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Overview: Partnering for Photovoltaics Manufacturing in the United States A. ADDRESSING THE RENEWABLE ENERGY CHALLENGE The United States has entered a time of both urgency and great opportunity with respect to its energy generation. The urgency is driven by substantial na - tional investments in renewable energy in the current economic downturn. 1 The urgency is also driven by a growing consensus that the United States spends too much on energy, uses much of it inefficiently, and must reckon with a “nexus of concerns” related to the impact of carbon-based energy on the environment, on national security, and on economic growth.2 In his keynote remarks at the National Academies symposium on the future of photovoltaics manufacturing in the United States, Senator Mark Udall of Colo- rado listed some of the advantages of more widespread use of solar technologies, 1 William Branigin, “Obama lays out clean-energy plans,” Washington Post March 24, 2009, p. A05. 2 See National Academy of Sciences, Electricity from Renewable Sources: Status, Prospects, and Impediments, Washington, D.C.: The National Academies Press, 2010. See also National Research Council, The National Academies Summit on America’s Energy Future: Summary of a Meeting, Wash- ington, D.C.: The National Academies Press, 2008. Speaking at the National Academies Summit, Dr. Steven Chu noted that reliance on the dominant sources of energy being used today poses grave risks to humans. These “hidden costs” of damages from air pollution associated with electricity generation relying on fossil fuels, motor vehicle transportation, and heat generation alone has been estimated by the National Research Council at $120 billion in the United States in 2005. Not included in this figure are damages from climate change, harm to ecosystems, effects of some air pollutants such as mercury, and risks to national security. See National Research Council, Hidden Costs of Energy: Unpriced Con- sequences of Energy Production and Use, Washington, D.C.: The National Academies Press, 2009. 3

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4 FUTURE OF PHOTOVOLTAICS MANUFACTURING including new economic opportunities and improved national security. 3 For the economy, he said, solar energy would be able to create “millions” of new jobs and provide a key pillar of the economy for the twenty-first century. Solar energy would spur innovation, he said, and create “a pathway whereby we’re producing clean energy in our country.” From his perspective as a member of the Senate Armed Services Committee, he said, he saw the advantage of reducing the coun- try’s dependence on foreign oil. “We have to keep reminding ourselves,” he said, “that this is a critical step.” National Renewable Energy Goals In 2009, President Obama set a goal of deriving a quarter of energy used in the United States from renewable sources by 2025 (up from seven percent in 2007—see Figure 1) and, to this end, committed $59 billion from the economic stimulus package to clean energy projects and tax incentives and a further $150 billion over ten years to develop and deploy new energy technologies.4 Elaborat- ing on the President’s goals, Under Secretary of Energy Kristina Johnson high - lighted, in her symposium remarks, the objective of conserving 3.6 million barrels of oil within 10 years, reducing U.S. greenhouse gas emissions by 83 percent of 2005 levels by 2050, and the building a world-class workforce for a sustainable green economy.5 Energy from the Sun: The Photovoltaic Challenge According to the National Academy of Engineering, fossil fuels are not a sustainable source of energy. Moreover, it has noted, “for a long-term, sustain - able energy source, solar power offers an attractive alternative. Its availability far exceeds any conceivable future energy demands. It is environmentally clean, and its energy is transmitted from the sun to the Earth free of charge. But exploiting the sun’s power is not without challenges. Overcoming the barriers to widespread solar power generation will require engineering innovations in several arenas— 3 Seethe summary of Senator Udall’s remarks, delivered in the symposium of July 29, 2009, in the Proceedings section of this volume. 4 The American Recovery and Reinvestment Act of 2009 includes substantial new national invest - ments in renewable energy, smart grid, transmission, advanced vehicles, energy efficiency, and many other aspects of energy, environment, climate, and sustainability. The $787 billion U.S. economic stimulus bill includes at least $59 billion in new spending and tax credits for the development and expansion of energy technology. The Obama Administration’s $3.55 trillion budget proposal for fiscal 2010 calls for spending $150 billion over 10 years to promote clean energy and energy efficiency. It includes nearly $75 billion to make permanent a tax credit aimed at stimulating private-sector invest - ment in research and development. 5 See the summary of Under Secretary Johnson’s remarks, delivered in the symposium of July 29, 2009, in the Proceedings section of this volume.

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5 OVERVIEW Total = 101.605 Total = 6.830 quadrillion Btu quadrillion Btu Petroleum Solar Energy (1%) (40%) Hydroelectric (36%) Geothermal Renewable Nuclear Electric Energy (5%) Energy Power (7%) (8%) Biomass (53%) Coal Natural Gas (22%) (23%) Wind Energy (5%) FIGURE 1 Solar energy in the U.S. energy supply (2007). NOTE: Sum of components may not equal 100 percent due to independent rounding. SOURCE: Energy Information Administration, Renewable Energy Consumption and Elec- tricity Preliminary 2007 Statistics, Washington, D.C.: U.S. Department of Energy, Table INTRO-Figure 01.eps 1: U.S. Energy Consumption by Energy Source, 2003-2007, May 2008. for capturing the sun’s energy, converting it to useful forms, and storing it for use when the sun itself is obscured.”6 Solar power technologies can be divided into two main types: flat plates and concentrators. Flat-plate technologies include crystalline silicon and thin films of various semiconductor materials, usually deposited on a low-cost substrate, such as glass, plastic, or stainless steel, using some type of vapor deposition, or wet chemical process. Concentrator systems use only direct, rather than diffuse or global, solar radiation; therefore, their areas of best application (e.g., in the southwestern United States) are more limited than those for flat plates. 7 This report focuses on the future of photovoltaic cell manufacturing technologies in the United States.8 The PV Innovation Challenge The challenge of exploiting the power of the sun will require innova - tive mechanisms to facilitate bringing affordable and practical technologies to market. To help address this challenge, the National Academies Board on 6 National Academy of Engineering, Grand Challenges for Engineering, Washington, D.C.: The National Academies Press, 2008. 7 For an extended description and the trade-offs, benefits, and costs of each type of solar technol - ogy, see National Academy of Sciences, Electricity from Renewable Sources: Status, Prospects, and Impediments, op. cit., pp. 77–92. 8 The STEP Board, in 2008, convened a meeting on the challenge of concentrated solar power generation: “Making Big Solar Work: Achievements, Challenges & Opportunities,” July 29, 2008.

