XsunX CEO Tom Djokovich: Why crystalline silicon solar's days are numbered

Within the burgeoning solar power industry, a technology war is underway: crystalline silicon vs. thin film cells. Silicon may have the upper hand, but XsunX CEO Tom Djokovich says not for long.

What are the first words that come to mind when you think of solar power?

Brilliant? Inefficient? Logical? Expensive?

Tom Djokovich believes that all those words are fair -- which is why he and his company are working to turn the negatives into positives.

Djokovich is the CEO of Aliso Viejo, Calif.-based solar firm XsunX, and his company's claim to fame is a thin-film photovoltaic solar process that takes inspiration from the hard drive industry.

Yes, the hard drive industry -- that hardware-based consumer electronics sector that, under pressure from ever-thinning margins, is in the midst if reinventing itself as a services-based business.

XsunX says its thin-film CIGS ("copper indium gallium selenide") solar cells, branded CIGSolar, are manufactured in such a way that allow them to be price- and performance-competitive with the crystalline silicon solar cells on the market, which currently dominate the global market at 80 percent share.

The company's manufacturing process holds promise. Will it succeed? I sat down with Djokovich to find out.

SmartPlanet: XsunX has a unique manufacturing process that differentiates you from the rest of the industry. Tell us about it, and how the company got started.

TD: We were formed right at the end of 2003, beginning of 2004 with a couple of patents for the development of semi-transparent solar cells. We ultimately determined that, while we perfected the technology, it wasn't economically viable to produce them. I think that's still the situation today.

Fundamentally, we were founded on the promise to found new technologies. We've developed a lot of acumen for opaque, amorphous thin-film solar panels.

In 2008 to 2009, we struggled. It was really difficult to find financing. Since then, we've had a technology advisory board -- one of our members is a gentlemen from the hard-disk drive industry, and he suggested to use those techniques to make individual solar cells, rather than full-size panels.

Our chief technology officer, Robert Wentz -- who was our chief engineer at the time -- worked for Global Solar out of Tuscon, Arizona. Robert's background was in CIGS, and we explored these techniques and determined there wasn't any economic viability [in its existing form]. Robert adapted aspects of [hard drive] manufacturing techniques to the CIGS process, and the economics look pretty good if we hit certain metrics.

The fundamental premise was based on the following: first, CIGS has an opportunity to produce conversion efficiency close to crystalline silicon, and is one of the only thin-films that has the headroom to do that; second, the best techniques for producing the highest efficiency CIGS applications -- such as co-evaporation -- have proven difficult to scale. We fundamentally saw an opportunity to adapting these magnetic disk techniques to produce higher-quality layers.

We're not trying to scale the process. We're keeping to those small, laboratory-sized, bell jar-type research structures with a controlled environment.

SmartPlanet: It all sounds good on paper, but how will you challenge crystalline silicon for solar market share?

TD: A lot of crystalline manufacturers are reporting single-digit margins.

We take an approach that is fundamentally different than our competitors. We're focusing on the design of these cells as a replacement for silicon, as close as possible in size and even in conversion efficiency. What we have been offering is an opportunity to essentially say, look, you're currently buying silicon wafers or cells and doing this at a certain price -- what if we can offer an alternative at similar efficiencies at a lower per-watt cost?

It doesn't change the UL rating or economic impact. It allows you to enjoy a larger margin.

There's a boatload of existing infrastructure in place to use that form factor. If you can offer a better alternative, that's the first step to ensuring that you have a fundamentally sound business model.

Secondly, the building of a [new] factory is really capital-intensive. Money's not cheap right now, [so it is easier for solar panel manufacturers to take cells that already fit in their existing production lines]. There are companies that just want to make cells and sell them to a market and move them further up the supply chain.

We earn some licensing fees, pass the equipment through -- we don't want to be considered an equipment manufacturer, and that's why we have a relationship with [Santa Clara, Calif.-based solar cell manufacturer] Intevac -- and focus on making a few cents on every watt of potential power.

Right now we're still in the development stage. We're hoping in the next few weeks to producing our first co-evaporated sample. We have a lot of people that say, "This makes sense, but show us the beef." We're approaching that rapidly, and once that starts happening, we can start herding the flock.

