05 Aug 2011
Leading PV company expects demand to increase strongly in the second half of 2011 as US and Indian markets gain momentum.
First Solar, the world’s leading producer of thin-film photovoltaic modules, is still anticipating a strong rebound in demand during the second half of 2011, as established European markets adjust to new feed-in tariffs and business in the US and India grows rapidly.
On a day that saw stock markets plunge across the globe on worries over the global economy and debt levels in southern Europe, CEO Rob Gillette said that the company was positioned for a “significantly better second half”, as demand returned to the key markets of Germany, Italy and France – and lower pricing of its modules helped to stimulate that demand.
So far this year, business in Europe has been slack, following Germany’s feed-in tariff reduction, delays to legislation in Italy and uncertainty over support mechanisms in France. As a result, in the second quarter of 2011 it was the newer markets of the US and India that stood out, together accounting for half of the company’s revenues.
Gillette said that North America would become the company’s number-one market in 2012, as it worked on a number of very large installations, such as the 290 MW Agua Caliente facility that will become the world’s largest PV facility by far when operational.
Meanwhile demand from India has grown faster than expected, and should now account for around 10% of megawatts shipped by First Solar this year. The company sold only 10 MW into India in 2010, but that figure should rise to 200 MW in 2011 – double an estimate made earlier in the year. And while China remains a small market right now, Gillette welcomed the emergence of a new national feed-in tariff in the country, and said that the government may increase its 2020 PV installations target from 20 GW to 50 GW.
Rebound in H2
Those emerging markets helped to offset the European weakness evident in the first half of 2011, but shipments of CdTe modules to Europe should now ramp up quickly – notwithstanding any credit squeeze in Italy. In the second quarter, First Solar posted revenues of $533 million and produced 483 MW of modules – a 19% sequential increase as its production capacity continues to ramp, but reflecting a decrease in average selling prices.
That revenue figure will rise sharply in the both the third and fourth quarters, with the company expecting to post around 70% of its annual revenues in the second half of the year. In the major European markets, it is expecting Germany to install 4-5 GW total PV this year, Italy 2-3 GW and France 500-800 MW.
The slowdown in the first half has also provided the company with an opportunity to implement changes to improve module efficiencies, which should deliver a reduction in cost-per-watt figures by the end of the year. At the moment, that figure of merit stands at $0.75/W, unchanged for the past three quarters.
Recent developments within the company’s research and development operation, which have resulted in an NREL-certified CdTe cell operating at a record-breaking 17.3%, suggest that significant further cost reduction is on the cards.
“Not a hero device”
Gillette stressed that the record-breaking cell was no “hero” device, but instead represented a practical development that has a good chance of being implemented on the production line in the future:
“We are not focused on hero cells,” said the CEO. “Unlike other record cells, we used full-scale manufacturing tools and processes, and commercial materials…we believe that they [the cells] can be reproduced economically.”
First Solar’s long-term technology roadmap still calls for reaching a module conversion efficiency of around 14% in 2014, but Gillette suggested that this roadmap may be accelerated for certain applications, for example rooftop PV generation. And despite the rapid recent falls in the cost of rival crystalline silicon PV modules, Gillette believes that First Solar will be able to maintain a cost advantage over its largely Chinese competitors, thanks partly to improved conversion efficiencies.
In its latest consensus forecast for the wider PV industry, First Solar is still predicting that global PV demand will grow from last year’s large expansion, to reach 19.8 GW. And although subsequent annual growth is expected to be slower than the historic rate, it still sees a CAGR of 12% between 2010 and 2013, with the market expanding to around 23 GW as average module prices track lower.
First Solar says that its system cost has now fallen by 30% since 2008, and it is predicting a further 19% reduction by 2014 – enough for its systems to deliver electricity at a levelized cost of $0.10-$0.12 per kWh, and close to the cost of fossil-fuel electricity during peak demand periods in locations such as California.