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6 FUTURE OF PHOTOVOLTAICS MANUFACTURING BOX A Photovoltaic Cell Technologies When sunlight strikes the surface of a photovoltaic (PV) cell, some of the photons are absorbed and release electrons from the solar cell that are used to produce an electric current flow, i.e., electricity. A PV cell consists of “two or more layers of material designed for the dual functions of (i) absorbing light to generate free electrons and (ii) driving a current of those electrons through an external circuit. The absorbing materials can be silicon (Si), which is also used in integrated circuits and computer hardware; thin films of light absorbing inorganic materials, such as cadmium telluride (CdTe) or gallium arsenide (GaAs) that have absorptive properties well matched to capture the solar spectrum; or a variety of organic (plastic) materials, nanostructures, or combinations. A wide range of PV technologies is now at various levels of development. Sili- con flat-plate PV technologies are mature and actively deployed today. Reduction in the production cost of the cell and an increase in efficiency and reliability will make the silicon PV even more attractive to consumers. New technologies such as thin film, which has great potential to reduce the module cost, are in a relatively mature development stage, with further research and testing required to bring this technology into commercial production. Other competing technologies, such as dye-sensitized PV and nanoparticle PV are at an early stage of development, and commercialization will require much more technology development. National Academy of Sciences, Electricity from Renewable Sources, 2010.a aSee National Academy of Sciences, Electricity from Renewable Sources: Status, Pros- pects, and Impediments, Washington, D.C.: The National Academies Press, 2010, pp. 54 and 59. Science, Technology and Economic Policy (STEP) convened two symposia, held on April and July 2009, that examined the role that a government-industry- academia partnership for PV manufacturing can play in structuring, facilitating, and leveraging the multiple abilities and perspectives needed to increase PV efficiency and reduce costs. These meetings, whose proceedings are summa - rized in this volume, did not focus on the technical obstacles to the deploy - ment of solar technologies. Instead, they examined how partnerships among government, industry, and academia can accelerate innovation in concentrated solar and photovoltaic (PV) technologies and help develop a robust market and manufacturing base in the United States. This workshop summary has been prepared by the workshop rapporteur as a factual summary of what occurred 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 neces - sarily represent the views of all workshop participants, the planning committee, or the National Academies. A key feature of the meetings was to bring experts

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7 OVERVIEW from national laboratories, representatives of leading firms, officials from the Department of Energy, and members of Congress and their staff. This introduc - tion captures the key themes of both these symposia. As several participants in the two symposia noted, successful technology partnerships among industry, academia, and government has many elements, including the sharing of experience and information, the joint assumption of risk, and ultimately successful insertion into commercial markets. 9 In particular, the development of roadmaps and agreements on technical standards through partnerships can enhance the PV industry’s ability to assess and address technol - ogy obstacles, gaps, and opportunities.10 As several participants at the National Academies symposia also pointed out, a partnership in the PV industry could support research more effectively through the provision of financial support, technical guidance, and performance evaluation. It could also support research directly through partners in government agencies and laboratories, universities, nonprofits, and industry.11 Part II of this introduction examines some of the major challenges facing the nation in realizing its goals for generating electricity from renewable sources. Part III reviews some of the challenges facing the PV industry in bringing new prod - ucts to market. Finally, Part IV reviews how a PV industry research consortium can help accelerate the research and commercialization of PV technologies, draw- ing key lessons from the experience of the semiconductor industry in advancing collaborative research. B. REGAINING U.S. LEADERSHIP IN RENEWABLE ENERGY In her comments at the July 2009 symposium, Congresswoman Gabrielle Giffords emphasized how difficult meeting the nation’s renewable energy objec - tives will be. According the Energy Information Administration of the Depart - ment of Energy, summer peak electricity use in the United States is around 780 GW. By the end of 2008, approximately 1 GW of solar PV had been cumulatively installed, including 342 MW installed that year. Assuming that all installed capac - ity would be available on peak, meeting just 20 percent of peak demand with PV would require a more than 150-fold increase in installed capacity. 12 9 See, for example, remarks by Robert Margolis, summarized in the proceedings of the April 23, 2009, symposium, and Larry Sumney, summarized in the proceedings of the July 29, 2009, symposium. 10 See, for example, remarks by Subhendu Guha summarized in the proceedings of the July 29, 2009, symposium. 11 See the summary of remarks by Clark McFadden at the July 29, 2009, symposium in the Proceed- ings section of this volume. 12 PV modules are generally most effective during summer peaks, when warm sunny afternoons lead to increased use of air conditioning. However, typical performance of a PV module, even under these near-ideal conditions, is less than 100 percent of its rated capacity.

