Tariffs-Smariffs, We Can Already Make the World’s Lowest Cost Solar Modules — Here In The US
By Brad Mattson, CEO Siva Power and author of The Solar Phoenix
The stiff solar tariffs recently imposed by the US on Chinese panels have made quite a splash. I think it is great my government is pushing to level the playing field so more solar companies can make products from a technology we invented. However, trade subsidies are unnecessary in the long run. That’s because it’s already possible to make solar modules for under $0.50/watt in the US — without new tariffs. It comes down to applying America’s genius for invention to solar technology production.
For solar modules, that means choosing the right photovoltaic (PV) technology and best manufacturing approach so PV modules can be scaled cheaply. That’s being made possible by trends in the solar industry. Foremost is the sector’s consolidation into a few large companies that will become the big names of the future. This trend is exactly what happened to automobile manufacturing in the 20th century. History is already beginning to repeat itself for the renewable energy industry here in the 21st century — a development I talk about more here.
We know silicon PV was a brilliant technology. But if the US is going to regain its place as a solar manufacturer, it will have to go where the technology is heading today — thin film. “Hold on,” you might say. “Isn’t thin film dead and buried with Solyndra?”
The answer is simply, “no,” because new processes and research show that thin film can be scaled cheaply. This is a crucial difference given the trend lines in energy in general and the solar industry in particular.
Silicon PV was for the 20th century, when the solar industry was created, what I call Solar 1.0. But as we move into 2015, we have entered the era of Solar 2.0, where only those companies that can run gigawatt manufacturing facilities at lower costs will survive. We are also facing a 46,000 GW energy deficit that will fully manifest itself by the middle of this century.
Solar power is the renewable energy source that can best fill this global energy gap. To meet such demand, we need to start producing more solar power at utility-scale levels, and we need to do it fast. This is why choosing the right technology that allows for the necessary scalability is so important.
Take our company, Siva Power. At the risk of sounding self-promotional, I want to illustrate the point of thin film as the future by elaborating on our experience. It is highly likely that other companies are soon going to follow us into thin film. It will be the only way to scale this industry and make substantial profits in the process.
We have a plan to build a 300 MW capacity facility that will manufacture CIGS thin-film modules at an unsubsidized cost of $0.40/watt in its first year of operation. Within just a few years, that cost of production will drop to as low as $0.28/watt. Our bottoms-up cost model, which is similar to that of the National Renewable Energy Laboratory (NREL), clearly shows how such pricing can be achieved.
That $0.40/watt will be much lower than competitive CIGS companies (~$0.74/watt) and also lower than the best silicon production lines in China ($0.50-0.70/watt). And all of this can be achieved without government policy trying to level the playing field.
Our analysis reflects a detailed, bottoms-up calculation of costs for the manufacturing process. For each step, all cost elements — labor, electricity, spare parts, materials, consumables, water, gas, overhead… everything — are added together to reach the total processing cost ($/m2).
The Advantages of Glass over Silicon
A key element of reducing the cost is using glass as a substrate, which has already been scaled in the FPD industry. Much of the necessary equipment is essentially off-the-rack. By comparison, silicon as a substrate scales poorly because of the fragility of the wafer, and fabrication lines are unlikely to scale much more in the future. The only way to expand silicon capacity is to build lots of small lines…thousands of them. There is not much cost savings in that kind of scaling.
To complement our choice of CIGS material and glass substrate, Siva Power has selected 300 MW as the best scale for module production, or about 10 times the capacity of the typical silicon production line. By taking advantage of the high-speed automated tools already developed for the FPD industry, only minimal adaptation is needed to achieve 300 MW throughputs in solar, ensuring cost reductions and avoiding execution risk.
In Solar 1.0, China was able to dominate by brute-force replication of old silicon technology that simply flooded the marketplace with cheaply priced production. However, replicating many small factories is not equivalent to scaling the technology. Silicon cannot continue to scale cost-effectively because it is so capital-intensive.
In the era of Solar 2.0, solar power that helps fuel the world will come from scaled modules. Scaling itself reduces capital intensity, which brings down costs and makes solar power cheaper. But this is only achievable with the right technology. Silicon cannot and will not be the technology of the future because it cannot be scaled cost-effectively. But thin film can.
With current technology, the capital cost alone would be about $50B to build solar factories to meet demand over the next 5 years. Using Siva’s thin film technology, however, that cost would only be $15B, about 1/3rd the capital cost. Over the long run, out to 2050, this could save the industry $5T, that is trillion with a “T.”
The real action needed to realize this tremendous potential is investment in competitive new U.S. manufacturing capability, not applying tariffs to try to subsidize old technology. Embracing this new process, which just happens to be made in America, is how we can achieve dominance in Solar 2.0.
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