Category Archives: Energy Electronics

GaN and SiC-Based Power Electronics Set to Deliver Big Value in Distributed Solar Installations

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Inverters’ importance in the solar market has only been emphasized by the oversupply and price pressure that has driven down the cost of components around it. Suppliers are doing their part to reduce costs as well, with incremental improvements in efficiency and component count reduction, but the holy grail for solar inverters is the implementation of wide bandgap semiconductors – specifically, silicon carbide (SiC) and gallium nitride (GaN). They offer the promise of higher efficiencies, as well as superior thermal management – critical for temperature-sensitive applications such as solar inverters. GaN and SiC offer indirect cost savings in addition to direct performance benefits – superior thermal conductivity of SiC over Si reduces the size of the heat sink in inverters. Higher switching frequencies of SiC and GaN reduce the failure probability and count of passive components, while high power density enables footprint reduction and installation cost savings. The question is, what is the opportunity for introducing diodes and transistors using these higher cost, but higher performance materials?

Microinverters offer the best absolute $/W premium for SiC or GaN  diodes with Si transistors (SiC + Si, and GaN + Si, respectively) and represent the ideal niche entry for these devices in the residential segment. However, string inverters are the most attractive segment for price premiums relative to silicon with the introduction of SiC and GaN transistors in addition to diodes. Acceptable string inverter price premiums of all-GaN and all-SiC systems versus all silicon top $0.10/Wp in the residential market segment enabling price premium of greater than 20% relative to silicon-based inverters. Importantly, string inverters enable ready access to the growing commercial and residential segments, delivering both volume and price in the two segments set to dominate new solar installations in the developing world for the coming years.

Notably, SiC diodes are already hitting the market through microinverters. As GaN diodes and SiC and GaN transistors become more commercially available, they should take the same path – and will have a similarly beneficial impact, while enabling discrete device developers to penetrate the large-scale inverter market at a healthy 10% price premium. As devices fully featuring GaN and SiC hit the market, they’ll hold the biggest competitive advantage in small systems – microinverters and small string inverters, for residential and commercial solar installations – with a powerful proposition: lowering the levelized cost of energy (LCOE) and increasing margins on electricity sold through PPAs.

The race is on to position for technology-driven differentiation in these growing markets. Little surprise to see inverter mainstay Advanced Energy acquire REFUsol on this basis given the latter’s valuable SiC-based inverter IP and products. Though the payback will take some time, the $77 million Advanced Energy paid for that IP will look like a bargain down the road. Others would be wise to take note of this and ABB’s similarly SiC-related acquisition of PowerOne and act accordingly.

Source: Lux Research report “Reaching for the High Fruit: Finding Room for SiC and GaN in the Solar Inverter Market” — client registration required.

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Outlook for Sapphire Dim at Photonics West

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At Photonics West in San Francisco, much of the buzz was around turmoil in the sapphire crystal industry. Following the recent oversupply of sapphire substrates, sapphire crystal growers largely sat idle at the conference. We spoke with Gavish, Guizhou Haotian Optoelectronics Technology (HTOT), and Zhejiang Shangchen; and they all said that they are unable to compete in price with the two-inch sapphire substrates from the numerous suppliers utilizing turn-key equipment from GT Advanced Technologies (client registration required), and have chosen instead to focus on four-inch and six-inch substrates.

HTOT and Zhejiang Shangchen are also known customers of GT Advanced Technologies, a supplier of turn-key sapphire crystal growth equipment. They are being undercut by peers in Asia with presumably similar turn-key equipment, indicating either low barriers to entry for two-inch sapphire growers or the learning curve necessary to scale to larger diameters. As these sapphire manufacturers look to differentiate with large diameter substrates, expect prices for four-inch and six-inch substrates to follow the two-inch trend and fall rapidly, and for the major players – Rubicon (client registration required), Saint Gobain, and Monocrystal – to lose market share.

