable experience in high-efficiency solar cell designs.

Mr Zan was previously with the Centre for Photovoltaic Engineering and

School of Photovoltaic Engineering at UNSW.

The workforce in Suntech are involved in R&D, manufacturing, business

development, sales, purchasing and back-end operations including finance,

administration and information technology (IT). The workforce in China

grew by six-fold in a span of three years from nearly 250 in 2003 to nearly

1,400 in 2005. The global workforce reached 2,200 in 2006 including those

in China, Japan (230 employees in its subsidiary company MSK), United

States and Europe and expects the workforce to increase to nearly 3,000 by

2007. Suntech will employ 200 new employees at its new manufacturing

and R&D facility in Caohejing Hi-tech Park, Shanghai, once it begins

operations in 2008.

7.1.4 Technology Developments

In 2006, Suntech had about 60 employees involved in R&D at its R&D

centre in Wuxi, including those recruited abroad. Half of the employees at

the R&D centre specialise in their own fields of R&D in PV technologies.

These areas of involvement by Suntech’s researchers include R&D in silicon

materials, solar cell device physics, processing technologies and design of

advanced PV manufacturing equipments. Researchers at MSK’s R&D facility

in Japan bring their expertise developing building integrated PV modules

such as PV roof tiles and architectural glass windows.

Suntech manufactures a range of mc-Si and sc-Si PV cells and modules for

grid and off-grid applications used in the residential, commercial, industrial

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and public utility sectors. One of Suntech’s key business objectives is to be

the “lowest cost per watt” provider of PV products in the industry. The

management of Suntech is in the opinion that the long-term growth of the

industry and its business would have to depend less on government

incentives. Thus, prices of its PV products would have to decline to create

demand and stimulate business growth.

To achieve this, Suntech would have to reduce the manufacturing cost of its

PV cells and modules through improved technologies. Suntech allocated

nearly US$20 million in 2006-2007 for R&D and exploring new technologies.

Of the amount, US$10 million were for R&D in increasing the conversion

efficiency of its PV cells.

By mid-2006, Suntech held seven patents and another 16 pending

applications in China. Besides its R&D centre in Wuxi, Suntech (led by Dr

Wenham) has a technical collaboration agreement with UNSW’s Centre of

Excellence for Advanced Silicon Photovoltaic and Photonics. The agreement

includes a US$1.2 million contribution to the Centre to fund R&D to develop

technologies to increase the conversion efficiency of PV cells. Furthermore,

Suntech expects to establish a new manufacturing and R&D facility

(estimated to cost US$60 million) at the Caohejing Hi-Tech Park in Shanghai

by early 2008.

Suntech’s acquisition of MSK provides opportunities for both companies to

exchange and receive new technologies from the other. MSK would receive

from Suntech technical support and technologies for thinner silicon wafers

and higher conversion efficiency for its PV cells. MSK strengths in BIPV in

Japan provide opportunities for Suntech to provide value-added system

integration services in China. Furthermore, MSK’s product development in

building integrated PV modules (e.g. PV roof tiles and architectural glass

windows) provides value-added solutions to Suntech’s customers.

Silicon feedstock cost about 70% of the manufacturing costs of Suntech’s

modules. Through R&D, Suntech is shifting productions towards thinner

wafers and improving the conversion efficiency rates of its PV cells are the

two key strategies implemented to reduce the manufacturing cost. By Q1

2006, Suntech shifted production towards 210-micron wafers and

developing the capabilities to utilise wafers with a thickness of 180-micron.

Suntech has also made advances in R&D to utilise wafers with a thickness of

150-microns.

In Q4 2006, Suntech announced it would adopt the “semiconductor finger

technology” which it co-developed with UNSW. The technology overcomes

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the limitation of the standard screen painting process used in the industry

to produce PV cells.

The technology involves using heavily doped semiconductor strips

built into the cell surface and therefore collects electrical charges

more effectively.

The technology also reduces the number of metal contact strips on

the cell surface therefore reducing shading from the sun increasing

the cells ability to absorb more sunlight.

This allowed Suntech to increase the conversion efficiency of its solar grade

mono-crystalline silicon cells by as much as 18% compared to the industry’s

14%-15% and targets to achieve 20% conversion efficiency by 2008. Even

with lower grade silicon wafers, the technology has the longer-term

potential to increase the conversion efficiency up to 17%.5 This enables

Suntech to utilise lower grade silicon wafers (that otherwise would be

treated as rejects) and reduce the manufacturing cost of its PV cells (per

watt peak).

