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Panel II

Opportunities and Challenges Facing
PV Manufacturing in the United States:
Large Companies’ Perspective

Pete Engardio

Mr. Engardio commented that his magazine was extremely interested in the issue of U.S. global competitiveness in green technologies, especially as the country emerges from the current financial crisis. What kinds of industries will create the jobs of the future? Will the immense investment in R&D translate into jobs and industries that employ more than engineers and people who install equipment? The broader issue before this panel, he said, is of critical importance: How sustainable is our lead in not just solar technology but in a whole range of industries for the long term. He encouraged panel members to address this question.


Eric Daniels
BP Solar

Mr. Daniels began by saying he had been in the solar energy industry for nearly 30 years, and believed there is a strong future for solar technology in the United States. Of the companies in the business, BP is one of the most senior, he said, and has reached a “watershed moment” in its expansion plans. Its factories in the United States at one time led the industry in capacity, and it was now planning to restructure its manufacturing in preparation for the next stage of growth, with an effort to site competitively priced manufacturing closer to key markets.

He said that BP Solar was the first to commercialize multicrystalline technology, which grew to about 50 percent of the substrate market. The company had worked with the Department of Energy and universities for most of those years in “successful relationships,” and had produced in particular one product through

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Panel II Opportunities and Challenges Facing PV Manufacturing in the United States: Large Companies’ Perspective Moderator: Pete Engardio BusinessWeek Mr. Engardio commented that his magazine was extremely interested in the issue of U.S. global competitiveness in green technologies, especially as the coun- try emerges from the current financial crisis. What kinds of industries will create the jobs of the future? Will the immense investment in R&D translate into jobs and industries that employ more than engineers and people who install equipment? The broader issue before this panel, he said, is of critical importance: How sustainable is our lead in not just solar technology but in a whole range of industries for the long term. He encouraged panel members to address this question. PV MANUFACTURING IN THE UNITED STATES Eric Daniels BP Solar Mr. Daniels began by saying he had been in the solar energy industry for nearly 30 years, and believed there is a strong future for solar technology in the United States. Of the companies in the business, BP is one of the most senior, he said, and has reached a “watershed moment” in its expansion plans. Its factories in the United States at one time led the industry in capacity, and it was now plan- ning to restructure its manufacturing in preparation for the next stage of growth, with an effort to site competitively priced manufacturing closer to key markets. He said that BP Solar was the first to commercialize multicrystalline technol- ogy, which grew to about 50 percent of the substrate market. The company had worked with the Department of Energy and universities for most of those years in “successful relationships,” and had produced in particular one product through 59

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60 FUTURE OF PHOTOVOLTAICS MANUFACTURING those relationships that is critical to the company’s future—“new students, archi - tects, engineers and marketers for this industry.” Mr. Daniels described three kinds of forces that were necessary to moving the business ahead. The first was R&D, he said, describing a dozen or more es - sential partnerships of great value, including one with Dow Corning, one with IMEC, and a new one with Applied Materials. The other two forces, he said, were market incentives and manufacturing incentives. He singled out the manu- facturing incentives offered in China as “pretty spectacular,” saying that for one project his team had been offered “more or less free facilities, with infrastructure supplied, in an environment where growth is essentially unlimited. Those are hard incentives to turn down.” Mr. Daniels pointed to some events (market incentives) of the past as “a good indication of things to be concerned about.” Most of the industry, he said, had grown up in an off-grid market. Japan launched several incentive programs in the 1980s and early 1990s8 that stimulated growth for the industry as a whole and gave birth to the idea of solar-powered homes. As the solar home market was penetrated and market incentives declined, a lot of the Japanese local market opportunity began to diminish, and Japan itself tried to shift to export markets. More recent German incentives,9 he said, had been critical to the growth of the early part of this decade, when many companies had found profits in utility projects. Today, incen- tives in Germany are being restructured to favor the residential market. “My reading of the tea leaves,” he said, “is that more of the German community can participate in the growth of the industry by looking at the residential market than they could from a focus on utilities.” At the same time, he said, utility scale projects “are critical in bringing the scale we need for our cost curve.” The Spanish govern- ment began its incentives in 2008, and consumed at least 70 percent of the industry’s output—over 2 GW—in that year. However, in 2009 this consumption is expected to shrink sharply to about 300 MW. “In the space of a year,” he said, “because of how fast they brought enormous supply to market, in 2009 Spain is likely to now be a smaller part of the overall pie.” As a result, he foresaw a year, 2009, when growth will be capped, capacity stranded, and prices decline as much as 15 percent. “As a manufacturer thinking about bringing on new capacity and new technologies,” he said, “it’s hard to plan around that (e.g., changes in market incentives).” Mr. Daniels said that he was not pessimistic, however, because the industry had been through this kind of “jolt” three or four times already. He said he had learned that “we always end up with the massive amounts of growth after such market corrections, primarily because of changes of price points in the market. We’re already seeing substantial change in pricing going into ’09.” 8 See, for example, the New Sunshine Program of 1993, whose short-term (2000) target was to develop PV technology that could produce electricity at a cost competitive with conventional electri - cal rates. 9 See Michael Ahearn’s discussion of trade-in tariffs, above.

