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Panel VI Roundtable Discussion— Key Issues and Next Steps Forward Moderator: Congresswoman Gabrielle Giffords (D-Arizona) Congresswoman Giffords (D-AZ) said in her introduction that she is “incred- ibly passionate about solar energy,” not only because she hails from Arizona, but more fundamentally because the technology aligns so well with the challenges this country faces in energy independence and climate change. She also noted its power in stimulating more technical innovation, and in helping to attract and train more of the scientists and engineers we need. “I really think solar is an incredible solution to the tough issues we face,” she said. “Of course the whole world faces them, but we as a leader in technology have a lot more at stake.” Jim Ryan Joint School of Nanoscience and Nanoengineering Gateway University Research Park Greensboro, North Carolina Dr. Ryan noted that he had come to the symposium mostly because of his work with IBM, which was described earlier by Dr. Kelly. He described his special interest in industry-university-government consortia and issues under discussion at the symposium that his group had worked with. Eric Daniels BP Solar Mr. Daniels noted BP Solar’s “long history of perfecting the final product, the module that goes to market.” He said that goals for the future must in - clude lower cost and better performance of solar modules. He noted that R&D 115

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116 FUTURE OF PHOTOVOLTAICS MANUFACTURING subsidies “have been fantastic in bringing new people to our organization and our industry.” He attributed some key patents issued in the last few years largely to new members of BP’s research effort. He said that the company had filed for many patents, and suggested that “anything we might do to speed up and assist our friends at the patent office” would be extremely important. “This is a fast-paced industry.” A second goal of importance, Mr. Daniels said, was to gain a better under- standing of module lifetimes. All solar cells have a tendency to degrade under the sun’s rays, with thin-film panels degrading more rapidly than crystalline panels. The systems BP was installing in the field were assumed to last a minimum of 20 years in most cases and warranted accordingly. BP Solar is one of the only companies that have had products in the field for periods longer than their war- ranty. Levelized Cost of Energy (LCOE) modeling tools use assumptions regard- ing projected long term performance for solar products in order to predict the cost of solar energy for solar power systems. Actual history is available for some technologies, “but we really need to understand this better,” he said. “I’ve spent a lot of time looking at design models, and there’s an enormous amount of work ahead of us to get more precise about that.” Mr. Daniels also commented on the continuing need for lower costs. He said that much of the U.S. industry’s progress had depended on the development of foreign markets. Most manufacturers, he said, have a multinational presence in site locations. “Were it not for that international competition,” he said, “our prices today would not be where they are. We are now in some cases at grid parity. We can do more to continue to drive costs down.” Mark Pinto Applied Materials Mr. Pinto suggested that one of the most important lessons about PV de- velopment is to “remember the learning curve. We’re on one. This technology continues to get cheaper. It comes from innovation; it’s technology based. It’s not just using bigger glass; there’s real technology down to the fundamental level.” Having said that, however, he agreed with the consensus that “it’s still driven by initiatives that need to happen on the demand level.” For the time being, he said “a lot of creative ideas,” such as those presented by Mr. O’Rourke, were needed to navigate the difficult currents of demand. But as time goes by, he said, “some of those things will go away, and the learning curve will take us where we need to go.” In terms of manufacturing, Mr. Pinto again referred to the ideas presented by Mr. O’Rourke, including some of the disadvantages for manufacturers. “We’ve just made an initial start at addressing that here in Washington. But it is a difficult challenge for our customers, which is one reason so many manufacturers have built factories outside the United States.”

