First Solar (FSLR), a leading manufacturer of thin cell (thin-film) photovoltaic (PV) semiconductor modules has lost it cost advantage and must be rethinking its corporate strategy.  Just as extreme price pressure from Chinese competitors crushed Solyndra and forced it to shut down amid the US Government grant scandal late last year, those same market dynamics coupled with dramatically decreased polysilicon prices will force First Solar to make changes.

As reported by Trefis for MSN Money, there have been significant decreases in the price of polysilicon, “…prices for polysilicon fell from a record $475 per kilogram in 2008 to around $33 per kilogram in Q4 2011.”  Coupled with an increase in production estimated to double capacity within 3 years, it is obvious that there will be significant changes.

From a pure solar technology and manufacturing standpoint, production photovoltaic (PV) panels are made using either polycrystalline silicon (aka polysilicon, poly-Si or poly) or amorphous silicon (thin-film , thin cell using cadmium-telluride CdTe).  Thin film manufacturers, like First Solar, now have competitors that have an efficiency (polysilicon is higher efficiency) and an emerging pricing advantage due to higher volumes, lower manufacturing cost and lower material cost.

Trefis’ graph and data but note that First Solar's CEO recently made a statement claiming the company's ability to reach the $.70/watt with CdTe thin-film technology.

The net effect is lower prices for consumers as manufacturers are forced to retool to fit a quickly changing landscape.

Companies to watch:

• Suntech Power (NYSE: STP), Yingli Green Energy (NYSE: YGE), Trina Solar (NYSE: TSL) – polycrystalline manufacturing with size and scale advantages.
• First Solar – due to it’s US presence, dominance in thin-film, R&D and the risk that polysilicon prices may not trend lower.  First Solar recently claimed success reaching a world record for CdTe Solar PV “module” efficiency, reaching 14.4% total area efficiency. Press release here.  The company also noted that this achievement differs from their ability to reach 14.5-15% average efficiency for production modules.  The later is a goal set for the end of 2015.  First solar Says it used production manufacturing machinery.
• Q-Cells SE (ETR: QCE). Solibro GmbH, a subsidiary of Q-Cells SE, marked a record with its thin-film technology CIGS. Solibro’s thin-film Q.SMART module technology is now the first in the entire thin-film sector to achieve a solar module efficiency of 17.4% (aperture area).  Press release here.  Q-Cells says that the manufacturing process used can be scaled to mass production.  They also remind us that, “…a polycrystalline solar module from Q-Cells’ in-house research centre achieved a module efficiency of 18.1% related to the aperture area in July 2011.”

Q-Cells SE Wafer Wetbench