Solar PV manufacturing

This paper evaluates the diversification opportunities for Indian corporates keen on entering the solar PV manufacturing sector. This includes both crystalline silicon and thin film technologies.

The white paper is divided into three sections. The first section examines the global market dynamics of the solar PV sector and the opportunities and challenges for this sector. This section also provides an introduction to the prominent technologies used in solar PV. Some of the key questions answered in this section include

• What are the global solar PV installation trends?
• Which is the largest solar market in the world?
• What are the various solar PV technologies available?
• What are the key differences between crystalline silicon and thin film technologies?

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Solar PV Manufacturing
A White Paper by EAI

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Solar PV Manufacturing
A White Paper by EAI
Preface
These are exciting times in the solar PV sector. The rapidly falling PV system prices, the ever
increasing coal and oil prices, and the furious pace of PV production capacity addition
happening worldwide and ambitious governmental missions, have set the stage for an
exponential growth the of solar PV. The implication of these developments for the Indian solar
PV manufacturing sector is significant too.
This paper evaluates the diversification opportunities for Indian corporates keen on entering
the solar PV manufacturing sector. This includes both crystalline silicon and thin film
technologies.
The white paper is divided into threesections. The first section examines the global market
dynamics of the solar PV sector and the opportunities and challenges for this sector. This
section also provides an introduction to the prominent technologies used in solar PV.
In the second section, the different parts of the crystalline silicon solar PV value chain are
analysed (for both crystalline and thin films), with a view to provide insights on manufacturing
opportunities available in these segments. The status of India for each of these segments is
provided too. This section should help the reader in comparing the key industry dynamics
worldwide and in India for various elements of the value chain.
The third section provides the highlights and summary and also provides a framework to
enable Indian companies to decide on investing in solar PV manufacturing in India.
This report was prepared by Energy Alternatives India (EAI), a leader in the Indian renewable
energy consulting and research sector, with a specialised focus on solar. Our solar division is
one of the few teams in India that has prior expertise in having worked on all the segments
within the solar PV value chain.
The report was last updated in December 2011.
Narasimhan Santhanam
Cofounder and Director
EAI - Energy Alternatives India @ www.eai.in
[email protected], Mob: [phone]

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Solar PV Manufacturing
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Table of Contents
SECTION 1 – PV STATUS AND TRENDS 7
INTRODUCTION 9
Global Solar PV Installation Scenario 9
Global PV Manufacturing Scenario 12
PV Technologies 13
Key Differences between Crystalline Silicon and Thin Film Technology 14
Market Share of Different Technologies 15
Key Takeaways 16
SECTION 2 – INDIA SOLAR PV MANUFACTURING 17
KEY DRIVERS 19
MANUFACTURING OPTION S 21
CRYSTALLINE SILICON 21
POLYSILICON 23
Major Factors Influencing Profitability 24
Global Market Scenario 24
Indian Scenario 25
Future Outlook 25
Conclusion 26
INGOT AND WAFER 27
Major Factors Influencing Profitability 28
Global Market Scenario 29
Indian Scenario 29
Future Outlook 29
Conclusion 30
CELLS 31
Major Factors Influencing Profitability 32
Global Market Scenario 32
Indian Scenario 32
Future Outlook 33

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Conclusion 34
MODULES 35
Major Factors Influencing Profitability 36
Global Market Scenario 36
Indian Scenario 36
Future Outlook 37
Conclusion 39
CRYSTALLINE SILICON VALUE CHAIN COMPARISON 40
MANUFACTURING OPTIONS 41
THIN FILM PV 41
AMORPHOUS SILICON (A-SI) 43
Major Factors Influencing Profitability 43
Global Market Scenario 43
Indian Scenario 44
Future Outlook 44
Conclusion 45
CADMIUM TELLURIDE (CDTE) 46
Major Factors Influencing Profitability 46
Global Market Scenario 46
Indian Scenario 47
Future Outlook 47
Conclusion 48
COPPER INDIUM GALLIUM (DI)SELINIDE (CIGS) 49
Major Factors Influencing Profitability 49
Global Market Scenario 49
Indian Scenario 50
Future Outlook 50
Conclusion 50
THIN FILMS COMPARISON 51
SECTION 3 – SUITABLE PV MANUFACTURING OPPORTUNITY 53

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Section 1 – PV Status and Trends

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Solar PV Manufacturing
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Introduction
Solar PV manufacturing is a very dynamic sector that has seen long term growth amidst lots of
demand shortages as well as excess production capacities. From being a technology intensive
sector based in Europe and USA, solar PV manufacturing has become more of a commoditized
business and has moved to lower cost production bases in China and other far-east Asian
countries. This shift in PV manufacturing has resulted in huge capacity expansions which have
led to significant drop in the price of solar PV systems. This cost reduction in turn has
accelerated the adaption of solar PV not only in rich countries like Germany, but also in
resource constrained countries in Africa.
Global Solar PV Installation Scenario
Solar photovoltaics have been around for a long time, but its adaption as a major energy source
started only about 10 years back. From a modest 1.5 GW of total global installed capacity in the
year 2000, the figure almost touched the 40 GW cumulative installed capacitymark in 2010. The
year 2010 alone saw the addition of about 17 GW solar PV installations. The chart below shows
the drasticgrowth of solar PV installations all over the world.

Source: European Photovoltaic Industry Association (EPIA)
The key driver for the growth of the solar PV in the past decade has been the enormous
contribution of European Union (EU) in general and Germany in particular. The policy initiatives
first taken by Germany, and later Spain and Italy, resulted in huge capacity additions. While the
installations in the non-EU region grew from 1300 MW to 10777 MW during the period 2000-
1.51.82.32.8
4.0
5.4
7.0
9.5
15.7
22.9
39.5
0 0.30.50.61.11.41.6
2.5
6.2
7.2
16.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
20002001200220032004200520062007200820092010
Global capacity additions in GW
Cumulative(GW) Annual(GW)

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2010, it grew from 180 MW to 29.25 GW during the same period. In other words, EU had only
12% share in the global PV installations in 2000, but it reached 74% in 2010. The figure below
illustrates the point.

Source: European Photovoltaic Industry Association (EPIA)
As mentioned earlier, Germany has been driving the solar PV growth within the EU as can be
seen from the chart below.

Source: European Photovoltaic Industry Association (EPIA)
Germany has close to 60% share in EU and 43% share globally in PV installations.



0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
20002001200220032004200520062007200820092010
Cumulative global capacity(GW)
EUNon EU
17.19
3.78 3.49
1.95
1.02
1.80
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Germany Spain Italy Czech
Republic
FranceRest of the EU
Cumulative Installations in GW

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Installation projections
It is expected that the total global installed solar PV capacity will reach about 400 GW by 2020
1


Source: EAI
Indian Scenario
India, through its Jawaharlal Nehru National Solar Mission, set itself a target of installing a total
of 20 GW of grid connected solar power plants by 2022. Out of this, 10 GW will be solar PV
projects. The states of Gujarat, Rajasthan and Karnataka also announced policies to support the
growth of the solar sector. The highlights of these policies are given below.
JNNSM Gujarat Rajasthan Karnataka
Targets 20 GW by 2022 1 GW by 2012 & 3
GW (in next 5 years)
10 GW – 12 GW (in 12
years)
350 MW by
2015 -2016
Timelines Phase 1(2012-13)
Phase 2(2013 -17)
Phase 3(2017 -22)
300 MW (Grid
Connected) by DEC
2011
Phase 1: 200 MW (PV) up
to 2013
Phase 2: 400 MW (2013-
2017)
126 MW by
2013 - 2014
40 MW per year
till 2016
Local
Content
Applicable for c-Si
Modules and Cells; Not
applicable for TF
None None; But incentives for
local manufacturing
None

1
Source: Energy Alternatives India analysis
7 18 20 19 23 27 30 34 40 48
59
73
22
40
60
79
102
130
160
195
235
283
342
415
-
50
100
150
200
250
300
350
400
450
200920102011201220132014201520162017201820192020
Installations/Year (GW)Cumulative(GW)

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Feed-in-
Tariff
Reverse Bidding :
Round 1 -Solar PV
Rs. 10.9 - 12.75/kWh
Rs. 15/kW (1
st
12
years)
Rs. 5/kWh (13
th
to
25
th
year)
Reverse Bidding Rates: Up to 200 MW.
Rs. 14.50 /kWh
(max)
Current
Status
Phase 1 : 150 MW PV
allotted; 300 MW by
end of 2011
PPAs signed for about
1200 MW
Allotment in progress Allotment in
progress
Source: Various state policies, EAI
Global PV Manufacturing Scenario
One of the major shifts happening in the global PV manufacturing sector has been the rapid
increase of manufacturing capacity in Asia (especially China and Taiwan) during the last decade.
For example, LDK Solar of China, one of the leaders in the solar PV manufacturing, started its
operation only in 2006. The accompanying chart below shows the shift in manufacturing
leadership from western countries to East Asian countries.

