The Chinese Solar Machine
--------------------------------------------------------------------------------
Chinese manufacturers have dominated the international market for conventional solar panels by building bigger factories faster. Now they will need to innovate to maintain their lead.
January 2012
By Kevin Bullis
technologyreview.com
Ten years ago, solar panels were made mostly in the United States, Germany, and Japan. Chinese manufacturers made almost none. But by 2006, the Chinese company Suntech Power had the capacity to make over a million silicon-based solar panels a year and was already the world's third-largest producer. Today Chinese manufacturers make about 50 million solar panels a year—over half the world's supply in 2010—and include four of the world's top five solar-panel manufacturers. What makes this particularly impressive is that the industry elsewhere has been doubling in size every two years, and Chinese manufacturers have done even better, doubling their production roughly every year.
This dominance isn't due to cheap labor in Chinese factories: making solar cells requires such expensive equipment and materials that labor contributes just a small fraction of the overall cost. Nor is it because the Chinese companies have introduced cells that last longer or produce more power: by and large, they make the same type of silicon-based solar panels as many of their competitors around the world, using the same equipment. They have succeeded in large part because it's faster and cheaper for them to build factories, thanks to inexpensive, efficient construction crews and China's streamlined permitting process. The new factories have the latest, most efficient equipment, which helps cut costs. So do the efficiencies that come with size. As a result, Chinese manufacturers have been able to undercut other makers of silicon solar panels and dash the hopes of many upstarts hoping to introduce novel technology.
But the solar market is rapidly evolving, and technological innovations are becoming increasingly essential. Though demand for solar power continues to grow around the world, the market is flooded with photovoltaic panels: worldwide production capacity more than doubled from 2009 to 2010 and continued to increase in 2011. The overcapacity was so great that last fall, Chinese manufacturers had trouble selling solar panels for more than it cost to make them. In such a market, the way to differentiate your product—and charge enough to stay afloat—is to make it better than your competitors'. For solar manufacturers today, that means inventing cells that are more efficient at converting light to electricity. As the price of solar panels has fallen, installation costs have come to account for a greater percentage of solar power's cost. Customers want panels that are more powerful, so that they can install fewer of them. From now on, the best way for Chinese manufacturers to lower the cost per watt of solar power may not be by lowering manufacturing costs but, instead, by increasing the number of watts each panel generates. "The game is now changing," says Mark Pinto, executive vice president of energy and environment solutions at Applied Materials in Santa Clara, California, the world's largest supplier of solar manufacturing equipment. "Before, it was all about scale. Now it is about conversion efficiency while keeping the cost down."
This might sound like bad news for Chinese manufacturers that have focused on scaling up standard technology. But their experience in building conventional solar panels could help them implement new designs that significantly boost the performance of silicon solar cells. Over the years, these manufacturers have lowered costs in part by developing better ways to manufacture the cells. That's given them an understanding of what works and what doesn't on the factory floor. They also have the capital and the engineers to help them translate newer technologies into mass production. They might not have initially set out to commercialize those technologies, but now, having mastered the market for conventional solar panels, they're poised to do just that.
KEEPING PACE
In 2010, when the U.S. secretary of energy, Steven Chu, gave a speech to the National Press Club laying out his case that the United States was falling behind in advanced manufacturing, Suntech Power was his Exhibit A. He had toured its factory, and he was impressed by what he'd seen. "It's a high-tech, automated factory," he said. "It's not succeeding because of cheap labor." Not only that, he noted, but Suntech had developed a type of solar cell with world-record efficiencies.
Chu's assessment might have surprised some observers, but Suntech's record-setting solar cells are impressive. The technology that goes into them takes advantage of changes in both design and manufacturing technique. The conductive metal lines that collect electric charge from the silicon aren't created with screen-printing methods, as is standard. Instead, Suntech uses a proprietary process to deposit much thinner, more closely spaced lines that are more efficient at extracting electricity from the cells. The changes have allowed the company to reach efficiency levels and cost reductions that an industry road map released in 2011 had set as targets for 2020. "When you put all those things together, we are not only doing better than what people are doing now," says Stuart Wenham, the chief technology officer at Suntech. "We are also doing better than what they think they could be doing in 10 years."