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61 PANEL II Strong Job Creation Mr. Daniels noted that the solar industry also has a bright future in job cre- ation. At the current time, the Photovoltaic Association in Europe calculates that three of every four jobs related to the industry are in “downstream” installation activities, with one of four in manufacturing itself. The ratio is even larger if one includes making existing home conversions, procurement, and other ancillary activities. He turned to the topic of grid parity,10 which has long been an industry goal. Most current PV systems were installed at a cost of about $8 per watt. Before rebates or incentives, he said, this translates into retail costs that are becoming competitive with utilities. For example, for northern California, PG&E during peak hours of the day charges 35 cents per kWh; the retail amortized cost, be- fore rebate, of PV power is about 20 cents. “So,” he said, “the math is starting to work.” Further optimism for pricing is caused by 2009 installation costs approaching $4 per watt for crystalline and thin-film products, which is about half the costs for existing installations. “We’re starting to get into rates that are competitive with off-the-peak utility rates.” Turning to manufacturing challenges, Mr. Daniels said that BP Solar had “a long history in the silicon part of the value chain.” A particular challenge was to “extend the art beyond multicrystalline technology.” The company in 2006 discovered a new technique it is now bringing to market—in effect a new way to grow monocrystalline silicon, leading to the production of high efficiency cells and allowing for lower costs. The company is working with IMEC and others who had already achieved over 17 percent efficiency with traditional technologies and are now looking at over 18-19 percent with some specialized cell processing. This technique, however, requires a high capital outlay. “It’s a wonderful thing if you can plan on the future being there to use that capacity and new technology,” he said. “It’s a disaster if we go into this with 50 percent capacity utilization.” This technique, Mono2TM, also requires access to metallurgical silicon with low energy costs of production, and market access to be successfully deployed. The Need for Improved Standards Mr. Daniels emphasized the need for improved standards and quality as the industry grows. The design and standards for today’s solar modules, he said, came from the United States early in the industry’s development. A manufac - turer can choose to comply with these standards or not, but they are critical in building consumer confidence. In the past, the goal of the industry was watts, or 10 A state of grid parity is achieved when the cost of photovoltaic electricity is equal to or cheaper than grid power. President George W. Bush set a goal of 2015 for solar power to achieve grid parity in the United States.

