First Solar (NASDAQ: FSLR) has entered into a two-year collaboration and licensing agreement with Intermolecular Inc. (NASDAQ: IMI), a research firm focused on the semiconductor and clean energy space, to improve conversion efficiency of its thin-film Cadmium-Telluride (Cd-Te) panels.  The move is one of many efforts undertaken by First Solar to boost the performance of its thin-film panels which are facing strong price competition from higher efficiency polycrystalline panels.
Why Conversion Efficiency is Important
Higher efficiency panels convert a larger amount of light into electricity and have a more compact size for every watt of rated power output. Higher efficiencies also help manufacturers bring down production costs as they reduce the amount of raw material used to produce a solar panel of a given wattage. Additionally, conversion efficiencies have become the most recognizable specification of a solar panel and are an important aspect in marketing and advertising of panels.
First Solar’s thin-film panels have traditionally had a lower price and weaker conversion efficiency compared to polycrystalline panels. (See Also: A Comparison Of Solar Technologies And What They Mean For Companies) However, stiff competition among Chinese panel manufacturers and rapidly declining prices of polysilicon, a key raw material used to manufacture polycrystalline panels, have brought polycrystalline panel prices to levels similar to those of Cd-Te panels. For instance, as of Q3 2012, First Solar’s panel manufacturing cost was $0.67 per watt while Yingli Green Energy (NYSE: YGE), one of the world’s largest polycrystalline panel manufacturers, had a manufacturing cost of around $0.70 per watt. However, on the efficiency front, First Solar still trails silicon based manufacturers (First Solar panels had an average efficiency of around 12.7%, which is around 2% to 3% lower than polycrystalline panels). This has created an urgent need for First Solar to improve panel efficiency and bring down costs in order to stay competitive.
Details Of The Deal And First Solar’s Other Initiatives To Boost Efficiency
Under the collaboration agreement, researchers from both firms will work together to develop disruptive new approaches to increase conversion efficiency of First Solar’s Cadmium-Telluride solar panels. The developments would leverage Intermolecular’s proprietary High Productivity Combinatorial platform, which speeds up the experimentation process and reduces time-to-market for product development.
Over the past year, First Solar has been improvising its manufacturing process to produce higher performance panels. It recently introduced an updated laser scribing procedure which it expects to deploy across its production lines by mid-2013. Laser scribing reduces active area losses of panels by using lasers rather than mechanical contact to create micro-channels in the film. ((Laser Scribing To Increase Solar Efficiency, Alternative Energy News)) Besides this, the firm has also been improving semiconductor deposition technologies and technologies for the back-contacts of the panels. Notes: