Photovoltaic Exploration Industry of Daystar Technologies - Assignment Example

Introduction Daystar Technologies is a company which produces photovoltaic solar panels solar panels. The panels are based on a special technology known as Copper Indium Gallium Selenide (CIGS) thin-film. The company has its own customized manufacturing process. Daystar claims that this process increases the cells' efficiency and reduces production costs. Other thin film technologies are: Cadmium Telluride and Amorphous Silicon. But Daystar claims that CIGS has proven to be more efficient. Although thin-film technologies have proven to be cheaper to produce than the standard poly-crystalline silicon panels, they are less efficient and require more space to produce the same quantity of electricity. Daystar Technologies is currently constructing its first large-scale production facility in California. This site is designed to produce 25 MW of solar panels each year. With the growing concern over global warming, solar and other forms of renewable energy have received support in the form of larger investments, government tax breaks and subsidies, in order to make them more competitive. Competitors The photo-voltaic market is growing very rapidly. Daystar mainly competes with the following companies in this industry: Ascent Solar Technologies ( www.ascentsolar.com ) First Solar ( www.firstsolar.com ) Evergreen Solar ( www.evergreensolar.com ) Sun Power ( www.sunpowercorp.com ) Energy Conversion Devices ( www.ovonic.com ) EMCORE ( www.emcore.com ) Other competitors in this category are small division of huge corporations: BP ( www.bp.com ) Sharp Corporation ( www.sharp-world.com/solar ) Kyocera ( www.kyocerasolar.com ) Five Forces Analysis Supplier Power The solar photo-voltaic market has been slowed down by silicon shortages. Mostly photovoltaic systems use purified silicon for their products. Daystar on the other end doesn’t rely on silicon and thus this shortage has no effect on Daystar. Due to shortages the competitors of Daystar are asked to pay more for silicon. The cost of silicon is important as it adds upto 45% of the module’s cost. Hence, when silicon prices rise, Daystar’s competitors either raise their prices or are forced to absorb the costs. The suppliers are also looking at this situation and are coming back with much more bigger facilities to produce more silicon to fulfill the constant demand. All such activities will hurt Daystar as its competitors will be able to supply cells at a much cheaper rate. Barriers to Entry Daystar is in such a category where the initial setup costs are very high. Daystar itself has a very complex manufacturing process. Also the new facility it is building costs in millions of dollars. Hence the barriers to entry are high in this regard. But the profit margin is high too. Also, this category relies on innovation and technology. Daystar has its own CGIS thin film PV solar cell. It competitors heavily depend on silicon suppliers as they have the generic silicon based cells which cost more. As issues related to global warming and alternate sources of energy are becoming the talk of the day, Governments are now supporting such firms. So entry is possible with some aid from the officials. Threat of Substitutes Each firm produces cells based either one of the few available technologies. They may be CGIS based as in the case of Daystar and Ascent or they maybe silicon based. The costs greatly vary depending on the underlying technology. Any customer who will buy such an expensive solution will surely do a survey and some market research, so once a customer has bought a product, he may not switch easily unless a competitor has a breakthrough product and is giving far more efficiency. Also the switching costs are high as new installations and setup will cost the same as the first time approximately. Also the products are though different from each other but for the buyer the main concern is the cost versus the conversion efficiency. Buyer Power Daystar is initially targeting space agencies and rural off-grid applications so that they can be given electrical power off the grid. Hence the buying power of such organizations is huge. But only few such organizations exist hence the buyer volume is low. Such are organizations are relatively lesser sensitive to prices. But heavily demand reliability and stability. Also daystar plans to implement its solution in homes for the common man. Such homes are highly in demand but cost higher than homes powered by the electrical grid. These home consumers are price sensitive. Other substitutes are available for the customer from other competitors of Daystar. Rivalry Innovation and marketing are two key aspects in this industry. With the growing concern over global warming, solar and other forms of renewable energy have received support in the form of larger investments, government tax breaks and subsidies, in order to make them more competitive. The number of competitors is still not very high but with time and looking at the