The upside of a down year: Advances in the global solar industry in 2011

by Solar Server International Correspondent Christian Roselund
February 2nd, 2012

2011 is being looked back on in the global solar industry for many negative qualities. Primarily, a collapse in profitability in solar photovoltaic (PV) manufacturing led to companies restructuring, layoffs, plant closures, and even a number of bankruptcies. Late in the year a vicious trade dispute sharply divided the U.S. PV industry, which also saw significant negative press, most notably the fabricated scandal of the Solyndra DOE loan guarantee.

However, all of this obscures the fact that global PV, concentrating solar power (CSP) and concentrating photovoltaic (CPV) industries continued to grow in 2011, at some times and in serveral regions dramatically. But perhaps more significant in the long run were a number of technological and political breakthroughs during the year which promise to pave the way for the future growth of these industries, and the greater transformation of our global industry infrastructure.

And while there were significant developments throughout the solar industry in 2011, in this article we focus on two of the most important trends for the long-term growth of the industry: Technology developments in CIGS PV, CPV and CSP, and the rise of feed-in tariffs in Asia.

In the long view, 2011 may be seen as a much better year than what we have thought.


Technology development

CIGS technology advances

If the global PV market did not continue its exponential growth path, growing in perhaps a more limited linear fashion, the PV industry continued to make significant progress in improving efficiencies, particularly for thin-film technologies.

Q-Cells Q.SMART CIGS PV module; Image source: Q-Cells
Q-Cells Q.SMART CIGS PV module; Image source: Q-Cells

Of all the commercially available PV technologies, copper indium gallium diselenide (CIGS or CIS) PV technology stands out in 2011 for advances in efficiencies, manufacturing capacities, and market adoption. In 2010, CIGS represented only 2% of the global PV market share at 426 MW. And while the technology had reached efficiencies of 20% under laboratory conditions, efficiencies for commercially available modules were far lower.

In 2011, one company alone - Solar Frontier - produced 577 MW of PV modules, with a half dozen competitors also producing CIGS modules at comparable efficiencies.

Solar Frontier's commissioning of its landmark Kunitomi PV plant, which boasts an annual production capacity of 1 GW, will likely be remembered as a landmark event for CIGS technology. Even more remarkable is that Solar Frontier appears to have shipped more than 500 MW of its product during 2011. Solar Frontier is far ahead of any other CIGS producer in size, with its nearest competitor, Solibro, boasting only 135 MW of capacity.

Workers at Solar Frontier's Kunitomi plant inspecting modules. The factory is the worlds largest CIGS PV production facility, with an annual output capacity of 900 MW
Workers at Solar Frontier's Kunitomi plant inspecting modules. The factory is the worlds largest CIGS PV production facility, with an annual output capacity of 900 MW

Even if it is largely the result of only one company, this increase in manufacturing capacities and shipments has followed rapid increases in efficiencies. For commercially available modules, both Q-Cells subsidiary Solibro and Soltecture have begun mass-production of modules with 13.4% efficiencies.

Many companies are getting closer to commercializing their developments in the lab. MiaSolé produced 15.7% efficient "champion" modules in late 2010. In 2011 Solibro took the lead in efficiency records, reaching 17.4% aperture area efficiency with a 16 square centimeter CIGS module on November 29th, 2011.

Ongoing increases in efficiency will be the result of work by both CIGS manufacturers and equipment manufacturers. One notable development in 2011 for equipment technology was Manz AG's acquisition of the production line located at Schwäbisch Hall, Germany, from Würth Solar.

Manz states that this production line will be converted into an innovation line for the further development of CIGS production and process technology. Manz also notes that with the acquisition it is also the only equipment supplier globally with 118 CIGS experts on staff.

Flexible CIGS is also setting records. On May 19th, 2011 the Swiss Federal Laboratories for Materials Testing and Research (EMPA) announced that they reached an 18.7% efficiency with flexible CIGS cells.

The Ammerland PV plant, currently the world's largest operational CIGS plant at 20.8 MW; Image source: Martin Bucher
The Ammerland PV plant, currently the world's largest operational CIGS plant at 20.8 MW; Image source: Martin Bucher

Ultimately the test of this technology is adoption, and in this realm CIGS also saw new records. On October 28th, 2011 Q-Cells and GP Joule officially opened the 20.8 MW Ammerland PV plant in Lower Saxony. Since that time, Solar Frontier has announced that it will supply modules for an even larger PV plant.

It is unknown if CIGS can carve out a major share from the dominance of crystalline silicon (c-Si) PV in coming years, given rapidly falling c-Si costs. Critics note issues with performance stability in CIGS, particularly the potential for moisture damage. On the other side, Q-Cells is quick to point out its Q.SMART modules' high performance in tests, and CIGS producers emphasize the modules' "light-soaking" effect and greater relative performance in low-light conditions over c-Si.

Regardless of what the future holds, following the rapid expansion of efficiencies, capacities and market adoption, 2011 saw CIGS emerge from a niche technology into the mainstream.