Source: European Photovoltaic Industry Association (EPIA)
The changing manufacturing scenario is leading to a situation where two conditions are critical
for the survival of a PV manufacturer.
a. Scale, which helps a company remain cost competitive
b. Vertical Integration, which also helps a company remain cost competitive and shields it
from supply chain fluctuations.

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Most of the PV manufacturing leaders started at some part of the value chain (Polysilicon,
Wafer, Cell or Module) with a few tens of MW. But over the last few years, most of them have
become vertically integrated and also have expanded their production capacities to the GW
range. The following comparison will illustrate the speed of vertical integration of some of the
top players.
Company Polysilicon Ingot and Wafer Cells Modules System Integration
LDK, China 2009 2006 2010 2010 2010
ReneSola, China 2007 2005 2009 2009 2010
REC ASA, Norway 2009 1994 2003 2010 2010
Trina Solar, China -- 2005-06 2007 1997 2009
Yingli, China 2009 2004 2004 2002

The table below illustrates how much capacity some of the top companies:
Company Revenue(US $
million in 2010)
PolySilicon(MT) Ingots and
Wafers(MW)
Cells(MW) Modules(MW)
LDK Solar 2509.6 12000 3500 570 1600
ReneSola 1,205.6 3500 1300 240 400
REC ASA 2399 17000 2375 550 590
YingliSolar 616.1 3000 1000 1000 1000
MEMC 2240 13100 1200 -- --
PV Technologies
PV Technologies can be broadly divided into crystalline Silicon(c-Si) and thin film(TF)
technologies. In case of c-Si technology, silicon wafers are converted to semiconductors that
generate electricity due to photovoltaic effect. In case of thin films, thin layers of photoactive
material are deposited on a substrate.
c-Si can divided into two categories
Mono-crystalline, and
Multicrystalline
Thin Film technology can be further classified into 3 types, namely:
Amorphous silicon
Cadmium Telluride

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Cadmium Indium Gallium (di)selinide
Key Differences between Crystalline Silicon and Thin Film Technology
Thin film solar cells
Monocrystalline solar
cells
Polycrystalline/ Multi
crystalline solar cells


Construction


Thin film made by
depositing one or more
thin layers (thin film)
of photovoltaic material
on a substrate.
Monocrystalline cells are
cut from a chunk of silicon
that has been grown from
a single crystal.
A polycrystalline cell is
cut from multifaceted
silicon crystal.


Efficiency

Less efficient than
polycrystalline and
monocrystalline panels:
Efficiency range – 10%
to 12%

Efficient compared to
both polycrystalline and
thin film. Efficiency range
– 15 to 19%
More efficient than
thin film solar cell but
less efficient than
Monocrystalline solar
cell. Efficiency range -
11-15%
Flexibility
Yes (using plastic
glazing)
No
No

Weight
Light weight compared
to monocrystalline and
polycrystalline cells.
Heavier compared to thin
film but less in weight
compared to
polycrystalline cells,

Price
$0.93 per watt
(€0.69 per watt)
$1.12 per watt
(€0.83 per watt)
$1.02 per watt (€0.75
per watt)
Area
(Avg. output
per 1000 m
2
)

0.623 MW

0.98-1MW

0.91MW
Stability Less stable Very good stability
Good stability and
better than thin films.
Performance
Performance is less
compared to
monocrystalline cells.
Better than polycrystalline
cells and thin film solar
cells.
Performance is less
compared to
monocrystalline cells
Temperature
Largely unaffected
while operating under
higher temperatures
Operate at decreased
efficiencies in higher
temperatures
Operate at wide range
of temperatures.

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Market Share of Different Technologies
Crystalline Silicon(c-Si) has been the dominant technology globally. In 2010, c-Si technology
cells had more than 80% market share in production.

Source: GTM Research
The global PV installations are dominated by the crystalline silicon technology but thin film
technology has been gaining some market share in the last few years. According to the
estimates of Centrotherm (made in 2010), thin film’s market share is expected to increase in
the future.


Source: Centrotherm

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Key Takeaways
Globally, the annual solar PV installations have been accelerating during the past
few years from 2.5 GW in 2007 to 17 GW in 2010
The cumulative global installed PV capacity was 40 GW in 2010 and it is expected to
reach about 400 GW by 2020
Key European countries along with China, India and USA are expected to drive the
global solar PV market.
The solar PV manufacturing base has shifted from Europe and USA to Asian
countries like China and Taiwan
Chinese manufacturers have been scaling up their production capacities at a rapid
pace and command more than 50% of market share in many parts of the PV value
chain
Globally, crystalline silicon technology is the most prevalent technology and
commands close to 80% market share in terms of cumulative installations
The most critical factors that with determine the success of a manufacturer in the
solar PV sector are:
o Scale
o Vertical Integration

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Section 2 –India Solar PV Manufacturing

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Solar PV Manufacturing
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Key Drivers
Market
The solar PV segment in India is expected to achieve very high growth rates over the course of
the next few years. While currently, India contributes relatively little by way of manufacturing
in solar PV value chain; this contribution is expected to increase significantly. It has been
predicted that even under the worst case scenario, India would see installations of about 500
MW in 2012.

Drivers for PV Manufacturing in India
The following are drivers for accelerated investments in the solar PV manufacturing ecosystem
Increasing demand for solar power
Domestic content requirements
Requirement of technology tailored to Indian conditions
Priority sector lending
Avoiding the volatility of foreign currency borrowing
Growing Demand
The recent announcement of winners revealed something that was totally unexpected – Solar
has almost attained grid parity in India. The lowest quoted price under the reverse bidding was
Rs. 7.49 per kWh(15 cents per kWh),suggesting that the capital cost for solar has gone down
significantly – falling from the previous high of about Rs. 14 Crore per MW to possibly Rs. 9
Crore per MW. With solar coming within the reach of the common man, it is highly likely that
the levels of capacity addition will be far higher than expected. Considering the future
exponential increase in demand, local manufacturers can be assured of good off take
Domestic Content Requirements
The National Solar Mission currently mandates that for power plants using c-Si technology, both
the c-Si cells and modules would have to be manufactured in India. States such as Rajasthan
have started providing incentives to manufacturers who are involved further upstream i.e.
they provide incentives for manufacturers producing everything from wafers to modules. With
states having taken this initiative, it is very likely that the National Solar Mission would follow
suit.
It is also likely that the domestic content requirements would be enforced on other
technologies (Thin Films, CPV etc.). The likely reason that it has not been enforced currently is
to ensure that technology transfer takes place from abroad. When domestic