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Steven Chu steps down at U.S. Department of Energy, leaving a mixed legacy

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Last week brought the widely expected news that Steven Chu will be stepping down as Secretary of the U.S. Department of Energy (DOE). Chu has been a hero to scientists and clean energy advocates, but on his watch the DOE has made some questionable decisions, particularly from a commercialization and business standpoint. That said, Chu has also laid the groundwork for a strong legacy of energy innovation – if those initiatives produce results, he may justly be regarded as one of the most important DOE Secretaries since the department was created in 1977.

Unfortunately for Chu and DOE, the name “Solyndra” will appear in the first paragraph of most appraisals of his term – the DOE’s ill-fated $535 million loan guarantee (client registration required) to the Silicon Valley solar panel maker became a rallying cry for opposition to the Obama administration’s clean energy investments. Other recipients of DOE loan guarantees and other largesse, including A123 Systems (client registration required), Beacon Power (client registration required), EnerDel, and Abound Solar (client registration required), have also filed for bankruptcy. While there was a case for deploying government funds when private investors largely stopped lending during the financial crisis, the DOE loan guarantee program mixed investments in reliable projects, like solar power plants using established technologies, with funds for firms like Solyndra that faced steep technical and market risks. It was highly likely that several would fail, but DOE either underestimated the risks or wasn’t well prepared for the political fallout (or some combination of both), and arguably hurt the cause of government support for new energy technologies – previously a point of bipartisan consensus.

Chu’s DOE also showed commercial naïveté in its claim that it could help bring 1 million electric vehicles to U.S. roads by 2015 – and President Obama personally cited Chu’s assurances in defending the administration’s focus on electric vehicles. While the DOE target included plug-in hybrids (PHEVs) like the Chevy Volt, as well as all-electric vehicles (EVs), only around 250,000 such vehicles will realistically be in operation in the U.S by the end of 2015 (see the report “Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market” — client registration required). Anemic sales to date of PH/EVs also belie such optimism, and just before Chu stepped aside, DOE began publicly backing away from the goal – suggesting that DOE’s EV enthusiasm may not have been the best use of its resources.

What’s more, DOE has largely been on the sidelines of the most important energy story of Obama’s first term – the phenomenal boom in domestic gas and oil production, driven by technologies like hydraulic fracturing. To some extent that’s only right – by the time the technology (which had benefitted from DOE support in decades past) was ready for prime time, the industry hardly needed further help from DOE. However, given the impact this production will have on the energy and climate picture in the U.S., and the remaining technology and policy needs to help access these resources safely and make the best use of them, it’s surprising how little focus they’ve received (barely meriting a mention in Chu’s review of his term in his resignation letter).

Despite these stumbles, history may well look kindly on Chu’s tenure, because programs he’s championed have the potential to create a generation of impactful new technologies and keep the U.S. a center of innovation in energy. Through the network of 46 Energy Frontier Research Centers, and especially the new Advanced Research Projects Agency – Energy (ARPA-E), the DOE is funding research on really novel technologies with a breadth, depth, and purpose beyond its previous basic science efforts. ARPA-E, in particular, is well-positioned to help fill a void left by venture capitalists that are (wisely, by their financial standards) increasingly reluctant to invest in early-stage energy technologies. If these programs help shepherd along impactful energy technologies that that come to the market over the next decade, they’ll have a greater impact than even a successful Solyndra would have, and will validate Chu’s initiatives.

Given the ups and downs of Chu’s tenure, who should Obama tap to replace him? Some favor another academic, like Shirley Jackson of Rensselaer Polytechnic Institute, or Ernest Moniz of the MIT Energy Initiative, to continue to build DOE’s innovation efforts. Others argue that DOE’s commercial blind spot argues for a businessperson like Duke Energy CEO Jim Rogers. While a course correction is needed, and energy business acumen at DOE would be welcome, a utility executive may not be the best steward of Chu’s innovation legacy (and may sit uneasily atop what’s still largely a scientific agency). A business leader with more innovation experience could serve admirably – GE CEO Jeff Immelt has been floated, though seems unlikely to serve. Otherwise, given the controversies DOE has weathered and the need to defend its budget in an era of sequestration and discretionary spending cuts, a more seasoned politician might also be a wise choice to follow Chu. Someone like former (moderate) Republican governor and EPA administrator Christie Todd Whitman or past North Dakota Senator Byron Dorgan could serve to consolidate Chu’s gains in long-term innovation, but would still be inclined to pivot the agency more toward the pressing issues of the day.

