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Energy Conversion Devices: the other story

For many years of its history, Energy Conversion Devices had more cleantech and related business going on than this blog has categories for. The 51 year-old company filed for bankruptcy on Valentine’s Day, after having failed to generate sufficient revenues from its main business, United Solar Ovonics.

Tech writers are focusing on the Solar part of the tale, which is understandable because it neatly fits into a pattern of high-cost solar makers taking a tumble in the face of low-cost Chinese competitors. But what I found fascinating about the firm is the part referred to as Ovonics.

The word Ovonics was coined by ECD’s founder, Stanford R. Ovshinsky. He took the first two letters of his name and added the end of electronics to create a sort-of blanket term describing the way a bit of energy can convert amorphous and disordered materials into structured crystalline materials. It also covers the reverse process. The various energy and information applications that Ovshinksy put his inventive mind to include nickel-metal hydride batteries, LCD screens, read-write CDs, amorphous silicon thin-film solar material (and a nifty machine to make it), hydrogen fuel cells, and phase change electronic memory. It would be hard to imagine American life without many of these technologies – and some are still to come.

He is considered a Hero of Chemistry by the American Chemical Society. At 88 years old, he is still inventing at his new company Ovshinsky Innovations (he left ECD in 2007). The curious part of the tale is that Ovshinsky is self-taught – he didn’t go to college or graduate school. And his inventions began with research on energy and information that he pursued in the 1950s and 60s.

ECD started out as a laboratory – founded in 1960 – before it became a company. Even as a business, it ran more like a stand-alone research laboratory – think Bell Labs or Xerox labs without the rest of the corporation. The company brought in money by doing everything other than making and selling products - it had equity investors, research grants, and many collaborations along with a bit of licensing revenue.

It seemed to be always on the cusp of the big time, but it was ahead of its time. In some ways it was both ahead and behind at the same time. It had already licensed  the nickel-metal hydride rechargeable battery years before it powered the Toyota Prius. Now electric cars will have lithium-ion batteries. ECD made thin-film solar that would find a niche in building integrated photovoltaics, but that niche still is not large enough to save the solar business. Yet its cost structure still belongs to the solar industry of five years ago.

Ovshinsky was also ahead of his time when he focused his work on renewable energy to break the world’s dependence on petroleum.

I don’t know ECD intimately but as an outsider, it seems that the company likely lost its driving force when it lost Ovshinsky five years ago. The management wanted to concentrate on making the company profitable – so it focused on solar energy, which was experiencing a boom. That was a bet that did not pay off.

First Solar Explains Itself

When a publicly-traded company issues a curt press release – just in advance of a quarterly earnings report –  saying “Effective immediately, [insert name]  is no longer serving as Chief Executive Officer, and the Board of Directors thanks him for his service to the company,” shareholders may fear that something unfortunate is happening.

If that company is a solar firm, shareholders may even worry that their firm will be the next [insert name of bankrupt solar firm].  But it turns out that is not the case at thin-film solar biggie First Solar. The Arizona firm has replaced recently departed CEO Rob Gillette with interim chief Mike Ahearn. Ahearn, in a conference call with investors and analysts, said it was due only to a lack of fit, and not due to anything improper. Ahearn has been closely connected to the firm for years – serving as CEO from August 2000 to September 2009 and board chairman from October 2009 to December 2010.

The firm even released its earnings statement a few days early to help keep down panic. The results, and the remarks from executives, show that the scary stuff going on at First Solar is the same scary stuff happening across the industry – namely inventory overhang due to subsidy cuts in Europe, and sharply declining prices from crystalline silicon producers in China. First Solar built its business – making thin film cadmium telluride modules – on low cost. But pricing competitiveness is now squeezing the firm’s margins.

First Solar is still making money. In the third quarter it racked up a bit over $1 billion in revenues – up 26% year over year, and it had $197 million in net income, an 11% increase from last year’s third quarter. But, the inventory problems and cost competition has led the firm to lower its EPS outlook for the year by $2.20 to $6.50-$7.50 per share.