7.1.5 Business Developments

Suntech purchases silicon wafers from its suppliers to manufacture its PV

cells. The company’s production of PV cells doubled from 67.7 MWp in 2005

to an estimated 134.9 MWp in 2006. In 2005, nearly 74% of Suntech’s cell

production was for its in-house manufacturing of modules while 26% sold to

other module manufacturers. In 2006, that Suntech consumed an estimated

85% of its cell production for its module while 15% sold to other module

manufacturers. By 2006, Suntech increased the quantity and proportion of

its cell production for its module manufacturing to meet increasing orders

for its modules from its overseas customers.

Suntech has been increasing its cell production and capacity annually since

it began operations in 2002. However, its share of the production and

capacity in China began to show a decline in 2005 brought about by other

manufacturers in China increasing their cell production and capacity. In the

immediate term, Suntech expects to increase its production capacity to 420

MWp and production to 280 MWp by the end of 2007. According to Dr Shi,

Suntech may increase its cells production capacity to 1,000 MWp by 2010

depending on the growth of the global PV market.

5 Suntech increased the conversion efficiency of its poly-silicon cells from 15.2% to 15.4% by the Q1. 2006

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Table 7.1.5a. Suntech’s PV Cell Production in China

2002 2003 2004 2005 2006e

Capacity (MWp) 15 30.0 60.0 150.0 270.0

Share of capacity in China 62.5% 66.7% 69.0% 41.7% 19.9%

Production (MWp) 0.9 6.4 29.5 67.7 134.9

Share of production in China 18.2% 46.0% 59.0% 43.4% 19.5%

Source: ENF

Suntech has been increasing its PV module production and capacity annually

since 2002 to keep up with demand from its overseas clients. One of

Suntech’s major clients is Solarworld, which it supplies as an OEM and in

2006 agreed to supply 24 MWp of PV modules. Like its cell production

capacity, Suntech may increase its module production capacity to 1,000

MWp by 2010.

Table 7.1.5b. Suntech’s PV Module Production in China

2002 2003 2004 2005 2006e

Capacity (MWp) 15.0 30.0 60.0 150.0 470.0

Share of capacity in China 18.5% 13.5% 11.5% 10.0% 11.8%

Production (MWp) 0.8 1.5 25.9 49.8 114.1

Share of production in China 3.9% 3.3% 14.4% 11.3% 9.4%

Source: ENF

Suntech exports nearly 80% of its production while the remaining 20% is

for its domestic market. However, the company expects the domestic

market will eventually account for 50% of its production as China embarks

to increase usage of renewable energy to account for 15% of the country’s

electricity generating capacity by 2020. Suntech major export markets are

in Europe, US and Japan. Major markets in Europe are Germany and Spain

and to a lesser extent Italy. Suntech, as with most export oriented

manufacturing businesses in China, has the advantage of lower

manufacturing and operating cost to compete in the international markets.

Suntech markets its PV products outside of China through distributors while

in China the company supplies its products namely PV cells to module

manufacturers and directly to the end-users. Its sales and marketing

strategy is to established a diversified geographical and customer mix

including end market applications.

124

Besides, depending on distributors, Suntech recently established

Suntech America and Suntech Europe as part of its long-term

strategy to market its PV cells and modules.

Suntech’s acquisition of MSK provides the company a platform to

enter the Japanese market and MSK’s offices in Europe and the US

synergises with Suntech’s overseas market expansion strategy.

Suntech’s business relationship with SolarWorld as an OEM provides

Suntech the opportunity to indirectly enter other markets in

Europe, which its does not have a strong presence such as France

and Greece.

Suntech is establishing new offices outside of Wuxi (its head office) to

increase its market presence in China. In recent years, Suntech has

established sales offices in Shenzhen and Shanghai.

Suntech’s acquisition of MSK provided the company a platform to enter the

Japanese market and synergise with MSK’s already established presence in

the US and European markets. Suntech’s acquisition also enables it to

acquire MSK’s expertise in systems integration and technologies in building

integrated products, which the company considers as value added with high

profit margins. The acquisition would also result in some of MSK’s

manufacturing activities and backend operations relocated to China offering

MSK the opportunity to lower its manufacturing and operating cost.

