The issue of intermittency is well-known in alternative energy circles. Solar panels don’t work when the sun doesn’t shine, nor do wind turbines when the wind doesn’t blow. But there is a more subtle problem with solar panels that National Semiconductor Corp. (NYSE: NSM) hopes to address with a new chip set it has developed.

Conditions that partially obscure a solar panel, say shade at certain times of the day or bird droppings on the panels, cause the affected cells to produce less electricity than those that are fully exposed to the sun. This mismatch lowers the overall efficiency of the panel and is the condition that National’s chip set addresses.

National already has customers using the chip sets, called SolarMagic.  SunEdison, a division of MEMC Electronic Materials, Inc. (NYSE:WFR), has retrofitted the devices to existing solar panels, and General Electric Co. (NYSE:GE) has embedded the chip sets into some of its solar PV products.

First Solar, Inc. (NASDAQ: FSLR) first broke the $1.00 per watt cost level back in early 2009, and the Q2-2010 earnings report showed that the cost per watt was now down to $0.74.  For further solar energy gains to come in a land that desires to go away from foreign energy sources, the efficiency of modules is going to be just as important as the input costs of each cell.

The competition for this kind of device appears to be coming primarily from a couple of venture-funded companies. One, Israel’s SolarEdge, claims to have developed technology to increase electricity production by 25%. Another start-up, Tigo Energy, offers a similar product that it says boosts efficiency by 20%.

National claims that its SolarMagic product can recoup up to 75% of mismatch losses. No matter which of these companies ultimately prevails, or at least survives, the products they are working on help solve one of the other big problems with solar cells. The conversion rate of sunshine to electricity on crystalline solar cells currently tops out at about 22%, while the conversion rate on thin-film cells is around 10%.  Coupled with these mismatch issues, the efficiency of a solar module is far less than customers might hope for. A solution that does not depend on higher conversion rates could be relatively cheap compared with developing materials and cells that approach, or try to surpass, the theoretical limit of about 33% conversion.

National has the advantage of size over its start-up competitors due to its size, plus a head start on competing chip makers wanting a piece of the action.  Maybe hitting the solar industry can turn around the stock’s 52-week slide of about 10%.

Paul Ausick

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