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UZOAMAKA N. OKENWA

MANAGEMENT OF INFORMATION AND TECHNOLOGY

CASE STUDY : ZT SOLAR INNOVATION

PRESENTED ON: NOVEMBER 18 TH 2009

PROFESSOR: DR. SUSANA KHAVUL

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Executive summary and recommendation

The Technology is an innovative type of solar panel produced by using affordable

materials and a new surfacing technique to convert sunlight to electricity. United States

market for solar cell and need for cheaper ones is the need driving this innovation. Given

the ever increasing energy cost, there is a great potential for any alternative technology

whose cost does not increase over time. Currently solar innovations are receiving more

attention than ever before from government, in form of funding for the research and

commercialization. Government programs such as Solar Energy Technologies Program are

seeking to identify and minimize or remove barriers to solar technology commercialization

as quickly and efficiently as possible. The continuously rising energy costs are driving

homeowners and industries to seek alternative power source that has no running cost.

Technology summary

Solar panels are made by wiring many solar cells together. The electricity collected by

each cell is concentrated into the electrical output of the panel. Panels can be made to

produce more electricity or less electricity by adding or removing solar cells. For

applications where more electricity is needed, a series of panels can be connected together

to give higher power output. Researchers at University of Texas at Arlington have

developed ZT solar, an innovative solar cell that comes with a surface texture which may

be safely and easily applied to already existing solar cells to improve their energy

efficiency and cost-effectiveness.

The nature of the ZT solar cell is incremental. ZT solar cell innovation provides

surface structuring technology which is solution based and has low cost, high throughput
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and significant efficiency improvements that can be easily integrated into current solar cell

manufacturing processes.

Solar cells are still in the early growth point on the S-curve, because currently Dr.

Meng Tao and many other researchers are still researching to create more efficient and cost

effective panels, so that economies of scale can be experienced in the solar power market.

Currently large amounts of money, effort and other resources are expended in solar power

generation and there are small performance improvements being observed. Government is

expending huge amounts of money in financing solar energy programs in form of subsidies

for research, rebates for homeowners and publicity in the form of greener environment.

Emerging and existing competition

Due to the increased funding provided by the government for renewable energy

research there has been an increase in the number of researchers who are developing new

solar cell alternatives. This has led to increased competition among solar cell innovators.

One of such competition is Innovalight; this manufacturer is developing products for the

residential and commercial rooftop market. The initial product will have a similar look and

feel to today’s crystalline based solar cells and modules but will have a significantly higher

power output per area. The manufacturers believe that the system integrators will require

less mounting hardware, cables and labor to complete an installation. These reductions in

balance of system costs coupled with lower cost products will drastically reduce the cost of

solar installations.
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Another major emerging competitor is Covalent Solar. Unlike conventional

concentrators, their dye-based solar concentrator does not require any tracking or cooling

systems so overall costs are greatly minimized. A special mixture of dyes is coated on

large glass panel; sunlight is absorbed and transported within the glass to the solar cells at

the edge. Because there is very little energy loss with the dye, power obtained from the

solar cells increases 10-fold. And, when added onto existing panels, efficiency increases

by 50%. Production is expected in the next three years.

NanoSolar’s flexible thin-film solar panel is another huge competition; they are

manufactured at a fraction of the cost of conventional panels. Unlike most silicon panels,

which need to be baked in bulk, their panels are printed in mass. The results are solar cells

produced 100 times faster and 100 times thinner, reaching efficiency of about 14%.

Even though there are many competitors in the race to develop and commercialize

more efficient and cheaper solar cells, it will take decades before the competition in the

solar market will be significant, given that currently only about 1% of the entire energy

generation is attributed to solar power.

At the moment, the greatest downside of solar power systems is initial cost of

installation. All innovators in the solar energy sector are focusing on how to make cheaper

and more efficient solar cells. Dr. Meng Tao and his team claim that the solar cells they

have developed will provide cheaper and better solar panels. According to Dr. Meng Tao

they created a surface texture on solar cells using spherical micro particles that can be

applied to all types of solar cells to reduce reflection. According to him, “this improves

sunlight collection, often by as much as 10 percent, because the spheres are Omni
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directional.” They can absorb sunlight from any direction even on a fixed-orient.

Currently government is investing heavily in renewable energy initiatives; this

creates a great opportunity for solar energy innovation. This is because many of these

government initiatives come in form of funding for research and also incentives for

commercialization of any such innovation. Government is making it easier for home

owners to install solar panels in their homes by offering different types of rebates to people

who purchase solar panels for home use. As more home owners become more aware of the

savings they can make by powering their homes with solar panels, the market for solar

power systems will continue to expand.

Industry structure

Bargaining power of buyers: The buyers in the solar energy industry have low

bargaining power at the moment because there is relatively lower number of sellers, this is

due to the fact that solar panels are still in the early growth stage, and the industry is not

experiencing economies of scale yet. Solar panel manufacturers are all still facing the same

problem of high cost of silicon; hence there is not much variation in price across the

industry.