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8 FUTURE OF PHOTOVOLTAICS MANUFACTURING Political Resistance at Home One of the most daunting barriers, Representative Giffords said, is political resistance to investments in renewable energy. While oil and coal lobbyists have spent over $76 million during the first quarter of 2009 to advance their causes, the wind power lobby spent some $1.6 million, and SEIA, the solar energy lobbying effort, spent $410,000 over the same period. “This is what we’re up against,” she said. “I’m not putting this up so we can get discouraged, because obviously with few resources, the solar industry has made tremendous strides. But now we have to figure out how to get this technology out there and installed and making a dif- ference for our country and our world.” To do this, she urged that supporters of renewable energy should “organize, advertise, and educate.” Policy Support and Increased Competition from Abroad The United States enters the twenty-first century renewable energy challenge from behind. It currently trails other nations in the manufacture and installation of PV modules. As Ken Zweibel of George Washington University pointed out, leading European and Asian nations have created incentives for the manufacture and installation of PV systems.13 While there has not traditionally been a com- parable coordinated approach in the United States to stimulate the growth of the PV industry, the 2009 American Recovery and Reinvestment Act has allocated $117 million to expand the development, deployment and use of solar energy throughout the United States. Political action on a national level has proved crucial for the growth of PV markets in Europe where several national governments have obligated power utilities to buy renewable electricity at above-market rates. Illustrating this point, Subhendu Guha of UniSolar noted in his symposium remarks that Germany of- fers incentives ranging from 41 cents per kilowatt-hour to 51 cents/kWh. France offers about 40 cents/kWh and, for building integrated photovoltaic structures, they give about 70 cents/kWh.14 These incentives work, he said, because they al- low construction of large manufacturing plants. As these plants bring economies of scale, their costs come down. Indeed, as Ken Zweibel pointed out, these incentives have, within a short period, led to a rapid growth in the demand for renewable energy technologies.15 This demand, in turn, is attracting PV manufacturing and research to Europe and 13 See the summary of Ken Zweibel’s remarks, delivered at the April 23, 2009, symposium in the Proceedings section of this volume. See also Vasilis Fthenakis, James E. Mason, and Ken Zweibel, “The technical, geographical, and economic feasibility for solar energy to supply the energy needs of the US,” Energy Policy 37(2):387–399, February 2009. 14 See the summary of Dr. Guha’s remarks, delivered at the July 29, 2009, symposium in the Pro - ceedings section of this volume. 15 See Mario Ragwitz and Claus Huber, “Feed-in systems in Germany and Spain: A comparison,” Fraunhofer Institut für Systemtechnik und Innovationsforschung, 2005.

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9 OVERVIEW 4,500 Rest of World 4,000 United States 3,500 Taiwan PR China 3,000 PV Production (MW) Europe 2,500 Japan 2,000 1,500 1,000 500 0 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 Year FIGURE 2 United States trails in manufacturing modules. NOTE: World PV Cell/Module Production 1990-2007. SOURCE: Arnulf Jäger-Waldau, PV Status Report 2008, EUR 23604 EN—2008, Joint INTRO-Figure 02.eps Research Center, Luxembourg: Office for Official Publications of the European Com - munities, 2008, p. 5. is creating new “green” jobs. According to Dr. Guha, Germany, which has tradi - tionally been the auto capital of Europe, today employs fewer people in the auto industry than the PV industry, which has created 180,000 new jobs. More recently, several Asian nations have made significant investments in renewable energy industries, funding research and development and setting ambi- tious targets for renewable energy use, outpacing the programs currently under consideration in the United States. For example, South Korea recently announced plans to invest about two percent of its gross domestic product annually in envi - ronment-related and renewable energy industries over the next five years, for a total of $84.5 billion. And India aims to install 20 GW of solar power by 2022, more than three times as much as the photovoltaic solar power installed by the entire world last year, the industry’s best year ever. While an admittedly ambitious target, it reflects the Indian government’s recognition of the long-term benefits and potential employment contributions of solar power.16 16 See Vikas Bajaj, “India to spend $900 million on solar,” The New York Times November 20, 2009.

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10 FUTURE OF PHOTOVOLTAICS MANUFACTURING Significantly, China’s new stimulus plan raises the nation’s 2020 target for solar power from 1.8 GW to 20 GW.17 Calling renewable energy a strategic industry, China is also shielding its clean energy sector so that it can grow to a point where it has the capacity to export PV around the world. China has already built the world’s largest solar panel manufacturing industry. While exporting over 95 percent of its PV output to the United States and Europe, China is also requiring that at least 80 percent of the equipment for its solar power plants be domestically produced.18 Declining U.S. Market Share in PV This growing competition from abroad has led to a decline in the U.S. mar- ket share. See Figure 3. As Robert Margolis of the National Renewable Energy Laboratory noted in the symposium, the United States was in a commanding leadership role in the PV industry until the 1980s, with more than half of global PV production. By the 1990s, Japan had begun a program of incentives and quickly became the global market leader while the U.S. share dropped to the 30 to 50 percent range.19 According to Michael J. Ahearn of First Solar, Europe is likely to hold two- thirds of the world market by the end of 2009, the United States 10 percent, Japan 7 percent, and the rest of the world 17 percent.20 On the supply side, he estimated that by year end Europe would have 30 percent of total manufacturing capacity, China 27 percent, Japan 12 percent, the rest of Asia 9 percent, the United States 9 percent, and the rest of the world 13 percent. In absolute terms, the estimated market by 2009 would be 5.6 GW versus existing and announced manufactur- ing capacity of 12.3 GW. “The numbers can be debated,” he said, “but the basic message is right: There’s a lot more manufacturing capacity in the world than there is demand. Absent some [policy] change, that’s not going to correct itself.” Dick Swanson of SunPower observed that this shift in leadership away from the United States was consistent with the message that manufacturing and the technology need to follow the markets: If we want to have manufacturing in the United States, he observed, the United States has to be a market leader.” 21 As 17 See Steven Mufson, “Asian nations could outpace U.S. in developing clean energy.” Washington Post July 16, 2009. 18 See Keith Bradsher, “China builds high wall to guard energy industry,” International Herald Tribune July 13, 2009. 19 See remarks by Robert Margolis of the National Renewable Energy Laboratory in the Proceed - ings section of this volume. 20 See the summary of Michael Ahearn’s remarks, delivered at the April 23, 2009, symposium, in the Proceedings section of this volume. 21 See the summary of Dick Swanson’s remarks, delivered at the April 23, 2009, symposium, in the Proceedings section of this volume.