7.1.6 Ensuring Supply of Silicon Wafers

Suntech faced a major challenge in last 2-3 years on supplies of silicon

feedstock for its PV cells i.e. constrain in supplies and rising prices. On the

technology front, its strategy is to develop technologies using thinner silicon

wafers and improving the conversion efficiencies of its PV cells. On the

supply side, its strategy is to enter medium to long-term agreements with

its suppliers for wafers at fixed-prices and below spot prices. These

agreements ensure security in supply and reduce its manufacturing cost for

PV cells. Suntech expects 70% if not all of its projected needs for silicon

wafers in 2007 would be from such agreements.

In July 2006, Suntech entered into a 10-year binding agreement

with MEMC Electronic Materials, Inc., to purchase silicon wafers.

The purchases valued between US$5 billion and US$6 billion allows

Suntech to purchase wafers at pre-determined prices. As part of

the agreement, Suntech would provide interest free loans or

security deposits to MEMC to expand its production capacity to

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meet Suntech’s supply requirements. MEMC would also receive

warrants to purchase a 4.9% equity stake in Suntech.

In October 2006, Suntech announced it had into a 5-year

agreement with Renewable Energy Corporation (REC) of Norway to

purchase silicon wafers. The purchased valued at US$180 million

allows Suntech to purchase wafers at a predetermined fixed price

below the spot market prices. Furthermore, prices negotiated with

REC would decrease in the subsequent years during the duration of

the agreement. The agreement structured on “take or pay contract”

would require Suntech to purchase specified quantities of silicon

wafers and pay REC if it does not take delivery.

In November 2005, Suntech entered into a 5-year agreement to

purchase solar grade silicon wafers from Shanghai Cotonsec Solar

Technology Co., Ltd. The purchase valued between US$475 million

and $580 million would allow Suntech to purchase silicon wafer at a

predetermined price subjected to annual review and increase its

purchase volume during the agreement period.

In December 2006, Suntech announced an agreement to purchase

silicon wafers over a five-year period from Sunlight Group, Inc.

Sunlight based in the United States has silicon wafer manufacturing

facilities in China and Japan. Purchases estimated to worth between

US$366 million and US$670 million during the five-year period

allows Suntech to increase its purchases at fixed prices each year

with the prices reviewed annually.

Suntech also has a 10-year agreement for Deutsche Solar AG of

Germany to supply fixed quantities of silicon wafer monthly

beginning in January 2006. It also has a 10-year cooperation

agreement with LDK Hi-tech Co., Ltd. of China beginning with

supply of 30 MWp of silicon wafers in 2006 and 100 MWp in 2007.

Suntech entered into an agreement with Luoyang Silicon Co., Ltd.,

of China to establish a joint venture facility with a capacity of 30

MWp to produce PV cells and modules. The new facility located in

Luoyang, China, and expected to be operational in 2007. As part of

the joint venture agreement, Luoyang Silicon would supply to the

new facility on an exclusive basis silicon wafers for manufacturing

the PV cells.

Suntech entered into a 10-year agreement with China’s LDK Hi-

Tech to supply Suntech 30 MWp of silicon wafers in 2006 and 100

MWp in 2007.

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Besides improving long-term supplies of silicon wafers, Dr Shi expects

immediate cost savings in 2007 with purchases of the wafers below the spot

market prices. This would contribute towards improvements in the profit

margins. Having long-term supply contracts augurs well for Suntech with its

aggressive strategy to increase production capacity from 270 MWp in 2006

to 660-720 MWp by 2007.

7.2 Short Case Study on Yingli Solar

7.2.1 Background

Company : Baoding Tian Wei Yingli New Energy Resources Co., Ltd.

Address : No. 3055 Fuxing Middle Road, Baoding National New High-Tech Industrial Development Zone, Baoding, Heibei, China

Tel : +86 312 8929 700

Fax : +86 312 315 1881

Website : http://www.yinglisolar.com

Baoding Tien Wei Yingli New Energy Resources (Yingli Solar) is another

major manufacturer of PV products in China. The company’s headquarter is

located at the Baoding National New High-Tech Industrial Development Zone

in Baoding, Heibei Province. The company began in June 2002 when it

initially assembled modules and has since integrated across value chain

manufacturing mc-Si silicon ingots, wafers and cells for production of its PV

modules.

