Mike Gering, CEO of the start-up Global Solar, picks his way along his factory floor, tracing the convoluted path that his thin-film solar panels follow from birth to shipping truck. The raw materials the workers carry are ultra-thin sheets of flexible plastic, which are then coated with a series of chemicals--indium, gallium, diselenide--that allows the module to turn sunlight into electricity.
The atmosphere here is less high tech than high school chemistry lab, and Global Solar's days in this cramped Tucson, Ariz., facility are history. The company is shifting production to a sparkling factory just a few miles down the road. The new facility is fast enough to churn out 40 megawatts' worth of thin-film solar panels a year, more than 10 times Global Solar's previous capacity.
It's a story being repeated throughout the solar world, from the Southwest to Silicon Valley to Germany. Everywhere you look, thin-film solar companies are opening new, more efficient factories. The thin in thin film refers to the skinny layers of photoactive chemicals needed for the technology, as compared with the thicker films used in crystalline-silicon solar modules. Though thin-film photovoltaics are cheaper than the crystalline ones on most rooftop solar panels, the technology has proved maddeningly difficult to mass-produce, which had kept it from going mainstream. But today thin film is the hottest part of the fastest-growing new energy source in the world. BCC Research, which charts technology markets, expects the global solar market to grow from $13 billion to $32 billion by 2012, with thin film expanding 45% a year. Masdar, the clean-energy arm of the government of Abu Dhabi, just announced that it will invest $2 billion in thin film. "Crystalline silicon has had its day," says Peter Harrop, chairman of the London-based research firm IDTechEx. "These new technologies will be taking over."
That evolution hasn't occurred overnight. Thin film is a relatively young technology, and moving it from the laboratory to mass production has been tricky. Even some of the best-funded thin-film start-ups--like Miasolé, based in Santa Clara, Calif.--have been plagued with production disruptions. "Going from R&D to manufacturing is always fraught with gotchas," says Joseph Laia, Miasolé's CEO. "There are a whole series of things you didn't see because no one has really done this at scale." Since the industry is still small, for example, companies can't always count on easy access to the raw materials they need, such as cadmium and selenium. "There's no well-oiled machine, no infrastructure," says Laia. "Our supply chain doesn't exist."
It was that reality that led the solar arm of BP to pull out of the thin-film industry in 2002, claiming that the economics would never add up. But the numbers have changed, thanks largely to the enormous success of Phoenix's First Solar. Though the company was launched in 1999, it has its origins in a solar start-up that had been around since the mid-1980s. First Solar spent years tinkering before moving to mass production. It was able to weather those early days of profitless experimentation because it had a rich, patient backer: Wal-Mart heir John Walton, who pumped $250 million into First Solar before his death in 2005.
Walton's investment has paid off handsomely. Since it began commercial production of thin-film modules in 2002 (much of the output has been sold to small-scale solar farms in Germany, where generous subsidies have primed the market), the company has done nothing but grow. With factories in Arizona and Germany and another being built in Malaysia, First Solar should be producing 1 gigawatt of solar power yearly by the end of 2009. "They've fully overcome the technological barrier with large production and low defects," says Rhone Resch, president of the Solar Energy Industries Association. "Their plants are fully automated--it looks just like a silicon-chip factory."
As First Solar scaled production up, it was able to bring its costs down. Solar producers measure their costs in terms of dollars per watt of energy produced, a formula that's a combination of the cost of producing a module and its power efficiency. Right now the best crystalline-silicon makers can sell modules at $3 to $4 a watt; First Solar can sell at around $2.40 a watt, a price the company expects to reduce steadily. "They've really pushed this industry over the threshold," says Travis Bradford, author of The Solar Revolution. "They possess great technology."
But First Solar doesn't generate the most buzz. That notoriety belongs to the start-up Nanosolar, which shocked its competitors in December when it announced it would begin profitably selling thin-film panels at $1 a watt. That figure is solar's holy grail, the point at which power from the sun becomes generally cheaper than coal, without the help of subsidies.
Nanosolar ceo Martin Roscheisen, who, like many new solar kings, has roots in Silicon Valley, says he can achieve radical cost savings by directly applying photoactive chemicals with an ink composed of nanoparticles. Nanosolar's PowerSheet cells roll off the machines like pages of newspaper in a printing press, at the rate of several hundred feet a minute. Roscheisen, an intense Austrian, says Nanosolar's first 18 months of production have already been purchased. "We're looking for a 35% market share in the next couple of years," he says. "The simple truth is, we can scale a lot more product out for a lot less."
Roscheisen's competitors are, to put it gently, dubious about his claims, pointing out that the cost of raw materials alone should make it impossible to produce $1-a-watt panels profitably. "Of course they doubt it," he says. "Otherwise it makes a joke of their business models." Nanosolar's claims should become more transparent as the company scales up and either meets demand or fails to; in the past, it has suffered production delays.
Either way, there may be room for almost everyone as the solar market grows and cheaper thin film eats into the share held by crystalline silicon. "I've had three tours of combat, and this is more exciting than that," says Global Solar's Gering, standing on the floor of his new factory. "I'm a true believer." A limitless supply of clean, cheap energy--if thin film can deliver that, who wouldn't believe?