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11 OVERVIEW 50 2,000 1,800 U.S. Percent of World PV Shipments 40 1,600 U.S. market share 1,400 MW of PV Shipped 30 1,200 Non U.S. 1,000 20 800 600 10 400 200 U.S. 0 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 2005 1998 1999 2000 2001 2002 2003 2004 Year FIGURE 3 U.S. market share & world PV cell/module production (MW). NOTE: The black curve and INTRO-Figure the graph illustrate the relative portion left (vertical) axis of 03.eps the United States has contributed to annual world production. It is useful to note that world shipments increased to a record high of 1727 MW during 2005. The largest annual increase in U.S. production since data collection began—a 35 percent increase—occurred between 2003 and 2004. U.S. production reached a record of more than 153 MW in 2005. SOURCE: National Renewable Energy Laboratory, 2009. Ken Zweibel put it, “manufacturing will occur in the United States once we have adequate markets, unless something else drives or attracts it away.” C. CHALLENGES FOR PV MANUFACTURING The future of PV manufacturing in the United States depends on both the supply of inputs into the manufacturing and installation process as well as the demand for PV technology. Participants at the National Academies symposia examined both sides of the challenge. Addressing the Supply Side A solar panel is made up of multiple components. For polycrystalline PV cells, the manufacturing process typically starts with highly refined polysilicon, which is grown into large single crystals, or ingots. Those ingots are sliced into wafers, which are used as solar cells that are laminated behind large glass panels

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12 FUTURE OF PHOTOVOLTAICS MANUFACTURING BOX B Rising Private Investments in Renewable Energy Technologies One bright spot for the future of the U.S. renewable energy industry is the surge in private investment over the past few years in solar technologies.a Just five or six years ago, private investment in PV was on the order of tens of mil- lions of dollars. This figure has now risen to the scale of billions a year as venture capital and private equity markets have taken on significant new investments in thin-film technologies, multijunction, concentrated PV technologies, and other next-generation technologies (See Figure B-1). According to Robert Margolis of the National Renewable Energy Laboratory, “this has been a dramatic change and [is having] a very big impact on how the industry is organized, how it does R&D, and how it interacts with the government.” $18,000 Solar M&A Activity $16,000 VC & PE Investments $14,000 Solar Debt Millions of Dollars $12,000 Solar Public Equity Activity $10,000 99% CAGR 2000-2008 $8,000 74% CAGR 2000-2004 127% CAGR 2004-2008 $6,000 $4,000 $2,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year *Excluding government R&D and project finance investments; 2008 numbers are preliminary. Source: New Energy Finance FIGURE B-1 Total historical global investment in solar energy. SOURCE: Robert Margolis, NREL, presentation at the April 23, 2009, National INTRO_FigureB-1_replacement Academies Symposium on “The Future of Photovoltaics Manufacturing in the United States.” aDr. Margolis noted in his presentation at the April 23, 2009, symposium, that of about 200 companies that received private-sector investment in the past three years, more than 100 are in the United States. Firms in Asia have focused primarily on existing crystalline silicon technologies, with heavy investments in mono- and polycrystalline technologies, both in terms of research and in scale-up of production. See the full summary of his remarks in the Proceedings section of this volume.

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13 OVERVIEW and installed in a PV system. Such systems are heavy and somewhat challenging to install, so that the cost of installation is traditionally about 50 percent of the system cost. The weight, fragility, and large size often require that these panels be manufactured locally. The actual ingot is about 20 percent of the cost and the manufacturing and conversion into panels about 30 percent.22 Scaling Up to Lower Manufacturing Costs Making PV panels that are efficient and competitively priced requires lower- ing manufacturing costs by making the production process more efficient. The PV industry’s manufacturing costs have followed a steep downward trajectory, converging, according to NREL estimates, to about a dollar a watt produced by 2011 as manufacturing capacity expands sharply. See Figure 4. 6 1992 1993 Overall PV Industry: Crystalline Silicon, Thin Films, and Concentrators 5 1994 Manufacturing Cost ($/Wp) 1995 4 “Average” Module 2005 Data 1996 14 PV Manufacturing R&D participants with 1997 active manufacturing lines in 2005 1998 Direct module manufacturing cost only 1999 3 (2005 Dollars) 20012004 2000 2005 2002 2003 2 2006 2007 2008 2009 2010 2011 1 0 0 500 1,000 1,500 2,000 2,500 3,000 Total PV Manufacturing Capacity (MW/yr) FIGURE 4 PV industry cost/capacity (DoE/U.S. industry partnership). NOTE: The cost/capacity graph shows the 2005 data of 14 Project participants with ac - tive module manufacturing lines in 2005. The graph shows continued progress toward INTRO-Figure 04.eps meeting the Project goals of decreasing direct costs of manufacturing and increasing production capacity. From the perspective of technology learning curves, these data reflect an average 17 percent drop in direct costs of manufacturing for every doubling of production capacity. SOURCE: National Renewable Energy Laboratory. 22 See the presentation by Dick Swanson at the April 23, 2009, symposium in the Proceedings sec - tion of this volume.

