Solar shingle business heats up

No sooner had Dow Chemical Co. ended production of its Powerhouse solar roof shingles than Tesla Motors Inc. CEO Elon Musk announced he was getting into the market.

Musk said “solar and batteries go together like peanut butter and jelly.”

A $750 million factory is under construction in Buffalo, N.Y., where Musk's pending acquisition, SolarCity Corp., will manufacture a product similar to the one Dow just dropped. The solar shingles are integrated into the roof — with no mounted, tilted panels — and serve as both the top of the building and a source of clean energy.

The exit of one industrial titan and the apparent arrival of a billionaire entrepreneur shows the commercial effort to harvest the power of the sun is continuing on a “natural progression,” according to Integrated Solar Technology LLC CEO Oliver Koehler.

Based in Port Chester, N.Y., and in the market for two years with solar shingles and tiles, Integrated Solar Technology does business as SunTegra. Koehler said the company is benefiting both from Dow's departure and Musk's vision for roof-integrated solar panels to generate enough electricity to store in a home battery that can power both a home and an electric car.

“The solar market has been growing 20 to 70 percent since 2003-2004,” Koehler said in a telephone interview. “We're now in a phase where we have consolidation and more differentiated products. The market is large enough that solar shingles and solar tiles can find their place and I think we'll see other more specialized products increasingly get into the market as it continues to grow.”

Some market watchers heard echoes of a rustbelt failure in Musk's announcement about roof-integrated solar shingles. However, Koehler thinks Midland, Mich.-based Dow's problems were linked to using copper indium gallium selenide (CIGS) solar cells, as opposed to conventional crystalline silicon.

“The industry has interpreted Dow's exit from roof-integrated solar shingles as signifying a problem with solar shingles. But really their exit is due to a failed technology and product strategy,” Koehler said. “They focused on an immature thin-film technology that requires huge scale in order to be made cost effectively.”

Chris Fisher, product development leader of photovoltaics for CertainTeeed Corp., agreed. The Malvern, Pa.-based subsidiary of building materials maker Cie. de Saint-Gobain makes roof-integrated solar shingles and tiles called Apollo II.

“The primary difference between the Dow and CertainTeed products is that Apollo II uses industry standard components for the solar module, which allows Apollo II to shift with the market and take advantage of ongoing cost, efficiency, manufacturing and technology improvements driven by the broader industry,” Fisher said in an email.

Dow “put together an interesting product,” Koehler added, but at about $6 per watt, it cost around 50 percent more than competitors.

“They really priced themselves out of the market,” Koehler said. “Despite their best efforts, they were able to get a good amount of customers across the U.S. But they were never able to get close to the scale they needed to cost effectively produce the product.”

Bright spot

SunTegra and CertainTeed sales started picking up as soon as Dow announced in July that it would stop taking orders for its solar shingles.

“They spent four years developing a lot of good customers and we've been contacting them and a lot have switched to our product,” Koehler said. Customers include roofers, homebuilders and companies that sell home improvement products. “It's great. We can offer them a lower price than Dow and more performance.”

SunTegra took a lower-risk technology strategy with monocrystalline solar cells, Koehler said. They tend to be more uniform in appearance, a little more efficient and a little more expensive than multi-crystalline solar cells. CertainTeed also uses monocrystalline solar cells.

For SunTegra products, a solar laminate with a polyester-type back sheet adheres to a glass-filled polymer composite frame with high UV stability. The plastic in the frame allows SunTegra to get the shape it wants, while the non-conductive plastic eliminates the need to individually ground each panel to meet national electrical code for exposed metals.

Two other features differentiate SunTegra, Koeheler said. He pointed to corner connections with shorter cables, which avoid problems with long cables getting pinched as they're fastened to the roof, and a patented ventilation system at the front of the solar shingles, which reduces the temperature underneath the panels.

“Any solar panel will operate less efficiently at higher temperatures,” Koehler said. “An integrated panel will operate about 5 percent less efficiently. Our products will operate about 2 to 3 percent less efficiently. So we have some energy savings there though our TegraVent technology.”

