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Summary:

First Solar, one of the largest solar panel makers in the world, says it’s breaking a record for the amount of sunlight that its cadmium-telluride solar cells can convert into electricity. The improvement promises to deliver cheaper solar electricity for consumers in the long run.

First  Solar Topaz
photo: Ucilia Wang

One of the important ways to make solar energy cheaper is to improve the amount of sunlight that solar cells can convert into electricity. So it’s a big deal to see that First Solar announced on Tuesday that it’s managed to create a record 18.7 percent solar cell, up from the 17.3 percent cell it touted in July 2011.

That 18.7 percent sets a new world record for cells made from the material cadmium-telluride. It represents the best the company could achieve, but to make cells with that efficiency in mass production will likely take a few years.

Boosting the efficiency helps to reduce production costs of solar cells. Efficiency is correlated with how much power a panel of a given size can produce – more power means higher efficiencies. There is a fixed cost and amount of time for making each panel. If the company produces each panel with a higher power rating (in watts) for the same amount of time as it did before, then that panel’s cost-per-watt is lower.

For consumers, a solar panel with more efficient cells also means they won’t need as many solar panels to get the same amount of electricity. Or they could get more solar electricity with the same number of panels. That’s good news for those who have homes with a limited roof space or want to rely less on their utilities for power.

First Solar 18.7% cell

The Arizona company has long built its reputation as a low-cost manufacturer, but it has faced increasing competition from companies that have gotten better at reducing costs. Like First Solar, many of these rivals have built mega factories and developed their own or licensed technologies to cut costs.

A good number of these solar cell makers are based in China, and in recent years these Chinese companies also have gotten strong financial support from their national and local governments — as well as state-controlled banks — to become formidable players. But that help has gotten the Chinese manufacturers in trouble in the U.S. and Europe, where trade complaints have been filed to stop what their rivals say is unfair competition. The U.S. government started to impose tariffs on imported Chinese silicon solar cells last year after investigating such a trade dispute in 2011-2012.

With the new efficiency record, First Solar also wants to show that its material of choice, cadmium-telluride, is capable of squeezing more and more electricity from sunlight for years to come. Most of the solar cells made today actually use silicon, the same material for chips that run computers and mobile phones. But there has been a long-standing debate over when silicon and cadmium-telluride will be close to hitting the maximum efficiencies the materials can inherently produce.

Without switching to a new material — and spending lots of money to replace factory equipment — solar companies are looking at different ways to boost the efficiencies. One idea is to stack another layer of cells on top of the existing layer to induce chemical reactions that help to minimize the loss of electrons in the process of converting sunlight to energy. Figuring out new ways to boost silicon solar cell efficiency is one area where startups might still be able to attract venture capital, especially if the ideas involve licensing the technologies to big producers.

Many investors have shied away from putting money in startups that want to build factories to manufacture the technologies they have developed. Solar manufacturing technology has shown to take a lot more time and money to commercialize than some VCs have the appetite for, and investors haven’t seen enough success stories to want to place more bets.

When solar cells are assembled into a panel, the efficiency of the entire panel is typically a few percentage points lower than the cell efficiency. First Solar announced a 14.4 percent panel efficiency record about a year ago. But the panels that are rolling off its production lines en masse clocked in at an average of 12.9 percent as of the end of 2012, up 0.7 percentage point from 12.2 percent by the end of 2011.

The company also reported its fourth-quarter financial results on Tuesday. It posted $1.1 billion in sales for the quarter, up from $415 million in the fourth quarter of 2011. It generated $154.2 million in the quarterly net income, or $1.74 per share, compared with a net loss of $413.1 million, or $4.78 per share, from the year-ago period. For the entire 2012, First Solar took in $3.4 billion in sales, up 22 percent from 2011, but it recorded a net loss of $96.3 million, or $1.11 per share, for 2012.

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  1. The problem with competition from China has been caused to a large degree by Chinese government subsidies and over investment in solar panel manufacturing capacity. Where have we heard this before? The result is global oversupply that may force at least two of the larger Chinese solar panel manufacturers out of business. The Chinese government is probably loath to do this and cause unemployment and social unrest. The pricing for solar PV panels at the moment is a buyers dream come true.

  2. First Solar is not a low-cost manufacturer — at all.

    Their cost/watt is terrible, to be honest.

    The only reason they are still in business — and profitable — is that their Cd-Te technology outperforms silicon-based panels in hot climates, where utility-scale systems tend to get build.

