Sunny days for solar power

By
Published: Monday, 22 June 2009

One ray of sunshine in the current economic climate is the photovoltaic cell (PV) market, which is growing year on year. Certain industrial minerals used in specific PV applications, such as silicon carbide and fused silica, are already seeing growth in demand. Alison Russell reviews the state of the industry and its future prospects

Forcasts for the photovoltaic cell (PV) market in Europe, the USA and Japan all predict that the amount of electricity generated by PV is set to rise over the next five years.

This market has attracted certain industrial mineral suppliers which have sensed an opportunity for growth in this sector (see panel p.52).

However, solar electricity is one of the most expensive power sources, and is still largely dependent on supportive government tax breaks and schemes to make it economically attractive.

Ten years ago, Japan was the leading producer and market for PV, but around five years ago, Europe overtook Japan to become the leading market.

By 2008, Europe accounted for over 80% of the 5.6GW global PV market. Spain and Germany are the two leading consuming countries with markets of 2,511MW and 1,500MW respectively. In 2008, the Spanish market was over ten times the size of the Japanese market. Last year, the PV market in the USA grew to 342MW, while the Japanese market rose to 230MW.

But not even this growth industry is immune to the current economic climate. Companies are having trouble raising finance, and others are making significant staff cuts.

 
 Blocks of polycrystalline silicon awaiting wiresaw cutting (using SiC) into silicon wafers. Courtesy PV Crystalox Solar Plc.
In other cases, institutional investors, some of the main backers of alternative energy, have withdrawn funding, which has hit development and production.

Other areas, such as sales of PV cells in the USA for swimming pool heaters were lower in 2007 and 2008, according to the Solar Energy Industries Association based in the USA.

Solar energy usage

There are three ways to use energy from the sun; passive heat, solar thermal heat and photovoltaic energy. Passive heat is natural sunlight and buildings are now being designed to minimise heating requirements whilst, solar thermal heat is used to provide hot water for homes, heating systems or swimming pools.

The third method of using the sun’s energy are PV systems, which convert solar radiation into electricity. Within this, there are PV cells consisting of one or two layers of a semi-conducting material.

When light shines on the cell it produces an electric field and causes electricity to flow. The greater intensity of the light, the greater the flow of electricity. PV cells only require daylight to operate, not bright sunlight which increases their applications and geographical range.

PV cells are used in two main ways. The first is PV cell production for electricity generation, which can be either for an individual facility or as a concentrating solar power plant (CSP) or grid to provide power to the existing electricity networks. The other area is for PV cells to produce solar energy for thermal applications, such as heating pools, hot water for homes and heating systems, particularly in the USA.

PV technology

There are two main types of photovoltaic technology, crystalline silicon technology and thin film technology. The most common technology is crystalline silicon, which accounts for around 90% of the PV cells produced at the moment.

In this, crystalline silicon cells are made from thin slices of a single crystal (mono-crystalline silicon), or slices from a block of crystals (polycrystalline or multicrystalline). They can also be made from grown ribbon sheets.

Commercial solar cells have a conversion efficiency of sunlight into energy of approximately 15%. In research conditions, efficiencies have reached 25%.

Thin film PV cells are produced by deposition of very thin layers of photo-sensitive materials on to a low cost backing such as glass, stainless steel, or aluminium. Thin film modules have a much lower manufacturing cost than crystalline technology, but at the moment this is offset by much lower efficiency rates of 5-13%. Again, in a research environment, efficiencies have been as high as 20%.

There are currently four thin film modules commercially available. These are amorphous silicon (a-Si); cadmium telluride (CdTe); copper indium/gallium diselenide/disulphide (CIS, CIGS); and multi-junction cells (a-Si/m-Si). However, there are other issues with the use of indium and cadmium in terms of their availability and also environmental concerns with disposal and usage.

The manufacturing process for silicon cells is very costly, and a quick run through the production process soon explains why.