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26 FUTURE OF PHOTOVOLTAICS MANUFACTURING The IMEC Model The perceived success of cooperative research initiatives developed by the U.S. semiconductor industry has since led to the establishment of similar, often substantially better funded cooperative research organizations overseas, of which IMEC in Flanders, Belgium is a key example.44 In his symposium presentation, Johan Van Helleputte of the Flanders Inter- University MicroElectronics Centre (IMEC) in Belgium observed that a central challenge for a high-technology manufacturing industry is to deal with both very high cost research and a rapid rate of technological change.45 He said that this means that no single company can sufficiently tackle these challenges on its own. The answer, he averred, lies in partnering in R&D. Each company had a choice on how to spend the percentage of revenues it devotes to R&D: it can spend all of it on exclusive work, or it can spend part of this budget on a research platform, like SEMATECH or IMEC, and gain a much larger R&D reach. The IMEC approach, said Dr. Van Helleputte, is to address generic prob - lems somewhat early in a technology’s life cycle.46 It tries to create a program by defining what it intends to do for the next three years and then signs bilateral contracts with companies: partner A, partner B, partner C, and so on. IMEC asks each partner to send one or more industrial residents to do joint research within the team. The rule for intellectual property protection is that any foreground in - formation to which the partner resident has contributed is co-owned with IMEC. If the industrial partner does not contribute to certain elements of the program, it receives a nonexclusive, nontransferable license on foreground results for its own use so there are no “blind spots” in using the technology back home. At the same time, IMEC provides a nonexclusive license for the background informa- tion required to exploit the foreground results. In return for these benefits, IMEC charges an entrance fee and a yearly affiliation fee. Dr. Van Helleputte added that company research labs begin to form their intellectual property from a “research infrastructure” on which they build “tech - nology platforms” of expertise and competence. In other words, a company with multiple technology programs can offer them to multiple partners and harvest greater value from the resulting partnerships, though collaboration within IMEC. “So you’re building leverage on leverage on leverage,” said Dr. van Helleputte, 44 In 2008, the government of Flanders invested 44 million Euros in structural funding for IMEC. This investment saw high returns in revenues of 270 million Euros. The investment in IMEC has also positioned Flanders as a global center in semiconductor research, attracting scientists and researchers from around the world. Currently, SEMATECH receives no government support. 45 See the summary of Dr. Van Helleputte’s remarks, delivered at the April 23, 2009, symposium, in the Proceedings section of this volume. 46 For a review of the IMEC model, and the innovation strategy of the autonomous region of Flanders in Belgium, see National Research Council, Innovative Flanders: Innovation Policies for the 21st Century, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2008.

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27 OVERVIEW “and you reuse the mechanism of co-ownership without any accounting to each other about the foreground research.” Translating the Model: From Semiconductors to PV The semiconductor and PV industries face many of the same challenges and both can benefit from collaboration by firms at the precompetitive level. Ac - cording to Dr. Polcari, semiconductor companies need to know, from a strategic perspective, the most productive architecture for a factory of the future. Tacti- cally, they need to continuously reduce costs in today’s fabs and manage ever- increasing capital, manufacturing, and R&D costs. There are also sustainability challenges, such as how to reduce the industry’s environmental footprint, find safer materials, and conserve consumables. “All of these challenges,” he said, “are also relevant to photovoltaic technologies.” Dr. Polcari added that the history and present activities of SEMATECH could yield numerous practical lessons for the PV industry. He said that the SEMATECH model has applications not only in technology development but also manufacturing productivity and collaborative strategies that could benefit all participants at the precompetitive level. “Certainly our experience in orga - nizing and recruiting consortia has helped to bring a lot of cost reduction to the industry.” The Role of Roadmaps The semiconductor industry’s use of technology roadmaps might also have great relevance for the PV industry.47 Steven Freilich of DuPont noted that an industry roadmap, such as the one developed by the Semiconductor Industry Association, could be a key tool to control a fast-moving technology within fast- moving markets.48 The International Technology Roadmap for Semiconductors (ITRS) sets out the objectives for each technology, performance goals, mile- stones, and timing. “Since everybody is working from the same page, everybody understands the same things about where the industry is going, what it needs, when, why, and how much. It gives you a chance to address shortcomings at the R&D phase, or at least before there’s been a tremendous investment.” 49 47 For a description of the history of the Semiconductor Roadmap, see Robert Doering, “Physical limits of silicon CMOS and semiconductor roadmap predictions,” in National Research Council, Productivity and Cyclicality in Semiconductors: Trends, Implications, and Questions, Charles W. Wessner, ed., Washington, D.C.: The National Academies Press, 2004, p. 12. 48 See the summary of Steven Freilich’s remarks, delivered at the July 29, 2009, symposium in the Proceedings section of this volume. 49 The PV industry has established a roadmap that sets the deployment goal f 200GW peak in the United States by 2030. See Sandia National Laboratories, “Photovoltaic Industry Roadmap.” Access at .

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28 FUTURE OF PHOTOVOLTAICS MANUFACTURING Larry Sumney noted that roadmaps have also accelerated the pace of innova- tion in the semiconductor industry by setting the pace of competition. In this way, roadmaps have helped to sustain Moore’s Law: “You try to get from one node, or minimum feature size, to the next as fast as possible. That has served to excite the industry to beat the roadmap, and they have done that. It wouldn’t have happened without that expectation or cadence that Moore’s Law provides.” Dr. Sumney concluded that “for PV, this kind of expectation could also be used, along with a roadmap developed with the Department of Energy and others.” Challenges and Opportunities for Collaborative Research in PV While there is much for the PV industry to learn from the successes of the semiconductor roadmaps and research consortium, some participants expressed caution about applying the model directly. Noting that there is no equivalent of a common CMOS technology that can be the basis for a unified technology road - map for the PV industry as it has been for the semiconductor industry, Mark Pinto stated that any future PV consortium would have to be adapted to the exigencies of that technology. Doug Rose of SunPower pointed out that a big difference between the PV and semiconductor industries is that processing and chip design in the semicon - ductor industry has a natural sharing of intellectual property because of shared interest in geometry shrinks and other advances that came on a predictable sched- ule. “There’s no analog to that in PV.”50 Bettina Weiss of SEMI also added that PV industry presents unique chal - lenges for collaborative research.51 The industry structure is still not well defined, with a mix of very small to very large companies operating in different tech - nologies and markets and focusing on different manufacturing targets. The PV industry also suffers from deployment bottlenecks and very high logistics costs, especially for transport of modules and panels, she noted. Setting the difference between the PV industry and the semiconductor in - dustry in perspective, Mr. Lushetsky of the Department of Energy said that “put simply, the IC industry is one materials set with an infinite number of circuits; the PV industry is one circuit with an infinite number of materials.”52 He acknowl- edged that where the IC industry was able to collaborate on materials, we clearly run into differences in PV. For other technical issues such as metrology, material handling, and deposition tooling at a high level, however, he suggested that there exist opportunities for precompetitive partnerships. Another opportunity for col - 50 See the summary of Doug Rose’s remarks, delivered at the July 29, 2009, symposium, in the Proceedings section of this volume. 51 See the summary of Bettina Weiss’ remarks, delivered at the July 29, 2009, symposium, in the Proceedings section of this volume. 52 See the summary of Mr. Lushetsky’s remarks, delivered at the July 29, 2009, symposium, in the Proceedings section of this volume.