The General Manager and founder of Yingli Solar is Mr Liangsheng Miao who

has a master’s degree in business administration from Beijing University.

Unlike Dr Shi from Suntech, Mr Miao had only 2-3 years in the PV industry

before establishing Yingli Solar in 2002. Yingli Solar’s success in recent

years is a result of Mr Miao’s entrepreneurial spirit rather technical

qualification. Mr. Miao is also the Executive Director of China’s Photovoltaic

Committee of the China Renewable Energies Association.

Tibet Tianwei Yingli New Energy Resources (Tibet Yingli) is a subsidiary

company of Yingli Solar. Tibet Yingli is involved in assembling and marketing

PV modules in the Tibetan region as part of China’s Renewable Energy

Development Programme. The subsidiary’s plant is at the Dazi Industrial

Garden in Tibet and has production capacity of 3 MWp. Another subsidiary is

Chengdu Yingli with its operations at Xindu Industrial Garden, Chengdu.

Besides marketing Yingli Solar’s range of PV modules, Chengdu Yingli is also

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involved in installation and systems integration for grid and off-grid PV

systems.

7.2.2 Management and Organisation

Mr Mao, as an entrepreneur, is the driver of Yingli Solar’s business setting

the company’s directions and strategies. Mr. Xiangdong Wang is the Vice

President responsible for plant operations while Mr Zhiheng Zhao is the Vice

President responsible for business operations. Dr Seok Jin Lee (a Korean

National) brings his experience in PV as Yingli Solar’s Chief Operating

Officer. Prior to joining Yingli Solar, Dr Lee worked with Hyundai Heavy

Industries as the General Manager for the company’s solar business. Dr Lee

has a master’s and doctorate degree in electrical engineering from Yonsei

University, Korea.

Dr Guoxiao Yao brings his technical expertise in PV as the Yingli Solar’s

Chief Technical Officer. Dr Yao graduated with a master’s degree in solar

engineering from the European Solar Engineering School, Dalama

University, in Sweden. Dr Yao also has a doctorate from his studies on PV

engineering from the University of New South Wales, Australia, which is

renowned for its research and developing new technologies in PV.

Yingli Solar’s employees have been increasing since it began operations. The

number of employees increased from 300 in 2003 to more than 1,000 by

the end of 2006. Nearly 85% of the employees are involved in

manufacturing wafers, cells and modules. Production of modules, which

requires greater use of labour than manufacturing wafers and cells, account

for nearly half of the employees involved in manufacturing.

7.2.3 Developments

Yingli Solar’s business strategy is to integrate manufacturing across the

value chain from manufacturing silicon ingots to PV cells for production of

its modules. Yingli plans to increase the production capacity for each of the

processes in the value chain (ingots, wafers, cells and modules) to 600 MWp

by the end of 2008. Suntech’s business strategy, on the other hand, focuses

increasing capacity and production of cells and modules preferring to

purchase wafers from suppliers.

The advantage of Yingli Solar’s integration is it would only need to focus

sourcing for silicon and not subjected to interruption in supply of other

silicon materials across the value chain. Another advantage is it would be in

a position to sell any excess production in the value chain to other

manufacturers. Integrating across the value chain and increasing the

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production capacity to 600 MWp also provides Yingli Solar the economies of

scale and in a position to reduce its production cost.

Yingli Solar’s production of PV cells quadrupled from 13 MWp in 2005 to an

estimated 60 MWp by 2006. All the cells produced at its plant were for

manufacturing of Yingli Solar’s modules. Consequently, production capacity

also increased from 60 MWp in 2005 to 90 MWp by 2006.

Table 7.2.5a. Yingli’s PV Cell Production in China

2003 2004 2005 2006e

Capacity (MWp) 6 10 60 90

Share of capacity in China 13.3% 11.5% 16.7% 6.6%

Production (MWp) - 4.7 13.0 60.0

Share of production in China 0.0% 9.4% 8.3% 8.7%

Source: ENF

Production of modules increased from 13 MWp in 2005 to an estimated 100

MWp by 2006 due to increasing demand from exports. In 2006, Yingli Solar

had to source cells from other cell manufacturers since its cell plant was

unable to produce sufficient quantities due to the global silicon shortage.

