Solar Cells Info

Commentary: Intel, H-P and IBM are making bets, but payoff likely years away
By Therese Poletti, MarketWatch
San Francisco, CA, July 3, 2008
Source: http://www.marketwatch.com/news/story/tech-giants-try-revolutionize-solar/
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As companies like Intel Corp., IBM Corp. and Hewlett-Packard Co. have made moves in the solar power space, many have wondered if these high-tech heavyweights could use either their manufacturing or intellectual muscle to push down costs and thereby lower the price of solar power. Perhaps eventually, but not quite so fast.

Because of the vast use of silicon wafers in the solar industry, it is easy to leap to the conclusion that these tech giants, which all have great expertise working with silicon, will have a big effect on the nearly $20 billion estimated market this year for solar cells and modules. Solar cells, encased in panels on the rooftops of homes and businesses, convert solar energy into electricity.  While the three tech giants have made investments in solar, their recent actions are unlikely to add a big new supply of solar cells to the market anytime soon. Even though the once-tight market for polysilicon, a key ingredient for the cells, is loosening up a bit, subsidies by governments and utilities currently play more of a role in the cost of solar power.

“Without incentives demand will fall sharply,” said Paula Mints, principal analyst in the solar research area at Navigant Consulting in Palo Alto. In the U.S., the federal solar tax credit program decreases next year, which could have the biggest impact on big, commercial installations of solar power.  Intel, the world’s largest semiconductor maker, made a big splash two weeks ago with news that Intel Capital was leading a $50 million investment round in a start-up company called SpectraWatt. The theory is that Intel will bring its expertise in high-volume silicon manufacturing to solar cell technology. “I’m happy to see a solid company entering the sector,” Mints added. “It’s not going to change prices. They won’t have enough market force to lower prices. The market sets the price so there is a lot more to it than one company entering.”

SpectraWatt will be based in Hillsboro, Ore., where Intel also has major chip manufacturing and research facilities. But SpectraWatt’s agenda seems to pale compared to the Chinese companies that are building large plants in mainland China to manufacture solar cells.  SpectraWatt will build an approximately 60,000-square foot plant to make solar cells, which convert energy from the sun into electricity. Construction is expected to begin this year and the first shipments of solar cells to module makers are expected by mid-2009. “You have a lot of competition,” said Jim McGregor, research director at In-Stat in Scottsdale, Ariz. “It’s hard to get a read on this, but there are anywhere from 11 to 33 new facilities going up in China right now.”

Plus the Intel-funded startup is a bit late to the solar party. Other chip companies, such as Cypress Semiconductor’s  SunPower Corp. subsidiary and chip equipment maker Applied Materials Inc. (AMAT: 19.13, +0.43, +2.3%) have been in the solar market for a few years. McGregor estimates there could be as many as one hundred solar companies, ranging from startups in Silicon Valley to a number of young public solar firms.  IBM is researching ways to lower the costs for the next generation of solar energy products. Two weeks ago, it announced a partnership with another computer chip maker, Tokyo Ohka Kogyo Co. in Japan to develop a new manufacturing process that has the potential to create high volumes of thin-film solar cells made from different materials than silicon, which has been rising in price and adding to the cost of solar cells.

These thin film solar cells, made from copper indium gallium selenide, a new semiconductor material, could be 100 times thinner than current silicon-based solar cells. IBM does not plan to manufacture the cells itself, and will partner with another company. A version of this thin film technique has been in the works at one Silicon Valley firm, Nanosolar Inc. of San Jose, Calif., which began shipping its first panels last year after five years in development.

IBM’s expertise, like Intel’s, in the process and underlying science of computer chip design and manufacturing, could lead to more innovations and ultimately to lower costs of solar power. But IBM does not expect any products based on its manufacturing process to hit the market for about two years. Hewlett-Packard Co. also unveiled a research feat. Earlier this month, H-P announced a licensing deal with Xtreme Energetics, a solar energy system developer in Livermore, Calif., for a transparent transistor technology which can also be used to make lower cost solar energy devices, at what it says is half the cost of traditional solar panels.

The entry of these tech giants into this growing but fiercely competitive market will undoubtedly be good for the sector – and for consumers and businesses in the long run. But investors should not be banking on anything like a quick return.