Bargaining power of suppliers: Given that there are relatively fewer suppliers

than buyer of Solar panels, the buyers are forced to buy a whatever price the manufacturers

are willing to sell. Hence the bargaining power of the suppliers is high. This is likely to

change few years down the road because there are many innovators who are focusing on

finding cheaper alternative to expensive silicon which is a vital part of the solar panels.

New Entrants: The high startup cost and problems associated with gaining proper
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permits for producing polysilicon makes it very difficult for new entrants to enter the solar

industry. According to a survey by EUPD research, existing Solar panel manufacturer and

new market entrants assert that the competition within the solar industry is expected to

increase. However, due to the highly complicated production process of solar panels, new

entrants are not considered to be a great hindrance.

Substitutes: Within the renewable energy sector there are many competing

alternatives to Solar panel in the race against time to find a solution to high cost of oil and

gas. The major competing substitute is wind energy turbine. Many electricity generating

companies are already building wind energy farms where they generate enough energy to

feed in the national power grid. Within the solar industry, there are some emerging

innovations seeking to replace the existing silicon based panels, one of such innovations is

the “thin film” technology. These panels convert sunlight into electricity using little or no

silicon. While thin-film panels sell for as much as 40 percent less than their silicon

counterparts, they also, on average, produce roughly half as much energy per square meter,

meaning that they require more panels and a larger installation area to generate the same

amount of electricity. But as manufacturers develop more efficient products and better

manufacturing processes, analysts and industry participants say thin-film technology could

play a key role in turning solar power into an economical energy option for businesses,

electric utilities and even homeowners. As earlier mentioned, another substitute is the dye

based technology, in this process glass panels are coated with dye which trap and converts

solar energy to electricity.

Rivalry: The rivalry among solar panel innovators is very intense, the rivalry range
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from small private labs to research and development departments of big companies who

are receiving enormous funding from the federal government. On May 27, 2009 the

Department of Energy announced that it was making available $117.6M to accelerate

widespread commercialization for clean solar energy technologies across America. One of

such big companies who have received funding in the past is Sunpower Corp, which is a

Silicon Valley-based manufacturer of solar cell. Two years ago Sunpower, through the

Solar America Initiative, received $10.5 million from the Department of Energy, on

October 30, 2009 Sunpower Corp announced that they have developed a full-sized solar

panel with 20.4 percent total area efficiency. They are expecting that this improved solar

panel will be commercially available within 24 months. Since 1999 when the National

renewable energy developed the thin film solar cell , many advancements have been

achieved in the thin film solar technology , currently First Solar , a Phoenix -based Solar

company has started commercializing thin film solar cells, there are also sixty companies

who have obtained licenses to start thin film production by 2010

This industry is very attractive given that compared to the available market, the

supply is relatively low. However there is one key issue that an innovator has to deal with,

that is the difficulty to enter the market as both an innovator and manufacturer. It may be a

better idea for the innovator to license his innovation to a manufacturer or to form an

alliance with an established manufacturer. The success of this innovation will depend on

the innovators commercialization strategy.

What it takes to compete effectively in the Solar industry

To compete effectively in the Solar cell industry the key is development of

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innovative and exclusive solar cells not just new solar cells. An innovative and exclusive

solar cell should be able to compete effectively cost and efficiency wise with currently

existing power generating sources. According to the U.S. Energy Information

Administration, currently, it can cost 20 cents or more to produce a kilowatt-hour of

electricity from a solar-power system, depending on where the system is located and the

level of incentives offered. By contrast, generating electricity from coal or natural gas costs

between 2 and 10 cents a kilowatt-hour, depending on the fuel and age of the power plant,

while utility power in America averages about 8.9 cents. Hence, any solar innovation

should have a target of meeting and beating the 2 to 10 cents a kilowatt-hour cost range, to

be able to compete effectively in the industry.

Market potential

In 2007, due to increased demand for solar panels, solar panel manufacturers used

more silicon than the entire semiconductor industry. The competition for silicon between

solar panel and semiconductor manufacturers led to silicon glut in 2007, since then the

demand for silicon due to increased solar panel production has continued to increase. As a

result of worries of ever increasing energy prices, increased consumer interest in green

technologies and assistance from different levels of government in form of cash discounts

and rebates, the solar market is booming more than ever before. According to a report

released in July 2009, by the Interstate Renewable Energy Council, there were 62,000 new

solar thermal and solar electric installations in 2008, a 16 percent increase from 2007. The

capacity of photovoltaic installations completed in 2008 grew by 63 percent compared with

installations in 2007.Currently California is the dominant state in the U.S solar market, the
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state experienced a 95 percent installation increase in 2008 as compared to 2007. It is very

important to note that in the global solar market, the United States is only a small portion.

Currently, in Germany the largest solar market, Architects are designing homes with

special consideration for Solar panels. Homes are designed to have a peculiar roofing

technique to improve the amount of sunshine that it receives since the roofing sheets are

made of solar cells which power the homes. The Chinese market currently has a least 241

of solar panel manufacturers. The number continues to grow due to the increased demand

for solar energy systems. As the demand for cleaner and cheaper energy continues to grow

so will the market for fossil fuel alternatives such as solar energy will continue to expand.

