Some people fear that the current crop of solar technologies that are more or less mainstream will be reaching the end of their development soon, in the sense that most of the improvements that can be had from process and product innovations have already occurred.
We're not so sure about that, since in the midst of probably the worst glut the industry has ever experienced, big new companies like Foxconn (FXTCF.PK) are still entering the field. Clearly they think they can undercut existing producers on the basis of their vast process experience in similar technology (semiconductors) -- so who are we to differ?
However, present product and process technologies are likely to have reaped the most low-hanging fruit already. The steady progress comes from three main sources:
- Increases in cell efficiencies
- Increases in scale economies
- Increases in learning economies
The first represents product enhancements and the second two are familiar production process efficiencies. The latter of these is simply the familiar experience curve, an empirical relationship that holds for many production processes and which show unit cost to decline with cummulative output. Doing things over and over again makes persons better at it, and the same holds for companies.
The slowing of progress here opens the market up for more radical break-throughs, both on new products (like more efficient cells or much cheaper designs and materials) and/or new production processes.
So we're saying that the market is increasingly opening up for a more radical breakthrough, and this at a time when the industry is going through a substantial crisis, with little sign the overcapacity and oversupply is ending any time soon. Funny enough, while all of this is bad for the solar companies, both the crisis and any emerging radical break-through are a boon for the whole concept of solar energy.
Before we turn to describing a few of the contenders, there are also some policy implications from this juncture of forces to ponder. If the line of thinking is right, public policy should shift (at least somewhat) from subventing actual use (and thereby driving the market and achieving economies of scale and learning), to making more financing available for more radical innovation that departs from the mainstream approaches.
We're not sure that is necessary, though, that part of the sector is either in labs at big universities or in companies that receive venture fund backing, which still seems plenty. We'll give you a taste of some of the more radical approaches that, if successful, could drive solar out of subsidy land altogether.
And we would like you to keep in mind that a company like First Solar (FSLR), which started to work on cadmium-telluride thin film technology in the 1980s, would not have been able to scale production like it did in the last decade and be able to achieve (as the first company ever) to produce modules at less than $1 per watt if there hadn't been the German feed-in tariff.
Now for the hunt for the new First Solars. There is all kind of weird stuff happening in labs and companies around the world, but mostly in the US. While it's perhaps less successful in manufacturing, it is still a world leader in innovation. We already suggested that division of labor some time ago.
There are two reasons for looking at the next wave of solar innovation:
- The present mainstream of solar manufacturers is expected to have squeezed out most of the cost improvements through efficiency gains in product and processes, economies of scale and learning
- The strength of the US has always been more to develop new approaches out of the lab, rather than mass producing existing ones.
So that's where we'll look now, some of those new approaches. Some are trying to integrating solar cells in windows, others have developed a solar paint, or a solar foil, while yet others try three-dimensional solar cells..
This is a company trying (and, by the looks of it, succeeding) to build transparent solar cells in windows. It operates in the so called BIPV (building integrated photovoltaics) space. Some of these window cells have already been installed in the Sears Tower in Chicago. They have a grant from GE, the company is not yet public, but it's one to keep an eye on.
Even easier would be just to paint buildings with stuff that generates electricity. Well, it turns out the University of Waterloo and University of Notre Dame have developed something like that. Titanium dioxide nanoparticles are coated with CdS or CdSe. The composite nanoparticles, when mixed with a solvent, form a paste that can be applied as one-step paint.
It has other advantages too, as the dots capture the whole visible light spectrum, although conversion efficiency, at 1% is very low still but there is a lot of room for improvement here. The immediate goal is to achieve efficiencies greater than 5% which would be a five fold improvement. And one has to weigh the low efficiency against the ease of application and cheapness of production.
One can already invest in HyperSolar (HYSR), which trades OTC. Here is its latest quarterly report. It is manufacturing a thin, magnifying film that increases the efficiency of existing solar panels by as much as 300%. The technology (here a detailed description) is patent pending.
It also has other interesting technology which produces renewable hydrogen and natural gas using sunlight, water and carbon dioxide. These renewable gases can be used as direct replacements for traditional hydrogen and natural gas to power the world, without drilling or fracking, while mitigating CO2 emissions.
We have to say that all this is pretty out-of-the-box thinking, very interesting stuff. We'll keep an eye on this one as well.
Just like in other semiconductor applications, solar cells are also looking to build in three dimensions to increase efficiencies. There are two effects at work. The 3D structure can pick up light when the sun is at lower angles and internal reflections within the structure help increase the amount of captured light. These structures needn't be complex. A simple cube, open at the top and covered inside and out with photovoltaic cells, can generate as much 3.8 times the power of a flat panel with the same footprint.