Table 7.2.5b. Yingli’s PV Module Production in China

2003 2004 2005 2006e

Capacity (MWp) 50 50 100 200

Share of capacity in China 22.4% 9.5% 6.7% 5.3%

Production (MWp) - 5 13 100

Share of production in China 0.0% 2.6% 2.9% 8.2%

Source: ENF

The company intends to establish a Solar Grade Silicon Crystalline Wafer

Research Centre and a Professional Training Centre. The purpose of the

Research Centre is to develop new technologies in PV whereas the Training

Centre would develop the technical skills of its employees. To keep abreast

with new technologies and its developments, Yingli Solar will continue to

collaborate with other research institutions in China and overseas such as

the University of New South Wales in Australia.

Yingli Solar exports nearly 90% of its production of modules and current

main market is Germany and Spain but yet to make any significant entry for

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its modules into the US market. Exports are through its European

distributors usually through a supply agreement under negotiated prices.

For example, Maaß Regenerative Energien has a supply agreement with

Yingli Solar to receive over 160 MWp of modules from 2006 to 2010.

Another is Phönix Sonnenstrom purchasing 6 MWp in 2006 and 143 MWp by

2010. Yingli sells its production outside the supply agreement to potential

buyers at market prices.

A significant milestone for Yingli Solar is its expected listing on the stock

exchange through a public listing. Initially intending to list on NASDAQ in

the US, the company eventually decided to list on the New York Stock

Exchange. One of the major reasons for Yingli Solar’s listing is to obtain

capital for its plant expansion. Expectations are the company would list on

the New York Stock Exchange sometime in 2007.

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8.1 Future Challenges

Government support for PV. The market for PV will continue to depend

on government support through financial incentives or subsidies until end-

user prices of PV are sufficiently attractive to create mass end-user

demand. Reduced government support and changes in government policies

not in favour towards PV would dampen demand. Delays in implementing

renewable energy programmes for PV would stall demand for PV.

There is already build-up in production capacity across the value chain and

further capacity would come online in 2007-2010. Reduction in government

support for renewable energy programmes would create excess or idle

capacity in the value chain.

Overcapacity across the value chain. As new players enter the PV

industry and existing players expand their production capacity across the

value chain, there is possibility of overcapacity in 2007-2010 if capacity

increases too aggressively. Prices of key materials and components such as

polysilicon, wafers, cells, thin films and modules could decline drastically

before manufacturers could recover their cost of investments. Silicon

manufacturers experienced such a scenario during the burst of the

technology bubble in 2001. In such a scenario, consolidation of the PV

industry would occur sooner than expected.

Barriers to entry and business risks. Barriers to entry decreases as the

value chain moves from upstream activities to downstream activities.

Production of polysilicon has the highest barrier to entry and therefore this

segment of the value chain is characterised by fewer players and high

investment cost. As activities moves downstream, the barriers to entry

decreases and the segment of the value chain involved in PV installation has

the lowest barrier to entry with the highest number of players and lowest

investment costs.

Investment cost is highest for production of polysilicon and

therefore large-scale production is necessary to achieve economies

of scale. The risk from reduced government support is highest with

the silicon manufacturers because of its very high investment costs

and any financial losses would be the most severe in this segment.

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Wafer manufacturers are at risk in securing silicon supply especially

smaller manufacturers who are unable to enter into long-term

supply agreements with the silicon manufacturers. Another risk is

the market moving away from silicon based PV resulting in idle

machineries.

Cell manufacturers are at risk in securing supplies for wafers

especially in times of silicon shortages resulting in idle capacity and

inability to supply cells to the module manufacturers. Similar to the

wafer manufacturers, a market moving away from silicon based PV

would result in idle machineries.

Modules manufacturers face risk of overcapacity from aggressive

industry expansion in production capacity and new players entering

the industry. A crowded market and slowing demand for PV would

result in pricing pressures. Aggressive expansion into the global

market from manufacturers in China is an overcapacity threat.

Reducing the cost of PV. The challenge for the PV industry is to reduce

the cost of PV systems to the level that it no longer requires government

support. The system price has to be in the range of at least US$3 per Wp to

achieve a significant market and US$1 per Wp to create a mass market.

