First presentation

Technology & Strategy on

Presented by,
Miguel Van den Bogaert
Kannan Ramalingam

3/23/2011 Technology & Strategy 1

Evolution of the solar industry
 1883: Charles Fritts made scientific
discovery of solar power
 1954: Bell Labs
- Discovery of semiconductor wafer
diodes generate voltage at light
exposure (space devices)
 1980’s: silicon p-n junction solar
cells
- By large semiconductor companies
- But: small-scale & low-power
consumer device (calculators)
 Large scale in the early 90’s:
1) Peak-load reduction
2) Reduce transmission &
distribution losses


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


Brief company’s history
 Started as a glass company, created by Harold
McMaster (physicist)

- 1948: founded Permaglass; shatters in small pieces
when 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 North
Partners and renamed First Solar (production
capacity > 20MW)


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)


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)


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


Sources of Innovation: Porter’s diamond
 Factor conditions:  Firm Strategy,
- Rise of interest in structure and
renewable energy rivalry:
- Price of fossil fuel - Focus on single
- Inexhaustibility of the
technology ( CdTe)
sun - Low manufacturing cost
- Rich subsidies - Solar industry relies on
 Related and
subsidies
supporting  Demand conditions:
industries: - Developing countries
- Semiconductor
business
- System-setup sector


Value Chain
Solar panels= Technology push

Scientific
discovery of Manufacturing
Invention of Marketing
solar power (at. lowest
solar panels (subsidies)
(in 1883 by cost possible)
Fritts)


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


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


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


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

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

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”


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 Technology & Strategy 16

SOLAR INDUSTRY MARKET
SHARE
13% First Solar
Suntech
7% Sharp Electronics
40% Qcells
Yingli
7%
JA Solar
SunPower
7% Kyocera
Motech
5% Gintech Energy
4% 5% Others
4% 4% 4%


ENTRY STRATEGY CATEGORIES
 FIRST MOVERS
GE (General Electric)
 EARLY FOLLOWERS
Kodak
Monosolar
Matsushita and Ametek
 LATE ENTRANTS
SUnTech
Sharp
Qcells


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

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

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

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

THANK YOU
&
QUERIES???
Visit our blog on First Solar at:
http://innovtechnovision.blogspot.com/


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