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manufacturers/suppliers start to exhibit significant expertise in this area, it is likely that the
domestic requirements would be enforced.
Requirement of Tailored Technology
Most of the PV technology in use today is tailored to the western markets and their climatic
conditions. This is the reason why thin film modules are performing better in India owing to
their lower temperature coefficients. With sufficient R&D, factors like temperature degradation
can be lowered to better suit the hotter Indian climate. For instance, currently, CdTe based
modules offer lower temperature coefficients (-0.25% per K) compared to others but the use of
carcinogenic materials may limit its potential. With significant R&D, other technologies such as
c-Si and CIGS could be adapted to achieve similar performance levels.
These minor improvements in technical characteristics would result in modules that perform
better under Indian scenarios, thus providing higher kWh/kW yields. This would act as the USP
for indigenous modules leading to higher demand provided the product is marketed properly.
Priority Sector Lending
Presently, most of the modules used are thin films imported from abroad (primarily USA). The
drivers for this are two fold
No domestic content requirement for thin film modules under the National Solar
Mission
Availability of financing at low interest rates from foreign institutions (i.e. EXIM Bank,
OPIC etc.)
Low interest rates are can significantly impact projected costs and returns. It is likely that the
government would learn from this and offer low interest rate loans to both Indian developers
and domestic manufacturers to meet the increased demand that this would create (a la China).
Avoiding Volatility in Foreign Borrowing
The problem with importing modules is that they are all charged at international rates (read:
Dollars). With the Rupee currently depreciating rapidly, it would make more sense to not hedge
it against the dollar or other foreign currencies. This provides a significant reason for
developers to source modules manufactured locally.

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Manufacturing Options
Crystalline Silicon
The Crystalline solar PV module is produced when a group of Solar cells is interconnected and
assembled. The detailed schematic representation of the solar PV value chain is given below.
Solar PV Value Chain

1. Polysilicon
Polysilicon is the first part of the crystalline silicon value chain. In the polysilicon process,
the feedstock metallurgical grade silicon (MGSi) is first converted to chlorosilane vapours
and then reconverted to silicon using the CVD (Chemical Vapour Deposition) process.
2. Ingot and Wafer
The polysilicon produced in the first stage of the crystalline PV production is first converted
into ingots and these ingots are then sliced to produce thin wafers with thickness of about
180 microns. The wafers can be classified as mono-crystalline and multi-crystalline (or poly-
crystalline) wafers. Mono-crystalline wafers are slightly more expensive than multi-
crystalline wafers, but have higher efficiencies.

3. Cells
Polysilicon
Ingots & Wafers
Cells
Modules
Rooftop/ Off grid Grid Power Plant Solar Products
Micro Mini Lanterns
and lights
Solar water
pumps
Other Solar
Products
a-Si, CdTe, CIGS
(Thin Film)

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The silicon wafer is converted to a photovoltaic material in the cell manufacturing process.
The material used and the production process determines the output cell efficiencies. The c-
Si silicon cells available in the market have efficiencies upto 25% as of August 2011.
4. Modules
The solar PV module is the end product which is used to generate power for 20-25 years.
The PV module production is essentially an assembly process wherein cells are
interconnected and laminated to give the requisite power rating. The efficiency of the
module depends on the type of cell used and will be 2-3% points less than the efficiency of
the cells used.

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Polysilicon
Polysilicon is a common feedstock for both the solar industry and the electronics industry. The
level of purity of the polysilicon determines how it is classified. Solar grade polysilicon has a
purity level of 99.999999% (6N) whereas semiconductor/electronics grade polysilicon has a
purity level of 99.999999999 % (9N). According to WackerChemie, the polysilicon market in
2010 was €6.8 Billion out of which solar sector constitutes 75% and semiconductor market
constitutes the rest. The polysilicon demand in the solar sector has been growing at 30%
annually while the same for the semiconductor sector has been growing at an annual growth
rate of 6%
2
.

As mentioned earlier, polysilicon is produced from Metallurgical Grade Silicon (MGSi) using the
CVD process. The commercially popular production technologies are
o TCS Siemens using hydrochlorination
o TCS Siemens using chlorination & converters
o Silane Siemens
o SilaneFluidizedBed Reactor
About 1.2 to 1.6 Tonnes of MGSi is used to produce oneton of polysilicon. Depending on the
scale of the production facility, the total power consumption for the polysilicon plant in the
range 100-200 kWh/kg of polysilicon production.The cost of production by large scale
manufacturers is $30-$35/kg and it is expected to go down to about $25/kg. It has to be noted
that the major cost driver for polysilicon production is the electricity cost.

Source: GTM research

2
Source: WackerChemie

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While the costs of polysilicon have been relatively stable, the price of polysilicon has seen huge
fluctuations. It briefly touched $500/kg in 2008 and slid to $50/kg in 2010. It was trading in the
range of $50-$53/kg in August 2011 and is predicted to reach $35/kg by end of 2011.
Polysilicon has one of the highest margins in the entire solar PV Value chain. Just to illustrate
the point, the graph below shows the EBIT margin for the polysilicon division of WackerChemie,
one of the BIG 4 polysilicon producers. Starting from €74.5 million in 2004, the EBIT margin
grew to about €734 million in 2010 which is a tenfold increase. This is fairly representative of
the performance of the top companies in the sector.

Major Factors InfluencingProfitability
o Capex depreciation–Capital expenditure for a polysilicon plant is very high. For
example, a 2500 MT plant will have a capital expenditure of approximately 250
million Euros
3
.
o Availability of inexpensive and uninterrupted power supply – As mentioned earlier,
the electricity requirement can be in the range of 100-200 kWh/kg and this
represents a major cost of production. Due to this factor, site selection for a plant is
very critical. For example, Lanco solar selected the state of Chattisgarh for its
integrated solar PV manufacturing facility because Chattisgarh is a power surplus
state.

Global Market Scenario
The polysilicon market is an oligopoly, with the top five companies commanding a lion’s share
(about 75%) of the production capacity and market share. According to EPIA, the total global

3
Source: Centrotherm photovoltaics
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1000
1200
1400
1600
20042005200620072008200920102011(H1)
Million Euros
Margins for Wacker Chemie Polysilicon Group
Total sales EBITDA EBITDA %

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polysilicon production capacity was 350,000 MT in 2010 which is expected to rise to 370,000
MT in 2011. Among the top 10 companies, five companies (Hemlock, WackerChemie, OCI,
Tokuyama, Daqo) are pure play Polysilicon producers, but are mostly present in other chemicals
production. Three players (GCL, MEMC, M.Seteck) also produce wafers a well. Two other
companies (LDK, REC) are fully integrated with their presence in all parts of the crystalline
silicon PV value chain.
Indian Scenario
Currently, no Indian manufacturer makes polysilicon on a large scale. However, to meet the
large scale uptake of solar PV installations projected under JNNSM, about 15,000 tons per
annum of polysilicon production would be required assuming domestic content requirements
stipulated by JNNSM might be extended beyond cell/module to wafer/polysilicon.
Large scale production of polysilicon in India would also depend on how the issue of
uninterrupted power supply with very little voltage fluctuations is addressed as this is a critical
factor that affects cost of production of polysilicon. In addition, polysilicon production, being a
capital intensive process would require low interest rate loans (which is currently hard to
procure within the country).
Companies such Lanco Solar, BHEL and Birla Surya have announced their plans to set up
polysilicon plants in India. LancoSolar’s plant is expected to produce 11 N (semiconductor
grade) polysilicon, while BHEL’s tie up with BEL is expected to result in an integrated
manufacturing facilitythat produces 10,000 tons of polysilicon per annum.
Future Outlook
Due to the increase in the total production capacity, it is expected the polysilicon market will
change drastically. Some of the expected changes are
Polysilicon spot price expected to drop to $35/kg and more by end of 2011.
Cost of production to drop to $20/kg.