So far, Suntech has made relatively few solar panels based on the new technology. Instead, it has focused its resources on tweaking manufacturing processes to decrease the cost of making conventional silicon solar panels. But that could soon change. This year Suntech has started to increase production of the new cells, and now it can make enough of them annually to generate 500 megawatts of power—roughly 2.5 million solar panels. That achievement owes much to the company's success as a producer of the conventional products.
The technology behind the new cells was developed in the 1990s at the University of New South Wales, Australia, but the techniques used in the lab were too expensive for commercial production. It was a "horribly sophisticated process" including photolithography, vacuum deposition of "quite exotic metals," and "all sorts of chemical processes," says Wenham, who is also head of the photovoltaics research program at UNSW and was formerly a professor of Suntech's CEO and founder, Zhengrong Shi. According to Wenham, the technology remained a lab curiosity for decades until Suntech's researchers figured out how to adapt it to an assembly line. "They came up with a simple, low-cost way to replace all of that while achieving the same results," he says. The new technology could increase the power output of a standard-sized solar panel from 205 watts to 220 watts or more—and the cells costs less to produce than conventional ones.
Individual parts of the technology were quickly successful. Suntech introduced these into its standard manufacturing lines, with an eye to keeping just ahead of its competitors in terms of cost and efficiency. Scaling up the complete process, however, was a challenge. A pilot manufacturing line was up and running in 2009, but the company had to develop and implement new equipment to get yields and production rates to the point that the process was economical. Here Suntech's position as a market leader with experience in developing new manufacturing equipment proved critical. Not only did the company have the expertise it needed to improve the process; it also had the funds to keep working on the technology for years without its bringing in significant revenue.
Suntech isn't the only Chinese solar manufacturer to identify promising new technology and find ways to produce it at a large scale. Last September, Yingli Green Energy, based in Baoding, announced that a partnership with a Dutch research center, ECN, had yielded solar panels that could convert 17.6 percent of the energy in sunlight into electricity; the average is just over 14 percent. "ECN made the technology available to anyone in the world who wanted it," ¬Wenham says. "Yet it's only been Yingli that's taken that technology and worked out how to make it in large-scale production, at low cost."
MATERIAL ADVANTAGE
Even now that Chinese solar manufacturers are shifting focus from production to innovation, there may be limits to what they can do with their chosen material, crystalline silicon. This material is attractive because the industry knows how to work with it, thanks in part to decades of research in silicon microchips. But compared with some other semiconductors, it's lousy at absorbing sunlight. Some alternatives, like gallium arsenide, can be made into films of material that can generate as much electricity as a typical silicon cell but are just a hundredth as thick, potentially reducing material costs. Such thin films can also be flexible: they could be rolled up, reducing packaging and shipping costs, and they could be built into roofing shingles to reduce installation costs.
Yet despite their potential advantages, it has been difficult for thin-film solar cells to compete with the ever decreasing costs and improving efficiency of crystalline silicon ones. One company, Arizona-based First Solar, has succeeded in developing low-cost manufacturing techniques for thin-film solar panels, but these methods use a material—cadmium telluride—that results in panels less efficient than silicon ones. Other companies have tried to compete with silicon by using higher-efficiency thin-film panels of copper indium gallium selenide. Some of them, however, have had to declare bankruptcy and close their factories after failing to lower manufacturing costs fast enough.
Despite these struggles, Wenham believes that thin-film technology will eventually challenge conventional solar panels. If that's true, Chinese makers of crystalline silicon solar cells may not dominate the market forever. But the strategy of first scaling up conventional technology and then introducing innovative designs to keep lowering the cost per watt of solar power has put them in a good position to maintain their lead for years. In the meantime, some, like Suntech, are working to produce thin-film panels of their own. When thin films do replace crystalline silicon, it could be Chinese manufacturers that make them.
Suntech headquarters in Wuxi, China
Suntech manufacturing plant in Wuxi