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117 PANEL VI Progress in R&D, he said, would also depend on “recognizing this learning curve and not waiting for the ‘next big thing’ that is somehow going to make a 5x difference. If we do that we’re not going to be part of the game here.” At the same time, he said, there is a role for investments in future research. He referred to the lessons of the semiconductor industry, described earlier by Mr. Kelly, in building collaborations and focusing on joint precompetitive research. In the solar industry, Mr. Pinto said, it is often difficult to form collaborations because manufacturing and technological development were still competitive. One reason for this, he said, was there were some three dozen solar start-ups in Silicon Valley developing nearly that same number of different CIGS processes, all of them competing. “Believe me,” he said, “I know, because they all want equipment, and it’s hard to find.” But there are areas where collaboration is help - ful, he said, citing the example of modeling, which all solar technologies need in order to explore optics and electronics. “You can plug in whatever band structure you want for whatever elements,” he said, “and do the model from first principles. This helps to figure out what’s going on and how to design these structures. Every company should benefit from that.” Beyond modeling, Mr. Pinto said, firms could also learn from the investments of the semiconductor industry in good fabs around the country. “That’s something we could all stand up and do,” he said. “This is a real technology industry, and we should be spending R&D the way a real technology industry does. Applied Materials spends a billion dollars a year in R&D and we’re doing a lot in this area. If you look carefully at companies in the United States, and some of them are making quite a bit of money, you’ll see that they spend only about 3 percent on R&D. That needs to change.” A last point, he said, was the shared and precompetitive need to develop standards for the PV industry. “This is a role where NIST can play a critical role,” he said. “We all need that.” Richard Bendis Innovation America Mr. Bendis said he had created a new entity called Innovation America “be- cause I believe in both: innovation and America.” It is a public-private partnership that functions as an intermediary between the states, regions, federal agencies, and the investors “who really fuel innovation.” The day before the symposium, the group had released a paper called “Creating a National Innovation Frame - work.” Part of its message, he said, was that many developing countries have more integrated science, technology, and innovation plans than the United States, despite its many fundamental achievements over the decades. “I’m hearing that PV originated in the United States, but 20 or 25 years later, we see the PV ev - erywhere but in the United States, and we have the biggest potential market for this technology.”

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118 FUTURE OF PHOTOVOLTAICS MANUFACTURING The Innovation America paper, he said, discussed the need to create a long- term, integrated, national innovation strategy. “This does not exist,” he said, “because we have federal agencies that operate as silos. They do not work and leverage resources with one another, and we have a crisis in America today.” He said that every source of private investment had pulled back. Angel investing declined 26 percent in 2008; early-stage venture capital investing dropped 45 percent since the previous year; and the average VC investment was $8.3 million, far more than the $0.5 to $2 million needed by the average PV start-up. The SBIR program is one solution, he said—one of the best early-stage in- vestment programs in the world—but Congress will not reauthorize it for longer than four months. “We need to renew that program for six to eight years and it should be one of the cornerstones of early-stage funding in the United States. Our paper says that the United States is eighth in the world in innovation, behind Singapore, South Korea, Iceland, Ireland, Finland, and other countries. Unfor- tunately, our government’s programs are generally geared to big business, while most new jobs are created by companies with less than 10 employees. So if we want to see the next generation of solar, PV and renewable energy leaders emerge here at home, we need a major commitment to the innovation roots of America, which is small business.” DISCUSSION Congresswoman Giffords asked the panel to ponder how the United States can move its manufacturing forward and encourage industry to step up and invest in facilities at home. Frank Calzonetti of the University of Toledo commented that solar manu- facturing and the solar industry in general would only advance when it had the outspoken support of industry. He recalled trying to get a renewable industry standard through the Ohio state government. “The university spoke out, and R&D experts spoke out, but it was not until industry stepped forward that the legislature really noticed that this is a job-creation activity.” Spreading Interest in Solar Congresswoman Giffords said that interest in solar was certainly spreading in her Arizona district. “We find that people are curious about solar, but they don’t understand how it works—how tax credits work, how long they last. We have a ‘Solar 101’ course we do in conjunction with the Pima County Library, and the interest is tremendous. We need to get the message out to the consumer in our respective communities.” Marie Mapes of DoE asked for more information about consortia. Could consortia be organized by technology—with the thin-film people having one consortium and the crystalline silicon people having another? “Is there actually