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62 FUTURE OF PHOTOVOLTAICS MANUFACTURING “horsepower.” Today, he said, the emphasis has to shift to energy—from horse - power to miles per gallon; from watts to watt-hours. In most markets today the customer pays for watts. “We would like to begin being paid for kilowatt-hours. There will be a natural migration of jobs back to the United States as we move to bring on market scale. A lot of programs today are making the solar modules more efficient.” He mentioned the company’s ThermoCoolTM technique that will change the thermal characteristics of the module toward higher energy output. He also said that circuit optimization in solar arrays can raise energy production by more than 28 percent due to being more shade and soiling tolerant, “which is good for utilities and consumers. However, if the customer is only paying for watts, or power, it’s of less interest. Here’s an opportunity to think about industry incentives in a new way, energy focused instead of on watts.” A strong point for solar power systems is their reliability over time. “We have regularly delivered solar power systems that have 99.998 percent availability,” he said, “which is a phenomenal statistic if you’re in the power business. Solar power can be deployed on either side of distribution (wholesale or retail), so in the smart-grid sense, solar can be sold on the retail side of distribution without adding more current or carrying capacity.” A disadvantage of solar is that it is not “dispatchable,” so that a major area of current BP research is power storage. Utilities also worry about the effect of clouds and weather moving from one part of a grid to another and the effect of weather on power generation. The “SmartGrid/EnergyNet” concept seeks to develop a means to forecast the impact of weather and resultant change in energy output from the renewable energy device. Within the SmartGrid/EnergyNet concept, solar can be thought of as a wireless power supply that can be deployed off grid or on grid, and its value increased beyond being a clean energy source for residential, commercial, and utility markets. He mentioned companies that use solar modules on the retail side of distribution to generate power for wastewater treatment, irrigation, and other daytime uses, reducing the peak load on the grid. During the day, the energy is provided at the point of consumption by the solar power system without having to travel over grid lines. At night, energy is provided over traditional utility dis - tribution grids. In doing so, loading on our grid infrastructure is reduced. How is this valued economically? Finally, Mr. Daniels made the point that PV electricity has a natural role in DC lighting systems, some of which already have storage. Solar can be added as a source of power when the sun is available; when there is more PV power than needed, the rest can go to the grid or to storage; when there is less, stored sources are tapped or energy is taken from the grid. Such newer lighting systems take advantage of efficient LED bulbs that can operate on DC electricity and in doing so avoid the need to have solar DC power converted in to AC. Wireless communications are another application in the EnergyNet that can be similarly powered. Each such application is small, he said, but collectively they consume a substantial amount of energy. Such applications offer the means to take electrical

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63 PANEL II loads off our capacity-strapped distribution infrastructure. “Pursuing such appli - cations for solar is also a great way to engage more industries in the clean-tech journey and create more green jobs than currently envisioned in smart grid discus- sions,” he said. Support for applications development may also provide means for sustainability via broader uses for solar. In summary, Mr. Daniels, like other speakers, made the point that “good market growth leads to jobs.” Not all jobs need to be solar device-oriented, he said, but could grow further through incentives for applications development and energy modeling support. Nor is there any reason to limit clean tech to the SmartGrid as currently conceived: It can bring broader industry engagement and support, and lead to an improved grid. There are many ways to leverage the technology’s natural attributes, he concluded. By simultaneously leveraging util - ity, commercial, and residential markets, the United States can drive scale while creating incentives for broader industry participation. APPLIED MATERIALS’ PERSPECTIVE Mark Pinto Applied Materials Mr. Pinto reviewed the history of his company, which was founded 40 years ago and became a world leader in semiconductor equipment manufacturing. In the early 1990s it entered the flat-panel display market and is now the largest maker of equipment for the LCD, TV, and monitor industry. Five years ago it moved into equipment and manufacturing solutions for energy, and today manu - factures equipment for wafers, thin-film-based PV modules, and flexible sub - strates. In the past 12 months, revenue in the energy area was almost $1 billion, out of total revenues of $7.4 billion, indicating rapid growth. He showed a slide indicating that Applied Materials is the world’s leading supplier of equipment for the production of PV cells and modules,11 producing nearly twice the dollar value of its nearest competitors (almost all of which are European). He showed the company’s progress against a background of the Moore’s law learning curve, which he said was useful in understanding where the industry might go. Since 1968, the cost of a transistor has shrunk from about a dollar to about a nanodollar. By the same scaling, an iPod manufactured in 1976 would have cost $1 billion, vs. a hundred or so dollars today. “So that’s the power of the learning curve,” he said. What underlies the drop in cost, he said, is the drivers of the cost per func- tion, and many lessons learned in the semiconductor field can be applied to PV. An overarching lesson is that cost is extremely important in consumer products. Cost per function can be divided into two things: a process cost (consisting of 11 Source: VLSI Research, February 2009.