However, there are other factors that might actually counteract the above trends. These
include:
Purity becomes important. More and more customers are demanding 9N purity polysilicon
because, higher the purity of the polysilicon, higher the efficiencies that can be achieved at
the module level.
Shortage of metallurgical grade silicon. Centrotherm Photovoltaics AG expects that the
MGSi production capacity will face difficulty in keeping pace with the polysilicon demand.
This could lead to a shortage of MGSi in 2014. In this scenario, the polysilicon price is likely
to go up.
Upgraded Metallurgical Silicon (UMG) gaining market share. With the advancements in
production technology, some of the companies are betting that they will be able to produce

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UMG at less than $15/kg at quality levels comparable to those of polysilicon. Some of them
expect to capture about 30% market share by 2016
4

Conclusion
Polysilicon industry is going through a phase of massive capacity expansion by the entrenched
incumbents. This capacity addition, while creates bigger barriers to entry for newer players,
also leads to economies of scale and price reduction. This price reduction is passed through in
the value chain and will result in lower PV module prices.
For a company evaluating polysilicon manufacturing opportunity, it is important to
ensure the following:
a. Production capacity should be substantially large as this results in low polysilicon
price which in turn ensures that the product is cost competitive in the global market
against the offerings from the entrenched market giants
b. Ensuring cheap and uninterrupted power supply is a critical factor for successas
price of electricity forms a major chunk (26%)of production cost while
uninterrupted power ensures efficient polysilicon production
c. Along the c-Si value chain, CAPEX depreciation is highest for polysilicon (45%). Thus
access to low cost of capital should be ensured to remain cost competitive



4
Source: Photon International

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Ingot and Wafer
Multicrystalline modules dominated in the c-Si space with a 68% market share as against 32%
market share for monocrystalline modules in 2010
5
. However, with the increasing demand for
high efficiency PV modules, it is likely that mono-crystalline technology will become more
prominent in the near future.
Production of Ingots and Wafers are typically done together in the same plant, even though
there are companies that specialize in the manufacturing of either ingots or wafers. The most
common commercial wafer production technologies are
Czochralski crystallization production process – For Mono-crystalline Ingot
manufacturing
Bricking/solidification - Multi-crystalline Ingot manufacturing
Wafer slicing(using wire saws) – For shaping and slicing the ingots into thin wafers
The schematic for the ingot and wafer production is given below

Source:MEMC
Typically, one Silicon wafer of standard size (156 mm X 156 mm square wafer) is converted to a
cell with wattage of approximately 4 Wp. About 6 grams of polysilicon is required to produce 1
Wp of PV wafer. This is expected to reduce to about5.5 grams by 2013.
The wafer production cost was about$0.52/Wp in early 2011
6
.The wafer price has been
moving in line with the polysilicon prices. The graph below gives the wafer spot price trend.


5
Source: WackerChemie
6
Source: Photon International, Apr 2011

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After touching more than $10/wafer in the second quarter of 2008, the wafer spot prices are in
the following range as of August 2011.
Monocrystalline Wafers (156 mm X 156 mm) – $2.5 - $2.8/Wafer
Multicrystalline Wafers(156mm X 156 mm) – $1.9 - $2.4/Wafer


Source: EnergyTrend
The EBIT margins for the Ingot and Wafer production havehovered around 20% over the year
(2011).

Major Factors InfluencingProfitability
Capex depreciation– The investments for an ingot and wafer plant can be in the range
of $0.5 million to $1 million. The capital expenditure for setting up monocrystalline
Ingot manufacturing facility is higher than that for a multicrystalline ingot manufacturing
facility. This is due to the fact that monocrystalline ingot production process is more
complicated than the multicrystalline ingot manufacturing. Ingot production contributes
to about 30-40% of the capex and Wafer production contributes to the rest – 60-70% of
the capex.
Consumables – Materials like crucibles, slurry and sawing wire are used up in the
production process and it adds considerably to the cost of production.
Availability of inexpensive and uninterrupted power supply – While this factor is not as
critical as in the case of polysilicon, electricity cost and availability affects the
profitability. On an average, about 30kWh/kg of electricity is required for an ingot and
wafer plant.

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Global Market Scenario
According to EPIA, the total global production capacity was between 30-35 GW in 2010. Out of
this, more than 55% capacity is in China. Of the top 10 Wafer manufacturers, twocompanies
(Pillar-Spain, Green Energy Technology-Taiwan) are independent wafer manufacturers.
Twocompanies (GCL Poly, MEMC) produce polysilicon as well, whereas onecompany (Trina
Solar) is fully integrated except for polysiliconproduction. Five companies (LDK Solar,
Solarworld, REC, Renesola, Yingli) are fully integrated.
Indian Scenario
Currently, there are no Indian companies that manufacture c-Si waferson a large scale. It is
estimated that an annual production of about 2000 MW would be required to meet the
proposed installation capacities under the National Solar Mission.
About 60% of the cost of production of wafers can be attributed to the raw materials used
(including polysilicon). The fact that polysilicon cannot be sourced locally is a major source of
concern that discourages setting up of wafer manufacturing units within the country. Thus
scaling up the domestic polysilicon production would be required for proliferation of wafer
manufacturing units. Failing to do this, companies would have to resort to setting up integrated
manufacturing units (i.e. producing both polysilicon and wafer) to ensure that they remain cost
competitive.
As mentioned earlier, Lanco Solar and Birla Surya have announced plans to set up integrated c-
Si PV plants. Carborundum Universal (part of Murugappa Group) had also announced its
intention to enter this segment. The fully integrated Lanco Solar production line is expected to
produce about 250 MW of wafers per year catering to both the monocrystalline as well as
multicrystalline markets.
Future Outlook
Globally, many cell manufacturers are backward integrating by getting into wafer production. It
is expected that standalone wafer manufacturing companies will find it difficult to compete and
will disappear. It is also expected that mono-crystalline wafers will become more popular
because of the increasing requirement for higher efficiency modules.
The price of wafers will also keep reducing in tandem with the polysilicon prices. The price
drops are expected to be so large that some of the big name wafer manufacturers are
contemplating a complete shutdown of their wafer manufacturing facilities. For instance, one
of the big name wafer manufacturer – REC shutdown their multicrystalline solar wafer plant in
Glomfjord, Norway (775 MW production capacity) in October 2011, followed by the temporary
closure of part of its 650 MW multicrystalline wafer facility in Herøya, Norway(expected to be
closed in December 2011) citing a 30% drop in wafer prices over the year.

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Other wafer manufacturers, like ReneSola, are striving to achieve cost of production of less
than $0.2/Wp by end of 2011 to counteract the bottoming wafer prices. The cost reductions are
expected to be achieved using more efficient manufacturing processes (reducing the amount of
electricity required for production and reducing waste) as well as lowering wafer thickness
using advanced sawing techniques over the next few years.
It is worth noting that wafer inventory levels have continued to decrease over the year. This can
be attributed to the fact that small and medium scale manufacturers are ceasing production
while the global wafer demand is met almost entirely by the inventory backlog that the large
scale manufacturers currently have. This suggests that the wafer price is expected to be
relatively stable for the immediate futurethereby ensuring that the EBIT margins remain fairly
stable.
Conclusion
With the improved manufacturing processes that reduce material losses, reduce electricity
consumption and improve the utilization of consumables, the prices of wafers are expected to
go down further. Together with the drop in polysilicon prices, this wafer price drop will
contribute to c-Si PV system price drop.
For a new entrant to the sector, the following key things need to be kept in mind.
a. It will be challenging for a stand-alone wafer manufacturer. After establishing the
ingot and wafer business, it might become imperative to vertically integrate either
forward cell manufacturing or backward to polysilicon manufacturing (or both)
b. Scale of the installation is critical, which will help to
i. Reduce the production cost
ii. Have a better bargaining power in sourcing polysilicon and selling wafers
c. Cheap and uninterrupted power supply is another critical success driver

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Cells
The solar cell manufacturing process has three main stages
After removing any surface damages, the silicon wafers are first treated with a dopant
(typically phosphorous) to create a photoactive p/n junction.
An anti-reflective coating is applied to the front side of the wafer to increase the
absorption of sunlight by the cells.
In the next stage known as metallization, narrow contact fingers and two or three wider
strips (“bus bars”) perpendicular to the contact fingers are printed on the front side. On
the back side, bus bars are applied and the back surface is imprinted with Aluminium.
The wafer is then dried and thermally fired (“sintered”) to ensure good electrical contact with
the Silicon.
Excluding the feedstock (Wafer), the processing cost for cells is in the range of $0.25/Wp –
$0.4/Wp. Another major cost in cell manufacturing is the R&D expense incurred on
continuously improving the solar cell efficiencies.
The solar cell prices have been falling quite drastically over the last few years.