CPV wins big contracts

Another PV technology that saw a banner year in 2011 was CPV. While high efficiencies and low costs have been boasted by CPV for some time, 2011 also saw this technology move into the big time with some very large PPAs and a major factory commissioning.

CPV makes big promises. While application of the technology is limited to areas with very strong natural sunlight, CPV producers claim that under these conditions they can deliver a much lower levelized cost of electricity than conventional PV technologies.

In addition to the PPAs for 305 MW of CPV plants using Concentrix systems in Southern California, Soitec has plans to build CPV plants in Morocco and South Africa, and has begun shipping units for a Chinese CPV plant; Image source: Soitec
In addition to the PPAs for 305 MW of CPV plants using Concentrix systems in Southern California, Soitec has plans to build CPV plants in Morocco and South Africa, and has begun shipping units for a Chinese CPV plant; Image source: Soitec

Despite these big promises, CPV has represented a fairly small market. GTM Research estimates that the CPV market volume in 2010 stood at only 5MW. The largest CPV plant in the world at 7.8 MW was built in several phases in Spain between 2006 and 2008, with another 5 MW plant in New Mexico with many smaller plants in the 500 kW - 1.5 MW range.

However, that may soon change. In 2011, San Diego Gas & Electric Company (SDG&E, San Diego, California, U.S.) has signed power purchase agreements with Tenaska Solar Ventures and Concentrix for 305 MW of Soitec's Concentrix CPV systems, which will be located in several large plants.

Soitec is also leading the international expansion of CPV into less developed areas. The company has plans to build CPV plants in Morocco and South Africa, and on November 30th, 2011 announced that it has begun shipping modules for a 3 MW CPV plant in China's Xinjiang province.

However, in order for these sorts of large projects to be completed, CPV's high-tech components need to be produced in much larger quantities.

It took until the end of the year for Soitec to finally name a location for its San Diego, California manufacturing facility, which will supply the modules for its very large American projects. However, Amonix took the lead in May 2011 with the commissioning of a CPV factory in Las Vegas with an annual output of 150 MW.

Ribbon-cutting at the Amonix's factory in Las Vegas, with former Amonix CEO Brian Roberterson (deceased) at right; Image source: Amonix
Ribbon-cutting at the Amonix's factory in Las Vegas, with former Amonix CEO Brian Roberterson (deceased) at right; Image source: Amonix

CPV technology also saw a major loss in 2011, with the accidental death of Amonix CEO Brian Robertson in a plane crash on December 22nd.


CSP and thermal energy storage

CSP technologies did not see the big market breakthroughs that CIGS and CPV saw in 2011. If anything, CSP suffered as PV prices fell, with a number of large CSP projects converting to PV, even as others began construction.

However, industry analysts argue that CSP's long-term edge is not its raw LCOE cost, but its ability to integrate low-cost energy storage. And in this regard 2011 saw a major improvement with Torresol Energy's commissioning of the 20 MW Gemasolar plant in Spain in May 2011, which in July 2011 became the first commercial-scale CSP plant to deliver electricity to the grid for 24 hours straight.

Caption: The Gemasolar plant under construction in May 2010, with molten salt thermal energy storage tanks in the foreground; Image source: SENER
Caption: The Gemasolar plant under construction in May 2010, with molten salt thermal energy storage tanks in the foreground; Image source: SENER

This carves out an important niche for CSP. As more variable and intermittent renewable energy sources, such as wind and solar, are brought online, the need for other sources to provide power in times of greater demand and reduced output grows.

In November 2011, the U.S. Department of Energy's National Renewable Energy Laboratories (NREL) released a report which examines the role that CSP with thermal energy storage (TES) can play in accompanying wind and solar generation by providing on-demand power to fill in during these periods. The report notes that TES provides advantages over other storage options, with an estimated round-trip efficiency of 95%, relatively low costs and excellent ability to ramp up and down to meet demand.

NREL shows that the use of PV and CSP with TES together allows for greater levels of solar power on the grid than PV on its own, modelling 15% PV and 10% CSP with less than 2% curtailment of electricity produced from PV. The report also notes that CSP can be used to replace inflexible "baseload" generation such as coal and nuclear plants, in a way that PV cannot without expensive electricity storage.

When viewed in this light, the Gemasolar plant and the increasing trend towards integrating TES with CSP suggests a very bright future for CSP, regardless of cost comparisons with PV.



Policy developments in 2011


Asian feed-in tariffs

In addition to these dramatic technical developments, 2011 also saw great policy changes, particularly in Asian nations. Not one but three Asian nations, China, Japan and Malaysia, moved towards feed-in tariff (FIT) policies, with Japan passing feed-in tariff legislation and both China and Malaysia implementing FIT programs, to join South Korea, Taiwan and Thailand.

While U.S. markets have shown some progress with a combination of tax policies, loan guarantees and renewable energy credits, well-designed feed-in tariffs are the sole policy instrument with a proven track record of establishing sustained exponential growth in national PV markets. If these policies prove successful, Asia will become a second center of world PV markets after Europe, eclipsing slower growth in North America.