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29 OVERVIEW laboration, he said, lies in developing lower cost installation methods, given that installation is a major element in the cost of PV systems. Drawing out the opportunities for collaborative research, Mark Pinto noted PV firms could share work on processes such as modeling, simulation, reli - ability, and characterization. Bettina Weiss added that PV firms could accelerate innovation through the collaborative development of industry standards, industry information that guides investment and planning decisions, and industry advocacy and promotion, among other arenas. Seizing the Market In his presentation, Bob Street of the Palo Alto Research Center warned that the United States not only needs to be a leader in materials research but also needs BOX F Innovation in PV Manufacturing: The Flexible Film Opportunity The FlexTech Alliance, formerly the U.S. Display Consortium, was initiated about 15 years ago with support from DARPA. The display consortium was struc- tured much like that of sematech, focusing on the precompetitive aspects of the supply chain of the then-nascent flat-panel display industry. The program brought together companies that could work together and were willing to cost share more than 60 percent of the R&D. According to Mark Hartney, the FlexTech Alliance has since evolved to focus on innovations in roll-to-roll manufacturing.a This process creates electronic devices on a roll of flexible plastic or metal foil that can be up to a few meters wide and 50 km long. Some of the devices can be patterned directly, much like an inkjet printer deposits ink. A key challenge, he said, is to use this high-throughput manufacturing technique to mass fabricate solar cells on large substrates, yielding flexible thin film solar cells at a fraction of the cost of traditional crystalline silicon manufacturing. In today’s PV market, said Dr. Hartney, crystalline silicon predominates, with about 90 percent of PV shipments being silicon wafer-based material. However, thin-film technologies have the highest growth rate, rising from 50 MW in 2007 to a predicted 4.5 GW of power generating capacity by 2012. Although some technologies representing this new generation of PV products are already in pilot stages, Steven Freilich of du Pont noted that developing thin film PV remains a substantial challenge. In addition to the substrate, thin-film PV also requires a flexible, durable, protective front sheet that is competitive with glass in blocking moisture transmission. “From a polymer perspective,” he said, “this is essentially unheard of.” He cautioned that progress in this technology will not be incremental and will require substantial investments and cooperative research in “radical new materials and processes.” aSee the summary of Mark Hartney’s remarks, delivered at the April 23, 2009, symposium in the Proceedings section of this volume.

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30 FUTURE OF PHOTOVOLTAICS MANUFACTURING BOX G Building a Solar Cluster in Ohio In her keynote address at the April 2009 symposium, Rep. Marcy Kaptur asked, “How can it be that Toledo, Ohio, ended up leading our nation in such a key area of energy independence?” She then highlighted several key factors that have helped to transform Toledo into a Solar City. • First, she said, the high power rates charged by investor-owned utilities along Lake Erie’s south coast to Cleveland are among the most expensive in the nation. This led to interest in alternative sources of electricity generation and made renewable energy more price competitive with grid power. • A second reason is that this region of Ohio, once known as the glass capital of the world, had established expertise in a PV related technology.a As Norman Johnson of Ohio Advanced Energy also pointed out, Northwestern Ohio was a region of high unemployment of displaced automotive and glass industry employ- ees who had many transferable skills. • A third reason for Ohio’s leadership in solar technology is the presence of a visionary innovator named Harold McMaster.b A lifelong resident of the region, Dr. McMaster and a group of colleagues founded Glasstech Solar in 1984 and invested generously in manufacturing and basic research at the University of Toledo and other institutions. These pioneering efforts gave rise to several of the companies and much of the research expertise that characterize the region today. • A fourth reason is the presence of a stable, long-term funding strategy focused on basic energy research. Ohio, said Rep. Kaptur, had just recognized the fruits of a two-decade-long effort in pursuing innovation and R&D by funding the Wright Center for Photovoltaics Innovation and Commercialization at the Uni- versity of Toledo.c • Fifth, significant resources have been devoted to commercialization of energy technologies. Rep. Kaptur noted that this is extremely difficult to do from to move new technologies rapidly from the laboratory to the marketplace. 53 He observed that the science of electronic materials has been advanced over the past ten years by the fast growing display industry, but warned that the large display industry in Asia, and the substantial ecosystem of local equipment manufacturers, materials suppliers, and technology developers that supports this industry, are poised to take over the new flexible PV technology when it is ripe. We should ask ourselves how easy it will be for these companies to just shift into solar when the time comes and be very competitive with what we can do, he remarked, adding that the focus should be not only on technological break - 53 Seethe summary of Bob Street’s remarks, delivered at the April 23, 2009, symposium, in the Proceedings section of this volume.

