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The Future of
Photovoltaics Manufacturing
in the United States

Summary of Two Symposia

Charles W. Wessner, Rapporteur

Committee on Competing in the 21st Century:
Best Practice in State and Regional Innovation Initiatives

Board on Science, Technology, and Economic Policy

Policy and Global Affairs

NATIONAL RESEARCH COUNCIL
                          OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

www.nap.edu



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Charles W. Wessner, Rapporteur Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives Board on Science, Technology, and Economic Policy Policy and Global Affairs

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by: Contract/Grant No. DE-AT01-06NA26358, TO #28, between the Department of Energy and the National Academy of Sciences. This report was pre - pared by the National Academy of Sciences under award number SB134106Z0011, TO #4, from the Technology Innovation Program of the National Institute of Standards and Tech - nology (NIST), U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of NIST or the U.S. Department of Commerce. This report was prepared by the National Academy of Sciences under award number 99-06-07543 from Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce. Additional funding was provided by The Heinz Endowments, Acciona Energy, Dow Corning Corpora- tion, IBM, SkyFuel Inc., and the Association of University Research Parks. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number-13: 978-0-309-14214-4 International Standard Book Number-10: 0-309-14214-8 Limited copies are available from Board on Science, Technology, and Economic Policy, National Research Council, 500 Fifth Street, N.W., W547, Washington, DC 20001; 202- 334-2200. Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu. Copyright 2011 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examina - tion of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the Na - tional Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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Committee on Competing in the 21st Century: Best Practice in State and Regional Innovation Initiatives* Mary L. Good, Chair Michael G. Borrus, Vice Chair Donaghey University Professor Founding General Partner Dean, Donaghey College of X/Seed Capital Management Engineering and Information Mary Maxon Technology University of Arkansas at Little Rock Initiative Lead and STEP Board Marine Microbiology Initiative Gordon and Betty Moore Foundation Richard A. Bendis David T. Morgenthaler Founding President and CEO Innovation America Founding Partner Morgenthaler Ventures Susan Hackwood Edward E. Penhoet Executive Director California Council on Science and Director Technology Alta Partners William C. Harris Tyrone C. Taylor President and CEO President Science Foundation Arizona Capitol Advisors on Technology W. Clark McFadden II Partner Dewey & LeBoeuf, LLP *As of July 2009.

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PROJECT STAFF* Charles W. Wessner Sujai J. Shivakumar Study Director Senior Program Officer Alan Anderson David E. Dierksheide Consultant Program Officer McAlister Clabaugh Adam H. Gertz Program Officer Program Associate (through June 2010) David S. Dawson Senior Program Assistant *As of May 2011.

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For the National Research Council (NRC), this project was overseen by the Board on Science, Technology and Economic Policy (STEP), a standing board of the NRC established by the National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the STEP Board is to integrate understanding of scientific, technological, and economic elements in the for- mulation of national policies to promote the economic well-being of the United States. A distinctive characteristic of STEP’s approach is its frequent interactions with public and private-sector decision makers. STEP bridges the disciplines of business management, engineering, economics, and the social sciences to bring diverse expertise to bear on pressing public policy questions. The members of the STEP Board* and the NRC staff are listed below: Edward E. Penhoet, Chair Amory Houghton, Jr. Director Former Member of Congress Alta Partners David T. Morgenthaler Lewis W. Coleman Founding Partner President & CFO Morgenthaler Ventures DreamWorks Animation Joseph P. Newhouse Alan M. Garber John D. MacArthur Professor of Henry J. Kaiser, Jr. Professor Health Policy and Management Professor of Medicine Harvard Medical School Director, Center for Primary Care Arati Prabhakar and Outcomes Research Stanford University General Partner U.S. Venture Partners Ralph E. Gomory William J. Raduchel Research Professor Chairman Stern School of Business Opera Software ASA New York University and Jack W. Schuler President Emeritus Partner Alfred P. Sloan Foundation Crabtree Partners Mary L. Good Alan Wm. Wolff Donaghey University Professor Of Counsel Dean, Donaghey College of Engineering and Information Dewey & LeBoeuf LLP Technology University of Arkansas at Little Rock *As of May 2009.

