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Transcript of First presentation
Technology & Strategy on
Presented by,
Miguel Van den Bogaert
Kannan Ramalingam
3/23/2011 1Technology & Strategy
Evolution of the solar industry
1883: Charles Fritts made scientificdiscovery of solar power
1954: Bell Labs
- Discovery of semiconductor waferdiodes generate voltage at lightexposure (space devices)
1980’s: silicon p-n junction solarcells
- By large semiconductor companies
- But: small-scale & low-powerconsumer device (calculators)
Large scale in the early 90’s:
1) Peak-load reduction
2) Reduce transmission &distribution losses
3/23/2011 2Technology & Strategy
Solar energy today
2009: solar power = fastest-
growing energy technology
Demand is growing at an
average of 48%/year since
2002
Global energy demand is
around 15TW/year
Solar energy= 0.04% of the
world’s total energy
consumption
Worldwide driven by energy
prices & government
policies
3/23/2011 3Technology & Strategy
Brief company’s history
Started as a glass company, created by HaroldMcMaster (physicist)
- 1948: founded Permaglass; shatters in small pieceswhen broken automotive industry
- 1984: Solar industry Glasstech Solar
( importance of cost competitiveness)
- 1990: Found Solar Cells (use of CdTe)
- very slow progress 1999: acquired by True NorthPartners and renamed First Solar (productioncapacity > 20MW)
3/23/2011 4Technology & Strategy
First Solar: Today
World’s leading manufacturer of solar panels (13% of the market-share)
- Annual production capacity of solar modules > 1 GW
Convert sunlight into electricity at a lower cost (< $1 cost/W) than its competitors
Use of Cadmium Telluride (CdTe) Crystalline Silicon
Recently in the system segment business (setup & maintenance of solar panels)
3/23/2011 5Technology & Strategy
Brief company overview
Type: Public (NASDAQ: FSLR) , share price: 150.75USD
Founded in 1999 (as First Solar Holdings, LLC)
Headquarters: Tempe, Arizona, U.S.
Key people:
- CEO :Robert J. Gillette
- Chairman of Supervisory Board: Michael J. Ahearn
- President Operations: Bruce Sohn
Revenue: US$ 2.56 Billion (FY 2010)
Operating income: US$ 748.9 Million (FY 2010)
Net income: US$ 664.2 Million (FY 2010)
Total assets: US$ 3,35 Billion (2009)
Total equity: US$ 2,65 Billion (2009)
Employees: 5,200 (2010)
3/23/2011 6Technology & Strategy
Types and patterns of innovation
Product innovation:
- Industry still developing
Competence-enhancing vs competence-destroying
- Depending on a lot of factors (new technology disruption)
Architectural innovation
Eg: Derbisolar from Derbigum
Beginning of the S-curve
Early adopters
3/23/2011 7Technology & Strategy
Sources of Innovation: Porter’s diamond
Factor conditions:
- Rise of interest in renewable energy
- Price of fossil fuel
- Inexhaustibility of the sun
- Rich subsidies
Related and supporting industries:
- Semiconductor business
- System-setup sector
Firm Strategy, structure and rivalry:
- Focus on single technology ( CdTe)
- Low manufacturing cost
- Solar industry relies on subsidies
Demand conditions:
- Developing countries
3/23/2011 8Technology & Strategy
Value Chain
Solar panels= Technology push
Scientific discovery of solar power (in 1883 by
Fritts)
Invention of solar panels
Manufacturing (at. lowest
cost possible)
Marketing (subsidies)
3/23/2011 9Technology & Strategy
Value Chain
Competitive advantage of First Solar
- Choice of CdTe
- Cost leader position
Defend position:
- No match with other energy sources (cost, performance)
- Industry still in its infancy many opportunities
Market instability: very fragmented
Unpredictability
- Survive major technology disruption
- Dependant on government regulations
3/23/2011 10Technology & Strategy
Standard Wars No dominant player of the industry
- First Solar = leader, but only 13% market-share
Increasing returns:
- Learning-curve: Cost decreasing, performance increasing
- Network externalities: system integration/installation
- Path-dependency: Huge bet on CdTe First Solar= non-dominant leader
3/23/2011 11Technology & Strategy