More interestingly for solar-watchers was a change of strategy outlined by Ahearn. Previously the firm had been deploying a graph showing how it planned to rapidly expand production – including with a new facility in Vietnam. But now the firm will be redirecting that spending toward R&D (to decrease its modules cost per watt) and toward opening new markets – such as in India, the Middle East, North Africa, and China – and away from a dependence on European markets where changing/shrinking subsidies can make or break a solar company.

One dig on First Solar’s products has been that the thin film modules are slightly less efficient than competing cyrstalline silicon. In the past, First Solar’s cost advantage more than made up the difference, but to keep that edge, the company will have to move rapidly to roll out efficiency improvements across all of its production lines. So far in the fourth quarter, the firm says its average efficiency has reached 12%, while its best lines are up to 12.4%.  The average cost per watt is creeping down only slowly – to 74 cents per watt. The firm made a bold claim that it would reach the mid 60s by the end of 2012.

Nevertheless, it is clear from listening to First Solar’s plans for 2012 that severe price competition in the solar space will be much like death and taxes for some time to come. One interesting way the firm is capturing growth is by taking on project work for utility-scale solar installations. In fact, its excess inventory in the fourth quarter will likely be totally absorbed by two new projects the firm is working on now.

I haven’t drilled down to try and figure out how much profit is captured in these projects, but on a sales basis, the firm booked $800 million of its $3 billion or so 2011 revenue from project work. Analysts were keen to learn how much revenue projects would bring in 2012, but executives weren’t ready to make any projections. I mentioned this turn in strategy for First Solar in a recent story on the rise in solar installations in the U.S.

Bad Biofuels Vibes, but no Break for Solar

Last week the National Academies released a report about the federal Renewable Fuels Standard – and the scientist-authors basically panned it from top to bottom. As a policy tool, the NAS said, the RFS is unlikely to work. They point out that production of cellulosic ethanol – the type of renewable fuel the policy is supposed to spur production and use of – still struggles to get off the ground.

As Jeff Johnson reported in this week’s issue, the government estimates this year’s haul of cellulosic ethanol will be a mere 6.6 million gal, far below the RFS target for 2011 of 250 million gal. The standard mandates a huge upswing in production of cellulosic ethanol – 16 billion gal by 2022 – at which point it would pass the amount of ethanol the country is supposed to get from corn. NAS points out what most folks would likely observe – that this goal would be very difficult to meet.

But NAS goes farther by questioning the green credentials of cellulosic ethanol. As a second-generation or advanced biofuel, cellulosic ethanol was supposed to be much better for the environment than corn ethanol, and certainly a vast improvement over fossil fuels. But, Johnson reports, the authors forecast major downsides from growing crops for biofuels including “the one-time release of greenhouse gases from disturbed biomass and soil may exceed future reductions of greenhouse gases expected as a result of the shift from gasoline to biofuels.”

Meanwhile the solar saga continues. The Washington Post is still digging into government e-mails related to the Obama administration’s dealings with Solyndra – the defunct solar firm that benefited from a $535 million loan guarantee. It looks like there will be plenty of material to keep this topic open for a while – as I predicted – and the issue will continue to cast a shadow over government actions in the green manufacturing sector.

That said, the U.S. will soon become a leading destination for solar installations, as I report in this week’s issue. This is a positive development in terms of the country’s ability to generate renewable power. But it comes at a price – the low, low cost of crystalline silicon solar cells, mainly imported from China, is likely to blast a hole through a portion of the U.S. solar manufacturing base.

If I were to put on my policy hat (first I’d have to dust it off and remove some cobwebs), I’d be pondering a few questions this week. Is it more important for the U.S. to be able to ramp up its capacity to generate renewable solar power by installing cheap solar modules or should the U.S. try to spend more money to spur more solar cells, panels, and modules to be made in this country? Right now, those two goals are not aligned.

And what should the future of cellulosic ethanol be? If there are questions about the environmental benefit of a production system that can generate 16 billion gal of the stuff, how should we begin to answer those questions? Biofuel backers say we should move forward and get facilities and feedstocks going and work to improve the climatic impacts as part of the learning curve. Critics say we should acknowledge the trade-offs up front, which may minimize the role of cellulosic ethanol.