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Thermal Management is a Critical Need and Innovation Opportunity to Drive LEDs Forward

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Cost is the name of the game with LEDs, but most of the time, the focus is entirely on the package. Significant opportunities for cost reduction lie in materials and technology innovation in the balance of system, including thermal management, drivers, and optics. In this respect, today’s technology solutions fall short of the dramatic cost reductions needed to mirror the LED package and alternate solutions are ineffective and uneconomical – presenting opportunities for technology innovation. Based on an LED bulb equivalent to a 60 W incandescent, with a SMD configuration, aluminum based thermal management, non dimmable drivers and standard lenses for secondary optics, thermal management accounts for about 27% of the bulb cost in 2011, or $6.00. While this figure will fall to $3.95 in 2020, that figure will amount to a larger share of the bulb cost, at 36%. The size of the heat sink and the choice of material largely determine the cost – aluminum is the incumbent heat sink material and the cheapest option on the market today. Switching to more thermally conductive materials such as copper can improve performance of the heat sink, but they are currently about two to four times more expensive, and can thus increase bulb costs by 50% or more.

Material replacements with better conductors like copper are unlikely to result in cost savings in the next 10 years, and while active thermal management is a promising approach to cost savings in LEDs, its impact is unlikely to be felt outside of niche, newly enabled, applications. Further opportunities to improve thermal management will be critical for ongoing future LED cost reductions. The share of the cost stack will only rise and serve to cap device capabilities unless the opportunity is addressed.

Source: Lux Research report “Cheaper, Brighter, Cooler: The Need for Cost Reduction Past the Package” — client registration required.

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Automotive LED market ripe for both technology innovation and IP wars

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Osram Opto Semiconductors introduced a new light-emitting diode
(LED) product called the “Oslon Black Flat” for automotive front lighting systems; it boasts LED packaging technology that allows the headlight to function without a lens. Osram claimed that this product offers good light output of about 200 lm at 25 °C and 700 mA operation (compared to a standard headlight that outputs between 150 lm and 190 lm); if operated at 1.2 A it can achieve 270 lm. It’s projected that an efficient headlight can extend the range of an electric vehicle by nearly six miles.

Leading auto OEMs such as BMW and Audi are investing in LEDs for front lighting in their cars to achieve energy and emission savings (and LED aesthetics as an added incentive); as a result; expect to see specific product releases for the automotive lighting segment from major LED makers like Philips and GE as well. However, just as in the general illumination and back-lighting segments the automotive space could provide for a testy IP environment for LEDs. In fact, LG Electronics and Osram Opto engaged in a IP infringement battle over LED patents for automotive headlights in Korea. With heavyweights wielding massive patent portfolios, this space will be as hostile to start-ups trying to enter as any other LED market. However, this challenge also presents an opportunity for developers of balance of systems such as drivers and thermal management technologies that are in need of more efficient solutions – the unique needs of automobile applications could provide opportunities for companies that want a new play in the LED space.

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LED Outlook Challenges Earnings and Exits for Manufacturers

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Investment continues to flow to new LED entrants (Client registration required). But more established firms are still struggling to find their footing amid a heavy market oversupply. We expect the oversupply to abate after 2011 (Client registration required), due partly from increased demand fueled by China’s recent policy announcements (Client registration required). But low margins and anemic growth still weigh on major industry players.

This was underscored by earnings releases last month from Semileds, Cree, Veeco, and Philips do not bode well for a recovery. Semileds reported second quarter earnings with a net loss of $7.1 million on revenue of $7.9 million, down from $10 million the same quarter a year ago. More concerning, however, was Semileds’ outlook for the third quarter, where it expects a higher net loss of $7.5 million on $7.9 million to $8.9 million in revenue. Cree’s Q3 results delivered a drop in profit by half to $9.5 million on revenue of $284.8 million compared to the same quarter a year ago, while Veeco’s LED and solar EBITA dropped four-fold to $17.5 million on revenue of $96.0 million compared to the same quarter a year ago. Philips, meanwhile, saw adjusted EBITA for its lighting division fall by nearly half to €110 million on revenue of €2 billion compared to the same quarter a year ago.

