Technology Road Map Key To Future Development

A technology roadmap for the PV industry is set to emerge during 2013, bringing the PV industry into alignment with adjacent technology sectors where roadmaps typically have broad industry support. The creation of the new PV technology roadmap will be a leading indicator for the new technology buying cycle, which will be driven collectively by top-tier c-Si manufacturers in China and Taiwan.

Until now, each tier 1 PV manufacturer has implemented a different technology roadmap. This lack of synergy has been a factor preventing cell efficiencies from reaching the 20% level. During 2011, only 15% of cells produced by tier 1 manufacturers were rated at 18% or higher. However, through collective efforts in implementing a new PV technology roadmap, 75% of tier 1 c-Si capacity will fall into this high-efficiency category by the end of 2015, according to the latest NPD Solarbuzz PV Equipment Quarterly report.

According to Ray Lian, Analyst at NPD Solarbuzz, "Previously, the PV industry was pursuing a wide range of manufacturing technologies across different c-Si and thin-film types. This created significant challenges for PV equipment suppliers, as they were unsure which customers would survive for repeat business. However, the current manufacturing shakeout is playing a pivotal role in filtering out uncompetitive technologies from the industry."

This shakeout is likely to reduce the number of cell and thin-film manufacturers from almost 400 in 2011 to less than 100 by 2016, with the top 20 manufacturers contributing over 60% of cells produced for module shipments. Within the thin-film segment, only 13 manufacturers are projected to have production output exceeding 100 MW by 2016.

The shakeout along the value-chain will be accompanied by a re-ordering of preferred tool providers, as new capital equipment suppliers challenge existing PV equipment leaders. Unlike PV manufacturing, where consolidation or acquisition of insolvent competitors has limited value, the existing PV supply chain offers more strategic benefits for new equipment entrants. Deals such as those awaiting completion by Oerlikon Solar and Tokyo Electron, Ltd. are likely to become more frequent moving forward, as new capital equipment suppliers prepare for the next PV technology spending upturn.

New order intake across the entire PV equipment supply-chain remains at a 5-year low, as the industry continues to digest the full effects of strong capacity over-investment in 2010 and 2011. This weak environment is forecast to continue during 2012 and 1H'13, with a limited number of new capacity additions in Taiwan (c-Si cell lines) and Japan (c-Si module lines).

"With PV CapEx in 2012 confined to maintenance-only levels, the short-term emphasis has turned firmly to cost reduction to restore corporate profitability," added Lian. "By mid-2013 however, silicon and non-silicon costs will have reached record lows. At this stage, the tier 1 c-Si leaders will be able to focus collectively on formulating a new PV technology roadmap."

Leading tier 1 c-Si manufacturers are motivated to implement new technologies in order to increase average cell efficiencies above the levels that can be achieved from idled and mothballed capacity of tier 2 and 3 competitors. This will effectively consign a considerable quantity of uncompetitive capacity as obsolete and remove its impact on the PV industry supply/demand balance.

Additionally, in order to prevent a secondary equipment market from emerging, PV equipment suppliers need to act quickly to cannibalize the multi-GW of un-installed tools purchased during the over-spending in 2010 and 2011. The new PV technology roadmap will greatly assist equipment suppliers in achieving this goal in 2013.

With new equipment suppliers expected to enter the PV supply chain, the competition for specific tool segments will increase. Until now, c-Si cell deposition tools have commanded the highest ASPs and offered the greatest served addressable market for c-Si PV equipment suppliers. Dominated today by Centrotherm and Roth & Rau (now Meyer Burger), the market for c-Si PECVD tools reached $880 million in 2011. However, with PV thin-film deposition equipment an unattractive segment to target in the near term, a greater number of tool suppliers are likely to contest c-Si deposition equipment revenues from 2014 onwards.

"It is not just that the tool types are set to change when PV spending restarts, but also that market share will shift among the suppliers. The first key deliverable will be to fully understand the timing and content of the PV technology roadmap that will emerge next year from tier 1 c-Si producers," added Lian.

The NPD Solarbuzz PV Equipment Quarterly report enables PV equipment suppliers to navigate spending cycle challenges by identifying target customers and competitors, equipment revenues on offer (down to the key process tool level), and the precise timing of each PV manufacturer's fab expansions by quarter through 2016.