Built-in solar struggles with cost, efficiency
By Reuters
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Building-integrated photovoltaics, or BIPVs, made by companies such as Energy Conversion Devices and Ascent Solar, are designed to be an integral part of buildings, in contrast to the photovoltaic panels made by First Solar, Suntech and others that need to be retrofitted on roofs.
Given their unobtrusive nature, BIPVs were once touted as the next big thing in solar power, but have so far not taken off as expected.
After a promising initial run, BIPV makers ran into the global financial crisis that brought construction activity — to which most BIPV sales are typically tied — to a near halt.
The immediate future doesn't look much brighter.
"It is going to be hard to see a lot of growth, given the economic challenges facing a lot of the traditional purchases of BIPVs," Simmons & Co analyst Burt Chao said.
"BIPV companies could languish for some time," he said. "Given the outlook for solar in 2011, with the subsidy reductions, companies are going to find it challenging."
Europe's largest solar markets — Germany, Italy, Spain and the Czech Republic — have unveiled plans to cut subsidies for the solar sector, which some said has been oversubsidized, to preserve cash amid Europe's debt crisis.
The steep drop in construction levels has dealt a major blow to BIPV makers. Energy Conversion Devices, for instance, slumped back into the red, following five consecutive quarters of estimate-topping results.
It was forced to cut jobs and scale down capacity utilization to as low as 25 percent as demand fell.
"ECD's original strategy was to partner with roofing and building material companies," Wedbush analyst Christine Hersey said. "Then the construction market fell apart and they had to switch gears."
Last year, when Dow Chemical unveiled plans to roll out a new rooftop shingle — likely to be widely available next year — it also said it would partner with home builders Lennar Corp and PulteGroup Inc in North America.
But construction activity has yet to pick up significantly. New U.S. home construction hit its lowest level in eight months in June, signaling the economy lost momentum in the second quarter.
BIPV systems are limited mostly to roofing tiles, which operate at lower efficiencies than solar panels and have been too expensive to gain wide acceptance.
Dow Chemical said its new rooftop shingles will use thin-film cells that will cost 10 to 15 percent less on a per-watt basis than rival polysilicon cells, but will still operate at a lower efficiency than some solar cells.
And with cost leader First Solar bringing panel manufacturing costs down to 76 cents per watt and reporting conversion efficiency — the proportion of sunlight received that is converted to electricity — of 11.2 percent in the latest second quarter, BIPV makers have their work cut out.
For instance, Energy Conversion reported a conversion efficiency of only 8.2 percent and manufacturing costs as high as $2.95 per watt in the quarter ended March 31.
While the company hopes to bring costs down to 95 cents per watt, when it operates at full capacity, and raise conversion efficiency to 12 percent by 2012, this still might not be enough to give it an edge over some of its rivals.
Lower conversion efficiency typically means more panels are needed to generate a given amount of electricity.
"This is a problem when you are looking at how much power you can get out of a rooftop, where space is limited," Wedbush's Hersey said.
As the industry struggles to compete effectively with photovoltaic panels, analysts say growth will be difficult in the near term, but could be possible in another year and a half.
"If BIPV players can get their costs down — they have to — once you get past 2011, you might see some growth in that space," Simmons' Chao said.
"Right now, they have to be very cautious."