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31 OVERVIEW a local or regional base. One way to start was to build a demonstration project now installed at the 180th Fighter Wing in Toledo, where solar cells now produce a 1-MW research base.d • Sixth, establishing standards has played an important role. Ohio’s Ad- vanced Energy Portfolio Standard, which mandates that at least 25 percent of Ohio’s electricity come from clean and renewable sources by 2025, is expected to advance a portfolio of clean-energy technologies. • Finally, Rep. Kaptur cited the importance of close partnership among uni- versity, industry, and government. “They’re all working together,” she said. A group of PV enthusiasts, including Norman Johnson, founded the Ohio Advanced En- ergy business trade association, which has served to promote renewable technol- ogy industries statewide over the long term. aPioneering Toledo firms included Edward Ford Plate Glass Company (1899-1930), Toledo Glass Company (1895-1931), and Libbey-Owens Glass Company (1916-1933). bHarold McMaster (1916-2003), one of 13 children of a tenant farmer, was once called “The Glass Genius” by Fortune magazine. In 1939, he became the first research physicist ever employed by Libbey Owens Ford Glass in Toledo and went on to found four glass companies. These included Glasstech Solar, in 1984, and Solar Cells, Inc., formed to develop thin-film cadmium telluride technology. Solar Cells was later bought and renamed First Solar, currently a world leader in thin-film PV. cIn 2007, the Ohio Department of Development awarded $18.6 million in state funding to establish the Wright Center for Photovoltaics Innovation and Commercialization (PVIC). The PVIC now has three research locations: the University of Toledo, Ohio State University, and Bowling Green State University. Matching contributions from federal agencies, universities, and industrial partners have raised this amount to $50 million. dRep. Kaptur secured $6.4 million in federal funding for two demonstration projects in Ohio, at the 180th Fighter Wing at Toledo Airport and Camp Perry. The first is a 1-MW field, the largest in Ohio, designed for simplicity and low cost of operation. Installation began in June 2008 and is now being evaluated by the University of Toledo as the prototype of a “solar kit” that produces low-cost electricity. throughs but on measures to secure the future of photovoltaics manufacturing in the United States. Initiatives undertaken in states such as Michigan and Ohio show how focused and long-term investments can build a successful manufacturing base for photo- voltaic technologies in the United States. At the April 2009 National Academies symposium, Norman Johnson of the Ohio Advanced Energy Association and Rep. March Kaptur of Ohio described the development of a PV technology cluster in Toledo, Ohio (see Box G). E. WHAT IS THE ROLE FOR GOVERNMENT? In his remarks at the April 2009 symposium, John Lushetsky said that the strategy for solar programs at the Department of Energy is not to replace anything

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32 FUTURE OF PHOTOVOLTAICS MANUFACTURING the private sector would do, but to find a role for government that helps to ac- celerate what industry can do on its own. He said that the National Academies symposia are helping to develop a better understanding of what private industry needs, and to help guide a government response that is sufficiently “prompt, ef - fective, and strategic.” Several participants at the National Academies symposia offered their views of how the federal government can best support the U.S. photovoltaic industry. Strengthening the Innovation Framework Several participants highlighted the role of the federal government in strengthening the innovation base through support for R&D, training the future technical workforce, and setting standards. Funding R&D: Michael Ahern affirmed the key role for the federal govern- ment in funding research and development through universities, national labs, and consortia to maintain a flow of commercially viable technologies. John Lushetsky noted that the budget for the Department’s Solar Energy Technology Program (SETP) was under $100 million for six years preceding FY2007, when it rose by more than $50 million under the Solar America Initiative. In FY2009, it rose by approximately $100 million more with the Recovery Act, and $51.5 million of that amount goes to photovoltaic technologies. He added that the request for FY2010 is similar to the 2009 total.54 Training and Attracting Technical Talent: Eric Peeters highlighted the im- portance of providing support for the education of “the people who are going to have those green jobs—a green-collar work force.” Steven Freilich noted further that these people are not just U.S. nationals; the government needs to ensure that international students and engineers can easily enter and stay in this country so U.S. industry has access to the best people in the world. Setting Standards: The federal government can adopt a national renew - able electricity standard to accelerate the development of PV. According to David Eaglesham other governments, including those in the European Union, China, India, and Australia, have already taken significant steps in this regard. Both Kent Rochford and Eric Lin of NIST emphasized the key role played by this government agency in developing the standards and measurement tools that set the trajectory of innovation and commercialization of photo - voltaic technologies. 55 As Eric Daniels further pointed out, “A manufacturer can choose to comply with standards or not, but they are critical in building consumer confidence.” 54 See the summary of Mr. Lushetsky’s remarks, delivered at the July 29, 2009, symposium, in the Proceedings section of this volume. 55 See the summary of Eric Lin’s remarks, delivered at the April 23, 2009, symposium, in the Pro - ceedings section of this volume.

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33 OVERVIEW Encouraging Government-Industry-University Collaboration Securing the future of photovoltaics manufacturing in the United States will also require new ways of collaboration and interaction among governments, firms, and universities. Steven Freilich observed that collaboration of businesses with university or national laboratory partners is essential for successful techno - logical development. He added that it is important for government to understand that funding small companies, universities, and government laboratories is also “critical to the life blood of large companies.” Under Secretary Kristina Johnson noted that federal partnership programs like the Small Business Innovation Research (SBIR) program can play an important role in bringing new renewable energy technologies to the market.56 She noted that ad- ditional funding for renewable energy from the Recovery Act, also enlarges the SBIR budget, which is based on a 2.5 percent set-aside from the Department of Energy’s extramural budget. She also highlighted the role of partnership programs within DoE as a part of a portfolio of programs that span from basic to applied research. Box H describes some of the Department of Energy’s key energy partnership programs. Stimulating Demand: Government as an Early Buyer According to Subhendu Guha, the federal government has a crucial role in bringing the PV industry to the point of grid parity. That role is to help create a sufficient demand base through incentives and grants. We can have the best technology in the world, he said, but if it does not have a demand base, it will not create manufacturing jobs in the United States. Eric Peeters stated that the federal government has a leading role in stimulat- ing demand and “making America a 21st-century solar power.” Federal policies to promote demand for solar, he said, include federal tax incentives, formulation of national renewable energy standards, federal interconnection and net metering standards, and feed-in tariffs. “We have to get people to connect to the grid,” he said, “and make sure the grid works well.” In his presentation, Steven Freilich noted that the government can stimulate a strong PV industry in the United States by acting as an early buyer; “it can set price floors, as it has in other industries.” He observed that even a company as large as DuPont constantly has to make decisions about programs at the margins. Often it’s the high-risk, potentially high-reward programs that drop off when there is too much uncertainty. “Government incentives that build market size and industry support can help industry make the right decision about those programs on one side or another of that very gray line.” 56 SBIR provides competition-based awards to small companies to develop proof of principle and prototypes of new technologies that address government missions. For a comprehensive review, see National Research Council, An Assessment of the SBIR Program, Charles W. Wessner, ed., Washing- ton, D.C.: The National Academies Press, 2008.

