With solar growing at arguably its fastest pace in history,
the sector needs an ever-rising supply chain, creating a
plethora of business opportunities for everyone involved,
including industrial minerals suppliers.
It has hardly been a better time to be active in solar. With
the discourse on climate change coming to the fore, the
requirement to reduce global carbon emissions and dependence on
fossil fuels, solar technology has gained the role of must-have
solution in energy requirements.
The technology has been around for a long time: the first
prototype solar cells date back to the 1950s. Through the
photovoltaic (PV) effect, light is converted into electricity
as it goes through the PV cells. The current is then harnessed
through conductors and taken where it needs to go. What makes
this method environmentally friendly is that it does not
require fuel to burn and has no moving parts such as turbines,
thus having zero emissions.
The range of opportunities that the so-called 'green
revolution’ may generate are already here for all
to see. In the first week of May, at around 11am on Sunday, 90%
of Germany’s entire electricity demand was covered
by renewable power – solar, wind, hydroelectric and
biomass. For a few moments, 55 out of the total 58 gigawatts
(gw) needed to power the country came from renewables. Under
standard conditions, not more than one-third of demand is
covered through these sources.
This could be considered purely symbolic, but the capacity
will keep increasing. Germany aims to phase out all its nuclear
power plants by 2023: this large vacuum in supply will have to
be filled somehow.
There is no doubt that solar and other renewables have to
drastically up their game for the world economies to move away
from fossil fuels. Solar now supplies only about 4% of European
electricity demand. The pace of growth, however, should not be
underestimated: last year, $161bn were invested in solar
worldwide, more than gas and coal combined.
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PV
The capacity of new global gridconnected PV systems
increased 25% in 2015 year-on-year, according to the latest
SolarPower Europe annual report. Solar in EU countries grew by
around 15%.
Today, there are 229 gw of solar capacity connected to the
global energy grid, evidence of a growth rate that SolarPower
Europe deemed "impressive".
Europe has a combined capacity of some 92 gw of solar power.
Germany is the dominant producer in the bloc by far, generating
almost 40 gw on its own. Italy is the second-largest producer,
although at half the size of Germany, with 19 gw nationwide.
The UK, France and Spain follow in this order with,
respectively, 9 gw, 7 gw and 5 gw.
While the sun shines on solar, other energy sources are
going through hard times.
Coal is arguably the utility sector experiencing the
toughest phase at the moment. In the US, 50 coal companies have
filed for bankruptcy since 2012. Burning coal is one of the
most polluting ways to generate energy. Low oil prices are
squeezing coal suppliers, overcapacity is denting returns and,
on a broader level, energy is moving away from obsolete
coal-burning to the opposite end of the spectrum – of
which solar is a core part.
Minerals in PV
The development of the sector is necessarily interlinked to
the input of minerals and metals manufacturers, who supply the
key materials that make up PV panels and make them work.
These include bauxite for the aluminium for the panel
structure but, more importantly, silicon, the basic component
of the cell.
The panel is in itself a fairly straightforward structure: a
series of cells connected through electrical wiring to external
circuits (batteries, inverters and the like), which are fitted
onto an aluminium frame.
Today, the most common solar cells are made of crystalline
silicon. Two broad product lines make up the bulk of supply:
monocrystalline and polycrystalline silicon.
Silicon thin-film cells are a third, less common technology
that manufacturers use. Through thin-film, the amount of active
material needed in a cell is lower than average, making them
cheaper and lighter. This however carries a lower efficiency
compared with crystalline silicon.
Amorphous silicon is the main thin-film technology used
today. Only a handful of producers are active in this segment,
partly due to the limited lifetime of thin-film products. The
category is expanding but has the lowest presence on the
market.
Shifting equilibrium: Europe and Asia
The growth of the renewable energy industry across the board
has created new opportunities for anyone involved.
At the same time, this has come at a price which, for
silicon cell and solar panel manufacturers in Europe, was in
the shape of aggressive competition.
The composition of the PV manufacturers market has changed
significantly over the last few years, chiefly driven by Asia
– with China in the lead – coming to the fore
as a leading producer, consumer and exporter of solar
cells.
The competition from Asia weighed heavily on Europe, which
in a matter of years has been pushed to the fringe of the
market.
"There was a crisis in the European market, which was due to
the decrease of prices from Asia, [specifically] China and
Taiwan," Javier Herrero, technical engineer at Eurener, one of
Europe’s largest solar panel producers, told
IM.
"The majority of European [solar cell] producers have closed
in the last three years. European cell supply has fallen
drastically: they are now hard to find and pretty
expensive."
