In the face of renewed pricing pressures, solar device manufacturers have had to refocus on minimising costs and maximising performance to maintain profit margins.

Advances in solar crystalline silicon technology, and the falling cost of the polysilicon raw material, have only increased the pressure on manufacturers of emerging thin-film technologies, including thin-film silicon (TF-Si), cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS) – many of which are under the gun to improve margins or face extinction, according to a report from Lux Research.

The report, titled Module Cost Structure Breakdown: Can Thin Film Survive the Crystalline Silicon Onslaught?, compares incumbent solar multicrystalline silicon (mc-Si) technology (representing roughly 80% of the crystalline silicon market) on a US$/W basis against three challengers: solar thin-film silicon (TF-Si), cadmium telluride (CdTe), and copper indium gallium diselenide (CIGS).

The report surveys process changes and cost reduction efforts that solar module developers have undertaken, and forecasts which technology will gain a long-term cost advantage at the solar module level.

“Crystalline silicon is dominant by volume and remains the cost/price benchmark for solar modules. Cadmium telluride is limited in efficiencies, but is the absolute leader in cost. We project these two technologies will continue to be highly profitable,” says Ted Sullivan, a Senior Analyst for Lux Research, and the report’s lead author.

“The profitability of thin-film silicon is much dicier, but copper indium gallium diselenide is positioned to outplace crystalline silicon in profitability by 2013 as leading developers improve process stability.”

Among the report’s key observations:

• Multicrystalline silicon remains highly profitable as cost-of-goods-sold (COGS) decline. The dominant technology will continue to be profitable throughout the value chain as vertically integrated players drive cost from US$1.45/W in 2009 to US$0.93/W in 2015, assuming poly pricing at US$70/kg. Efficiency will be a key driver of cost reduction, rising from 14.0% in 2009 to 16.1% in 2015;
• Oerlikon will give solar thin-film silicon new legs. Improvements enabled by Oerlikon’s new ThinFab line will push solar thin-film silicon efficiencies from 9.0% to above 11.0%. Significant improvements in output will cut depreciated capex per watt, and help to reduce TF-Si costs from US$1.32/W in 2009 to US$0.80/W in 2015;
• CdTe technology remains the long-term leader in terms of COGS. Led by First Solar, CdTe has a significantly lower cost structure than mc-Si, and its cost reductions will march onward, keeping it the most profitable solar technology, as COGS falls from US$0.80/W in 2009 to US$0.54/W in 2015; Costs for select CIGS solar technologies drop dramatically. CIGS sputtered on glass – which is Lux Research’s benchmark given its critical mass of developers – will see COGS plummet from US$1.69/W to US$0.76/W as efficiency improves from 10.0% to 14.2%, and factory nameplate capacity and yields grow, allowing the top developers to earn gross margins over 30%.