Do PERC Panels Pose A Threat To First Solar And SunPower?

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Solar manufacturers, particularly in China, have been increasingly turning to Passivated Emitter Rear Cell (PERC) technology for their poly- and monocrystalline solar products as a means to improve conversion efficiencies and reduce costs, thereby allowing them to compete more directly with Western rivals. Below we take a brief look at the technology, how it is scaling up and analyze the potential impact on solar rivals such as First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR).

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How PERC Technology Helps Silicon-Based Solar Manufacturers 

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Conversion efficiencies have always been one of the most significant performance metrics in the solar business, as higher efficiencies translate into more compact panel and systems designs, in addition to helping to cut down on balance of systems costs. For instance, a 100 bps improvement in panel efficiency can lower a systems cost by 5% or more on a per-watt basis. More efficient panels also command a higher price, given the balance of systems savings customers can realize. That said, efficiency improvements among silicon-based manufacturers, particularity in China, have been slow over the last few years. However, with the adoption of PERC technology, which essentially allows panels to capture more light by adding an extra passivation film to the rear-side of a solar cell, companies can boost efficiencies by roughly 1%-2% over their non-PERC counterparts. PERC modules also perform well under low-light conditions and high temperatures, on account of better temperature coefficients. Moreover, existing production facilities can be upgraded with PERC technology without large capital expenditures or overhauling existing equipment.

Chinese Firm’s Doubling Down On PERC 

Manufacturers of silicon based solar panels, particularly in China, have historically offered limited product differentiation, resorting to competing based on price with Western rivals. However, these firms are now doubling down on PERC technology as it could offer them an opportunity to compete on a more level plane, without having to undertake complete operational overhauls. For instance, China’s JA Solar said it expected its PERC production capacity to reach 1.4 GW by the end of 2016. Trina Solar and Canadian Solar are investing in PERC technology to move up the value curve. Trina recently announced that it has reached a record 22.61% for its p-type PERC cells.

First Solar And SunPower

First Solar’s current Series 4 panels currently offer conversion efficiencies of roughly 16.5%, putting them behind most mono-PERC panels, which typically offer efficiencies of 18%+. While mono panels are typically more expensive compared to First Solar’s Cd-Te panels, the increasing supply of mono panels is driving down prices, putting First Solar at a competitive disadvantage, given its higher balance of systems costs. However, the firm expects its new Series 6 panels, which are expected to hit the market in 2018, with efficiencies of ~18% and peak rated power of upwards of 420 watts per panel, to offer a price benefit relative to mono and multi PERC technologies. First Solar’s North American rival SunPower, which uses a proprietary monocrystalline technology, has been shifting its production mix away from its E-Series Panels (efficiencies of ~20%) towards its high-end X-Series (~23%), as it looks to differentiate itself against its Chinese rivals increasingly competitive mono offerings.

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