The Long Tail of Solyndra

The Solyndra bankruptcy debacle may haunt U.S. support for renewable energy for a long time. It’s been four weeks since news broke that the CIGS-in-a-tube operation would shut its doors, and the debate and recriminations seem to be growing louder with each passing day.

Congress and the press are asking some probing questions. Was the company and its technology properly vetted by the Department of Energy? Was political or other pressure applied to the process to make it go faster? More broadly, some are asking if the administration’s plans for clean energy are just a waste of money.

C&EN’s Jeff Johnson reported on these questions from a Sept. 14 Congressional hearing about Solyndra. He points out that the Solyndra loan – issued back in 2009 – was the first loan to come out of a program created by Congress during the Bush administration. While Congress looks in to the particulars about the Solyndra application, it would be difficult to argue that the loan program itself was too speedily implemented.

The New York Times reported from a House subcommittee meeting on Sept. 23 that Solyndra officials took the Fifth Amendment to avoid having to answer questions about the company. Members on both sides of the aisle were displeased with the firm, but Republicans were especially harsh, the paper reports.

Representative Michael C. Burgess, Republican of Texas, linked the Solyndra bankruptcy to current negotiations about the Federal Budget. The House had voted to cut loan guarantees for electric cars. As quoted in the Times, he explained:

“Yes, we took that money back,” Mr. Burgess said. “If the D.O.E. is going to be chumps, the very least we can do is corral what they’re doing.”

Ouch.

Dow Chemical, DOE aim for Solar at $2 a watt

Dow Chemical, maker of the Solar Shingle, has been awarded a $12.8 million, 3-year grant from the Department of Energy to fund building integrated solar products program. The aim of the funding is clear in the name of the DOE program “Extreme Balance-of-System Hardware Cost Reductions.” [note: Maybe not quite clear enough - I added the hyphens to help you figure out what Extreme is supposed to refer to.]

Dow's Solar Shingles. Credit: Dow Chemical

In short, DOE wants to bring down the installed cost of solar power to $2 per watt – without subsidies. Currently, it’s the upfront cost of installing solar panels that puts the breaks on the amount of installed solar in the U.S. Most solar systems are designed to last upwards of 20 years (most experts say you can count on your panels to work for 25 years), but the costs can mean the payback period can stretch out to more than 15 years, depending on where you live.  

Sharp offers an awesome and slightly addicting solar cost/payback/savings calculator on its website. Drop whatever you are doing right now (it’s the Friday before Labor Day, people, no one expects you to do real work anyway) and go here: http://sharpusa.cleanpowerestimator.com/sharpusa.htm

All you need to do is put in your zip code and the amount of your electricity bill and then you can spend a while fiddling with the variables. The default cost per watt of solar power is $7 per watt (or $7,000 per kW as shown in the calculator).

With my particulars, a 3,000 kW system would trim my power bill enough to pay for itself in a bit over 16 years. I’d only pay about 1/3rd the full cost of the system (or over $7,000) due to state and Federal tax rebates. So that shows two things: government subsidies are required to make solar even sort of make sense at current prices, and that $2 per watt sounds like a reasonable price target. If you lived in Arizona your calculation would likely be different.

Give it a try!

Epic Fail: Solyndra files for bankruptcy

While you were at lunch, the nascent cleantech manufacturing industry in the U.S. collapsed.

Actually, that’s not quite true, but it is true that Solyndra will file for bankruptcy. This is a big deal – Google News lists 85 news outlets covering the story. Solyndra is famous for its stylish, glass tubular, CIGS-powered, solar rooftop modules. And for raising vast amounts of venture capital. And for getting a $535 million Department of Energy loan guarantee. And for filing for, and later cancelling, a planned IPO in late 2009.

Solyndra’s success in raising money was an early indicator that venture capitalists had turned to so-called cleantech industries, taking some of the shine off of internet and technology-based start-ups. It was the first company to benefit from the DOE’s loan program, part of the 2005 Energy Act.

