Outlook is bright for solar photovoltaic sector

Encapsulants demand heats up

05 July 2010 15:46  [Source: ICB]

With solar energy headed for a bright future, the encapsulants market is thriving

Andy Brice/London

Despite the widespread troubles in the financial markets, the solar photovoltaic (PV) sector experienced only a temporary slide in demand in the second half of 2009 - and the outlook has since become far more positive.

US films producer Solutia suggests the global PV market should grow at 25%/year in the coming years, whereas compatriot chemical giant DuPont is targeting a 50% increase in its PV sales in 2010 because of strong growth in solar markets in Europe, North America and Asia.

As the solar sector grows, so does demand for encapsulants - the protective barrier employed to prevent damage to the sensitive electronics. The encapsulants market is worth some $2bn/year (€1.6bn/year) globally, says Gaurav Vyas, research analyst at global consultancy Frost & Sullivan, with key applications in the construction, automotive and solar sector. Although the latter is the smallest segment, it perhaps has the brightest prospects in the longer term. The PV encapsulants sector was worth $354m in 2009.

"Encapsulants are irreplaceable in PV modules - and the solar market is growing very fast," says Vyas. "For the last two years, a lot of installations have been delayed because of lack of funds, but now with economies looking stronger, the market is picking up. Last year, growth was close to 10% - but in 2007-2008 it had been growing at close to 40-45%."

To ride this tidal wave of growth, encapsulant manufacturers are striving to improve the efficiency and durability of their products. Despite the recession, many major players have announced significant investment so far this year: US silicones producer Dow Corning signed a strategic partnership with Germany-based equipment supplier REIS ROBOTICS that will help to increase the output of solar panels, and also announced it was investing around $13m in the expansion of its Belgian solar development center.

Japan's Kuraray, meanwhile, has added a production line in Frankfurt, Germany, to meet increased encapsulant demand - raising its capacity by 10,000 tonnes/year to 39,000 tonnes/year, whereas Solutia has also added to its existing polyvinyl butyral (PVB) capabilities with the acquisition of ethyl vinyl acetate (EVA) encapsulants producer ETIMEX Solar for €240m ($302m).

Typically, solar modules consist of several layers: a back sheet, the electronics, encapsulant and a sheet of glass. This is then laminated at temperatures of up to 150˚C (302˚F) to seal the unit. Different technologies yield varied efficiencies of those cells, and impact them positively or negatively.

The copolymer EVA is the most commonly used material to manufacture encapsulants, with a market share of around 82% in 2009, says Frost & Sullivan. The thermoplastic polymer PVB is its main competitor. It represents only 15% of the market, although its uptake is increasing rapidly.

PVB-based modules tend to offer improved performance and can be stored in inventories for longer without degrading (up to four years, versus only six months for EVA). But they have so far only gained a relatively small market share, however, because of higher costs and lengthier production times.

Last year, the markets for PV EVA and PVB were valued at $288.2m and $56.3m, respectively. More expensive options, such as ionomers and silicones, remain niche markets and accounted for only around 2% in 2009, representing revenues of around $9.60m.

"Price is still a major issue," says Vyas. "There is a lot of pressure coming from the module manufacturers on the suppliers to reduce the cost of the modules. At the moment, silicones cost $9-10/m², while EVA is much cheaper at $3-4/m²."

Increasingly, manufacturers are establishing themselves in Asian markets to capitalize on cheaper production costs and the rapidly growing domestic market. According to Frost & Sullivan, over 60% of the 63 main encapsulant suppliers are now based in China.

However, the largest markets have traditionally been in Europe. "The thirst for this technology in China is huge, but Europe is a significant portion of the global sales. It's a large base and will continue to grow," says Eric Nichols, vice president of business management for Solutia's Advanced Interlayers division.

"Spain was huge until 2008, when subsidies were removed and demand collapsed, while Germany's been a lot more measured with its incentives. Other countries in Europe, such as Italy, are beginning to introduce them, too," he says.

"We see European growth continuing to be strong, but we also see the explosive growth opportunities in Asia. A little further down the road, we see more interest in the US, but to jump-start the industry you do typically need some government policy or regulations to kick-start it. Over time, you wean yourselves off those subsidies to leave you with a viable industry."

"The market is thriving," agrees Don Buchalski, senior marketing specialist for Dow Corning's solar business. "The industry is striving for a concept called 'grid parity', where solar energy becomes an economically viable alternative relative to standard sources of electricity. Innovation is helping us to achieve that goal."

Enhancing processes and technologies is essential to make solar a viable option, he adds. Even during the downturn, investment in innovation and research and development (R&D) is essential to improve existing technologies (see below).

Dow Corning is working on a propriety technology that uses silicones instead of EVA or PVB. "If you don't use the right technology, you can negatively impact performance. Our silicones don't have that impact," says Buchalski.

Silicone polymers are inherently stable to ultraviolet (UV) light and do not break down over time, he says. Over time, solar panels tend to degrade because of UV light, so conventional encapsulants require UV blockers to protect the module. This reduces efficiency as the UV can't get through to the cell.

Dow Corning introduced the technology about two and a half years ago, scaling it up to full-size solar panels a year later. The full commercial launch followed in late 2009.

"We're also looking at the curing speed, which is much faster than the incumbent technologies," adds Buchalski. "By doing this, we're basically increasing the production of a solar facility and getting more modules out of the same assets. We're also able to cure at lower temperatures, which therefore reduces energy consumption."

EVA cures in around seven to 10 minutes, he says, meaning an overall production cycle of 15 minutes. In contrast, the curing time for Dow Corning's silicone material is 90 seconds, although the company hopes to cut this to 60 seconds. Currently, the entire cycle takes about three minutes, he says, with a target of 90 seconds within the next two years.

Solutia's Nichols also points to the importance of increasing the efficiency of the modules and specifically the launch of its Saflex PA27 reflective material earlier this year. This, he says, reflects light back through the module that is not initially absorbed by the various layers.

The increased emphasis on green issues and the push for cleaner, more efficient energy sources is fueling significant growth in the solar PV market. Although solar technology debuted several decades ago, it is only now starting to show signs of fulfilling its potential.

The industry faces hurdles in its development but, besides the volatile raw material costs, lack of subsidies and relatively slow uptake, the rapid growth potential suggests that the future for PV - and indeed, encapsulants - is bright.

Read Doris de Guzman's Green Chemicals blog for the latest on alternative processing and sustainability issues


Some €1.24bn ($1.53bn) needs to be invested in research and development by Europe's photovoltaic (PV) industry over the next three years to improve competitiveness with established, conventional energies, says the European Photovoltaic Industry Association (EPIA).

This would help to cut production costs and improve the connection between electricity grids and PV systems, says the EPIA.

It would contribute 12% toward EU electricity demand by 2020. The private sector would provide nearly 60% of the funding.

By: Andy Brice
+44 20 8652 3214

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