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STEP STAFF* Stephen A. Merrill Charles W. Wessner Executive Director Program Director Paul Beaton Adam H. Gertz Program Officer Program Associate (through June 2010) McAlister Clabaugh Daniel Mullins Program Officer Program Associate David S. Dawson Sujai J. Shivakumar Senior Program Assistant Senior Program Officer David E. Dierksheide Program Officer *As of May 2011.

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Contents PREFACE xv I. OVERVIEW 1 A. Addressing the Renewable Energy Challenge 3 B. Regaining U.S. Leadership in Renewable Energy 7 C. Challenges for PV Manufacturing 11 D. Accelerating Innovation Through Collaborative Research 20 E. What Is the Role for Government? 31 F. Conclusion 35 II. PROCEEDINGS—APRIL 23, 2009, SYMPOSIUM, THE FUTURE OF PHOTOVOLTAICS MANUFACTURING 37 IN THE UNITED STATES Welcome 39 Charles Wessner, The National Academies Introduction 41 Clark McFadden, Dewey & LeBoeuf LLP Opening Remarks 43 John Lushetsky, U.S. Department of Energy ix

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x CONTENTS Panel I: Opportunities and Challenges Facing PV Manufacturing in the United States 44 Moderator: Kevin Hurst, Office of Science and Technology Policy, Executive Office of the President First Solar, Inc. 45 Michael J. Ahearn, First Solar The Global PV Value Chain 51 Dick Swanson, SunPower Unleashing the Power of the Sun 54 Eric Peeters, Dow Corning Solar Solutions Panel II: Opportunities and Challenges Facing PV Manufacturing in the United States: Large Companies’ Perspective 59 Moderator: Pete Engardio, BusinessWeek PV Manufacturing in the United States 59 Eric Daniels, BP Solar Applied Materials’ Perspective 63 Mark Pinto, Applied Materials DuPont Reflections on Photovoltaics 67 Steven C. Freilich, E. I. du Pont de Nemours and Co. Panel III: National and International Consortia: Lessons and Best Practices 71 Moderator: Clark McFadden, Dewey & LeBoeuf LLP Collaboration for Success in Semiconductors 71 John E. Kelly, IBM Consortia in Europe: IMEC 75 Johan Van Helleputte, IMEC Public-Private R&D Collaboration: Lessons from PV Partnerships 79 Robert M. Margolis, National Renewable Energy Laboratory

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xi CONTENTS Panel IV: Economics of Photovoltaics in the United States 84 Moderator: Richard Bendis, Innovation America Global Manufacturing of Photovoltaics: Where Does the United States Stand? 84 Ken Zweibel, George Washington University Financing Photovoltaics in the United States 88 Steve O’Rourke, Deutsche Bank Securities The Toledo, Ohio, Solar Cluster 93 Norman Johnston, Solar Fields LLC, Calyxo GmbH, and Ohio Advanced Energy (OAE) Luncheon Remarks— Transforming the Glass City into the Solar City: Toledo’s Tradition of Innovation and Entrepreneurship 100 Congresswoman Marcy Kaptur (D-Ohio) Panel V: Next Generation: The Flex Display Opportunity 106 Moderator: William Harris, Science Foundation Arizona New and Synergistic Opportunities in Flexible and Printed Electronics 106 Mark Hartney, FlexTech Alliance Advancing Technology Through Measurement Science at NIST 110 Eric K. Lin, National Institute of Standards and Technology Flexible Electronics 112 Bob Street, Palo Alto Research Center Panel VI: Roundtable Discussion—Key Issues and Next Steps Forward 115 Moderator: Congresswoman Gabrielle Giffords (D-Arizona) Jim Ryan, Joint School of Nanoscience and Nanoengineering, Gateway University Research Park, Greensboro, North Carolina Eric Daniels, BP Solar Mark Pinto, Applied Materials Richard Bendis, Innovation America