Firstly, high grade quartz is reduced to metallurgical grade silicon and converted to solar grade silicon using hydrochloric acid. Solar grade silicon has a purity of 1ppma (or “six nines”), compared with the electronic grade silicon for semi-conductors, which has a purity of “seven nines”. The exceptionally corrosive nature of the HCl used to achieve this purity means that stainless steel equipment has to be frequently replaced.

The next step, the Sieman’s process is also very energy intensive, passing an electric current through a high purity Si rod, to produce the reaction to make the high purity polysilicon at a temperature of ~1,150°C. The silicon is then melted in high purity quartz crucibles at 1,400°C and then crystallised out using an Si seed crystal, which is rotated to produce a cylindrical ingot.

The ingot is cut into a square which results in a 25% loss of material, and the square ingot then is sliced into wafers. Slicing is very slow and takes many hours, even with a multiple wire saw, and losses as saw dust are up to 30%. Slicing is one of the most costly steps in the Si wafer production process.

Finally, the wafers are polished and cleaned ready for use in cell manufacture. In all, silicon wafers probably account for around 50% of the cost of a PV module. The large volume of electricity required to produce the silicon wafers is another limiting factor for wide scale production, until a more cost effective route can be developed.

However, solar cell research is moving fast and is now directed at solar specific materials and processes with a focus on driving energy usage and costs down.

 Comparison of efficiencies of single and multi-crystalline solar cells
 
Efficiency % Approximate market share (2007)
Module
Monocrystalline Dec-15 33%
Multi-crystalline Nov-14 53%
Ribbon na 3%
Thin film
CIGS 9-9.95 1%
Cadmium telluride 6-7.5 6%
Amorphous 5-Jul 4%
 Sources: PV Crystallox Solar plc; Navigant Consulting PV programme


In development

There are other PV technologies under development such as concentrated cells (CSP), which are built into concentrating collectors that use a lens to focus the sunlight on to the cells.

These use less of the expensive PV cells, while achieving efficiencies in the order of 20-30%. Another development is flexible cells which are placed on a thin plastic, which opens up a new range of applications in buildings and end-user applications.

 PV manufacturing process from quartz to solar cells
 
 Source: Meng Tao, Electrochemical Society Interface, Winter 2008


Polysilicon shortages

One of the bottlenecks in the production chain has been polysilicon supply, as four years ago, there were just seven producers worldwide. Over the last three years the number of established polysilicon producers has doubled, with new production coming on stream in Germany, China and Taiwan.

Additionally, there are a number of other manufacturers trying to get production facilities up and running in China. If all these planned facilities come on line, then polysilicon production is set to grow by over 80% over the next two years according to the Prometheus Institute for Sustainable Development in Cambridge, Massachusetts, USA. This is faster than the demand growth forecast for modules and should ease the supply situation, further easing module prices. By the end of 2009 or early in 2010, the polysilicon shortage should be over.

Following the extra capacity coming on stream, polysilicon prices have dropped from $475/kg to $400/kg on the spot market over the last few months. However, many polysilicon contracts are longer term, and so price decreases will not be translated into the modules for a while. Polysilicon production requires a high level of investment in facilities, which has limited the number of players in the market compared with the cell and module manufacture. For the downstream processes, cell and module manufacture, there is a lower investment requirement and also the flexibility to moderate supply to meet changing demand.

Si shortage drives technology

One result of the polysilicon shortage has been the growth of PV thin film technology, which is now establishing itself as an alternative. Thin film technologies are based on cadmium telluride (CdTe), Cl(G)S and amorphous silicon are forecast to further develop as each will meet the needs of different market sectors.

In 2005, thin film technology represented less than 5% of total PV capacity, representing around 90MW. In 2010, this is expected to grow to around 20%, accounting for just over 4GW and to grow to around 25% of the market in 2013 with about 9GW according to the European Photovoltaics Industry Association (EPIA).

Expanding PV capacity

Solar cell production capacity is expanding rapidly to meet demand. In Europe, a recent member survey conducted by EPIA revealed that its members expect production capacity along the PV value chain to show a compound annual growth rate of 20-30% over the next five years up to 2013.