Current cost of PV system ranges from US$7 to US$10 per Wp and would

to decline beginning in 2008 to US$3.50 per Wp earliest by 2015 according

to some sources. Thus, at least from 2007 to 2015, PV systems would have

to depend on government support to sustain the PV industry and market.

The potential may lie with thin films from improvements in technology to

mass produce thin films cheaply. The US Department of Energy cost goal for

thin films is about US$0.33 per Wp based on a module efficiency goal of

15%. At such price, it is possible for a PV system to cost below US$3 per

Wp. Though possible, it may not occur by the end of the decade until

further improvements in thin film technology.

8.2 Future Directions

Overall scenario. Demand for PV will continue to grow but a slower rate of

growth averaging 20% annually from 2007 to 2010. Based on this

projection, demand will grow from 2,400 MWp in 2006 to 5,000 MWp by

2010. Government renewable energy programmes especially in Germany,

Japan, United States, Spain, Korea and China would drive demand for PV in

2007-2010.

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Shortage of silicon will continue until 2008 when new polysilicon plants

begin operations. The polysilicon industry will also see new players entering

the industry attracted by high profit margins created by the shortages. The

trend within the polysilicon industry is to enter into multiyear supply

agreements requiring initial payments from their customers. This puts

smaller manufacturers purchasing smaller quantities of polysilicon at a

disadvantage since they are often unable to commit to multiyear supply

agreements.

Leading manufacturers will continue to reduce the cost of producing their PV

cells. These include improving cell efficiency among c-Si and thin film cell

manufacturers. Since polysilicon accounts for 40%-50% of a module’s

manufacturing cost, crystalline silicon cell manufacturers will continue to

develop technologies to produce thinner silicon wafers and reduce wastage

from sawing of ingots.

Shortages and increasing prices of polysilicon in recent years have driven

demand for thin film modules. The European Photovoltaic Industry

Association predicts demand for thin film modules would increase from 100

MWp in 2005 to 1,000 MWp by 2010 increasing its share of the module

market from 6% in 2005 to 20% by 2010. Many new thin film

manufacturers are start-up companies attracting venture capitalists in

potential thin-film companies.

China in the global market for modules. China is becoming a leader in

the global PV industry and market with increasing production capacity

across the value chain. Chinese manufacturers have been increasing their

production capacity for c-Si modules from 1,500 MWp in 2005 to 2,800

MWp in 2006. By 2007, China would increase its module production capacity

to nearly 4,000 MWp with further increases expected by 2010.

Development of China’s PV industry since 2004 has less to do from

demands from the domestic market but more from its export markets.

China’s advantage is it low labour cost to manufacture modules compared to

the United States, Japan and Europe. China exports more than 90% of the

modules produced in the country and exports would continue to drive the

industry in China and influence the market for PV modules.

Consolidation of the PV industry. A consolidation within the industry is

already beginning to take place. Major companies previously involved in

downstream activities in module and cell manufacturing are gradually

moving upstream into wafer manufacturing and some have invested into

silicon production. Consolidation is most likely to occur down the value chain

or in downstream activities due to the lower barriers to entry.

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With the industry consolidation and increasing production capacity, the

industry is gradually developing into a mass production industry improving

the economies of scale. With economies of scale, manufacturers will be able

to use their cost advantage to drive prices downwards generating greater

end-user interest and purchase for PV. With price decreases from large-

scale production, PV modules will gradually come into a commodity product.

Smaller companies without the financial resources to integrate across the

value chain will eventually merge with other companies or acquired by the

larger companies. However, industry consolidation would also improve the

competitive position of some of the smaller companies as they re-orientate

their business strategies and enter into niche markets.

Future technologies. The technology for c-Si cells and modules is a

maturing technology and industry predictions that an efficiency of 25% is

the maximum achievable with c-Si technology. Furthermore, applications for

c-Si technology are limited to flat panels. Though c-Si modules will continue

to dominate the market by 2010, its share of the PV market will gradually

erode due to competition from thin films.

Better materials, developments in thin-film transistor technology and

improved production technologies for thin-films are becoming a reality. Mass

production of thin films and improvements in efficiency that were once

technological barriers are removing gradually. The advantage of thin films is

its potential to produce PV modules at costs much lower than c-Si cell

modules.

Thin films have vast applications not possible with flat panel c-Si modules.