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xii CONTENTS III. PROCEEDINGS—JULY 29, 2009, SYMPOSIUM, STATE AND REGIONAL INNOVATION INITIATIVES— PARTNERING FOR PHOTOVOLTAICS MANUFACTURING 123 IN THE UNITED STATES Welcome 125 Charles Wessner, The National Academies Introduction 127 Clark McFadden, Dewey & LeBoeuf LLP Opening Remarks 129 Senator Mark Udall (D-Colorado) Panel I: Partnering for Photovoltaic Technologies 132 Moderator: Congresswoman Gabrielle Giffords (D-Arizona) U.S. Photovoltaic Roadmap: Perspective of the Manufacturing Industry (1) 134 Subhendu Guha, United Solar Ovonic (Uni-Solar) Perspective of the Manufacturing Industry (2) 137 David Eaglesham, First Solar Panel II: Advancing Solar Technologies: The Department of Energy 145 Moderator: Alicia Jackson, U.S. Senate Committee on Energy & Natural Resources The U.S. Department of Energy’s Perspective 145 Kristina Johnson, Under Secretary, U.S. Department of Energy DoE Solar Energy Technologies Program: Accelerating the U.S. Solar Industry 151 John Lushetsky, Acting Deputy Assistant Secretary, U.S. Department of Energy Bringing Department of Energy Innovations to Market 155 Carol Battershell, Senior Advisor for Commercialization and Deployment, Energy Efficiency and Renewable Energy, U.S. Department of Energy

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xiii CONTENTS Panel III: Facilitating Solar Innovation: Contributions from Other Federal Agencies 161 Moderator: Richard Bendis, Innovation America Measurement and Standards: The Role of NIST 161 Kent Rochford, Acting Director, Electronics and Electrical Engineering Laboratory, National Institute of Standards and Technology (NIST) The NSF Model: The Silicon Solar Consortium 164 Thomas W. Peterson, Assistant Director, NSF Directorate of Engineering Photovoltaic Manufacturing in the United States: A University Perspective 168 James Sites, Colorado State University Panel IV: Advances in Photovoltaic Manufacturing: Intermediating Institutions 171 Moderator: Pete Engardio, BusinessWeek A Solar Product Development Center 171 Stephen Empedocles, SVTC Solar Industry-University Partnership for Photovoltaic Technologies 175 Nolan Browne, MIT-Fraunhofer Center for Sustainable Energy Systems The SEMATECH Model: Potential Applications for PV 180 Michael Polcari, SEMATECH The Semiconductor Research Corporation (SRC): A Proven Means to Fund Relevant Research 184 Larry Sumney, Semiconductor Research Corporation PV Technology Roadmaps and Industry Standards: An Association’s Approach 189 Bettina Weiss, PV Group

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xiv CONTENTS Panel V: Building a Solar PV Roadmap 194 Moderator: Clark McFadden, Dewey & LeBoeuf LLP Building a Solar Roadmap 194 Ken Zweibel, George Washington University Observations on Building a PV Roadmap Panel 198 Doug Rose, SunPower Roundtable: Next Steps for Government-Industry Collaboration in Photovoltaic Technologies 206 Moderator: John Lushetsky, U.S. Department of Energy Doug Rose, SunPower Charlie Gay, Applied Materials Kevin Hutchings, IBM John Gloekler, Apogee Solar James Moreland, SolarWorld IV. APPENDIXES 215 A. April 23, 2009, Symposium, The Future of Photovoltaics Manufacturing in the United States: Biographies of Speakers and Participants List 217 B. July 29, 2009, Symposium, State and Regional Innovation Initiatives—Partnering for Photovoltaics Manufacturing in the United States: Biographies of Speakers and Participants List 239 C. Bibliography 261