In terms of total capacity, Germany has the largest installed solar electric capacity, with production of 5,308MW, of which approximately 1,500MW was installed in 2008. The next major producer is Spain with an installed capacity of 2,973MW, which saw a huge increase in new capacity in 2008 of 2,281MW, or about 75%.

Japan is another significant producer of solar energy with an estimated capacity of 2,173MW, whilst the USA has a capacity of 342MW. China and Germany are the largest consumers for solar water heaters, while the USA hosts the majority of the world’s CSP plants.

The global PV market –  a vintage year in 2008

Globally, demand for solar panels showed exceptional growth in 2008, mainly owing to record growth in Spain, which represented around half of all the new installations in Europe according to EPIA.

Other established markets including Japan, the USA and Germany also developed and last year saw the emergence of significant new markets in South Korea and other European countries such as Italy and France.

For many years, Germany has traditionally been the largest market in Europe, but last year Spain accounted for 45% of the global market and 56% of the 4,503 MW European market. However, EPIA forecasts that Germany will again overtake Spain, owing to favourable policies whilst other countries such as the Czech Republic, Bulgaria, Belgium, Portugal and Greece are putting in place favourable government policies which should boost demand.

The PV industry is dependent on government support mechanisms, and the introduction, changing or removal of these can have significant consequences on the PV industry. For instance, in Europe, the German and the Spanish government decreased the incentives for installing solar power.

In Germany, the amount of solar tariff was reduced by 10% to 34.2-48.8 cents per kilo-watt hour. In Spain, a cap was imposed on feed in tariffs, restricting incentive-eligible solar installations to 500 MW. This may slow down the explosive growth seen in the Spanish market in 2008.

Earlier this year, the European Photovoltaic Industry Association went through an extensive data gathering exercise and drew up two different market scenarios for the future of the PV industry.

One is based on moderate growth scenario, and the other is based on a policy-driven scenario, based on the assumption that the PV industry is supported by government policies, including Feed-in-Tariffs (FiT), in a large number of countries.

By 2013, the EPIA forecasts that the global market could reach 22GW under a policy driven scenario, realising a compound annual growth rate (CAGR) of 32% over the next five years. The more moderate growth rates are for an impressive CAGR of 17% over the same period, with the total market reaching 12GW.

 Development of cumulative global PV capacity
 
 Source: EPIA
 Historical development of global PV markets by region
 
 Source EPIA

USA – CSP leader

In 2008, in the USA, total solar energy capacity grew by 1,265MW to bring the total installed capacity to 9,183MW according to the Solar Energy Industries Association. This followed growth in 2007 of 1,159MW, and capacity looks set to increase again by a similar level in 2009.

To put this into some kind of context, a MW of solar electric capacity (PV and CSP) is enough to power between 150 and 250 homes, so solar energy usage is still at a fledgling stage compared with other electricity generating methods, but has great potential, especially as production costs are bought down with economies of scale.

The US industry has also been boosted by recent pro-alternative energy policy decisions. The “Emergency Economic Stabilization Act of 2008 (EESA)” enacted last October, gives the industry a platform to make longer-term investment and planning decisions.

The act extended the 30% solar investment tax credit for eight years, and also now allows utilities to make use of the credit. It additionally lifted the $2,000 cap for residential PV installations amongst other measures.

The next really positive move for the solar cell industry was the passing of the American Recovery and Reinvestment Act 2009 (ARRA) in February 2009. This act contains a stimulus package which will make the solar energy use increasingly attractive and economically viable for residential and business in the USA.

The ARRA created a fund to guarantee up to $600,000m. in loans, specifically for renewable energy and transmission projects, and also allows for an estimated $5,500m. for government procurement of energy efficient and renewable energy projects.

The act also established a temporary grant program that will allow commercial solar customers to receive a cash payment of 30% of the cost of installing solar equipment. All of these initiatives will mitigate some of the economic pressures on the solar cell industry during the downturn, and alleviate project financing constraints.