China and Taiwan today supply the majority of silicon solar
cells to Europe; as European companies have closed, Chinese
ones have opened and expanded.
The drastic change in the composition of the market affected
also industrial minerals operators supplying the PV sector, who
saw the number of their European customers sharply reduced.
Multinational company Washington Mills is one of the leading
suppliers of silicon carbide (SiC) products globally.
Headquartered in the US, its Norwegian operation, Washington
Mills AS, is the largest producer serving the European market,
supplying SiC microgrits and powders. Solar has been an end
user of the company’s products for almost 20
years, and today accounts for a sizeable amount of the overall
business.
"Five-six years ago there was a huge market in Europe. Then
the European solar industry almost collapsed," Ole J Svorkdal,
managing director at Washington Mills AS, told
IM. "In 2011-2012, that almost made us close
our production of microgrits."
As demand in Europe took a hit, so did prices. Competition
with China, although indirect in the case of Washington Mills,
has affected benchmarks for SiC products going into solar.
Downward price pressure has continued, although some
stabilisation has been seen since the closing months of last
year.
"In 2011, the Chinese had a huge underutilised capacity,
[but] today there is better balance between actual capacity
– also in China – and actual demand. The
market has continued to grow, and global demand is still
increasing," said Svorkdal.
Better products, lower cost
Despite the effect it had on Europe’s solar
cell producing segment, the shift was instrumental to
re-position the industry up a notch. With Asia entering the
picture big time, this brought about an increase in total cell
supply together with a decrease in costs and quality
improvements.
"Over the last five years, there has been a significant
decrease in terms of costs," said Eurener’s
Herrero. "There is no problem in sourcing cells today. On the
contrary, they are very much available and of better
quality."
A main driver that has allowed the industry to up its game
has been the evolution in cost-effectiveness of the products:
better quality at a lower cost.
Efficiency has been a crucial part of this. The sector went
through a quantum leap in efficiency in a relatively short
time. If in 2010 typical cell modules would deliver 220w, today
the same modules generate 260w, or 18% more.
"Modules today have a much better quality than five years
ago, cost half of what they used to and are 15-20% more
efficient," said Herrero.
The rise in global demand led to more investment coming in,
which in turn allowed the supply chain to expand at the rate it
has.
Far from standing still, the sector is constantly improving
and moving the goal posts further ahead, in the wake of
technology upgrades.
The scale of efficiency is still increasing from its current
standards. Panels that generate up to 300w are already
available, and they are the same size as the others.
"We are going to see more developments, reaching more
performance for the user," said Herrero.
Important developments are taking place in the field of
energy storage as well. This is evolving as battery capacity
and durability extends, new operators come to market and as
storage solutions are offered together with PV systems by
suppliers.
There is then the world of existing research in new
materials. Developing applications to apply perovskite solar
cells in PV panels is one of many worth mentioning. The
efficiency of perovskite cells has gone from 3.8% to 21%,
almost reaching the highest level available today –
that of the established copper indium gallium dieselenide
(CIGS) cells (21.7%). According to Lux Research, perovskite
cells should be on the market by 2019.
The ongoing product development needs SiC suppliers to meet
ever-changing requirements, Svorkdal told IM,
adding that Washington Mills is modifying its product specs,
such as the shape or size of the powders, "all the
time".
The same can be said for solar panels manufacturers. In
their case, it is certificates and norms that keep changing, as
countries adjust the regulations for PV installations. These
set the standards for installation of the structures, health
and safety, recycling capability of the panels and other
aspects.
Adhering to regulations requires a substantial amount of
work on the part of producers, since codes of practice are
often different from country to country.
The future is bright
Operators reckon that the extended PV systems portfolio,
lower overall costs of production and sale, and governments
gradually jumping on the solar bandwagon will allow for further
expansion of the customer base using PV energy.
One of the main trends forecast is the spread of small-scale
installations in private buildings, be it homes or businesses,
for own energy consumption as a way to reduce energy
costs.
According to Eurener, PV will be seen mainly as a
cost-saving resource rather than a generator of returns or a
commercial operation, such as the large solar farms that have
been set up in cities’ outskirts. The focus will
gradually move away from large-scale installations towards a
smaller-scale, private model aimed at self-consumption.
This would make for a proliferation of the technology and,
operators hope, will lead to a new norm, with solar applied in
everyday energy needs.
"Global demand increased a lot, and will increase further,"
Herrero said. "Having a PV installation will be like having a
fridge."