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Wednesday, 6 July 2011

Chinese Solar Companies Thrive on Manufacturing Innovations

Technology Review
July 4, 2011

Five years ago only one of the 10 largest solar cell producers was based in China. But by last year, four of the top five were based there, and each is growing fast: all four doubled their production last year. It's widely believed that this success is due to low labor costs, but Stuart Wenham, CTO of the largest solar cell maker in China, Suntech Power, argues that the real causes are advances in manufacturing technology that have improved solar cells' performance and cut costs.

Labor accounts for just 3 to 4 percent of the cost of making solar panels. Other factors, such as materials and the cost of equipment, are more significant. And as a result of increased automation over the last few years, labor costs are going down. According to Wenham, in 2008 Suntech needed four workers for each megawatt of production capacity. Last year, it only took 1.49 workers to make the same amount. "Why would Suntech be doing this if their key advantage were low labor costs?" Wenham asks. U.S. energy secretary Steven Chu came to share Wenham's view last year, after he visited Suntech's main plant. "It's a high-tech, automated factory. It's not succeeding because of cheap labor," he said.

Wenham says the top Chinese companies have been particularly good at identifying promising technologies—often concepts and prototypes that have been languishing in labs for decades—and finding ways to produce them at a large scale. For most of the last two decades, the solar cells that set world records for efficiency were made by researchers at the University of New South Wales in Australia. "They were trying to commercialize [that technology] the entire time," he says. "It took Suntech to turn those laboratory processes into production processes."
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