InterSolar 2009: Pragmatism Trumps Exuberance

This week, San Francisco plays host to a simultaneous staging of the annual SEMICON West and InterSolar tradeshows.

But the mood isn’t great. Semiconductor equipment providers are finding it hard to shake the gloom that clouds the sector, while the sparkle that glossed the solar industry seems to have lost a little luster since last year’s show.

Still, with San Francisco showcasing so much remarkable innovation this week, there’s reason for optimism. For more on what to expect at the shows, TechFluential asked Andy Skumanich, Ph.D., a former Applied Materials executive and Business Development VP at solar start-up Innovalight. Now, as CEO of SolarVision Consulting, he charts strategies for technology companies parlaying their innovation in the solar space.

The following is a summary of our conversation.

TF:Funding of solar-related companies has taken a hit this year. According to Q2 data from the Clean Tech Group, solar saw its lowest level of investment in over three years. Does this suggest that the days of massive $100-200 million capital infusions into PV companies are over?

AS: The days of unfettered large-scale spending are indeed over. Now, investors are more savvy and more aware of how the market requirements have to match with the technology. The best example is for low-efficiency thin film. Today, investors are saying that unless the technology can provide about 10% conversion efficiency, we’re not interested. That’s a far cry from the early days (2 years ago) when the investment decision rested simply on a company’s ability to make something that converted light into electricity.

TF: On a related note, are stimulus dollars pouring into the coffers of local PV companies yet? And how many are taking advantage of the DOE Loan Guarantee Program?

AS:Not yet, but it’s starting. So far this year, multiple funding opportunities have opened. But because of the overwhelming demand, and the review process, even the January close date funding programs are just now being published. The Government is trying to balance getting out a large amount of support while doing so with a measured review. It’s possible that the pace will pick up in the next couple of quarters.

As for the number of companies taking advantage of the Government-matching development funds and the DOE Loan Guarantees, I can say from my experience that if a company is NOT applying for something, they are in the minority. They all know about the resources. Academic institutions are also well appraised and pursuing their options as well.

TF:What topic(s) will likely dominate the discussions at InterSolar?

AS:Two topics will likely dominate the discussions: (1) just how bad is it going to be this year for PV, and (2) how far along are we coming for grid parity.

With regard to the first, even though the industry is staggering out of the double-barrel hits of the global economic crisis and falling off the cliff of the PV drop in Spain, companies are not on their feet just yet. There is substantial uncertainty about what the eventual size of the PV market will be this year. But, speculation by industry experts suggests that we’ll be doing well if we are flat from last year. And there may even be a drop-off. Of course, there are companies that will do well--because of their momentum and market positioning, First Solar being the prime example. However, many companies have taken a hit and are hurting.

On the issue of grid parity, the more than 30% drop in module prices is a “good” thing one might suppose. In fact, the current levels actually bring us closer to the historical trend curve. Prices had shot up from that dropping price trend curve in the previous 2 years due to high demand and low poly availability. Now, however, there is reduced demand and extra capacity. So, the industry is reaching the lower targeted costs, albeit in a painful way, which brings the reach to “nominal” grid parity that much closer.

However, grid parity is a simple term for a complex entity simply because of the high upfront costs for PV installation. The biggest impediment for PV implementation currently is the tight credit market. I personally know of specific installation attempts in Germany and other locations where the project is not getting the right up-front funding. So, grid parity really must reflect the complex financial requirements and configurations needed to address the up-front expenditures.

Recently, I talked with a property development firm that had the most unusual combination of circumstances that allowed for “grid parity” installation. They had: (1) lots of roof space, (2) the proper appetite for the various tax credits and incentives, (3) the in-house expertise to navigate the financial complexities, and (4) a tech-savvy in-house team. They became their own PPA. That is quite the combination, but it reflects the gap between just having low $/W product and actually having that product on roof-tops generating grid-parity electricity.

TF:Beyond PVs, what’s happening in the solar value chain? Are you seeing any specific technologies taking root?

AS:Actually, it’s exciting to see the breadth of exploratory technologies from my vantage point. If anything, the notion that there’s not much left to do in c-Si wafer-based PV is completely wrong. There are interesting developments in all aspects of the c-Si value chain which run the gamut from elegant and quite promising (SiGen’s new mode of wafer exfoliation), to evolutionary but valuable changes, such as improved production standards and more deliberate module testing. In all likelihood, the various technologies are all running ahead, and there will be a lot of good developments for the foreseeable future. We really do have the attention of the country’s best-and-brightest, and that’s a tremendous opportunity for both the PV community and our global community.

TF:Do you see similarities between the emergence of the solar value chain and what happened in the semiconductor industry when IC manufacturers began outsourcing for critical process technologies more than 30 years ago?

AS:There are many parallels between the solar and semiconductor worlds and this overlap makes for fascinating comparisons and contrasts. But that would take us beyond the question at hand. The question about outsourcing of critical process technologies is not yet happening in solar. In fact, for the companies that I’m in regular contact with (including many of the top 15 global companies), the opposite is true. They are more concerned about maintaining their competitive advantage by keeping that very element (their process knowledge) in-house and carefully guarded. The PV manufacturing companies see themselves as defined by their technology capabilities so there won’t be any of that outsourced for a good time to come, unlike the current IC sector.

TF:Are there particular semiconductor process technologies/tools that are proving a natural fit for PV manufacturing applications?

AS:The two worlds are really quite different in terms of what drives the tools. Whereas the IC world is driven by increasing complexity and reducing dimensions with 100s of wafers-per-hour throughput, the solar PV world is driven by ideally reducing complexity and increasing dimensions (size of cells), but having multiple thousands of wafers-per-hour throughput. This mis-match—namely the need to drive production to the stratosphere, not the dimensions to the atomic level--is what catches many IC refugees off-guard. The most common cross-over from ICs to Solar is really in “best-practices”. An interesting example can be found at SunPower, where in the early days as part of Cypress Semiconductor, they indeed benefited from being in the IC environment to implement the latter’s methodologies and rigor.