One leader, lots of consolidation as CIGS market emerges

New Hampshire, U.S.A. -- 2011 was "a breakout year" for CIGS solar PV as suppliers continued to trim production costs, increase module conversion efficiencies, and widen adoption in commercial rooftops. But while CIGS (and thin-film brethren CdTe, thanks to First Solar's market leadership) continue to press on, the solar PV industry is still very much dominated by silicon, which has more standardized manufacturing on the one end and far more installed capacity on the installation side -- and all-important bankability thanks to both.

CIGS, meanwhile, is still evolving, with a variety of substrates (glass, steel, polyimide) and manufacturing processes e.g. deposition (sputtering, evaporation, inkjet printing), plus variety in the associated equipment. CIGS also faces challenges in lifetime/reliability and bankability. Which, on the flip side, means that CIGS continues to be an area where improvements and innovations in technologies and materials can have a major impact.

Lux Research, in a new report, projects the CIGS market will nearly double to $2.35 billion and 2.3-gigawatt demand in 2015, up from 1.2GW today, as the technology emerges "into an early growth phase." Yet it is emerging in an environment where investments (e.g. venture capital) are hard to come by, and pricing pressure from the silicon side of solar PV continues to compress the cost equation and erode thin-film's advantages. “Strategic partnerships between start-ups and industrial conglomerates are likely to determine this technology’s overall viability and competitiveness,” says Pallavi Madakasira, Lux Research analyst and lead author of the report.
Who has the best chance of achieving escape velocity in CIGS? Lux plots out the players on an "Innovation Grid," below. Some conclusions:

• It's clear who is expected to assume the mantle as marketplace leader: Solar Frontier is ranked solidly in the grid's Dominant quadrant, and the only firm Lux ranked as "Strong Positive" in its calculations. The company has inroads into new and emerging markets (e.g. 30MW in India), not to mention a recent 150MW module supply deal in the US, and it's got the manufacturing muscle with a 900MW plant in Japan ramped last summer.

• Besides Solar Frontier, there's a trio of firms that could emerge as CIGS "champions": Stion, Miasole, and Nuvosun (which also is linked to Dow, via funding and as a solar shingle producer). Success for all these firms, Lux says, will depend on a number of factors: capacity utilization and ramp-up, customer relationships and strategic partnerships, and consistent execution across all areas: module costs, yield, and efficiency.

• Consolidation is likely among a group of "bankable players" including Global Solar, Avancis, and Solibro. Global Solar has shown "slow but steady progress" with its PowerFlex technology used in Dow's solar shingles, but "needs to adopt a less conservative approach," Lux says. Avancis has a CIGS module JV with Hyundai Heavy Industries in Asia, and opened a new German factory in December. Solibro, meanwhile, needs to solidify its financial footing (it topped 17.4% aperture efficiency back in November with CIGS test cells).

• Along with consolidation, some other players are likely acquisition targets: ISET, Flisom, and AQT all are designated "High Potential," potentially viewed as prize assets due to strong technical value -- but as Lux euphemistically puts it, they suffer from "weaker business execution scores."

Companies pursuing evaporation CIGS process have a temporary lead in the industry. (Source: Lux Research)

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