With these positive support measures in place, the PV market in the USA could grow to 4.5GW by 2013, making it the leading market worldwide.

One of the setbacks the US industry suffered was a moratorium on applications for solar development on Federal Lands issued by the Bureau of Land Management, which was repealed after an outcry. However, the issue of land access is an important one for the industry as many CSP plants come closer to commercialisation.

While some of the projects will be going ahead on private land, much of the land considered for solar development is managed by the Bureau of Land Management (BLM). The BLM has instigated a two year Programmatic Environmental Impact Statement Study for solar installations on its land, which should be finalised in 2010.

 Solar electric capacity* in 2008
 
Total capacity (MW) Capacity addition in 2008 (MW)
Germany 5,308 1,500
Spain Feb-12 228100%
Japan Dec-09 235 (est)
USA 1,547 34200%
South Korea 350 270
Italy 321 150-200 (est)
France 175 10500%
China 25-May 4500%
India 90 40-50 (est)
Belgium 70 50 (est)
Portugal 70 50
Greece 20 10
Czech Republic 5 50 (est)
 *Includes PV and CSP, does not including Thermal capacity (water heating/pool heating/space heating)

Sources:  IREC, EPIA, CNE, PV News, SEIA

 EPIA global annual market outlook 2008-2013 (MW)
 
2007 2008 2009E 2010E 2011E 2012E 2013E
France 11 46 Mod 250 340 600 900 1,000
Pol 300 500 850 1200 1400
Germany Jan-07 150000% Mod 2000 2000 2300 2600 3000
Pol 2500 2800 3200 3600 4000
Italy 42 258 Mod 400 600 750 950 1250
Pol 500 800 1100 1400 1600
Spain 560 251100% Mod 375 500 500 550 800
Pol 375 500 600 650 1500
Japan 210 230 Mod 400 500 700 1000 1100
Pol 500 1000 1200 1500 1700
USA 207 342 Mod 340 1000 1200 1500 2000
Pol 1200 3000 3,400 3,900 4500
China 20 45 Mod 80 100 300 600 1000
Pol 100 150 600 1200 2000
South Korea 43 274 Mod 100 150 220 300 400
Pol 200 350 450 700 1000
Total 2392 5559 Mod 4620 6000 7540 9,610 12,250
Pol 6,802 10,790 13,810 17,385 22,325
 Mod – EPIA moderate forecast

Pol – EPIA policy driven forecast

E - Estimate

Source: European Photovoltaic Industry Association 2009



Prices plummeting in 2009

Early in 2008, there were shortages in the PV supply chain which drove up prices. This spurred huge investment in silicon production, cell production and module manufacturing, which has increased supply worldwide. Then in the third quarter, the extra production and changes in the European market caused module prices to plummet

This is bringing about a shake-up in producers but is also translating into savings for installations as modules typically account for around 50% of the cost of PV systems. This is resulting in continued lower prices, making solar units more affordable and will boost demand in the longer term.

By the end of 2008, module prices were typically $3.50/Wp (power under peak solar intensity), and installed solar systems were $7/Wp – which translates into electricity that is around five times more expensive than electricity generated by fossil fuels.

Since the beginning of 2009, PV module prices have declined by 10-20% and are predicted to fall another 10-20% by 2010, which will aid its affordability.

However, despite all this optimism and forecast growth, it might be a good idea to put the industry into perspective in the scheme of power generation. Compared with other forms of renewable energy such as hydroelectric power and wind, its usage is relatively minor, largely due to cost.

In 2006, renewable sources accounted for 3.4 Trillion kilowatthours of electricity or 18% of the global output, according to the Energy Information Administration in the USA. Of this, 88% is attributable to hydropower and 3% to wind, and 9% to other sources including geothermal, biomass, biofuels, tidal and solar power. By 2030, the EIA anticipates that the renewable share of electricity will be 21%, of which hydropower will be 70%, wind 18%, and the balance from other sources.