    Cd-Te doesn’t match silicon’s efficiency otherwise so it makes no sense to use on residential rooftops and in most climates is a horrendous choice on commercial rooftops as well. But for utility-sized projects (or giant corporate projects like Volkswagen’s) it can make great sense.

  3. At some point, solar gets cheap enough for end users that the $/W number is unimportant. It no longer becomes the cost driver. How many know how much $/GB solid state memory or disk storage costs now, and who is the price leader, or how they’ve trended recently? Who cares? It’s cheap enough, time to move on to other issues like usability, ease of installation, integration with our other power scaffolds.

  4. Solar panels are down to $1/watt.
    But installation is stuck at $4/watt.

    It makes ZERO sense to install a lower efficiency panel using high dollar labor.

  5. Price per watt is one of the industry metrics, and it remains important for manufacturers and their customers. More importantly, we need more efficient solar panels. You think something that can convert less than a fifth of sunlight into electricity (this applies to most of the solar panels on the market today) is good enough?! We should invest in boosting the efficiency. Yet we are seeing more of that kind of work at large companies rather than startups because VCs don’t want to put money in solar manufacturing tech. That’s too bad.

  6. New technology is about to overtake these guys, 70% efficiency:
    http://phys.org/news/2013-02-patented-fabrication-technique-key-solar.html

  7. 20%+ module level efficiency (e.g. SunPower) is astonishingly good conversion efficiency for a 1-sun cell given all the loss mechanisms involved. Ucilia, if you do not understand this, you have no real business blogging about solar.

  8. @Really?: SunPower’s panels do have high efficiency for silicon panels. But it’s the exception at this point. Even then, the company is spending good money to drive up that efficiency number. You think it’s doing it just for fun? The rest of the silicon panel makers are producing panels at efficiencies that are mostly in the mid-teens. If you don’t understand why solar panel makers need to continue to improve their products’ efficiencies, then you need to do more reading.

    1. There is benefit in increasing efficiency, but it’s pretty small. And to be honest. it shouldn’t be mentioned much in the context of FirstSolar, which has no special track record on efficiency because Cd-Te is not an efficient technology.

      The bottom line is that total system efficiency is interesting. $ / watt on panels matters but so does total # of panels. Really cheap, inefficient panels require big systems. The nice thing for residential and “corporate” (read: office park or big-box retail) solar is that 280-watt panels are now ubiquitous and 80 cents/watt. FirstSolar has nothing to sell to these markets — at all.

      FirstSolar’s entire business is predicated on selling the fact they offer “higher than silicon performance” over 25 degrees Celsius. Their claim is true, but their efficiency is still worse there. So they need more land to do this. Their cost / watt is nominally better (barely), but they require more land and more and maintenance to make it so. Their system engineering division gets them “project wins”, but that won’t continue for long unless they keep improving Cd-Te tech, so news like this article does matter.

      But they are still missing the other two legs of the tripod of solar deployment and are nowhere near being part of them with this.

      With all due respect, FirstSolar has fundamental long-term structural problems because of its technology bet. And unless it can push efficiencies into the high 20s, it will always be cut out of huge chunks of the market. And that’s a bad problem that silicon does not have. That in turn creates a scale economics problem that silicon does not have.

    2. @Ucilia – More reading, that’s pretty funny.

      My comment was towards the remark about 20% not being good enough. That’s a silly remark. 20% modules push the limits for silicon. It is incredible. At scale, at the right cost structure, I have no doubt that anyone who achieves this will dominate. Efficiency is just one of several levers. I don’t get too excited about 40% HCPV cells, for instance, because with the cost structure and optical / tracking losses it doesn’t pencil. Anyhow – champion cells are nice.

  9. @Mark: I don’t think you and I disagree about First Solar. It needs to improve its efficiency to better compete. But certainly efficiency isn’t the only way for it to do that. The company is competing on price per kilowatt-hour and offers EPC and power plant operational services. If it’s not able to do what it does better and cheaper than its rivals, then it’s not going to last long.

    By the way, there is an ongoing debate on what is the theoretical maximum efficiency for silicon, Cd-Te, CIGS, etc. I wrote about this a few years ago and interviewed Martin Green, a well known expert in Australia: http://www.greentechmedia.com/articles/read/how-efficient-can-solar-technology-get

  10. I just wonder about the environmental impact of large-scale manufacturing and disposal of cadmium telluride and whether in broad terms any increases in efficiency over silicon panels is worth the risk/costs associated with handling toxic materials.

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