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Preface The global economy is characterized by increasing locational competition to attract the resources necessary to develop leading-edge technologies as drivers of regional and national growth. One means of facilitating such growth and improv - ing competitiveness is to foster more robust innovation ecosystems through the development of public-private partnerships, industry consortia, and other regional and national economic development initiatives. Many U.S. states and regions have developed programs to attract and grow companies as well as attract the talent and resources necessary to develop a knowledge-based economy. These state and regionally based initiatives have a broad range of goals and, increasingly, include significant resources. They often have a sector-based focus and, in many cases, are developed in partnership with universities and private foundations. However, there has been little or no recent analysis of the role of these in- novation partnerships. Despite the growing importance and growth of state and regional programs, relatively little is known about their goals, mechanisms, funding levels, accomplishments, and complementarities with federal programs. STATEMENT OF TASK An ad hoc committee, under the auspices of the Board on Science, Technol - ogy, and Economic Policy (STEP) is conducting a study of selected state and regional programs in order to identify best practices with regard to their goals, structures, instruments, modes of operation, synergies across private and public programs, funding mechanisms and levels, and evaluation efforts. The committee is reviewing selected state and regional efforts to capitalize on federal and state xv

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xvi PREFACE investments in areas of critical national needs. This review includes both efforts to strengthen existing industries as well as specific new technology focus areas such as nanotechnology, stem cells, and energy in order to gain an improved understanding of program goals, challenges, and accomplishments. THE CONTEXT OF THIS REPORT Since 1991, the National Research Council, under the auspices of the Board on Science, Technology, and Economic Policy, has undertaken a program of activities to improve policymakers’ understandings of the interconnections of science, technology, and economic policy and their importance for the American economy and its international competitive position. The Board’s activities have corresponded with increased policy recognition of the importance of knowledge and technology to economic growth. New Growth Theory in economics also em- phasizes the role of technology creation as a driver of local and regional growth. 1 Recent economic analysis also suggests that high technology is often char- acterized by increasing rather than decreasing returns, justifying to some the proposition that governments can capture long-term advantage in key industries by providing relatively small, but potentially decisive support to bring regionally based industries up the learning curve and down the cost curve. In part, this is why the literature now recognizes the relationship between technology policy and trade policy.2 Recognition of these linkages and the corresponding ability of governments to shift comparative advantage in favor of the state, regional, and national economy provide the intellectual underpinning for government support at all levels for high-technology industry. STEP seeks to bring new insight to bear on issues of national interest though its analyses of specific industries and technologies.3 The Board’s research ad- dresses both demand and supply side realities, the contribution of R&D partner- ships, and efforts to enhance U.S. competitiveness. This approach is of particular relevance to current initiatives to create and/or reinforce clusters of firms able to 1 Developed in the 1990s, New Growth theories highlight the role of innovation as the main driver for economic development, with the implication that policies that embrace openness, competition, change and innovation will promote growth. See Paul M. Romer, “Endogenous technological change,” Journal of Political Economy October 1990. Also see Gene M. Grossman and Elhanan Helpman, “Endogenous innovation in the theory of growth,” The Journal of Economic Perspectives 8(1):23–44, 1994. 2 J. A. Brander and B. J. Spencer, “International R&D rivalry and industrial strategy,” Review of Economic Studies 50:707–722, 1983, and “Export strategies and international market share rivalry,” Journal of International Economics 16:83–100, 1985. 3 National Research Council, Innovation in Global Industries: U.S. Firms Competing in a New World, J. Macher and D. Mowery, eds., Washington D.C.: The National Academies Press, 2008. This report follows a previous review of U.S. industrial performance by STEP. See National Research Council, U.S. Industry in 2000: Studies in Competitive Performance, D. Mowery, ed., Washington, D.C.: National Academy Press, 1999.