growth rate of this industry, it can be easily said that more and more new ventures will launch as the market is very profitable. Also each new or existing venture can improvise on its technology in its cells and rise against its competitors. The industry is not only targeted to corporate customers but solar cells are feasible for the consumers as well and can be implemented in homes across cities easily. Technology Concentrations Daystar is in the solar cells business. Solar cells absorb sunlight and produce electrical energy. This is known as the photovoltaic effect. Most of the solar cells available in the industry are based on silicon. This is the principal material in the semiconductor industry as well. The majority of the market demand today is fulfilled by these solar cell based photovoltaic cells. With the advancement of technology thin-films have been developed which can be used in solar cells, replacing the classical expensive silicon. The cells based on the think-films are not only cheaper but also provide better efficiency in terms of conversion from solar energy to electrical energy. Thin-film photovoltaic cells have the following attributes: Scalable and low cost of manufacturing Lower material costs Produce more electrical energy in low-light environments and high temperatures. Many thin-film based technologies exist namely: Cadmium Telluride Amorphous Silicon Copper Indium Gallium Selenide Of the three thin-film technologies available, solar cells and modules which are built on the copper indium gallium selenide think films have shown the highest conversion efficiency. Daystar is the market leader in producing high quality CGIS thin-film based photovoltaic solar cells. Daystar is using “monolithic integration” to produce CGIS films on glass substrate. Also Daystar is pioneering in making such films available on flexible media. Such on product by Daystar is TerraFoil. This consists of CGIS thin-films on flexible foils which are low in weight and can be used in Building Integrated Photovoltaic (BPIV) applications. Daystar is concentrating on its CGIS thin-film technology, further enhancing it and giving it new dimensions for broadening application areas. Market Strategy Daystar is an innovator and amongst the market leaders. Daystar is collaborating with firms like ELITE to run awareness programs which will help in convincing executives the importance of green energy solutions. This will help them realize their business needs before time and switch to environment friendly solutions. Daystar has adopted the low-cost high performance strategy. Daystar is working with the Government’s aid and is developing home for people which have built-in energy solutions. These homes will initially cost high but then they are powered through electrical energy from these thin-film photovoltaic cells and not electrical grids. Hence savings increase in the long run. Market Share The solar cell industry is divided based on the underlying technology used in developing modules. The major chunk (93%) is based on silicon. Whereas, the thin-film solar cells only have a small proportion of 7% of the total solar cell industry. Daystar is a leader in the thin-film category only match by Ascent Solar. In terms of revenue, the listing of the market share is: 1. Ascent Solar ( $1M ) 2. Bookham ( $203M ) 3. Daystar Solar ( $60K ) 4. Trina Solar ( $302M ) 5. Ultra Clean Holdings ( $404M ) (As of 2007) Development & Technology Strategy: Daystar has developed its own manufacturing process. This process helps in increasing the efficiency and conversion rate of solar cells and modules produced. Daystar has named this as the “CGIS Monolithic Manufacturing Process”. The whole process is based on the standard process but the Deposition Process is a Proprietary of Daystar. A brief image of the process from the Daystar website is given below: Daystar has a huge team of scientists and engineers who are continuously working to enhance this process and to devise new methods to produce thin-film based solar cells with higher conversion efficiency. Operations Strategy Daystar is a research driven organization. Its top management consists of engineers and people from a background in science and engineering. The operational strategy is simply based on producing in large volumes and offering the product for low costs. Also Daystar is doing strategic management and the new facility being constructed in California which can supply 25MW of energy is a product of this approach. Financial Total Revenue Total Assets Total Costs & Expenses References: Daystar Official Website – (http://www.daystartech.com/) Solarbuzz.com – (http://www.solarbuzz.com/Technologies.htm) Wikiinvest – (http://www.wikinvest.com/stock/DayStar_Technologies_(DSTI)) Yahoo! Finance – (http://finance.yahoo.com/q/in?s=DSTI) SEC (http://www.sec.gov/cgi-bin/browse-edgar?type=10k&dateb=2009%2F3%2F3&owner=include&count=40&action=getcompany&CIK=0001262200) AccessMyLibrary – (http://www.accessmylibrary.com/coms2/summary_0286-973007_ITM) Read More