At peak power, SunTegra shingles, which have exposed areas of roughly 52 inches by 20 inches, generate 100 watts each. Smaller tiles, which are about 52 inches by 14 inches, put out 67 watts. CertainTeed's Apollo II shingles and tiles, which are both roughly 46 inches by 13 inches, have maximum power outputs of 60 watts, according to company data sheets.

“For a typical home to power 60 to 80 percent of the home's energy use, you will need about 50 to 70 of our solar shingles for about 5,000 to 7,000 rated watts,” Koehler said. “For most homes, if you covered about 25 percent of the home's available roof space with solar you'd be supplying most of the energy used.”

Welcome Musk

Musk said he is acquiring SolarCity, which is run by his cousin CEO Lyndon Rive, in an effort to create the world's leading sustainable energy company. He revised his master plan on July 20 and the No. 1 goal now is the integration of energy generation and storage. The vision is to “create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world.”

The 1.2 million-square-foot, taxpayer-funded Buffalo factory is expected to be operating after the first quarter of 2017 with the capability to produce 10,000 solar panels a day. Koehler said it's “very positive” for SunTegra that Musk and SolarCity say they are going to focus on roof-integrate products.

“We think that really underscores our product strategy and gives us more credibility and awareness for integrated solar products,” he said. “We agree with his product direction and we think him bringing products to the market will be good for business.”

SolarCity will use a hybrid cell technology developed by Silevo, which it acquired two years ago, that is made with a crystalline substrate, thin-film passivation and a layer of a semiconductor oxide. Musk has described it as “the best technology out there for high-efficiency, low-cost solar panels, and at the same time, dramatically improving the aesthetics of having solar panels on your roof.”

Musk and Rive have said SolarCity plans to go after installers who replace some 5 million roofs a year as well as new construction.

SunTegra's products are made by contract manufacturers in Indonesia and Mexicali, Mexico.

“Even if you manufacture in the U.S., most of the solar materials are still made in Asia. So Indonesia was a good place to source a lot of those materials but we did want to do a final assembly closer to home to ensure the quality,” Koehler said. “Our current operation strategy has worked quite well for us.”

To date, SunTegra has installed panels in eight states and Ontario, Canada, through a network with 30-plus dealer partners. The project in Canada put solar shingles on the first net-zero house in London, Ontario, which means it was built to generate as much energy as it consumes.

Market outlook

The U.S. solar market is set to grow at a pace of 119 percent this year, led by utilities with strong growth in the residential and commercial sectors, according to the Washington-based Solar Energy Industries Association.

Solar accounted for 26 percent of all new U.S. electric generating capacity in the first half of 2016, according to a market report by SEIA and GTM Research. Another report says there are now more than 1 million operating solar photovoltaic (PV) installations, representing 27.5 gigawatts of capacity. A gigawatt generally solar powers 200,000 homes, SEIA says.

By 2021, solar is expected to account for more than 6 percent of U.S. electric generating capacity compared to just 0.3 percent at the beginning of this decade, SEIA adds.

“It's still just the tip of the iceberg,” Koehler said. “If you look at peoples' growing demand for electricity, growing populations, as well as the real issues with fossil fuels and the accelerated pace of global warming, solar is going to have to be a big part of the mix. The real question is will it be 50 percent of electricity generation or 90 percent. Either one of those is a big number.”

Globally, the building-integrated PV market for solar products is projected to grow from $3 billion in 2015 to $9 billion in 2019 and then $26 billion by 2022, according to RnR Market Research, which is based in India and has U.S. offices.

Even though Dow shuttered its production, a company spokesperson said the business would still play a role in the surging solar market by transitioning the Powerhouse platform to a licensing business model and retaining technology expertise to identify global opportunities and develop materials, such as encapsulant films.

Encapsulants protect solar cells and circuits from heat and weather, Koehler said. Along with SunTegra's polymer composite frame, which also acts as the mounting system because it attaches directly to the roof with a screw, the two components make plastics a key enabler for solar products, he added.

“Those are really important parts of the technology and will help solar panels operate more efficiently and longer,” Koehler said.