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xvii PREFACE meet new needs and contribute to improved U.S. competitiveness and the creation of high-value employment in the United States.4 Public-private partnerships are increasingly recognized as important ele- ments for the support of innovation-led growth because of their contribution to the commercialization of state and national investments in research and develop - ment. As documented by recent National Research Council analysis, technology partnerships can be critical to generating an environment supportive of technolo - gies that can have economic benefits with regional and national impact. 5 One important element of STEP’s analysis concerns the growth and impact of foreign technology programs.6 U.S. competitors have launched substantial programs to support new technologies, small firm development, and consortia among large and small firms to strengthen national and regional positions in stra - tegic sectors. Some governments overseas have chosen to provide public support to innovation to overcome the market imperfections apparent in their national innovation systems.7 They believe that the rising costs and risks associated with new potentially high-payoff technologies, and the growing global dispersal of technical expertise, underscore the need for national R&D programs to support new and existing high-technology firms within their borders. Similarly, many state and local governments and regional entities in the United States are undertaking a variety of initiatives to enhance local economic development and employment through investment programs designed to attract and grow knowledge-based industries.8 These state and regional programs and associated policy measures are of great interest for their potential impact on U.S. competitiveness. STEP’s project on State and Regional Innovation Initiatives is intended to generate a better understanding of the challenges associated with the transition of research into products, the practices associated with successful state and regional programs, and their interaction with federal programs and private initiatives. The project seeks to achieve this goal through a series of complementary assessments 4 See Charles W. Wessner, Growing Innovation Clusters for American Prosperity , Washington, D.C.: The National Academies Press, forthcoming. See also Karen G. Mills, Elisabeth B. Reynolds, and Andrew Reamer, Clusters and Competitiveness: A New Federal Role for Stimulating Regional Economies, Washington, D.C.: Brookings, April 2008. 5 National Research Council, Government-Industry Partnerships for the Development of New Tech- nologies, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2003. 6 National Research Council, Innovation Policies for the 21st Century, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2007. 7 Most notably, a number of countries are investing significant funds in the development of research parks. For a review of selected national efforts, see National Research Council, Understanding Re- search, Science and Technology Parks: Global Best Practices, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2009. 8 For a scoreboard of state efforts, see Robert Atkinson and Scott Andes, The 2008 State New Economy Index: Benchmarking Economic Transformation in the States, Kauffman Foundation and ITIF, November 2008.

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xviii PREFACE of state, regional, and federal initiatives; analyses of specific industries and tech - nologies from the perspective of crafting supportive public policy at all three levels; and outreach to multiple stakeholders. The overall goal is to improve the operation of state and regional programs and, collectively, enhance their impact. STEP MEETINGS ON PHOTOVOLTAIC MANUFACTURING Gathering representatives from leading producers of photovoltaics, congres - sional staff, leading academics and industry analysts, and representatives from relevant government agencies, STEP convened two meetings, held in April and July 2009, to examine the future of the U.S. photovoltaic industry and the practi - cal steps that the federal government and some state and regional governments are taking to develop the capacity to manufacture photovoltaics competitively. Drawing on the experiences of related industries, meeting participants explored the prospects for cooperative R&D efforts, standards, and roadmapping efforts that could accelerate innovation and growth of a U.S. photovoltaics industry. This report captures the presentations and discussions of these two symposia on the future of photovoltaic manufacturing. It includes a common introduction and summaries of the presentations at both meetings. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what oc - curred at the workshops. The planning committee’s role was limited to planning and convening the workshops. The statements made are those of the rapporteur or individual workshop participants and do not necessarily represent the views of all workshop participants, the planning committee, or the National Academies. ACKNOWLEDGMENTS On behalf of the National Academies, we express our appreciation and recognition for the insights, experiences, and perspectives made available by the participants of the meetings. We are also grateful to John Lushetsky of the Depart- ment of Energy, John Fernandez of the Economic Development Administration, Marc Stanley of the Technology Innovation Program of the National Institute of Standards and Technology, and Christina Gabriel of The Heinz Endowments for their interest and support of this project.9 We are indebted to Alan Anderson for his preparation of the meeting summa- ries. Sujai Shivakumar prepared the draft introduction to this volume and David Dierksheide prepared the report manuscript for publication. 9 As of July 2009.

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xix PREFACE NATIONAL RESEARCH COUNCIL REVIEW This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures ap- proved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for quality and objectivity. The review comments and draft manuscript remain confidential to protect the integrity of the process. I wish to thank the following individuals for their review of this report: Nancy Bacon, United Solar Ovonic and Energy Conversion Devices, Inc.; Robert Collins, University of Toledo; Stephanie Shipp, Institute for Defense Analysis; Richard Swanson, SunPower; and Cyris Wadia, Haas School. Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the content of the report, nor did they see the final draft before its release. Responsibility for the final con - tent of this report rests entirely with the author and the institution. Charles W. Wessner Rapporteur

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