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119 PANEL VI anything to do in precompetitive research other than the modeling mentioned by Mark Pinto?” Mr. Pinto replied that the mechanism of consortia would not be as simple for solar as for the semiconductor business, because the latter business was uni - fied by the same CMOS roadmap. “In solar there isn’t the equivalent of CMOS that everybody uses.” Certain aspects of manufacturing are very competitive, but consortia can still share work on processes such as modeling, simulation, reli - ability and characterization. He emphasized the importance of reliability. “No matter what BP’s quality is,” he said, “the whole industry can suffer if some companies with lower quality put panels in Arizona and they fail on the roof. We need to work together on ways to evaluate panels to ensure that they work for 30 or more years.” Jim Rand of GE Energy commented that the differences between the semi - conductor and solar cell industries might make comparisons among consortia difficult. Collaborating Around the Full Supply Chain Mr. Pinto expressed his approval of consortia “for a variety of reasons,” and said that they could be tailored to address specific problems and opportunities. His company commonly structures collaborations around the full supply chain in order to make sure the investments in technology upstream have a commercial outlet. They often bring in a commercial partner outside the solar energy field. He cited the example of Wal-Mart, which proved to be a valuable partner and al- lowed Applied Materials to “test a lot of interesting things on a rooftop.” He said that “our industry has been through quite an evolution over the years, and the use of this technology is limited only by our creativity.” Norway was the first solar market, he said, and it gave birth to a market for DC solar panels for cabins that still thrives today. “In the United States we worked with a consortium to develop solar-powered obstacle beacons and traffic boards. In the space of three years that entire industry went from fossil fuels to solar.” Eric Daniels of BP Solar said that his company, too, was a firm believer in the value of consortia. Roger Little of Spire Corp. said he was happy that the solar market in the United States would grow rapidly as a result of the stimulus bill, investment tax credits, and state initiatives. He expressed concern that the manufacturing capability of the United States would not be able to fill that market. “There’s a tremendous shortfall,” he said, “and I’m concerned the market will be satisfied by imports. I would like to see more ‘Buy American’ permeating the stimulus bill and the investment tax credits.” Congresswoman Giffords said that in the Congress’s work to help businesses stay competitive, it did not focus entirely on a ‘Buy American’ approach but also on how trade agreements can be structured so as not to put U.S. firms at a disad - vantage. However, she said, the best recipe for increased domestic manufacturing

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120 FUTURE OF PHOTOVOLTAICS MANUFACTURING would be increased domestic demand. “If we can get businesses to do the instal - lation and the investment that will spur the ingenuity and small companies.” She asked Bill Harris of Arizona for comment. The Need for Fair Trade Agreements Bill Harris of Science Foundation Arizona said that “the Buy American thing is something we would probably feel good about, but what the Congresswoman said is right: It’s a global market. It’s important to encourage the countries that sell things here to have open markets as well. We’ve heard today that a number of countries do not, for example, allow our cars in, while they sell their cars here. There has to be political give and take, and there also has to be growth in manufacturing here if we’re going to be successful.” Doug Payne of SolarTech, a California-based industry consortium, com - mented on the many kinds of barriers, some of them hidden, faced by the solar industry. He represents over 60 member companies, he said, and his board of directors includes Applied Materials, SunPower, and others. “We’re on the roofs, looking at standards and best practices.” Institutional Barriers He said he would try to tie the downstream issues of execution to manu- facturing competitiveness, cycle time, and innovation through three data points: • For the average residential home, the time installers spend on the roof is three to five days; behind the scenes, manufacturing takes 100 to 120 days. “We have to do better,” he said. • Of those 100 to 120 days, he said, 35 percent are consumed by institu - tional barriers created by utilities, cities, and other jurisdictions. About 15-20 percent of the profitability is in soft costs, human costs, and hidden costs behind that cost/watt reduction roadmap. “With billions of dollars in stimulus invested in technology innovation and products, we need to know when these things come to market how much in incremental funds to set aside to remove the downstream barriers to adoption—permitting, jurisdictions, codes, standards, financing best practices. These will be a fundamental barrier to the up-front investment that will not translate to the real rooftops and jobs.” • About 90 percent of the commercial solar market uses financing, and one transaction takes up over 200 pages of paper. Mr. Daniels returned to the discussion of standards and their importance to the industry. “I can buy a home today,” he said, “and find a place to plug in my washer, dryer, and refrigerator. I can’t plug in my solar array. And there are still questions about the reliability of the electrical circuits” due to inadequate