This is already beginning, and in China the progress was particularly dramatic. Bloomberg New Energy Finance estimates that the nation installed 2.2 GW of PV in 2011, making it the world's third-largest PV market, and NPD Solarbuzz places the nation's PV market at 2.9 GW in 2011.


FIT unleashes Chinese market boom

In the past few years, China has rapidly become the world center for solar photovoltaic (PV) manufacturing. However, contrary to nationalistic fears in the United States and Europe, the nation has not embraced solar technologies solely as export commodities.

20 MW PV plant in China developed by GCL. The nation's NDRC estimates that 2.2 GW of PV was installed in China in 2011, following the implementation of a national feed-in tariff;
20 MW PV plant in China developed by GCL. The nation's NDRC estimates that 2.2 GW of PV was installed in China in 2011, following the implementation of a national feed-in tariff;

China's rhetorical commitment to growing its domestic solar market is not new. What is new in 2011 is the implementation of an agressive feed-in tariff at the national level, following years of state and national level policies with varying levels of effectiveness.

On June 24th, 2011, China's National Development and Reform Commission (NDRC) took the definitive step towards the establishment of the program by announcing fixed rates for PV generation of RMB 1.15/kWh (USD 0.182/kWh) for projects completed before July 1st, 2011, and RMB 1/kWh (USD 0.158/kWh) for projects completed after that date.

Chinese policy experts often express doubt over official statistics, however analysts including Bloomberg New Energy Finance quote the NDRC's 2011 market estimate of 2.2 GW. In any event, the nation has seen a tremendous boom in PV, which is expected to continue into 2012, unless the nation cuts FIT levels.

China's approach to this issue is different than that of more developed nations. The nation is aggressively pursuing multiple avenues to increase electricity generation capacity to meet rapidly expanding demand, and this may affect its view of exponential growth in its PV market. Domestic demand will also help to support Chinese PV manufacturers, which have suffered from the global oversupply of PV products in 2011.


Japan responds to Fukushima Disaster with FIT

The motivations for aggressive renewable energy policies are very different in Japan. In the aftermath of the tragic Fukushima Nuclear Disaster, national leaders came under tremendous pressure to move away from nuclear power and towards renewable energy sources.

Japanese Prime Minister Naoto Kan resigned from office after the passage of the nation's feed-in tariff; Image source: World Economic Forum
Japanese Prime Minister Naoto Kan resigned from office after the passage of the nation's feed-in tariff; Image source: World Economic Forum

Former Japanese Prime Minister Naoto Kan vowed to oversee the passage of a feed-in tariff before resigning from office, and on August 26th, 2011 the nation's upper house of parliament passed the policy. The feed-in tariff will go into effect in July 2012, and includes a target of 30 MW of renewable energy development within the next decade.

Japan struggles with very high costs in its solar industry, however as a significant supplier of both PV modules and battery systems, the nation has an economic interest in the global growth of the industry.

Japan has not yet set FIT levels for 2012. However, NPD Solarbuzz estimates that even without the FIT, the Japanese PV market expanded 30% in 2011 to 1.2 GW.


Malaysia joins the ranks of nations with FIT policies

Given the national interests of China and Japan in supporting domestic PV manufacturing, it is not surprising that the other Asian nation to implement a FIT in 2011 is also a major PV manufacturing destination. On December 1st, 2011 Malaysia began accepting applications to its feed-in tariff program, meeting its 2012-2014 quota for non-individual PV projects within only two hours.

Given the small scale of the program, it is unlikely that Malaysia will become a world leading PV market any time soon. The program starts with incentives for 9 MW of installed PV in 2011, inceasing every year to 165 MW in 2015.

However, the Malaysian government is considering raising renewable energy generation quotas. Even if it does not, Malaysia's new capacity through its FIT adds to the larger growth of Asian PV markets. More importantly, Malaysia's FIT is a sign that even developing nations are embracing FITs as a policy tool.



Developments in 2011 pave the way for future success

The global solar industry has seen a number of significant setbacks over the past few years, for as varied of reasons as reductions in European FIT levels, oversupply in the PV industry, global financial conditions and bureaucratic and legal challenges to large-scale CSP in California.

However, the global solar industry has reacted to these challenges and continued to grow. New feed-in tariffs are passed in other regions, falling module prices lead to booms in installations in the U.S. and China, and CSP plants become both more technologically sophisticated and environmentally sensitive, while the government of California and the U.S. federal government streamline regulations to build new plants.

The combination of technological and policy developments in 2011 points towards significant future growth. This growth may not always be where we expect it, as the example of the Ohotnikovo and Perovo PV plants in the Ukraine demonstrate. And it may not be in the technologies that we expect.

The 100 MW Perovo PV plant was commissioned in December 2011; Image source: Activ Solar
The 100 MW Perovo PV plant was commissioned in December 2011; Image source: Activ Solar

However, we can expect growth in coming years in CIGS PV, CPV, and CSP with thermal energy storage. Also, as we move from a solar industry focused on Germany to an industry with more diverse global markets, Asia and particularly China is rising as a second center of PV demand.

All of these trends ultimately will help fuel the global energy transformation away from the fossil fuel and nuclear industries and towards a renewable future, with solar as a leading technology.