Source: EnergyTrend
From a high of more than $3.5/Wp in 2008, the spot price of solar cell has dropped below the
$1/Wp mark and is trading in the range of $0.7/Wp and $0.9/Wp as of August 2011
7
.
The sharp drop in the ASP (Average Selling Price) is taking a toll on the margins as well. From
healthy margins of more than 15%, the cell margins fell to about 4% by mid-2011
8
. Many of the
cell producers are estimated to have negative margins during the first half of 2011. This was

7
Source: Energytrend
8
Source: iSuppli

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caused by excess inventory in the supply chain that led to sharp price cutting by the cell
manufacturers in order to liquidate their stock.
Major Factors InfluencingProfitability
Capexdepreciation– The cost of setting up a solar cell plant comes to about $1
million/MW.
Materials–The Ag (Silver) andAl (Aluminum) paste used in the production process.
Process media (Phosphorous oxy chloride, other acids, gases like nitrogen, argon,
ammonia, etc.) contribute significantly to the cost.
R&D– As mentioned earlier, the demand for higher cell efficiencies is relentless. R&D
plays a key role in improving cell efficiency.
Global Market Scenario
In 2010, the total cell capacity was close to 30 GW, out of which more than 50% capacity was in
China
9
. Of the top 10 Cell manufacturers, two companies(JA Solar, Gintech) make only cells
whereas five companies(Suntech, Q-Cells, Motech, Sharp, Kyocera) make cells and modules.
Onecompany (Trina Solar) is present in wafers, cells and module manufacturing, whereas
another company (Yingli Solar) is fully integrated. First Solar, which is among the top 10, is a
CdTe Thin Film manufacturer.
Indian Scenario
The growth in solar cell manufacturing in India has largely been due to the inclusion of domestic
content requirements under the National Solar Missions which states that for solar PV projects
using c-Si technology, both the cells and modules would have to be manufactured within the
country.
Cell production in India started with about 20 MW of production capacity in 2001-02. This
number has grown to over 700 MW with about 320 MW of capacity being added in 2010-11.
Significant capacity additions took place between 2009 and 2011 coinciding with the
announcement of the National Solar Mission Guidelines.
Currently, there are over 10 companies manufacturing cells in India; the combined cell
production capacity is over 600 MW. The installed cell production capacity is expected to
double by yearend or early next year considering the fact that at least 500MW of solar capacity
is scheduled to be set up over the course of the next few years (of which 350 MW is scheduled
to come up under JNNSM which mandates a domestic content requirement).


9
Source: EPIA

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Source: MNRE
Company Annual Production Capacity in
2010(MW)
Capacity in
2011(MW) (E)
1 Indosolar 160 360
2 Moser Baer(includes Thin film) 150 250
3 Tata BP Solar 84 84
4 Websol 60 120
5 Jupiter Solar 45 145
6 Euro Multivision 40 40
7 USL Photovoltaics 35 100
8 KL Solar 30 100
9 Central Electronics 15 15
10 Shurjo Energy(Thin Film) 6 6
11 Bharat Electronics 5 5
Total 630 1225
Source: Photon International (March 2011)
Future Outlook
The trend of the Chinese manufacturers increasing their market share in the global solar cell
market is expected to continue. Large volumes of production from these Chinese companies
are expected to further drive down the price of solar cells. For instance, both the multi and
monocrystalline cell contract prices have dropped by about 23% over the past month.
It is expected that the capacity additions in cell production would be relatively low. Capacity
addition would mostly be limited to the large vertically integrated module manufacturers who

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are looking to source a significant portion of their cells in-house so that they can stem the
thinning profit margins in the module manufacturing business. Cell manufacturers would need
to provide cells with higher efficiencies through better cell design to hope to compete in the
market as seen in the case of the high efficiency cells offered by SunPower.
From a production of about 30GW(including Thin Films) in 2010, the announced production
capacities for 2011 will be close to 50 GW
10
. In a market where the total PV installation is
expected to be only 22 GW (for 2011), the cell capacity is more than double the demand.
Conclusion
The year 2010 saw record production of PV cells – about 30 GW, whereas the total global PV
installation for the year was less than 20GW. This huge supply-demand gap is expected to
continue in the near future and will lead to further reduction of cell and module prices.
The following points will influence the success of a newcomer to cell manufacturing industry.
Cells are getting increasingly commoditized, and the best way to differentiate a
product from the competition is to produce higher efficiency cells. This makes it
critical to invest in Research and Development (R&D) - both for process
improvements and for material usage.
In order to remain competitive, it is highly recommended that the new entrant plans
for vertical integration once the cell manufacturing business is stabilized.



10
Source: iSuppli

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Modules
Module production is a fairly standardized assembly process wherein cells are interconnected,
encapsulated, laminated and framed to produce the final product. The efficiency of the cell
drops a few percentage points due to the encapsulation of the interconnected cells.

PV cells contribute to about 70% of the total cost of a module and hence, the price of module
moves in tandem with the cell price. As seen in the previous sections, prices have been falling in
all parts of the value chain and this trend is reflected at the PV module level. The price trend
can be seen in the figure below.



The price drop has accelerated significantly over the previous year. The module prices were
about $1.8/Wp during 2010 and it has dropped to close to $1.2/Wp by August 2011. According
to the industry research firm iSuppli, the price of modules is expected to drop below $1/Wp by
the second Quarter of 2012.

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Major Factors InfluencingProfitability
Since module production is an assembly process, the only major factor that affects the
profitability of the module making is the material cost. As mentioned earlier, cells constitute
about 70% of the total cost and another 10-15% cost is constituted by other materials like
encapsulant, backsheet, glass, frame, etc.
Global Market Scenario
The module sector has very low barriers to entry because
a. The capital costs for setting up a module assembly unit is low(typically $50,000/MW)
b. Very low technology risk because the production process is an assembly process
c. Standardized production process
Due to this, there are several manufacturers of solar PV modules all over the world and the
sector is highly fragmented. Many of the top companies are integrated forward and/or
backward. Some companies like Q-Cells, MEMC, etc. do contract manufacturing for cell
companies. According to reports, there are over 400 module manufacturers in China with
varying capacities. Given below is the list of the top 15 Solar PV module manufacturers in 2010.

Source: GTM Research
Indian Scenario
The solar module manufacturing process is largely an assembly process. Due to the low
technological as well as capital requirements in this sector, India has seen an explosive growth

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in this segment. Starting with about 20 MW of manufacturing capacity in 2001-02, the current
manufacturing capacity is over 1600 MW with about 40 players in the segment.
As with the cell manufacturing segment, the growth in module manufacturing is largely
dependent on the domestic content requirements stipulated under the National Solar
Mission.With the emergence of state specific policies, the annual solar PV capacity addition is
expected to rise faster thereby fostering the growth of domestic panel manufacturers provided
they remain cost competitive with respect to the global market. The table below gives a
glimpse of the various companies involved in module manufacturing within the country.
Sl. No Module Manufacturer Technology C-Si
1 Solar Semiconductor Multicrystalline / Mono crystalline 195
2 XL Telecom Ltd. Polycrystalline 192
3 Lanco Solar Monocrystalline/Multicrystalline 131
4 Tata BP Solar India Ltd. Monocrystalline/Multicrystalline 125
5 EMMVEE Solar Systems Pvt
Ltd.
Monocrystalline/Multicrystalline 114
6 Synergy Renewable Polycrystalline/ Monocrystalline 110
7 Moser Baer Photovoltaic Ltd Monocrystalline /Polycrystalline/ Thin
film
100
8 PLG Power Polycrystalline/ Monocrystalline 100
9 Titan Energy Systems Ltd. Monocrystalline/Multicrystalline 100
10 Photon Energy Systems Monocrystalline/Multicrystalline 50
Others Monocrystalline /Polycrystalline/ Thin
film
387
Total 1604
Source: EAI
Future Outlook
Module prices are estimated to drop below $1/Wp by the second quarter of 2012and to
about $0.8/Wp by 2013
11
.