But cleantech — particularly solar — has been looking a bit less shiny lately. Earlier this month, Evergreen Solar filed for bankruptcy protection, and its filing shows that the firm does not plan to emerge in anything like its current form. Evergreen also received government largess, getting more than $50 million in support from the state of Massachusetts.

Both Solyndra and Evergreen had proven technologies and they had the financial resources to scale up their manufacturing. Compared to many segments of cleantech, this sounded like a pretty good risk for investors. However, both technologies were based, at least in part, on solar module designs that minimized the use of polysilicon. That was smart at the time, because polysilicon supplies were very tight, and shortages threatened to choke the life out of (traditional) solar manufacturing. That was back in 2007-8. But by the end of 2008, chemical makers made plans to ramp up their manufacturing of polysilicon. The stuff was fetching record prices, after all, and it’s made from sand.

Beginning in 2009, polysilicon manufacturers like Hemlock Semiconductor (owned in part by Dow Corning) and Wacker Chemie began doubling, tripling, quadrupling etc their polysilicon capacity. Billion dollar plus-sized polysilicon plants in the US also won government support. By late 2009 there was an overabundance of polysilicon and an oversupplyof modules in inventory, crushing prices.

Firms like Solyndra and Evergreen had raised money and started scaling up manufacturing right as solar modules became a commodity. Chinese manufacturers at that point had their eye on making solar modules for close to $2 per watt. It was not a good time to have a technologically distinct – and more expensive – solar product.

In 2010-2011, European countries – especially Spain – cut back on solar subsidies. Germany has trimmed them as well. All solar makers were busy cutting costs amid strong competition, especially from China, and selling into a market with constrained demand.

Looking at the subject from a distance, it seems that polysilicon makers and their ambitious and steep increases in capacity are what doomed the non-polysilicon players. Materials suppliers, not just of polysilicon, but of also of polymer backing sheets, UV protecting films, and metal pastes, are doing very well selling into the photovoltaic market.

But government bets on cell manufacturing technology have not paid off. It is not clear yet how much of the loan gurantee Solyndra leveraged into actual financing. Still, Congress will likely have a great deal to say about lessons learned from Solyndra.

DuPont gets Solar Blues from Innovalight

What is silicon ink? Is it magical pixie dust? Innovalight, maker of silicon ink, is a venture capital-funded company in Silicon Valley that was just acquired by DuPont. The announcement came Monday and I’ve been wanting to post about it but a small problem held me back.

Innovalight's silicon ink. Credit: Innovalight

I had no idea how Innovalight’s product works. I knew what it is though – it’s ink (and it sure looks like ink) made up of silicon nanoparticles suspended in chemicals. It can be screen printed in the same assembly line used to manufacture crystalline silicon solar cells.

The reason a manufacturer would add this extra step is simple. It increases the cell’s ability to capture energy from sunlight by 1%. 

Since Monday I’ve learned a bit more – enough to burden blog readers with my still incomplete understanding. Adding a precision-printed design of this ink to crystalline silicon solar cells allows the cell to capture more energy from the blue wavelength of sunlight. This sentence is where I would describe exactly how the ink makes that happen, so let’s pretend I did that.

Solar cells are generally hampered in their efficiency by an inability to capture energy from the full spectrum of light. Like the human eye, they do best capturing visible light. But that leaves a wealth of radiation in the UV and infrared part of the spectrum un-captured. Thus the 19% upper limit on even very efficient cells.

Interestingly, even within the visible spectrum, blue light is not well captured. My colleague Mitch Jacoby tells me that blue light is energetic enough for a solar cell to absorb and create a flow of energized electrons, but that the high energy electron and the “hole” left behind re-combine before they hit the conducting grids and without creating a current. Many people in many places like NREL have been studying ways to keep them separated and have them move to the negative and positive current collectors.

That’s why the DuPont press release about the acquisition talks about Selective Emitter solar cells. In spite of the capitalization, the term seems a bit misleading to me, because absorbing is what they’re going for. Anyway, selective emitter approaches involve an adaptation to the silicon, the surface and/or the conducting grid to make those electrons from the blue light migrate efficiently.