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34 FUTURE OF PHOTOVOLTAICS MANUFACTURING BOX H Department of Energy Partnerships Programs for Solar Energy Robert Margolis of the Department of Energy’s National Renewable Energy Laboratory (NREL) described several of the agency’s collaborative programs. The Solar Program received steady funding of about $80 million from FY2001 to FY2007 and which has been increased substantially under the Solar America Initiative to about $160 million per year. Funding for this program is expected to increase again, with new resources to leverage the private sector through a host of collaborative mechanisms. The goal of the PV Manufacturing R&D project, started in 1991, is “. . . to ensure that U.S. industry retain and extend its world leadership role in the manu- facture and commercial development of PV components and systems.”a The project was funded with about $150 million in federal money matched by an equal amount of private-sector money. The project is considered innovative in its use of multiyear contracting and cost sharing with industry. DoE’s Technology Pathway Partnerships supports early-stage partnerships between universities and industry. The TPPs started in 1997 with a three-year grant of $168 million in DoE funds, and a total of $357 million including industry matching funds. The partnerships, some of them with over a dozen members, included more than 50 companies, 14 universities, three nonprofits, and two national labs. Margolis suggested that this partnership experiment might be a positive model to accelerate PV technologies to the market. Most recently, the NREL has sought project proposals as part of the DOE’s Photovoltaic Technology Incubator program to accelerate commercialization of solar energy technologies. NREL has also announced partnerships with 13 small U.S. solar businesses that have the capability to enter the market by 2012. aC. E. Witt, R. L. Mitchell, and G. D. Mooney, “Overview of the Photovoltaic Manufacturing Technology (PVMaT) Project.” Paper presented at the 1993 National Heath Transfer Confer- ence, August 8-11, 1993, Atlanta, Georgia, August 1993. The Role of a Carbon Tax Several participants, including David Eaglesham and Doug Rose raised the issue of a price on carbon emissions that, by raising the price of fossil fuels, can spur demand for solar technologies. In his presentation, Michael Ahearn noted that carbon pricing has been a part of a “whole basket of solutions” in many European countries.57 57 Denmark and Germany are forerunners in implementing broad-based energy and carbon taxes while also leading producers of wind and solar energy, respectively. For a review of European carbon tax policies, see Stefan Speck, “The design of carbon and broad-based energy taxes in European countries,” Vermont Journal of Environmental Law 10, 2008.

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35 OVERVIEW Providing Subsidies and Direct Incentives Changing the nation’s energy usage by applying new resources of govern- ment and innovations of industry will require new financial arrangements to pro- vide incentives to the private sector. Ken Zweibel noted that today’s technological landscape, including the locations of manufacturing and installation, is defined by past R&D funding and market incentives. “It isn’t much of a leap,” he said. “Government policy has defined the landscape of photovoltaics. Photovoltaics isn’t a cost-competitive technology. It is a societal contract with manufacturers and technologists and scientists to develop a non-CO2 source of energy, one that can diversify us away from fossil fuels. Steve O’Rourke proposed a manufacturing credit to overcome tax disadvan- tages in the United States. “In China, we deal with companies that have very low cost of capital—three percent on average—and instead of paying taxes, they get tax credits,” he noted, adding that “manufacturing migrates to where companies are most profitable, and the single biggest issue in this analysis is taxes.” A manu- facturing tax credit of 27 cents per watt for equipment manufactured in the United States, and a capital spending subsidy like that provided in Germany, he said, are examples of what can be done with direct incentives to solve a very difficult issue. Drawing a comparison to the development of the nation’s nuclear industry, Rep. Marcy Kaptur noted that substantial federal subsidies helped that industry mature and that the same is needed to grow the solar industry. Nuclear power generates a large proportion of our electricity, she said, but this happened through a concentrated and deliberate approach to broaden our electrical usage. Between 1943 and 1999, she said, the nuclear industry received over $145 billion in federal subsidies, without counting tax subsidies. By contrast, the solar power industry had received some $4.4 billion and the wind power industry $1.3 billion. F. CONCLUSION As the nation strives to develop and harness renewable sources of energy, a key challenge will be to retain the industries and high value jobs that these new technologies bring. Participants at the two National Academies symposia summarized in this report identified a number of complementary approaches to respond to this challenge. Some participants emphasized the need to accelerate innovation through cooperative research and development of PV technologies. They observed that federal policies could create incentives that draw together the tremendous assets of the U.S. research universities of and firms. They held that the U.S. photovoltaic industry may be able to benefit from such collaboration, as has the semiconductor industry in the past. Several participants also stressed the need to develop incentives for demand. Recognizing that the future of photovoltaics manufacturing in the United States

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36 FUTURE OF PHOTOVOLTAICS MANUFACTURING depends on growing domestic demand for PV technologies, several participants at the National Academies symposia emphasized the role that public policies can play to encourage demand through early government procurement, feed-in tar- iffs, flexible financing options, tax credits for production and use, and expanded consumer education. The knowledge and views of participants at the National Academies sympo - sia, captured in this volume, can contribute to the development of a better policies and can help identify the practical steps needed to meet the goal of a sustainable energy future.