After a large number of companies developing thin film PV panels got huge amounts of venture capital funding between 2005 and 2008, a handful are now emerging with viable products.

Thin film PV panels are manufactured in a radically different way to traditional crystalline silicon PV panels.  This means they have the potential to be dramatically cheaper than regular panels because the manufacturing process is faster, uses less energy and requires fewer raw materials.  Despite this promise, thin film PV has a number of drawbacks.  The mains ones are efficiency (thin film PV tends to 11% efficient at best compared with 16% for crystalline silicon) and reliability (early thin film panels showed signs of degradation).

Since the thin film companies got their money a few ago, many have fallen by the wayside.  Setting up a thin film solar factory requires huge amounts of capital so a lot of companies just ran out of money and couldn’t convince investors to top them up with cash.  On the other hand, there are a few who managed to actually complete their manufacturing lines and start producing solar panels.  Unfortunately there is still a long way to go before the solar panels can be sold once that stage has been reached however.  In all markets, solar panels are now seen as a long term investment.  This means that investors need to have absolute confidence that the panels will last through their warranty period (usually 20 or 25 years).  Proving reliability is no easy task.  The panels have to go through months of intense testing, and many banks require at least 2 years of real field data before agreeing to lend money to projects involving those panels.  This means there is a long, long wait before these manufacturers can actually sell panels in any large quantities.

Up until recently there were only one, or possibly two, thin film PV companies that had reached that point, the most notable being First Solar who are one of the two largest solar manufacturers of any kind worldwide.  It seems that after all this time there is now a small selection of companies who may be about to join this list.

For me the front runners for this are the Californian company Miasole, the Japanese manufacturer Solar Frontier, and possibly the German company Q Cells with their Q.Smart thin film panels.  Miasole have just announced a large sales contract with the well respected German distributor Phoenix Solar on the back of two years of testing at their Bavarian headquarters.  Solar Frontier have announced a range of lucrative sales contracts around the world which should mean their panels should start to be seen much more widely in the near future.

There is still a long way to go before we know if people will start choosing silicon over thin film panels.  They still have a lower efficiency, which means they have to be sold significantly cheaper than higher efficiency panels, but it could be that the manufacturing costs are so much lower (once they get to large scale production) that the thin film PV companies are still able to make a good profit when selling at much below current prices.  Whether thin film PV enjoys rapid success or not, from now on there will be significantly more thin film PV companies to choose from.

The long discussed changes to the German feed-in tariff are still in debate after a report released Monday by Germany’s regional government assembly called for a relaxation of the planned cuts. This means that the changes, which were originally planned to come into effect in April and have already been pushed back until June, may be yet again delayed. The bill we continue to pass its way through the German parliament over the next two months.

Whilst everyone appears to be in agreement that the feed-in tariff should be lowered faster than originally planned in light of dramatic price reductions in PV systems, there is controversy over much it should be lowered and how the structure of the tariff should be changed. There is a big debate for instance, concerning the level of a ‘self-consumption’ bonus, whereby producers of solar energy are rewarded for any electricity they use themselves rather than export to the grid. Also in discussion is the difference in feed-in tariff paid to ground mounted solar farms compared to rooftop installations.

Meanwhile, solar installers are experiencing a continuation of strong demand. At the end of 2009, the rate of new installations reached an all-time high with around 2GW installed in the fourth quarter alone as customers rushed to install before the 2009/2010 feed-in tariff drop. The threat of new cuts in the feed-in tariff are only increasing the incentive to install in 2010.

An interesting pattern is emerging, whereby the PV market experiences surges in the run-up to a feed-in tariff change. This cyclical pattern creates extra incentive for the government to decrease the feed-in tariff and looking at the market it seems that prices are set to fall further over the next year or so. These factors may well push us into the realm of parity with retail electricity prices in Germany by 2013.

In the UK, the feed-in tariff is unlikely to be altered before 2012, although we will carefully scrutinize the aftermath of the forthcoming general election. Already commentators in the UK are speculating that the UK may experience its own mini ‘PV-rush’ in the run up to 2012. However, as Germany has repeatedly shown, one ‘PV rush’ can lead to another.

Several of the thin film PV manufacturers (see previous article) have announced ambitious plans to start selling their products in large volumes. In particular, NanoSolar, Solibro, Solar Frontier and MiaSole are makers of the new “CIGS” type of modules that promise to achieve high efficiency and lower cost than the thin film modules currently available. It will take time for these new technologies to be accepted for their reliability, but it is likely that at least some of the companies offering these products will succeed. News has been announced that a solar park using Nanosolar’s modules is already under construction.

Several of the developers of large PV projects in Germany, such as Phoenix Solar and Gehrlicher, are currently testing new technologies whilst at the same time being cautious about their forecasts for the German market. Phoenix Solar recently announced that it cannot provide details of its development strategy until the details of the German feed-in tariff have been finalized.

These developments should act to further decrease the price of PV.