Nevertheless, the PV industry is currently finding cost competitive applications today, particularly in remote areas for telecommunications. There is a large potential for repeater stations for mobile phones powered by PV or hybrid systems. Hybrid systems are when solar energy is used with another source of power such as a biomass generator, a wind turbine, diesel, or grid connected.

Other potential applications include traffic signals and signs, marine navigation aids, remote lighting, and security telephones. Off grid applications for rural electricity uses will also be a growth area, particularly as PV cells become more cost-effective.

The biggest drawback to the further expansion of the use of solar power is its cost. With economies of scale and cost reduction that will be brought by the increasing development of photovoltaic electricity, the EPIA estimates that by 2015 photovoltaic electricity will be competitive with electricity in the south of Europe, and in most of Europe by 2020.

Contributor: Alison Russell is an independent contributor to IM, she was formerly Deputy Editor, IM, and Editor Mineral PriceWatch

Mineral consumption

There are relatively few industrial minerals consumed directly in PV cells, and the volumes to date are relatively small. Minerals used include quartz as feedstock to produce the silicon metal wafers and those in glass production such as soda ash, feldspar, and silica.

Two key minerals used in the PV manufacturing process are fused silica and silicon carbide (SiC).

Fused silica

Fused silica is the critical ingredient used to manufacture the crucibles within which silicon metal is melted at 1,400°C, prior to crystallising out.

Cookson Plc’s refractories subsidiary, Vesuvius, is a world leader in manufacturing fused silica crucibles, and has spent the last few years investing in its fused silica business, particularly in China.

Indeed, although the company admitted in its 2008 results that its foundry business had been hit with the global downturn, its fused silica business grew by 20% compared to 2007, accounting for £72m.($118m.), “driven by good market conditions in the solar cell market.”

Fused silica crucibles represent half of Vesuvius’ total fused silica revenue, and grew strongly by 44% in 2008. The demand rise was put down to an acceleration in the solar energy industry as supply shortages of polycrystalline silicon used in the majority of solar panels had eased with additional capacity now coming on stream.

To maintain its position in the industry, Vesuvius completed two new fused silica crucible facilities in 2008, and a third is expected to become operational by mid-2009.

In March 2008, a new facility in Moravia, Czech Republic came on stream and in September 2008 the existing facility in Weiting, Jiangsu, China had its production capacity doubled.

A further new facility close to Weiting, has recently been completed for a total investment of just over £11m.($18m.) 

Following start-up trials, it is expected to become operational in the second quarter of 2009.

Silicon carbide

In one of the most costly processes in PV cell manufacture, silicon carbide is the abrasive component used in wire saw wafer cutting, and in polishing. Silicon metal ingots require cutting into manageable sizes, and then the ingot is precision sliced into silicon wafers.

In 2008, it became clear that traditional SiC markets such as in refractories and abrasives faced a changing raw material supply scenario as new higher added value applications such as in silicon wire sawing for PV began to grow. These applications demand large quantities of material and were starting to create a supply deficit, estimated up to 80,000 tpa of SiC (see “SiC’s solar eclipse”, IM October ’08, p.38).

However, the economic downturn has temporarily halted the situation, as demand for other SiC grades in the refractories and abrasives industries has subsided.

That said, SiC suppliers remain upbeat about PV’s future and its demands on SiC and are taking steps to invest in research and development, as well as plant capacity to produce suitable grades. Grain sizes used in wire sawing range FEPA500-1500.

One example is Saint-Gobain’s SiC department which is dedicating significant research into improving its production costs and developing new wire saw grits that the industry will need for the future.

Saint-Gobain has initiated a “PV Roadmap” for the next five to ten years.  The company projects that silicon wafer thickness will be further reduced to improve the cost of solar cells while increasing their efficiency, and is actively working on the effect of wiresaw grits on cut-rate, total thickness variation, warp, bow, subsurface damage, and slurry systems and their recyclability.