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64 FUTURE OF PHOTOVOLTAICS MANUFACTURING such components as substrate cost, tool productivity, consumables costs, and util- ity costs) and the function being improved (such as materials innovation, process innovation, and process uniformity); in other words, how much value you get per unit area. In integrated circuits (ICs), the value per unit area is measured in transistors—how many transistors can fit (Moore’s law). In PV technology, the value is watts: How many watts do you produce. Mr. Pinto listed several factors that drive cost per function: • Nanomanufacturing technologies have driven down integrated circuit and flat panel display costs and encouraged adoption. • Demand drivers have been critical. IC applications were first driven by government—for use in missiles, for example. Then came information technol- ogy and mobile technology. In displays they were used first in laptops, moved to the monitor, and are now in television. Those developments have driven invest - ment and progress, with different cost points making each investment worthwhile. • Some level of standardization is important to create critical mass. In semi- conductors, the standard use of CMOS12 underpinned the entire technology, but in solar, there will be diverse technologies. He predicted that other factors would bring standardization and help the industry gain critical mass. • Large-area tooling can be a major factor when process cost is significant. This differs from ICs, where the primary goal has been transistor density. Costs of architectural glass and flat-panel displays are driven by the process cost per unit area. Reducing that cost requires large-area equipment to increase throughput and reduce unit costs. • Factory site location does not necessarily signify ownership. Applied Materials supplies equipment to sites around the world. Steady Progress on Costs Mr. Pinto described the learning curve of solar in terms of module per cost per watt. There has been steady progress since 1980, when the cost was $1 per kWh in equivalent electricity cost. Today the cost is almost 10 times lower. There was a “little bump” in that curve caused by polysilicon shortage in 2007, which is now being resolved. In addition, the advent of thin-film technologies around 2007 is bringing even lower production costs, even though they have to compensate for lower efficiency. Factory scale has changed even more rapidly in the past few years, he said. In 1980, Arco Solar opened the world’s first factory with a production line size of 1 MW per year; it took 20 years to reach a capacity of 10 MW. In the next few years there will be factories that can produce gigawatts of capacity. This steady 12 The complementary metal-oxide-semiconductor (CMOS; pronounced “sea moss”) is a major class of integrated circuits used widely in both digital and analogy circuits and transceivers.

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65 PANEL II progress he attributed to demand initiatives in Japan and Europe, continuous inno - vation, and manufacturing scale. “You don’t get progress by waiting for a miracle. It’s been constant investment. That’s one theme we see across multiple industries. Nor do you get a pass if you just stay on the sidelines. This doesn’t mean you should not invest in breakthroughs, but constant investment and manufacturing scale can make huge steps.” Mr. Pinto turned to data he had assembled in October about his customers’ plans to add capacity in various areas of the world, both in wafering technology and in cells. China accounted for almost 50 percent of planned new wafering capacity; the United States planned virtually none. For cell capacity, China’s plans accounted for 35 percent, the United States for about 5 percent. “I did this by headquartered companies,” he added, “not by where they planned to site the plant. That would look even more dramatic.” He noted also that 66 percent of solar equipment suppliers are headquartered in Europe, 22 percent in the United States, and 12 percent in Japan (not including wafering). The keys to crystalline silicon manufacturing, he said, begin with extremely thin wafers that are sliced with minimal materials loss. This requires advances in materials science, he said, where “interfaces at the nanoscale really matter.” Another essential step is development of high-throughput tools. He illustrated a system in silicon that has raised the throughput from tens of wafers an hour to 3,000 wafers an hour. Finally, he stressed the importance of manufacturability and factory control. “If you’re not careful,” Mr. Pinto said, “you can go to higher efficiency but get a much wider spread in your factory output, which makes the whole factory investment less efficient in the number of watts per year. The only way it can work is to keep distribution tight, and that’s been a challenge for the industry.” As an example of manufacturing improvements, he said that the firm had begun in 2007 to build garage-door-size panels to lower production and instal - lation costs. There are now 14 such projects worldwide, with five in production: Three are in China, one in Taiwan, one in India, one Abu Dhabi, and the rest in Europe. None are in California. “One message,” he said, “is that eventually these factories will be sited where the building material will be consumed. So they will come to the United States; it’s a question of when.” The new factories are enormous. A one-gigawatt thin-film factory would consume 500 tons of glass a day, enough to cover 7.5 football fields. The plant would occupy a site the size of the Magic Kingdom in Disney World. The point of this kind of scale is that it brings the equivalent of a 20 percent cost reduction, which is equivalent to reaching grid parity one year earlier, or raising module ef - ficiency by 1 percent. “Making scale drives down the learning curve all by itself.” Importance of the Demand Side In discussing what could stimulate growth in U.S. PV manufacturing, Mr. Pinto, like others, emphasized the demand side. Here he stressed the importance