11
Source: iSuppli

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Source: IHS iSuppli Research, June 2011
There is considerable policy support from various countriesfor dramatically increasing the
global installed capacity of solar PV systems by bringing down their prices. One notable
programme is the “SunShot Initiative” by the US Government. This initiative targets to achieve
a PV system cost of $1/Wpby 2020 from the current system prices of above $3.5/Wp. One key
driver for achieving this target will be the reduction of module costs to $0.50/Wp.

Source: SunShot Initiative, DOE
Consolidation of the module market is expected over the course of the next five years with
most of the smaller players going out of business due to the glut of modules available in the
market. For instance, in China where there are over 400 module manufacturers, the number is

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set to reduce to about 15 by 2016-17 fuelled mainly by the cutthroat pricing wars amongst the
various Chinese panel makers.
Conclusion
Module making is one sector that is highly dependent on what happens upstream (polysilicon,
ingots and wafers, cells) on the cost front and the efficiency front. As seen earlier, the module
prices have been falling drastically, thereby increasing the solar PV penetration.

For an investor contemplating entry into this sector, there are several considerations
that include
o Module manufacturing is an assembly process and has the lowest capital
expenditure requirement. This means that the barriers of entry to this sector are
very low.
o The minimum size of a module manufacturing can be about 10 MW or lower.
However, higher plant sizes can help in decreasing the cost of production.
o Working capital required is relatively high for module manufacturing.
o More and more module manufacturers are investing in to branding in order to
differentiate their modules from the competition.

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Crystalline Silicon Value Chain Comparison
Poly Silicon Ingot & Wafer Cells Module
Margins ~ 50% ~20% >10% (June 2011) ~7-10%
Investments US $ 0.75
million/MW
US $ 0.5 to 0.75
million /MW
~ US $ 1 million/MW ~US $
100k/MW
Optimum Scale
of Investment
700 – 1000MW 80 – 100 MW 30 – 50 MW 10 – 20 MW
($ 560 - $ 800
million)
($ 45 - $ 60
million)
($30 - $ 50 million) ($ 1 - $ 2
million)
Project timeline 2.5-3 years 1-2 years ~ 1 year 4-6 months
Cost Drivers Electricity,
CAPEX
CAPEX, Raw materials, R&D Raw
materials
Raw materials &
Consumables
Utilization
requirement
High –
continuous run
rate
High – continuous
run rate
Medium –
continuous run rate
Low – Run
rate variable
to demand
Market
participation
8 players ~
80% market
share
8 players ~ 70%
market share
10 companies ~ 40%
of market share.
Fragmented
Vertical
Integration
Pure play
companies
predominant;
5 of the top 10
companies are
vertically
integrated
2 of the top 10
companies are
vertically integrated
Most players
are
integrated
forward
and/or
backward.
2 of the top 10
companies are
vertically
integrated
China factor
(includes
Taiwan)
3 Chinese firms
in top 10
6 companies in
top 10
6 companies in top
10
-

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Manufacturing Options
Thin Film PV
Thin Film (TF) technology came into the limelight during the polysilicon shortage of 2008.
During this period of shortage, polysilicon spot prices went upto $400/kg and crystalline silicon
modules prices were quite high (touching $4/Wp). At this time, many companies turned their
attention to the cheaper alternative which uses less material – Thin Film technology. Significant
R&D work was done in this sector, which resulting in CdTe and CIGS gaining more prominence.
However, the crystalline silicon prices have been dropping since 2009 and today we are facing a
situation where c-Si technology is becoming very competitive with TF on cost. In addition, c-Si
technology also has much higher efficiencies. This has put more pressure on the TF
manufacturers to reduce the cost further to remain competitive with c-Si.
There are three major commercially viable technologies in the market today:
a. Amorphous Silicon – a-Si
b. Copper Indium Gallium (di)selinide- CIGS
c. Cadmium Telluride – CdTe
A comparison of the three technologies is illustrated below.

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The three technologies have some pros and cons. Some of them are highlighted in the following
table.
ADVANTAGES DRAWBACKS
a-Si • Low Cost
• Good Diffuse Light Performance
• Lower efficiencies than other
TFPV
• Moderate stabilities
CdTe • Inexpensive High Throughput
Manufacturing
• Better suited for higher temperature than
a-Si
• Lower efficiency than CIGS
• Toxicity issue due to Cd usage
• Can’t be fabricated on flexible
substrate
• Potential shortages of Te supply
CIGS • High module efficiency than other TFPV
technologies
• No toxicity issues
• Higher stability
• Easy manufacture on flexible substrate
• High throughput fabrication
more difficult
• Expensive than a-Si and CdTe.
Thin Film technology has been growing at a steady pace in the last few years. In 2010, the
global production capacity of Thin Film modules was about 3 GW.This value is expected to more
than double and reach about 7 GW by 2014. Amorphous silicon (a-Si) will continue to be the
leader in production capacity for the foreseeable future, while CIGS and CdTe modules are
expected to gain share from a-Si. Unlike crystalline silicon, TF technology production capacity is
spread across the world with big capacities in USA (First Solar and Abound Solar-CdTe),
Japan(Solar Frontier – CIGS) and EU(mostly a-Si and CIGS).

Source: GTM Research
Each of these three technologies is analysed in depth in the followingsections.
0
1000
2000
3000
4000
5000
6000
7000
8000
200920102011201220132014
CdTeCIGSa-Si3rd Gen

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Amorphous silicon (a-Si)
This is the only TF technology that uses silicon as its raw material. The manufacturing process
for amorphous silicon photovoltaic modules uses an amorphous silicon deposition approach. In
this approach, tin oxide-glass plates are coated with amorphous silicon in a single vacuum
chamber. The overall manufacturing sequence is:
1. Glass preparation (seams and washes)
2. Deposition of tin oxide & laser scribing of tin oxide
3. Deposition of a-Si & laser scribing of a-Si
4. Sputter deposition of Al & laser scribing of Al
5. Encapsulation and testing
Micromorph-Si is manufactured using two types of silicon namely amorphous and
microcrystalline. These modules tend to offer higher efficiencies than traditional a-Si modules.
The higher efficiency however does not result in a higher price tag. Thus, these modules have a
higher market share compared to traditional a-Si modules.
The cost of the amorphous silicon module is about $1.1 per Wp. Many of the thin film
equipment vendors like Oerlikon are targeting a cost of production of less than $1 per
Wp.The price of a-Si modules is about $1.2/Wp.
Major Factors InfluencingProfitability
About 60% of the cost is due to the materials and process media used. These include
Amorphous silicon
Process gas
Substrate
Encapsulant
Junction box
Global Market Scenario
a-Si technology is the leader among thethree different technologies due to the fact that it the
oldest of all technologies. However, due to the limited potential to improve a-Si technology,
other technologies like CdTe and CIGS are catching up. Some of the prominent a-Si TF
companies are given below.
Company Country Actual
Production in
2010(MW)
1 Sharp Solar Japan 195
2 Trony Solar China 138

