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Solar Wars

October 20, 2010

Interesting article from Bloomberg New Energy Finance on what it takes to compete in the solar power industry these days…

….This paradigm, wherein the major manufacturers all ramp up production even as demand slows, has happened before. In fact, it almost always happens, and should catch none by surprise. But what does it mean at the sharp end, for those who are not yet capable of GW-scale capacity? And, what does it mean for those very large multinational companies which have heretofore been notable by their absence?

PV companies, in particular, must pass through three phases in order to be able to compete with global leaders. First, a company is technology; next, a product; finally, a project. A theoretical efficiency for a lab bench PV technology requires thousands of iterations to become product-ready as a module. A module, as product, requires yet more iterations – technical and financial – to become a project and attract debt. How to move most quickly through those steps when the targets for technology, product, and project move ever higher?

Two announcements last week give a hint. The first was from Avancis, a maker of European copper indium gallium selenide thin-film technology, about a joint venture with Korea’s Hyundai Heavy Industries. Avancis is a subsidiary of an already-large company, glass producer Saint-Gobain, and was also once part of Shell’s renewable energy portfolio. Hyundai’s heavy lifting, so to speak, should help its proven but not widely deployed product become project-ready.

The second announcement came from General Electric and Japanese CIGS manufacturer Solar Frontier, the spin-out from one of Japan’s largest refiners. Solar Frontier will supply modules, and GE will supply “power generation equipment”, for deployment in projects worldwide.

Both deals indicate the sort of strategic thinking that is happening as companies try to chase the ever-moving targets above: get big fast, or, if already big, get bigger under cover of some of the world’s largest, most experienced, and most credit-worthy energy and infrastructure companies. As one renewable energy lender once said to Bloomberg New Energy Finance, “I will finance a GE product or a GE project because it’s GE, and they can make the bad, good.”

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