Standard Wars
Government regulation
- Connection to grid, certified installer of
solar power, allowance of installations
- Grants, financial assistance
- Targets: RPS: by 2020, 20% of electrical
power is coming from renewable sources
3/23/2011 12Technology & Strategy
Market forces of First solar
Good Solar Resource to have High annual insulation
Favorable High electricity prices as they reduced the cost hurdle for substitution by PV
Large area needed in close proximity to maximize the amount of geneartion
Access to development land to support the buliding of solar facilities
3/23/2011 13Technology & Strategy
Buyers
In 2009, 10-K: First Solar’s largest systems integration customers in Europe were responsible for more than 90 percent of its revenue
System integrators in Germany & Spain
In U.S. at the start, only Residential customers using net metering & ITCs
By 2010, Sempra, PG&E and Southern California Edison became largest customers
3/23/2011 14Technology & Strategy
FIRST SOLAR’s mission
“ To Create enduring value by enabling a world powered by clean, affordable solar electricity”
SUSTAINABLITY Remark
“ The real thing to notice with renewable is not necessarily how they stack up against each other, but rather that they are all orders of magnitude better than the use of fossil fuels”
3/23/2011 15Technology & Strategy
THREAT OF ENTRY & SUBSTITUTES FIRST SOLAR commands only 13 percent of the
market
Major competitors: Suntech, Sharp, Yingli and Qcells
Solundra and Nanosolar represents potential future threats if their technology could achieve commercial scale
Life Cycle Analysis(LCA) is being performed on c-Si, CdTe to evaluate the environmental modules
Krueger hopes that “One day it might be a critical consideration”
3/23/2011 16Technology & Strategy
SOLAR INDUSTRY MARKET
SHARE
13%
7%
7%
7%
5%
5%4%4%4%
4%
40%
First Solar
Suntech
Sharp Electronics
Qcells
Yingli
JA Solar
SunPower
Kyocera
Motech
Gintech Energy
Others
3/23/2011 17Technology & Strategy
ENTRY STRATEGY CATEGORIES
FIRST MOVERSGE (General Electric)
EARLY FOLLOWERSKodak
Monosolar
Matsushita and Ametek
LATE ENTRANTSSUnTech
Sharp
Qcells
3/23/2011 18Technology & Strategy
TIMING OF ENTRY PATTERNS
Early CdTe cell were GE in 1960’s and then Kodak, Monosolar, Matsushita and AMETEK
But the First commercial success of Solar cell modules was achieved by Glasstech Solar(now named as First Solar)
From 2002 when their 7% of commercial products were available, till now First Solar continues as the leader by extending their production lines in many countries
3/23/2011 19Technology & Strategy
FACTORS INFLUENCING FIRST
SOLAR ENTRY
In order to make CdTe a commercial product,
McMaster raised his funds to additional of $15
million during 1990.
Despite many challenges, the company was
able to produce a commercially viable process
for producing thin cells with CdTe by 1993.
By 1998, It had annual production of 20MW
and in 1999, True North Partners acquired it
and renamed as First Solar
3/23/2011 20Technology & Strategy
TIMING OF ENTRY PATTERNS
First Solar had a substantial lead over its competitors in terms of module cost/watt.
But the entire industry was still in its infancy with many opportunities for competitors to usurp company’s lead
The huge success of First Solar in 2002 attracted not only the European market, but also companies like SUNTECH POWER, SHARP, YINGLI, QCELLS, JUWI SOLAR
3/23/2011 21Technology & Strategy
CONCLUSION
Out of world’s average rate of 15TW electricity produced yearly, only 0.04% is from solar resource
Present crisis of Fossil Fuels can increase their price. So at one critical stage, there will be a need of renewable sources
Solar industry not yet viable without Government financial support
More Improved Infrastructure, More Isolated land resource, more grants from Government, expansion of market in Asian countries can ease a tremendous growth for First Solar in the Future
3/23/2011 22Technology & Strategy
THANK YOU
&
QUERIES???Visit our blog on First Solar at:
http://innovtechnovision.blogspot.com/
3/23/2011 Technology & Strategy 23