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121 PANEL VI standards. The last thing the industry needs, he said, is failures of circuitry that dampen its reputation and growth. A participant from the Rochester Institute of Technology said that the shift from semiconductors to photovoltaics had brought a corresponding increase in graduate students wanting to work in photovoltaics. Yet most of the department’s graduate students come from overseas, because their studies are subsidized. Many American graduates with B.S. degrees must first pay off student loans before joining the graduate work force. She asked what could be done to increase the numbers of domestic students taking graduate studies in alternative energy. Dr. Ryan commented that more public policy incentives could be used to encourage people to enter engineering and science, but that “the problem starts in our K-12. It’s not cool to be an engineer or scientist. We have to change that perception, and get people in K-12 who can teach science and actually know what engineering is. So it really helps when the universities have outreach into the schools.” “What Kids Care About Is What’s Happening to the Planet” Congresswoman Giffords responded that after Sputnik, more than 50 years ago, the United States committed resources to science and engineering in the face of a specific international challenge. “What kids care about today,” she said, “is what’s happening to the planet. They care about what we’ve been doing in renewable energy in general. We think they will respond to this opportunity, to the legislation that’s moving forward, and to the little solar institutes that are sprouting up. ” Jim Hurd of the GreenScience Exchange said that his organization was fo - cusing on the use of stimulus funds for research, “but what I haven’t heard much about is the innovation and the monetization of innovation, the things we can do that are big home runs in the next two to six years. Everybody seems to avoid this conversation, partly because no one wants to use the term ‘valley of death’ any more. What about picking some winners?” Mr. Pinto said that he took a different view. He said that picking winners for small- to medium-scale ideas may have results, but larger projects have to be guided by market pull. “Picking winners like a $500 million loan guarantee I think is crazy,” he said. “Big amounts for one device is really hard to understand.” “The U.S. Could Lose a Generation of Innovators” Mr. Bendis said that in the PV portfolio were gaps in federal funding between the “early side and the late side.” “Whether or not the government is picking winners,” he said, “it has to be more active at stimulating innovation. This is something that will not be pushed by the states or the venture capitalists. We need

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122 FUTURE OF PHOTOVOLTAICS MANUFACTURING to get more innovation into the portfolio so we have the opportunity to pick win- ners.” He said that the United States could even lose a generation of innovators “if we don’t do something on the edges.” He noted that the panelists worked at big businesses now, but these had once been very small, and they had grown through innovation. “They survived because they were the winners. But we’re going to lose a lot of high-quality jobs unless we come up with a plan to stimulate this innovation immediately. These innovators will go someplace else where they’ll find someone welcoming them with money to commercialize their technologies.” Mr. Pinto said he did not disagree, but he did offer another point of view on VC activity. “Take thin film,” he said. “Every VC has a thin-film PV company in their portfolio. We’ve thrown money at way too many of them. We’re probably spending four times as much as we need to so that we’ll have companies that work. That’s where the gap comes in.” Mr. Bendis agreed that “everybody has to have one of something.” He re- called the three new solar research departments at three universities in Arizona. “What would happen if those three got together and developed one world-class solar institute?” he asked. “Why not leverage resources, eliminate the 45 percent of overhead, and get more of the money into the research that can go toward commercialization?” Mr. Hurd said that as he traveled, he heard many discussions about how people can participate in developing low-carbon fuels and the like. “What I sense is that ultimately the supply decisions in terms of which technology wins will be made by the market. What will help spur demand is to take the smart grid one step further and build around it a relationship with users so they can actually understand how they can participate.” Congresswoman Giffords closed the discussion by thanking the National Academies and the Department of Energy, and offered a “couple of parting words. One is, be bold. Now is not the time to sit back and avoid risks. And the second is, when you talk about working with consumers, we have to make these technologies approachable, easy to understand, and as exciting as they really are. And there’s nothing more exciting than seeing your meter go the other way!”