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Oct 262011

From Green Right Now Reports

Rob Gillette’s ouster Tuesday as the CEO of First Solar brings to light a potential market problem with the Cadmium Telluride “thin film” solar technology that First Solar relies upon.

CadTel solar panels are considerably less efficient than regular silicon solar panels, but they are cheaper to make.

For many years, CadTel technology appeared to be a worthwhile proposition, because it could offset its lower performance with lower prices that made thin film more marketable. It could break through the price barrier that was holding up solar adoption by utilities and residential consumers.

Then at the beginning of 2010, silicon prices began to fall, and by this fall, the price of conventional photo-voltaics had dropped by about 30 percent. Suddenly, conventional PV panels made with silicon crystalline wafers, still the choice of the majority of PV producers, looked a lot more affordable.

The metrics had changed. A Wall Street analyst quoted by Bloomberg said it best:

The falling price of silicon makes First Solar an unlikely takeover target, said Theodore O’Neill, an analyst at Wunderlich Securities Inc. in New York. The company’s technology “is barely competitive with silicon solar cells,” he said in an e- mail. “They make super cheap, very inefficient solar panels. Everyone else makes cheap, very efficient solar panels.”

First Solar touts the efficiencies of the CadTel thin film photovoltaics it manufactures, claiming proprietary processes and high volume manufacturing make these PV panels a good buy.

But CadTel also has special challenges, including an environmental issue that may be even stickier than the general recycling questions facing the entire solar industry. When the panels wear out, 25 or 30 years after installation, the toxic cadmium embedded in them must be recaptured and reused or disposed of, according to government requirements. The Occupational Safety and Health Administration (OSHA) refers to cadmium as an “extremely toxic metal” that requires special handling on the shop floor and thereafter.

First Solar has promised to take back old panels for free, and reclaim the cadmium for new uses. But will the company still being around in 25 years, or still being invested in the same solar panel production, and able to handle this outsized electronics take-back program?

By comparison, PV panels made with silicon do not contain toxics, though they will require heavy-duty recycling programs because of their size and weight. The glass panels, however, are fully reclaimable; glass having one of the best recycling profiles.

CadTel PVs still has some selling points on the table. The panels are lighter weight and can capture sunlight better in hazy or cold conditions compared with silicon panels.

But the market ahead will be quite different for CadTel than the one envisioned five years ago with traditional PVs falling much closer to the same price point.

PVs are  looking more attractive to utilities, businesses and consumers. Figures from the Solar Energy Industry Association show that the sector has grown tremendously in the last two years, employing about 100,000 American workers and projecting a spike in growth that could continue through 2015. The rise in production will be supported, in part, by the continuing Investment Tax Credit (ITC) for renewables, which was extended through 2016.

On the downside, however, the uncertainty around whether Congress will renew an alternate incentive known as the 1603 Treasury grant program combined with the current shaky economic climate, could mean that demand for solar will slip.

With PV manufacturers, retailers and installers already operating at lower profit margins, and many having to answer Wall Street’s expectations for dividends, a slowdown could do significant damage.

Lower prices for conventional PVs lower prices could be both a boon and a curse, opening up new market opportunities that challenge the spreadsheet.

At the Solar Power International convention in Dallas last week, industry and company spokespersons sought to put the best face on the situation, trumpeting gains in efficiency for traditional panels and new market tactics, like the solar leases requiring no upfront cash from homeowners.

General Electric was one company touting a new initiative: Its PV panel plant in Aurora, Colo., which will use state-of-the art robotics to churn out Cadmium Telluride panels.