Thin films provide opportunities for applications in building integrated

modules including roof tiles, windows and facades. Thin films can be

deposited on many types of surfaces and therefore has potential in flexible

plastics, glass and coatings on building materials to generate electricity.

CIGS thin films are generating interest with improvements in efficiency on

par with mc-Si modules under laboratory conditions and their potential for

mass production. Japanese companies are developing a-Si/sc-Si hybrid cells

and Sharp announced in January 2007 that it had developed the technology

to mass-produce a-Si/sc-Si thin films with an efficiency of 13%.

8.3 Opportunities

Business potential. Projected demand for PV would grow at average of

20% annually in 2007-2010. Though at slower pace growth, the PV market

still represents enormous potential for manufacturers. The following table

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summarises the market value of the various segments of the value chain

over a four-year period in 2007-2010.

Opportunities also exist for suppliers of materials for manufacturing PV

modules. Total value estimated on the value of these materials during the

four-year period in 2007-2010 is US$6.2 billion. The following table

describes breakdown of the value of the materials.

Opportunities for PV modules. Significant markets for PV and PV

modules in 2007-2010 are Western Europe (namely Germany and Spain),

Japan, US, Korea and China, driven by government supported renewable

energy programmes. Japan is a relatively closed market for exporters while

China is a net exporter of PV and in a position to compete on price with

Table 8.3a. Estimated Market Value for PV Industry in 2007-2010

Product

Total Demand in

2007-2010

Unit Cost

(US$)

Market Value in

2007-2010

(US$ billion)

Modules 15,500 MWp 3.50 per Wp 54.3

Silicon cells 13,000 MWp 2.70 per Wp 35.1

Wafers 13,000 MWp 1.40 per Wp 18.2

Polysilicon 140,000 tons 47.00 per kg 6.6

Thin films 2,400 MWp 2.00 per Wp 4.8

Inverters 17,500 MWp 0.50 per Wp 8.8

Table 8.3b. Market Value of Materials for PV Modules in 2007-2010

Materials/ Components

Market Value (US$ million)

Glass 1,364

EVA 1,153

Frame 1,073

Junction box 998

Tedlar 918

Interconnect 477

Adhesive 217

Total 6,200

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manufacturers intending to export modules into China. The European Union

and the US are net importers of PV modules and are potential markets for

exporters.

Opportunities for c-Si cells. China would continue to be a net importer of

c-Si cells in 2007-2010 as the country expands its production capacity for

PV modules. Even with the increase in China’s silicon production capacity,

production would not be able to meet China’s demand for c-Si cells,

The US would continue to be a net importer of c-Si cells since US companies

currently focus on developing thin film technologies. However, c-Si modules

would continue to dominate the market in the US at least until 2010. The

federal and various state renewable energy programmes for PV is creating

demand for c-Si cells from module manufacturers in the US.

Opportunities for polysilicon. Continuing demand for PV in 2007-2010,

though at slower pace of 20% annually presents market and business

opportunities for polysilicon manufacturers to increase their production

capacity. The market during the four-year in 2007-2010 is estimated at

US$6.6 billion.

Opportunities for thin films. Price will continue to be an important

determinant for PV and thin films’ lower manufacturing cost offers

opportunities to market lower cost PV. Thin films offer opportunities for

applications in building integrated modules including roof tiles, windows and

facades. Thin films also have applications in flexible plastics, glass and

coatings on building materials to generate electricity.

Opportunities for PV inverters. Inverters have a lifespan of 5-10 years

while PV modules have a lifespan of 25-30 years. Currently the replacement

market for inverters account for 10% of the inverter production. Over the

longer term, the proportion of the replacement market would increase as

old inverters come to the end of their lifespan.

Inverters have gone beyond its basic function of converting current from DC

to AC and there is trend for electronic gadgetry and stylish designs in

inverters. Inverters are becoming more like consumer electronics and a

potential for manufacturers to develop consumer appeal for their products.

Opportunities to attract investments. Countries that can attract

investments through tax holidays on income; have an available and

educated workforce; offers lower investment cost on land and capital; low

labour cost; an established semiconductor industry; and a government with

a pro-business policy are potential countries to attract PV manufacturers to

invest in the country. Further attractions are countries with low energy cost

136

to the industries and strong physical infrastructure. Developing countries

such as the Czech Republic, Mexico and Poland have successfully attracted

foreign companies to invest offering similar incentives. First Solar’s plan to

establish a 100 MWp thin film manufacturing plant in Malaysia was also a

result of such attractions.