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3 Uni-Solar USA 120
4 NexPower China 85
5 Kaneka Solartech Co. Ltd Japan 58
Total 596
Source: GTM Research
Indian Scenario
a-Si has been gaining significant market share in India. In fact the largest solar PV power plant in
India – a 30 MW installation commissioned in October 2011, by Moser Baer in Gujarat uses a-Si
modules manufactured by Moser Baer themselves. Further, Moser Baer expects to have a total
of 100 MW of installed capacity in operation by year end, all of which would use a-Si modules.
In India, Moser Baerand HHV are the only players in the a-Si manufacturing segment. Moser
Baer has an annual a-Si production capacity of 50 MW, while HHV has a capacity of 10
MW.HHV is expected to expand its production capacity to 500 MW over the next five years. It is
worth noting that HHV is the first Indian company to have developed both the technology as
well as the equipment for setting up a thin film module manufacturing facility.In addition, they
are the only indigenous vendor for thin film manufacturing equipment.
Future Outlook
The major challenge for the growth of a-Si is the limitation in efficiency, which is estimated to
be limited to 10%. Variants like Micromorph silicon could become more prevalent, but the
future is unclear. The recent exit of the top a-Si manufacturing vendor, Applied Materials, has
raised questions about the future growth of this technology.
Though this may have come as a blow, there are other big names keeping a-Si alive. For
example, DuPont (known in the industry as anencapsulant manufacturer) has started churning
out a-Si modules through its subsidiary DuPont Apollo who have their capacity sold out for
2011. Like other thin film manufacturers they too are focusing on emerging markets. For
instance, in the second half of 2011, DuPont Apollo signed an agreement to supply an Indian
company – Wipro EcoEnergy with a-Si modules while also coming up with a proposal to setup a
10 MW power plant in Gujarat using their a-Si modules.
Due to the physical properties (primarily flexibility) of a-Si modules, such as those using tandem
junctions, the future could be in off-grid applications such as solar powered cars and BIPV. The
market is currently prime for investors to gain a first mover advantage.

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Conclusion
While a-Si will continue to maintain its market leadership in the thin film segment for the next
few years, it is only a matter of time before CdTe or CIGS overtake a-Si Technology.

The key things a new entrant to the a-Si market should keep in mind are the following:
The limitation on efficiency increase needs to be counteracted by lowering the cost
of production.
Unlike the other technologies, the raw material – Si, is neither toxic nor a rare earth
metal. This eliminates the availability of raw material risk.

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Cadmium Telluride (CdTe)
Cadmium Telluride is a technology which is predominantly driven by just one major company –
First Solar. CdTe modules are currently the cheapest TF modules available in the market with
cell efficiencies(12-17%) higher than a-Si but comparable to CIGS. CdTe technology is however
considered risky by many because of its usage of Cadmium, a carcinogen, as one of its raw
materials.
Manufacturing of CdTe thin film solar cell involves a set of physical and chemical procedures in
which the layers are sequentially deposited onto a substrate in a back wall configuration which
means that light is incident on the larger bandgap material.
The most common structure is glass-TCO-CdS-CdTe-BC where
 TCO is the front contact, a transparent conducting oxide which is exposed to light
 The CdS film represents the n-semiconductor, transmitting a large part of the sunlight
into the absorber p-CdTe semiconductor.
 The sequence ends with a metallic back-contact (BC). Prior to BC deposition, the CdTe
layer is submitted to heat treatment in the presence of CdCl2, which deeply affects the
properties of the CdTe layer and is essential to achieve high efficiency.
The cost of CdTe module is about $0.85/Wp. As it currently stands, the cost of production is
about $0.75/Wp.However, First Solar claims to have lower production costs because of its
scale. First Solar production capacity is about 1.4GW.
The price of CdTe modules is less than $1/Wp making it the cheapest TF technology.
Major Factors Influencing Profitability
A big part of the cost is due to the materials and process media used. These include
Active material : Cadmium Telluride
Cadmium Sulfide
Substrate
Encapsulant
Junction box
Global Market Scenario
First Solar is the biggest Thin Film module manufacturer in the world and till recently, it had
production capacities higher than the top c-Si manufacturing firm – Suntech. First Solar is
followed by Abound Solar which ranks second in terms of annual production capacity. GE has
entered CdTe production in a big way through investments in its recently acquired subsidiary –
Primestar Solar.

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Company Country Annual Production Capacity in
2010 (MW)
1 First Solar USA 1400
2 Abound Solar USA 65
3 PrimeStar Solar USA 30
4 Calyxo GmbH Germany 25
Indian Scenario
Over 60% of the projects allocated under Batch 1 of JNNSM are scheduled to use Thin Film
technology. Of this, a significant portion (over 50%) is expected to be established using CdTe
technology. The primary reason for this is the low interest rate loans given by EXIM bank of USA
to project developers who import modules made in US (where FirstSolar, a CdTe manufacturer
is a major player). In addition to this, there is some on-field data which suggests that power
plants using CdTe technology has a higher electricity yield (up to 5% higher in some cases) when
compared to the more expensive c-Si modules. For instance, FirstSolar recently inked a deal
with Reliance Power to supply 100 MW of CdTe based thin film modules – which is the largest
sales deal in India to date (September 2011). It should come as no surprise then that part of the
project cost ($84.3 million) is being financed through a loan grant from EXIM bank of US.
GE, one of the new entrants into the CdTe market has an R&D base in Bangalore. The R&D
being performed here is expected to help GE produce cost effective CdTe modules with high
efficiency by employing advanceddevice design.
In India, there is no company that manufactures PV modules using CdTe Technology.
Future Outlook
CdTe is expected to continue to do well in USA and countries where the restriction on usage of
Cadmium compounds is limited, with FirstSolar leading the charge. CdTe module makers are
likely to shift focus to emerging solar markets such as India due to limited environmental
regulations, higher yield under high temperature conditions as well as the demand for low cost
modules.
Considering the highly carcinogenic nature of Cadmium, a threat of Cadmium ban looms in
European Union and other countries where environmental regulations are strong thereby
inhibiting the sale of CdTe modules in these markets.
CdTe is currently the cheapest module technology available. Further gains in market share
would depend on how well it is able to maintain its price edge over the other competing
technologies considering the fact that c-Si module prices have almost bottomed out over the
past few months. Further, CdTe based modules would also have to see a significant
improvement in terms of conversion efficiencies to remain relevant. FirstSolar aims to improve

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CdTe module conversion efficiencies to between 13.5% and 14.5% by 2014 making it highly
competitive.
Conclusion
CdTe has grown remarkably in the past few years, driven mainly by First Solar and possibly will
be driven by Abound and GE in the future. CdTe will have the advantages as the cheapest TF
technology and also good efficiencies. However questions on the toxicity of Cadmium remain.
For a new entrant into CdTe, the following challenges need to be overcome to be a successful
player in this segment.
Access to production technology that can lead to low cost production
Sufficient scale to remain competitive with the entrenched incumbents
Overcome the perception problem related to cadmium toxicity

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Copper Indium Gallium (di)selinide
(CIGS)
CIGS cells have reached higher efficiencies and do not use any toxic material like Cadmium in its
production. These cells operate similarly to conventional crystalline silicon solar cells. When
light hits the cell it is absorbed in the CIGS the photovoltaic characteristics of the material lead
to electricity generation. The basic steps involved in the manufacturing process are given in the
flowchart below.
1. Glass preparation
2. Sputter deposition of molybdenum
3. Molybdenum conductor patterning
4. Compound formation to create CIGS
5. Sputter deposition of the zinc oxide transparent conductor
6. Zinc oxide deposition
7. Encapsulation
8. Testing
CIGS being the newest technology of all TF technologies, it is still more expensive than others
and there is significant potential for cost reduction. The cost of CIGS production is about $1.2-
$1.3/Wp whereas the price is about $1.4/Wp.
Major Factors InfluencingProfitability
Most of the cost is due to materials like
Active material – Copper, Indium, Gallium Selenium)
Cadmium Sulfide
Substrate
Encapsulant
Junction box
Global Market Scenario
Solar Frontier (Japan) dominates the production capacity with a total of close to 800 MW
capacity. Other companies include
o Global Solar Energy – total production capacity - 75 MW (USA)
o Miasole – total production capacity - 60 MW (USA)
o Nanosolar (US)
o Avancis(Shell Solar) (Germany)
In September 2011, the CIGS market played host to one of the most high profile solar module
manufacturer collapse in recent times. Solyndra, a CIGS manufacturer producing innovative
cylindrical CIGS modules recently went under in spite of a $500 million loan guarantee from the