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66 FUTURE OF PHOTOVOLTAICS MANUFACTURING of accounting for true future costs. “One of the things I find frustrating in talking with utilities,” he said, “is that they think about their current model, not about where the utility may go. We need to broaden the discussion to the future—to smart grids, the value of time of day and year, and fossil fuel cost uncertainties. One thing Europe did in their feed-in tariffs was to include the hedged value of the fluctuation of the oil prices. That is typically not done here, and is something we should have learned in the last 12 to 24 months.” He described other aspects of the demand side that should be considered in stimulating growth: • Appropriate cost mechanism for carbon: The cost of burning carbon must be included, he said, because “it is coming.” • The value of distributed power: PV has the unique advantage that it can be built to any scale at any location on or off the grid: a house, a field, or a desert. This flexibility should lower the total utility cost. • Multiyear generation contracts: When a technology has as steep a learn- ing curve as PV, the costs are coming down rapidly. If they are averaged over the next five years, for example, the cost of panels would be lower than today’s cost. • Progressive and enforceable renewable energy efficiency standards: “We shouldn’t wait until 2019 to all of a sudden catch up.” • Refundability of renewable credits: He said that Applied Materials has many potential customers who would be willing to invest in factories if there were a market in the United States. They would not make money at the outset, so that tax credits would be less helpful than renewable credits. • A clean energy bank for low-interest loans: He said that solar should be considered a capital good. “Even if you put it on your house, you have to lay out the money ahead of time. So in analyses when you see levelized cost of electric - ity, there’s an assumed interest rate. If the prevailing bank interest rate is used, the economics of solar change dramatically. Using 8.5 percent, the rate of return of a utility, the levelized cost goes up significantly.” Mr. Pinto concluded by noting the advantage of incentives for both manufac- turing and for R&D, as practiced by Germany. He said that one of the company’s first customers for a thin-film factory was an Indian national investor based in the United States. The factory, however, was sited in Germany—because of the incentives. In summary, he closed with a quotation from J. Robert Maxwell, Westing - house’s Director of Solar Programs in 1981: “If a guy took out a piece of glass, poured some fluid on it, held it up to the sun and got some voltage off it, he made a headline and got funds. Those days are over. It’s time for big money commit- ments.” That statement, he said, is even more accurate today.

