The Dow Chemical Company
) is reported to have acquired NuvoSun, a thin-film solar
firm. NuvoSun develops Copper Indium Gallium Selenide
(CIGS)-based thin-film solar cells, which have a much higher
absorption coefficient than the most prevalent silicon cells.
Although the CIGS based PV cells are not as efficient as the
silicon based cells, they are closing the gap quickly.
The fact that PV cells based on CIGS semiconductor are much
thinner than the silicon based ones allows them to be more cost
effective due to the lower cost of materials and fabrication
involved in manufacturing. Dow's
integrates these cells in the asphalt shingles. The lower cost CIGS
solar cells that NuvoSun is working on can help Dow tap the rapidly
growing solar rooftop market more effectively.
See our complete analysis for Dow
According to the Solar Energy Industries Association
(SEIA), the U.S. domestic PV installations more than doubled
in 2010 and then again in 2011. In 2012, PV installations are
estimated to have grown at a rate of 70%, almost five times the
expected growth rate of 14% in the global market. The rapid growth
has largely been fueled by lower prices of PV modules due to
overcapacity in the industry. However, lower utility bills leading
to positive returns on investment and government subsidies are also
responsible for the sharp growth seen in the segment.
The installations in the residential segment grew at the rate of
12% q-o-q during the third quarter of 2012. This segment has been
the most stable in the U.S. market. Going forward, we see the
positive trend continuing as the manufacturing costs of solar
panels decline and technology driven enhancements in energy
conversion efficiencies make solar power a competitive alternative
to coal and gas.
Dow is seeing quick growth in the rapidly growing Building
Integrated Photovoltaics (BIPV) market. Dow's
integrates thin-film CIGS photovoltaic cells right
into standard asphalt shingles. In December, Dow announced a
major expansion of its
solar shingle availability to homeowners in New York,
Connecticut, Maryland, Massachusetts, D.C., Louisiana and Michigan.
It is expected to expand further in 2013, as homeowners
increasingly adopt the idea of solar rooftop for its economic
viability in regions of high utility tariffs.
Moreover, we expect further development and improvement in the
deposition methods used for thin-film PV cells by NuvoSun that will
allow much lower cost per watt going forward. This will not only
mean higher margins for Dow's
business, but it can also lead Dow to gain a larger share of the
overall solar power market.
We currently estimate Dow's coatings and infrastructure segment
market share to remain stable at around 6.7% over the forecast
period. However, if the company is able to better tap the rapidly
growing solar rooftop market with more efficient products and
increase its market share to around 10%, this would imply 10%
upside to our current
$33 price estimate
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