How quickly the solar market will grow will depend on the rate at which the cost of

solar capacity is reducing. The United States Energy Information administration (EIA)

cites that the cost of solar photovoltaic capacity has reduced from approximately $300 per

watt in 1956 to less than $5 per watt in 2009. EIA’s annual energy report estimates that by

2030, overnight capacity cost for new generating plants using photovoltaics will be 37

percent lower than the 2009 costs. The Obama administration has extended the tax credit

for solar power installation to 2016; solar industry analysts expect that this will cause the

US solar energy market to grow at a higher rate of about 50 percent in the years leading to

2016 and beyond.

Technological advancements in the solar industry are expected to continue, this will

lead to the production of more innovative ways to capture energy from the sun.

Consequently, cost of generating solar power will continue to decrease while the efficiency

of these solar cells is expected to increase. These changes will result in the much needed
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economies of scale in the solar energy industry.

Target customers.

Target customers in the solar energy industry can be divided into residential and

nonresidential. Residential solar power systems are designed to interconnect with existing

utility service; they feature solar modules, plug-and-play wiring, power electronics and

mounting kits. The aim of this type of system is to give homeowners the ability to generate

their own electricity at home. On the other hand, nonresidential customers are companies

that use solar power systems to generate energy for commercial purpose. Electricity utility

companies are examples of such nonresidential customers; these companies build solar

farms from which they generate enough energy to feed into the national power grid. Other

nonresidential customers include electrical and electronics companies that build solar

powered appliances such as solar refrigerators.

Financial potential

As earlier mentioned this innovation can make money in two ways: through

residential and nonresidential customers. The innovation will start making money for both

the manufacturer and innovators as soon as it is rolled out into the market. As long as there

is need for electricity, solar power systems will continue to be financially viable for

manufacturers. Currently, about 44 percent of population in developing countries lack

electricity, according to Michael Eckhart, the president of American council on Renewable

Energy, these countries have the potential to become the largest solar market. He estimates

that a typical village will cost about $32,000 to power; this will translate to billions of
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dollars if the solar industry chooses to pay more attention to those countries. As for where

the funds will come from, he cites that many local banks in those developing countries

have proven to be interested in funding solar projects. Apart from local banks, International

Monetary Fund, World Bank, United Nations and many other world organizations are

financing projects such as rural electrification and water project in developing countries

with focus on solar energy.

Commercialization Strategy

The production process for solar cells is highly complicated, the target market is

vast, the competition is fierce with several large players such as Sunpower Corp

dominating the market and access to capital for small start-up businesses is limited,

therefore it will be very difficult for an individual or a small company to enter the solar

energy market. The best way for Dr. Meng Tao and his team to structure their

commercialization of ZT solar is to form a corporate alliance with an already existing solar

panel manufacturer. This will probably yield better results, and thus better returns. Another

alternative is to license ZT solar technology to any other manufacturer. With this strategy,

revenue is achieved and its intellectual property will still be protected.

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Table 1 Annual Photovoltaic Domestic

Shipments, 1998 - 2007
Year Photovoltaic Cells and Modules1

1998 15,069
1999 21,201
2000 19,838
2001 36,310
2002 45,313
2003 48,664
2004 78,346
2005 134,465
2006 206,511
2007 280,475
U.S. Total 886,193
#1Total shipments minus export
shipments.
Notes: Totals may not equal sum of
components due to independent rounding.
Total shipments include those made in or
shipped to U.S. Territories.
Source: Energy Information
Administration, Form EIA-63B, "Annual
Photovoltaic Module/Cell Manufacturers
Survey."
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Renewable Energy Consumption in America’s Energy Supply, 2008

Source: Energy Information Administration
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Source: Mizuho Securities, Nikkei Microdevices

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Market dynamics – actual and projected. Source: PJC Poly Si Supply & Demand Analysis

Historical renewable energy cost trends with projections through 2020

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Source: Energy Information Administration:

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Works cited

1. American Council on Renewable Energy,

Report.http://www.acore.org/news/article/2009/07/28/interstate_renewable_energy_co

uncil_releases_2008_solar_market_trends_report.

2. Covalent Solar: http://www.covalentsolar.com/

3. Energy Information Administration: "Annual Photovoltaic Module/Cell Manufacturers

Survey." www.eia.doe.gov/cneaf/solar.renewables/page/forms/instr63b.pdf

4. EUPD Research: The global PV market 2008/2009 entering a new lifecycle stage:

http://www.eupd-research.com/en/home/.

5. Innovalight: http://www.innovalight.com/

6. Interstate Renewable Energy Council : Solar Installation Trends http://irecusa.org/wp-

content/uploads/2009/10/IREC-2009-Annual-ReportFinal.pdf

7. Nanosolar: http://www.nanosolar.com

8. TECHFORTWORTH: Business and Technology Press Releases of TECH Fort Worth

http//www.techfortworth.org/news.htm?key=29&client=Press%20Release