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67 PANEL II DUPONT REFLECTIONS ON PHOTOVOLTAICS Steven C. Freilich E. I. du Pont de Nemours and Co. Dr. Freilich summarized DuPont’s solar activities as “upstream in the supply chain and value chain as a materials supplier.” He displayed the corporate vision “to be the world’s most dynamic science company,” and said that “one way to keep that vision fresh is by focusing on—and in some cases, creating—the global megatrends.” These global trends, notably driven by the unprecedented growth in developing countries, he said, lead to increased need for efficiency in food production and new kinds of renewable energy, such as photovoltaics. DuPont, he said, had been in the photovoltaics industry “since its beginning.” The first solar battery, produced at Bell Labs in 1955, used DuPont ultrapure sili - con. He said that DuPont, since those early years, has specialized in nonsilicon materials for the conductors, back sheets, front sheets, encapsulants, engineering resins, and processing chemicals of PV modules. The company believes, he said, that thin-film PV is “a tremendous opportunity,” not just for DuPont but also for the industry. Thin Film on Flex Dr. Freilich turned to the specific topic of thin-film PV on flexible substrates. “My feeling is that PV on flex creates an opportunity for thin films in opening up new applications and potentially whole new markets,” he said. At the same time, he emphasized that thin film represents substantial materials challenges. It 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.” Yet his laboratory in Central Research and Development is now developing just such a polymer system as a protective front sheet for thin- film modules. The coating is only 20 nm thick, and in 85 percent relative humidity 85°C on a CIGS (copper indium gallium diselenide) thin-film cell, its durability and protective ability can indeed compete with glass. So far, he said, these are laboratory results, and they are “asking an awful lot out of a polymer system.” He said that another exciting potential of “thin film on flex” is low-cost roll- to-roll processing with monolithic integration.13 A number of labs have found that using CIGS brings large (4-5 percent) increases in efficiency as the temperature of deposition rises. What is required is a flexible, insulating substrate, such as a polymer that can survive at 500 to 600° C and match the coefficient of thermal 13 A joint project with the NREL. Monolithic integration aims to provide cost-effective and reliable integration of all components of an optoelectronic device on a single substrate for a wide range of applications.

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68 FUTURE OF PHOTOVOLTAICS MANUFACTURING expansion in the film system, he said, which is “virtually unheard of.” Moving to such materials will not be possible by incremental improvements from existing materials, but will require substantial investment in “radical new materials and processes.” A common thread for this and other efforts, he said, is that they are done in collaboration with university or national laboratory partners. This concept of “open innovation” has been a feature of DuPont research for the last century. “We recognize that while we have a strong and vital research facility ourselves,” he said, “we cannot possibly have all of the best people in the field. So we have to reach out to our industrial partners as well as the national laboratories and universities.” Dr. Freilich added that it is critically important for government to understand that funding small companies, universities, and government labs is “critical to the life blood of large companies.” The Advantage of “Open Innovation” Open innovation is most important in a rapidly moving industry such as photovoltaics, he said. When both technology and markets are moving quickly, the rate of change is very high, and this in turn means that investment becomes obsolete quickly. Dr. Freilich offered a cautionary tale from the display industry. In 2005, four major technologies were jostling for market share as the size of display panels grew ever larger: the traditional cathode ray tube (CRT); plasma displays, which was pushing the CRT for dominance in the mid-sized displays; liquid crystal displays (LCDs), which dominated the high-definition hand-held market and had suddenly solved problems in larger dimensions; and rear projection, which had dominated the largest sizes. Plasma was quickly pushed by LCDs, out of the mid- size market, which then pressured the rear projection displays, leaving the market to just two technologies instead of four. The investment of every one of these tech- nologies amounts to billions of dollars per fabrication unit, and yet companies must be prepared to shift quickly to keep up with evolving technologies, consumer tastes, and price changes. “You may think that [the display competition] is over now,” he said, “but up in the corner [of this chart] you find organic light emitting diodes, and in a couple years we’re going to start seeing this shift happening all over.” The same cautionary tale must be applied to PV, he said, with all its different technology options. “From a materials supplier’s standpoint, there can be a disin - centive to do truly revolutionary work when you see this rapid change in markets and technologies. We can do it, but the investment is so great, and rate of return so dependent on the longevity of the technologies, that you’re not going to see the kind of innovation you need.” Instead, Dr. Freilich said, companies had to confine themselves to the incremental change of existing materials and technologies. One solution for this state of affairs, he said, is government support to “de- risk” R&D in these areas. “The materials industry is wonderful at managing situ - ations of large market uncertainty, a good rate of market change, and a moderate