Innovalight’s value proposition is that solar cell manufacturers can make selective emitters in their current process by adding a silicon ink screen printing step after texturing the mono crystalline silicon.

According to the press release, “Selective Emitter technology could represent 13 percent of crystalline silicon solar cell production by 2013 and up to 38 percent by 2020.”

Washington Redskins Score 8,000 Solar Panels

I really can’t resist this little news item. File it under solar and, a new category for this blog- sports.

My hometown football team, the wonderous and often frustrating Washington Redskins will add 8,000 solar panels to their new-ish stadium. They will be working with energy firm NRG – that sounds redundant – to generate 2 MW of power from 3 different types of solar panels. They’ll include thin film and transluscent versions. The installation will also include 10 electric vehicle charging station for those Volt drivers who spurn the Metro.

Hidden Chemistry at Solar Biggie BrightSource

We don’t have too many rules here in C&EN blogville, but we do try to maintain a chemistry connection.  I was worried that would be at risk if I were to post about BrightSource Energy, a mega solar tech firm that has filed for a $250 million IPO.

BrightSource Energy's solar mirrors. Credit: BrightSource

To generate energy from the sun, BrightSource puts thousands of big mirrors in the desert that track the sun and focus light on a tower with a boiler full of water. The steam generated cranks a turbine to create electricity. It sounds like what a technology firm would think up if someone forgot to invite a chemist or chemical engineer to the concept meeting.  [Note that in contrast, other solar thermal companies use nifty heat-transfer fluids like biphenyl and diphenyl oxide, as described by my colleague Alex Tullo.]

But there are at least two innovative uses of chemistry in the BrightSource system, one is basic CRC handbook stuff and one is rather mysterious. To extend the hours during which the water can be turned into steam, BrightSource is working to store some of the sun’s heat  in a blend of molten nitrate salts (sodium nitrate and potassium nitrate). To save you the Googling, the melting point of sodium nitrate is 308 C and potassium nitrate is 334 C. For some reason this nice detail is in the firm’s S1 filing but I did not see it on the website.

The more mysterious chemistry is alluded to on the company’s website. As you can imagine, the boiler tower has to withstand some unusual conditions. But worry not, because, “The boiler is designed to withstand the rigors of the daily cycling required in a solar power plant over the course of its lifetime, and is treated with a proprietary solar-absorptive coating

to ensure that maximum solar energy is absorbed in the steam. [emphasis mine]. Hmmmmm…. I wonder what is in that coating? Tell me what you think.

Ramping Up Solar Manufacturing… with help from Intel

For one smallish solar manufacturer, having Walmart as a customer changes things a bit. Miasolé makes thin film copper indium gallium selenide (CIGS) modules. Back in September, the company was named as one that would supply thin film technologies to Walmart for rooftop installations in stores in California and Arizona.

Miasolé plans to expand its CIGS manufacturing. Credit: Miasolé

CIGS have been around a while, but still have a very small market share compared to traditional crystalline silicon panels. And, as experts in the industry have pointed out to me, one need only read the name of the technology slowly to oneself to understand that the manufacturing requirements may be rather… complex.

With the Walmart order (which will go through leading  retail solar firm Solar City), Miasolé now plans to ramp up capacity to 150 MW by the end of 2011, triple its current abilities. So the company has brought in Intel, the computer chip maker, to help. Apparently Intel can do this cool thing where it makes a whole lot of exactly the same thing. They’ve named this competency the “Copy Exactly! methodology.”

Interestingly, in its own manufacturing efforts, Intel works closely with manufacturing equipment supplier Applied Materials, which once made a big move into supplying  thin-film solar makers but has significantly lessened its exposure to that market in recent years. That was back when thin film meant solar made with amorphous silicon.

For many years now, however, the leader in thin film manufacturing has been First Solar, which makes cadmium telluride cells (also being bought by Walmart). First Solar is now ramped up to 1 GW in annual production.

Miasolé says it is the only thin film solar firm to use what it characterizes as a low cost sputtering process for its materials deposition. Maybe Applied Materials will be dragged back into solar manufacturing  — and in a new way — if it gets involved in the project along with Intel.