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US Government. The reason cited for this collapse is that the modules produced by Solyndra
could not compete in terms of price with the crystalline modules offered by the Chinese
module makers.
Indian Scenario
CIGS technology has started to make its foray into India. Solar Frontier, one of the largest
CIGS/CIS manufacturers in the world made an announcement in September 2011, that it had
closed deals to supply CIS modules to projects in India under the National Solar Mission and the
Gujarat State Policy totalling 30 MW.
Shurjo Energy has a production capacity of 7MW with plans to increase production capacity
to 100 MW in the near future
12
. No other company has a CIGS production facility in India.
Future Outlook
While CIGS has the potential to increase efficiencies, it has to reduce its cost base in order to
remain competitive with the c-Si technology. With the exit of equipment vendor VEECO,
question remains on the long term success of the CIGS technology. On the flipside, equipment
manufacturers such as Centrotherm are putting significant efforts into CIGS R&D to ensure that
their equipment guarantees high performance CIGS modules which can compete in the global
market.
The installed production capacity expanded to 439 MW in 2010. It is expected that the
production capacity would increase by close to 200% in 2011 to about 1.3 GW. Some experts
say that the production capacity addition by year end to could be as a high 2.2 GW. This
would help put CIGS in a more favourable position in the market in hopes that the large
volumes of production would drive down prices.
Conclusion
With higher efficiency potential, if CIGS can reduce costs, CIGS will get more market
penetration.
For a new entrant into CIGS, the following points are critical
- CIGS technology is still evolving and the production technology is yet to be standardized.
This presents both a challenge and opportunity.
- CIGS has to find a way to remain cost competitive with the other technologies.
- The opportunity is that the scope for increasing efficiencies is much higher relative to
the other technologies.
- As we have mentioned for others, scale is important in case of CIGS as well.


12
Source: Shurjo Energy

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Thin Films Comparison

a- Si CdTe CIGS
Margins 8 % 32% 31%
Capital
Investments*
$ 3 Million / MW $ 1.5 Million / MW $ 2 Million / MW
Project timeline 2.5 – 3 yrs 1.5 – 2 years ~ 2 Years
Cost Drivers
Raw materials and
consumables,
CAPEX depreciation
Raw materials and
consumables,
CAPEX depreciation
Raw materials and
consumables,
CAPEX depreciation
Utilization
requirement
Variable to demand Variable to demand Variable to demand

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Section 3 – Suitable PV Manufacturing
Opportunity

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Summary
The previous two sections provided the global and Indian trends in solar PV, the rationale for
having a local solar PV manufacturing ecosystem in India and the key characteristics of each
stage of the value chain.
The following points emerge:
The growth of solar PV is expected to be aggressive worldwide, and in India, for the
foreseeable future.
India has few or no companies operating in the upstream portions of the solar PV
manufacturing value chain.
China is fast becoming the manufacturing hub for all manufacturing segments in solar
PV, and will provide stiff competition from its low cost products, a result of the high
scales at which Chinese companies operate.
The different manufacturing segments along the value chain display strikingly different
characteristics on key parameters such as capital costs, profit margins and the key
drivers for success.

Choosing the Right Manufacturing Option for Your Company
Based on inputs and insights in this document, how does a corporate decide whether or not to
invest in manufacturing, and if they decide to invest, which segment of the value chain should
they invest in?
EAI has provided a simple, preliminary framework to enable such decision-making. This
framework, comprising four parameters, provides a quick checklist for your company to
eliminate/shortlist options.
For companies looking forward to venturing into the solar manufacturing business, the right
choice however would depend on:
Aspirations
o Is your company targeting global leadership or Indian?
o What are the profit margins that your company is targeting?
Constraints
o How much capital is your company willing to invest?
o How comfortable is your company to work in tech driven domains?
With these questions in mind, the following matrix aims to take your evaluation to the next
stage.

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Potential for
Global
Leadership
Potential for
Indian
Leadership*
Margins CAPEX (per
MW)
Technology
Requirement
Fully Integrated
(Polysilicon to
Modules)
Medium High High High High
Wafer->Cell-
>Module
Medium High Medium High High
Cell->Module Low Medium Medium to
Low
Medium High
Poly->Wafer Low High High High Low
Poly Low High High High Low
Wafer Medium High Medium Medium to
High
Low
Cell Medium Medium Low Medium High
Modules Low Low Low Low Low
a-Si Low Low-Medium Low High Low
CdTe Medium Medium-High Medium High High
CIGS Medium High Medium High High
* - Assumption – the company is able to compete on cost with global leaders
Highlights from the above table
The time window is fast closing for new entrants to organically achieve global leadership
in any segment of the solar PV manufacturing value chain.
With few companies operating in India in the upstream manufacturing sector in the
solar PV value chain, opportunities are high for achieving leadership these.
While most manufacturing opportunities require medium to high capital investments
(except module making, which is essentially an assembling operation), manufacturing of
cells (especially thin film) also require a technology orientation for success.
In general, one could say that as one goes down the value chain (from upstream to
downstream), the overall capital requirements start declining and so do the profit
margins, with module companies operating on very low-low margins.
The thin film and crystalline PV value chains are dramatically different from each other,
with the thin film manufacturing value chain comprising just one single, integrated stage
(from raw materials to modules) while the crystalline stage comprises four distinct
stages. This distinction highlights the fact that there are more options/choices available
within the crystalline silicon value chain than within the thin film value chain.

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EAI - Assisting Your Company for Attractive
Manufacturing Opportunities in Solar PV
EAI offers intelligence on the overall manufacturing opportunities in
Solar PV upstream – Polysilicon, Ingots and Wafers
Solar PV downstream – Cells and Modules
Thin Film manufacturing
Components – sub-components for cells and modules, chemicals and other
consumables
Balance of systems – inverters, monitoring systems
Equipment and machineries – Furnaces, wafer cutting tools, cell production line, module
production line

Identifying the most attractive opportunities for your company
Understanding your company’s aspirations in the context of solar energy sector
Understanding your company’s manufacturing competencies
Evaluating the fit between your aspirations + competencies and the available
opportunities
Clearly identifying the attractive opportunities appropriate for your company

Feasibility study for shortlisted opportunities
Demand and supply analysis
Costs and returns estimates
Strategic dimensions – extent of competition, buyer and supplier power, dominant
designs and industry concentration, degree of innovation, barriers to entry
Possibilities of JVs and technology partnerships
Identification of key success factors
Key characteristics of each opportunity

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Strengths
Dedicated Focus on Renewables - We work only in renewable energy and nothing else.
Wide Expert Network - We work with over 100 technical and business experts across all
primary renewable energy sources.
Financial Assistance - We work with over 25 different PE, VC firms and banks providing
our client easy access to finance.

Clients
EAI's consulting team has been assisting several organizations in diverse renewable energy
domains. Some of our esteemed clients include:
PepsiCo
Reliance Industries
World Bank
Sterlite Technologies
Bill & Melinda Gates Foundation
iPLON GmbH
Minda Group
GE
Bhavik Energy
Agarwal Group
Prominent companies that have benefitted from our research and reports:
Accenture
AT Kearney
Shell
Lafarge
Exxon Mobil
Boston Consulting Group
Schneider Electric
Bosch
GE
Danfoss Solar
IFC
Siemens
Sharp
Gehrlicher Solar AG
Reliance Solar
Emergent Ventures
Videocon
Q Cells
Emerson Network Power
Indian Railways

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