Amidst these developments, cost-cutting has come into fashion. Osram, for example, is reportedly planning its first LED manufacturing plant in China in an effort to reduce manufacturing expenses. This move is too little too late, however. Unless Osram is planning to introduce its GaN-on-Si technology (Client registration required) at the new plant, it is unlikely to find itself in a better position, given the oversupply situation and the scale of its competitors in China. Although Osram has fared better than its LED peer Philips Lumileds, it’s well-known that parent Siemens is anxious to shed the unit. Indeed, Siemens CFO Joe Kaeser speculated the IPO for its Osram unit – put on hold last year – could be resurrected this fall if the LED market strengthens.

At Philips, CEO Frans van Houten acknowledged the near term challenges presented by the LED transformation, including “higher investments in R&D and selling expenses, as well as competitor pricing pressure.” But he remained convinced of the Lighting Group’s “profitable future.” It’s hard to share Houten’s optimism, however, given that Philips Lumileds has dragged its feet on cost reduction just like Osram. What’s more, Philips has been less aggressive than peers downstream, where companies like GE and Cree are capitalizing on the shift in value. In the end, Philips Lumileds best path forward may be to follow that of Philips Semiconductors, which was spun out in 2006 to form now publicly traded NXP.

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Under the hood with power electronics at CES 2012

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Last month, we flew to Las Vegas to attend the Consumer Electronics Show (CES), the world’s largest consumer technology trade show and the traditional – though waning – barometer of trends in the electronics industry. Amid aisle after aisle of the latest and greatest OLED displays and ultrabook computers, we ferreted out talk of a technology more often found under-the-hood than out-in-front, but no less important or innovative: power electronics.

NXP, a leading semiconductor company, supplies millions of power conversion devices to industries ranging from automotive and aerospace to consumer electronics and wireless. We stopped by its booth and struck up a discussion with application design manager Theo Kersjes on the merits and motivations for gallium nitride (GaN)-based power conversion devices. Theo’s outlook on GaN were far more tempered than wide-eyed start-ups like Transphorm or EPC, but he did argue that the technology has significant appeal for some markets even today, while others are quite distant. NXP is a major automotive supplier, and Theo quickly dismissed any near-term viability for GaN in anything beyond a concept car. While some power conversion developers like Freescale and Fuji Electric or even Transphorm are heralding the emerging EV market as a top target, Theo sees the overbearing reliability requirements and long lead time to integration as major barriers for EV adoption. This diagnosis is likely correct, and what’s more, the haltingly slow development of the EV market will be an additional inhibitor (see the report: Unplugging the Hype around Electric Vehicles).

As for top targets, Theo said NXP sees power supplies – specifically for consumer devices, not large-scale systems – as ripe for innovation. Theo said that size is the main driver, with efficiency an added bonus. The past few decades have seen an astounding miniaturization of devices, but Theo said that the power supply has only managed marginal reductions in size – and thus has evolved to account for an increasing percentage of valuable space. He sees silicon carbide (SiC) and GaN power conversion devices as a partial solution to this “real estate” dilemma. Since these materials are inherently capable of operating at a far higher frequency than traditional silicon-based devices, SiC and GaN enable the use of simpler and smaller passive components such as inductors, capacitors, heat sinks, and electromagnetic interference (EMI) packaging. The resulting power supplies can be one-third the size of those based on traditional silicon. Furthermore, GaN devices have a higher power density, and therefore reduce footprint compared to both silicon and SiC. While advanced active elements enabled by SiC and GaN are eliciting clear interest and development, an additional and currently unmet need is the further miniaturization of complementary passive components. Companies able to navigate or innovate around the laws of physics towards smaller passives will find plenty of customers waiting.

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