Let's say we produce cells with 12 percent conversion efficiency. There may be some impediment in convincing someone to not buy 14 percent-efficient [crystalline silicon cells] -- but the good news is that the upper [efficiency] limit on CIGS is about 20 percent. We strongly believe we can hit that 14, 15 percent [tier]. It's a very attainable number.

There are definite, substantial economies of scale. Over a five-year period, by introducing 500 megawatts of our CIGS as opposed to 500 megawatts of [crystalline] silicon, that's a $650 million savings.

That's what the market is looking for: a nickel here and a dime there. We believe we can deliver.

SmartPlanet: How do you actually attain that savings, from a manufacturing standpoint?

TD: What happens with most thin-films right now is that you're using highly automated processes to produce large amounts of material with lower efficiencies. So your overall manufacturing costs on a per-watt basis are lower with thin-film, which adds up to lower cost per watt. But you also have lower efficiency, so your costs go up [at the end of the day].

With silicon, you get a higher energy conversion, but your cost is greater. With the CIGS solar cell, we carry over low costs and high manufacturing from thin-film and carry over higher conversions with silicon. When you bring those things together, you hit a sweet spot.

SmartPlanet: You believe you'll be competitive with other types of solar. Can solar power in general actually compete on price with fossil fuels and other types of energy?

On paper, it's a bedtime story I put myself to sleep with every night.

A simple way to explain [the value of solar power] is to do a little research on how much a coal-powered plant costs. The reality is this: the advertised cost of a solar power field over a given period of time -- quite often it's over 20 years -- it's 15 to 20 cents per watt of power. You never hear coal-fired plants talk like that! You can't compete with something built 30, 40 years ago where the costs have already been fully amortized.

I think that we're heading, over the next several years, [to a place] where more analysis is going to come out. If you want to spend $25,000 to put solar on the roof of your home, and you want to just pay your bill every month, there's a big swing to justify that capital investment. It's really, how do we satisfy the long-term power needs of a growing economy? How much does it cost to put these plants up?

I don't see such a disparity that I hear so often from some people who think that solar doesn't make sense. I think it makes a tremendous amount of sense.

SmartPlanet: What about the government incentives that are propping the solar industry up? Some say when they run out, so will the steam from the industry.

TD: You're absolutely right that without the incentives and inflow of capital, it will be difficult to continue growth. The government would be best incentivizing tax structure and quit giving away government money. I don't think subsidies are the good way.

I'm seeing all kinds of reports about solar sales. Granted, it's based on renewable energy requirements in various states -- you've got a lot of utilities that are quasi-being forced to install them, but I don't see utilities complaining, I just see them planning properly: where does a gas-fired turbine make more sense?

This is still a business. That moves up the food chain to attract businessmen and investors, who are always looking for a rate of return. Utilities are kind of technology-agnostic -- if you show them how peanut butter on plywood makes money, they'll invest in it.

I think [solar investment] is slowing because of the credit crunch, but I think the interest in solar hasn't abated. Just access to financing. The utilities already understand that it's starting to make economic sense.

An interesting thing about solar, too: if you put a field in, and put all the infrastructure in place, once it's up and running, the solar panels themselves almost become a disposable component. If three years from now, we're producing 40 percent solar panels at $0.10 a watt, you just pull them out and replace them.

You move into the future and better technology becomes available.

SmartPlanet: You take inspiration from the hard drive industry, but many of those hardware-focused companies are facing difficult business conditions right now. Will you run into the same problem in solar?

TD: The hard disk drive industry 10 years ago used to put big platters of substrate material into large chambers and process in volume and it's this whole concept of scale. By going smaller, we've seen what's happened to the cost of disk drives, haven't we? Improvements in capacity and drastic reductions in price. There may not be the same amount of headroom in solar, but it's directly applicable to solar.

It's a very fractured [solar] market; obviously, there are some big players, but there are a lot of small- and medium-size players that aggregate components and make their own solar panels. All we're trying to do is say look, here's a form factor that controls 80 percent of the market, and it offers the same amount of efficiency and it costs less. Are you interested?

Maybe we'll get usurped by a [company like] First Solar in the long-term. If we took over 10 percent of the existing silicon market, that would be a very sizable production market and a tremendous amount of revenue.

We're hoping to, by year's end, prove the technology to interested parties and enter into agreements with various manufacturers and rapidly move to manufacture and delivery of equipment so that we can start producing revenues in 2011. That's what we're focused on -- connecting those dots.

This post was originally published on Smartplanet.com


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