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69 PANEL II rate of technological change. Government labs, universities, and industrial basic research organizations are good when the technology is new, technological rate of change is high, and the market is embryonic.” One organization that manages this balance well, he said, is DARPA, which is experienced at driving consortia and development support. As an example, Dr. Freilich mentioned a high-efficiency solar program initiated by DARPA several of years ago. DuPont is now the prime contractor and works with up to 13 organizations—industries small and large; academia; and government labs—toward a clear target. There is financial support not only through the invention stage but all the way through development, prototyping, and the early stage of manufacturing. Controlling a Fast-Moving Technology Another way of controlling a fast-moving technology and fast-moving mar- kets, Dr. Freilich said, is through roadmapping. He gave the example of the Inter- national Technology Roadmap for Semiconductors (ITRS), in which DuPont has participated. The roadmap for lithography explored five technologies of note from 2000-2003: 157-nm lithography (which was dropped in 2004); 193-nm lithography with water immersion and double imaging; 193-nm lithography with high-index fluid immersion; EUV; and nanoimprinting. The ITRS was able to lay out the objectives for each technology, performance goals, milestones, and timing. This is important to a materials supplier, he said, because it clearly shows when a research program is not performing well. “You may think you’re doing fine,” he said, “but the roadmap makes it clear that there is some other component to success that isn’t happening at the right time scale. 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.” Dr. Freilich noted that the federal government plays an important role in technology development. In addition to helping close the “valley of death” be- tween federally funded R&D and major private investment, federal support for universities and government labs is also needed to train the people who make up the industry. Since 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. Dr. Freilich closed with some thoughts about the issue of incentives. Al- though the right policies and incentives are “kinetically” important in jump- starting the industry and keeping it moving at the embryonic stages, they cannot be “thermodynamically” important. That is, the industry itself has to be self- sustaining. “We want to be sure we create incentives that if pulled out will not sink the industry. PV has to stand on its own. One of the things that can help is that the government is an early buyer; it can set price floors, as it has in other

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70 FUTURE OF PHOTOVOLTAICS MANUFACTURING industries. 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 incen- tives 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.” DISCUSSION Dr. Wessner asked Dr. Freilich what level of R&D support is needed for the industry, and to what extent has recent progress in Asia been driven by lower costs of capital. Dr. Freilich said that the level of R&D support would vary with the particular technology being pursued. “The question really should be about when you bring in support,” he said. “If you bring it in at the early stage of R&D, it’s not clear to me that it will be as effective as when you need to get it out of the lab into prototyping. That tends to be much more expensive, and is when companies perk up and pay attention.” An attendee from the Rochester Institute of Technology asked how we can ensure the cost-effective availability of the scarce nonsilicon materials now being used, notably indium. Dr. Freilich agreed that this is a concern. Indium is cur- rently more important to displays than to PV, he said, but companies are actively seeking alternatives for thin film. He added that nonrenewable fossil fuels are currently needed for the thin-film polymers, and they are alert to opportunities to develop polymers from other sources. Michael Heben of the University of Toledo asked how the level of investment in the United States compares with levels overseas. He expressed concern about many jobs going to China, for example, where subsidized or free energy and land may be offered as incentives. He asked whether the cap-and-trade mechanism is one way to level the playing field, or whether would give an advantage to countries that do not include carbon emissions in the cost of manufacturing. A panelist said that the carbon content in PV is relatively small, so that it is not central to the cap- and-trade debate. Another panelist doubted the value of a protectionist trade policy, placing more value on the design and innovation leadership of U.S. products. A questioner asked about China’s foundry businesses, which had not done well, and whether its entry into the PV business would also be hampered by tech- nologies that are not quite state of the art. Mr. Pinto noted that China could raise demand for solar and create its own large market, which could be an advantage for an economy that needed more electricity. In terms of the technology, he said, China might also do well, as it has shown by its aggressive support of Chinese PV manufacturer Suntech. “Manufacturing efficiency and scale can get you there,” he said, “and Suntech14 is proving that it can do both.” 14 Suntech, founded in 2001, is already one of the largest manufacturers of solar modules in the world, and now plans a manufacturing presence in the United States.