Solar Frontier, the Japanese CIS (CIGS) thin-film panel manufacturer, is planning to cut the solar panel production cost by 20%. The company will turn to use a more efficient production process so that the material costs could be reduced.

Bloomberg interviewed Solar Frontier CEO and president Atsuhiko Hirano, revealing that the CIS producer is targeting at lowering the manufacturing costs at its 150MW Miyagi fab from US$0.5/W to US$0.4/W within two years. Excluding depreciation, the costs could be cut down to US$0.3/W ultimately. The cost cut will help the company stay cost-competitive over the global solar market.

Large Chinese panel makers reached in-house production costs of US$0.42/W~US$0.49/W in the first quarter this year, according to Bloomberg New Energy Finance, while average selling prices for those companies were US$0.58/W~US$0.6/W. To be more competitive, Hirano said that the Miyagi plant, which has a smaller production capacity than the 1,000MW Miyazaki fab, is ideal for increasing the production efficiency.

Solar Frontier would overhaul the Miyagi plant’s production line with a new module structure, reducing the manufacturing process from 32 hours to 24 hours. The more compact process will help reduce material costs so that the total costs would also be slashed as Hirano expected.

Japan is one of the most vibrant solar markets in the world. As the FiT scheme for renewable energy resources, which was initially introduced in July 2012, to be gradually cut, the nation’s market has been shifting from utility-scale projects to small-scale, residential projects. Lower costs and falling prices of PV systems are crucial for a solar company to compete among this market.