By comparison, a solar tracking mount produces an increases of only up to 1.8 times. According to Marco Bernardi from MIT, this isn't so complicated.
MIT is not the only one trying this approach. The Georgia Institute of Technology actually preceded it, albeit with something quite different. Its unusual approach (for a detailed description, see here) works largely underground and involves fiberoptic cables seeded with zinc oxide nanostructures, coated with a dye that converts light into electricity. Only the very tip of the cable needs to be exposed to actual sunlight.
What they lack in efficiency, which at 3.3%, are still quite low, they hope to gain in cheap manufacturing, aesthetics, and flexibility of placing. Also, they hope to be able to increase that efficiency to 8% in the near future.
Apart from labs, there is actually a company called Solar3D who argues that its dimensional cells could theoretically reach 25% efficiency. Here is a description of what they're working on:
A silicon "microcell" at the nano scale that uses an optical element to direct sunlight into a walled-in structure, thus capturing more photons and increasing the amount of electrons that are discharged. If a traditional solar cell is the ceiling of a room, the 3-D solar cell would be the room itself with the optical element acting as a skylight.
CEO Nelson says that the cells are designed to be produced on existing manufacturing lines, and can be dropped into an existing module, which would provide a huge boon if this really turns out to be the case.
They are very good at tweaking the efficiency of monocrystalline silicon cells and the production process, achieving 19% conversion efficiency, which the firm argues is a record for screen-printed cells in full-scale production. Basically, by importing innovations and techniques from semiconducter manufacturing, like ion implantation, it's positioning itself as a high-efficiency cell manufacturer (like Sunpower, (SPWR)) while being a low-cost producer.
It's just doing another round of VC financing and forgoing a DOE loan, which might very well put the proposed location of their factory in Michigan. Besides the DOE loan, there are other, rather big, incentives to locate the new factories in the US, like in the Great Lake Solar Technology Park. The company is presently located at Norcross.
It's one to keep an eye on for a possible IPO. It's clearly a success, exporting 80% of its products to Asia and Europe.
Here is a Japanese company that just opened the largest thin film plant in the world, outshining even mighty First Solar. The plant is fully automated, operates 24/7 and cost $1B and is the result of 30 years of R&D. The technology is the CIGS, or copper, indium, gallium and selenium technology, and CIS (copper, indium and selenium) modules. The latter are more environmentally friendlier because they do not use toxins like cadmium or lead.
They strive to have 10% of global market share in seven years, nothing if not ambitious. And the company has set its sights on is CdTe (cadmium telluride) thin film behemoth First Solar.
The approach isn't radically new, but it seems to be one of the new crop of thin film producers which, five years ago were about to take over the solar market. But silicon producers and the Chinese came right back, helped by a very large fall in the price of polysilicon.
Its cell efficiency is 12.2%, a little higher than those of FirstSolar (11.6%) although in the lab, it's already reached 17.2% efficiency, which would be good for silicon based modules. In the next few years, it hopes to take the efficiency up to 14.2%. It's already exporting to the US, and soon will be to Italy as well.
Yet the following quote shows that it's still quite a long way off from where it wants to be:
A 2 MW roof-mounted solar array covers the factory’s vast roof, but it provides just 1% of the plant’s energy needs. It is capable of providing up to 2%, but recent volcano eruptions in a distant part of Kyushu have dusted the panels with a thin layer of ash, reducing the efficiency.
There is reason to believe the company could be at least as competitive as First Solar, as its panels are more efficient and offer a larger surface.
The University of Texas has developed an organic plastic that could double solar cell efficiency, and it's very cheap as well. Using pentacene, a type of plastic, prevents the hot electrons from being lost to heat, so doubling the number of electrons produced by a light photon from the sun. Keep an eye on this one as well.
It was long known that pyrite, or "fool's gold," had enormous capacity to absorb solar energy and could be used in extremely thin layers, but the material started to decompose pretty quickly, preventing the energy from being harvested. Now, new pyrite-like materials have been developed that have all the advantages but do not suffer from the decomposition, like iron silicon sulfide. Iron and sulfur are among the most abundant elements on earth, which helps as well. This one comes from Oregon State University.
And this is just the start. We'll part with one of the more outlandish ideas we have encountered: solar energy from space, to be beamed back to earth by lasers or microwaves. Hope they keep that beam straight.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.