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Asia: a magnet for thin film
Solar PV installations in Asia have outpaced those in Europe and the US, a new report has found. But where does the thin film market stand in this geographic shift?
Led by China and Japan, Asia's installed PV capacity in 2013 accounted for 54% of the global total, according to the newly released Global Renewable Energy Report 2014, published by the China New Energy Chamber of Commerce and Hanergy Thin Film Power.
Hanergy: an isolated case in China?
China alone represented 31% of the world's new PV installations last year. However, the country's thin film industry has so far been dominated by one player. Hanergy, which was only established in 2012, has been gearing up to take a sizable slice of the market, making four international acquisitions in the past two years.
"Our research shows that China has already become the one of the world's biggest solar markets," says Li Hejun chairman and CEO of Hanergy.Indeed, China installed 12 GW of solar PV power capacity in 2013, a staggering 232% year-on-year increase.
Hanergy's portfolio now includes U.S. based Global Solar Energy and MiaSolé, Germany's Q Cells AG's Solibro, and the latest addition – American thin film cell developer Alta Devices, alongside six research and development centres.
The company is constructing a 3GW CIGS thin-film manufacturing complex in Hebei Province, which is part of a wider, US$780m plan to build two separate factories with a combined capacity of 600 MW – 300 MW employing MiaSolé-based CIGS and 300 MW employing Solibro’s co-evaporating manufacturing process technology.
A financial boost was also given to Hanergy in January through an agreement with China Minsheng Banking Corp. and Asia Financial Cooperation Association, which will entitle the manufacturer to around US$3.28bn in the next three years. "The fund will primarily be used to integrate the PV industry chain and build more clean energy manufacturing bases," Hanergy said in a statement.
Armed with the newly acquired technologies and funds, and driven by China's target to install 14GW of solar energy in 2014 (8GW from distributed generation and 6GW from ground mounted plants), Hanergy is ready to make the most out of its home market, which on the longer term aspires to have 70GW of solar capacity by 2017.
Recent improvements to regulations are also adding to the appeal of the Chinese solar market. For instance, owners of rooftop solar systems in China can now use an easier invoicing system for the electricity sold and submit their VAT claims with the State Grid Company instead of the tax regulator.
In addition, templates have been issued for power purchase agreements for utility-scale solar projects, a move which has boosted confidence among financiers, developers, and even other Chinese CIGS manufacturers, such as GS Hong Kong Solar.
The company, which opened a 40MW production plant in China this year, is currently building a 750 kW CIGS solar field and commissioning a 35 MW-plant set to come online this autumn. The new facility, according to managing director Naseer Sayed, will help meet China's 2015 goal of achieving solar-electricity cost competitiveness with grid electricity, "especially through the use of flexible CIGS thin-film technologies in building-integrated applications".
Foreign players flock to Japan
Japan's FiT scheme that was launched in 2009 has been among the most successful in the region, attracting global investors such as Goldman Sachs, which plans to invest around half a billion US dollars in the country's renewable energy sector in the next five years.
Thin film pioneers are profiting, too. More than 90% of Solar Frontier's sales in 2013 took place in Japan, prompting the Showa Shell subsidiary to embark on building a fourth, 150MW CIS-module factory in the country, where it already has over 1 GW of production capacity.
Brooks Herring, vice president of Solar Frontier told PV Insider in June that the Tohoku plant will be a blueprint factory for the company's future production plants. "The technology that will be introduced at the Tohoku Plant is the latest mass production technology, enabling higher conversion efficiency. In addition, the Tohoku region offers the opportunity for us to expand our sales in Tohoku."
Having completed an 11.6 MW CIS installationat the Kansai International Airport, the company is now constructing a 13 MW CIGS thin-film power plant in Hiraizumi, which will meet the annual electricity needs of the town's 2,630 households.
Solar Frontier is not alone in the market. First Solar is already present with projects at various levels. On the distributed-generation side, the American company recently signed a distribution deal with XSOL to provide 100 MW of First Solar CdTe cells, including 20 MW take or pay.
"We have multiple efforts underway (in Japan) on the mega solar; we're both pursuing our own development efforts; we're working alongside of third-party developers on a partnership basis and there are multiple of those partnerships," Jim Hughes, CEO of First Solar, said during the company's Q2 2014 earnings conference call that was transcribed by Seeking Alpha.
"The Japanese market is a very large market that we expect to see strong growth out of for many years to come. There are certainly steps being taken to rein in the FiT," Hughes added.
Thailand gains momentum
Indonesia and Thailand have both set targets of 25% of renewable energy by 2021 and 2025, respectively. While Indonesia limited its quota to 140 MW for 80 locations, Thailand implemented the attractive adder subsidy programme in 2006, encouraging large-scale solar projects and ensuring guaranteed payment for 10 years.
The scheme, however, backfired with oversubscriptions and delays in completion, and was eventually described as 'weak' due to insufficient monitoring and absence of degression rates, which led to windfall profits.
Incorporating lessons from this experience, the government recently announced new FiTs for 200MW of rooftop solar and 800 MW of community-owned ground mounted PV plants, which must be completed by the end of 2014. Thailand is now targeting 3GW of installed solar capacity by 2021.
Among the operational thin film PV plants in the country is DuPont Apollo's 8.7MW ground-mounted L Solar 1 PV park. Upcoming projects include a 52MW thin-film power plant to be constructed by Sharp Corporation for power producer Serm Sang Palang Ngan Co., and completed by the end of this year. This will raise the capacity of Sharp's solar plants in Thailand to over 150 MW.
Besides DuPont and Sharp, First Solar also operates in the Thai market through a local office it set up in 2012, and is said to be supplying local projects from its Malaysian factory.
Vietnam to Malaysia
Malaysia is targeting 11% of renewable energy by 2020 and has had solar FiT schemes in place for some time. The country's approach to incentives has been well thought out and includes degression rates should panel prices plummet again. Moreover, new solar projects cannot exceed 30MW without special approval, and the FiT rate is linked to the completion date.
First Solar is one of the foreign companies active in Malaysia. "We've had a commitment with JX Nippon on the TetraSun product, which is commencing production this year out of Malaysia," Hughes said.
The company suspended plans for a US$1.2bn Vietnam factory in October 2011, citing an imbalance in supply-demand at the time. But ever since, it has been entangled in land and asset-related issues, although Vietnam Investment Review recently reported that the necessary legal procedures for the project will soon be completed, enabling First Solar to sell its assets there.
Compared to neighbouring markets, Vietnam is targeting a mere 5.6% of renewable energy by 2020. Despite receiving EUR1m last year from the Spanish government to develop solar energy, and despite the presence of stable solar radiation particularly in the south, progress has been slow due to the lack of incentives and legal framework.
Philippines: new thin film territory
Philippines aims to triple its renewable energy usage by 2030, adding 16.2GW of new capacity. The country set an FiT of US$0.23 per kWh in 2012 for solar systems of all sizes and technologies. It also offers exemptions from custom duties and import taxes, as well as on profit taxes if the project is within the Philippines Economic Zone Authority.
While DuPont Pioneer is constructing a thin film pilot rooftop plant on its existing production plant at Tarlac, province, most upcoming projects in the Philippines will use crystalline silicon PV, indicating room for thin film growth in an unsaturated market.
According to the China New Energy Chamber and Hanergy's report, global thin film production capacity increased by 20% in 2013, reaching nearly 8.4GW. Impressively, this is double the global production capacity of 4.2 GW in 2010.
The growth was attributed to more thin film solar enterprises realising strategic capacity expansions through global mergers and acquisitions, technology upgrades, and equipment localization.