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References from reports

1. PV Status Report 2006, August 2006, European Commission, DG Joint Research Centre

2. Polysilicon Supply, Demand & Implications for the PV Industry, 2006, Prometheus Institute

3. Suncreen II, Investments Opportunities in Solar Power, July 2005, Credit Lyonnaise

4. The Chinese Silicon Photovoltaic Industry and Market, 2006, Nicoletta Marigo, Centre for Environmental Policy, Imperial College London

5. Pessimistic vs Policy Driven Market Scenarios towards 2010 in Europe and Globally, December 2005, European Photovoltaic Industry Association

6. Solar Generation, September 2006, Greenpeace and European Photovoltaic Industry Association

7. Photovoltaic in Germany, Market and Industry Development, 2006, Germany Solar Industry Association

8. Future State of the PV Industry, 2006, M. Morgan, W Coleman, Y Yudi, S Yin and C Casillas

9. Pessimistic vs Policy Driven Market Scenario toward 2010 in Europe and Globally, December 2005, European Photovoltaic Industry Association

10. Solar Electricity in 2010, 2001, European Photovoltaic Industry Association

11. Solar Photovoltaic Market, Cost and Trends in the EU, September 2006, IEEJ

12. A Vision for Photovoltaic Technology, 2005, European Commission

13. US Solar Industry, Year in Review, 2006, Prometheus Institute

14. Making Affordable Thin Film Cells a Reality, 2006, Miasole

15. The Status and Outlook for the Photovoltaic Industry, 2006, BP Solar

16. Photovoltaic Energy Barometer, April 2006, Observ’ER

17. Chinese Solar Cell and Panel Manufacturer Market Survey, 2006, ENF

18. European Solar Cell and Panel Manufacturer Market Survey, 2006, ENF

19. Trend in Photovoltaic Applications, 2006, PVPS, International Energy Agency

20. PV Market in Japan, 2006/2007, RTS Corporation

21. US Solar Industry Year in Review, 2006, Solar Energy Industries Association

References from company websites

22. Sharp Solar - http://sharp-world.com/solar/index.html

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23. Kyocera - http://global.kyocera.com/prdct/solar/index.html

24. Sanyo - http://www.sanyo.com/industrial/solar/

25. Suntech - http://www.suntech-power.com

26. SolarWorld - http://www.solarworld.de

27. SOLON - http://www.solon-pv.com/english/index.html

28. Schott Solar - http://www.schott.com/photovoltaic/english/index.html

29. Isofoton - http://www.isofoton.com

30. BP Solar - http://www.bpsolar.com

31. Q-Cells - http://www.q-cells.com

32. Motech - http://www.motech.com.tw

33. Mitsubishi Electric - http://global.mitsubishielectric.com/bu/solar/index.html

34. Mitsubishi Heavy Industries - http://www.mhi.co.jp/power/e_a-si/index.html

35. Mitsubishi Materials Corporation - http://www.mmc.co.jp/english/index.html

36. Hemlock - http://www.hscpoly.com/

37. Wacker - http://www.wacker.com/cms/en/home/index.jsp

38. REC - http://www.recgroup.com

39. Tokuyama - http://www.tokuyama.co.jp/eng/

40. MEMC - http://www.memc.com

41. SMA – http://www2.sma.de/en/home/index.html

42. Fronius – http://www.fronius.com

43. Xantrex – http://www.xantrex.com

44. Mastervolt – http://www.mastervolt.com

45. Sputnik Engineering – http://www.solarmax.com

46. First Solar – http://www.firstsolar.com

47. Kaneka – http://www.pv.kaneka.co.jp

48. United Solar – http://www.uni-solar.com

49. Kyocera – http://www.global.kyocera.com/prdct/solar/index.html

50. GT Solar – http://www.gtsolar.com

51. Spire Corporation – http://www.spiresolar.com

52. EnergoSolar – http://www.energosolar.com

53. Etimex – http://www.etimex.com

54. Bridgestone – http://www.bridgestone.co.jp.english

55. Coveme – http://www.coveme.com

56. Energy Equipment Testing Services – http://www.eets.co.uk

PV International Industry Research Final

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