During its analyst day event held last week, First Solar (NASDAQ:FSLR) presented an updated roadmap for its Cadmium Telluride (Cd-Te) thin film panels, indicating that conversion efficiencies, which have typically been one of the company’s weak spots, could improve significantly going forward. If the company is able to execute on its targets, we believe that it could emerge as one of the technology leaders in the industry, in addition to being one of the lowest cost producers.
Why Conversion Efficiencies Matter
Some of the key attributes that solar panel manufacturers compete on include price, conversions efficiency, temperature coefficients and aesthetics. Conversion efficiency is typically the most touted and advertised feature. All else being equal, a higher efficiency panel converts more sunlight into electricity and has a smaller size (surface area) for every watt of rated power output. Besides this, higher efficiency panels help to reduce the balance of systems cost (structural components, electrical equipment and labor costs) for a solar installation, which is a function of panel size.
First Solar’s panels currently offer average conversion efficiencies of around 13.4%. In comparison, polycrystalline panels, which are typically manufactured by Chinese companies, offer efficiencies of around 15% to 16%, while high-end monocrystalline panels sometimes have efficiencies of over 20%. First Solar’s roadmap indicates that its module efficiencies could improve to around 14.9% this year while rising to around 19.5% by 2017, as compared to its previous roadmap which targeted a 17.2% efficiency in the same time frame.  The company expects the efficiency of its modules to equal those of polycrystalline modules by the end of 2015.
Possibility Of A Long Term Edge If The Company Executes On Its Plans
Besides efficiencies, First Solar’s panels also have other advantages. Cd-Te panels tend to perform well under a variety of lighting conditions, and also have an edge in hot and humid climates, due to their better temperature coefficient, which helps their output hold up better when compared to silicon-based panels which experience some performance degradation as temperatures soar. First Solar is already the world’s lowest cost solar cell manufacturer, with its core manufacturing costs standing at around $0.54 per watt. The company has guided that it could reduce its core manufacturing costs to less than $0.40 by the end of 2018.Notes: