As the world scrambles for clean energy technologies, it
appears that solar's day in the sun has finally arrived. But
converting sunlight into electricity through photovoltaic cells
is still an industry in its infancy, and the growing pains are
One major problem had been getting enough polysilicon into
the hands of solar cell and module manufacturers. Silicon
producers quickly whipped out plans for output expansions and
many other new projects were announced. Those same producers
are now concerned that too many of them have signed up to fill
the void. The degree of any oversupply will depend on demand,
of course, but that side of the equation is notoriously hard to
predict, in part because solar installations-still an expensive
proposition compared with other energy sources-are highly
dependent on government subsidies.
Particularly key will be how the two countries at the
forefront of employing solar installations-Germany and
Spain-will adjust future subsidies. German legislators in late
May reached a tentative agreement to cut the so-called feed-in
tariff-basically, a fixed-income security in which the
government buys electricity from solar installations at a fixed
rate that is far above the grid cost-by about 10 percent next
year. It wasn't a welcome development for the solar industry,
but the tariff cut was a lot less severe than originally
Robert J. Dietrich, executive vice president of finance and
chief financial officer of Timminco Ltd., Toronto, one of North
America's major silicon producers, thinks the market could be
in oversupply by 2011 or 2012. That's later than some have
speculated, but Dietrich points out that many of the projects
being planned are by unestablished companies lacking experience
with silicon technologies. As such, start-up delays are
"I would say that if there is an oversupply it will be
pushed out further than what people anticipate today," Dietrich
said, adding that it's even possible there won't be much
oversupply at all, given that demand by that time could be
strong enough to absorb all the extra capacity.
Dietrich sees a bright future for the solar power market,
more so now than ever before because of rising costs for
"dirtier" energy sources, such as oil and coal. "If the price
of fossil fuels continues to rise or stays at today's level,
then grid parity with solar likely is going to appear at a
faster pace than what some people expected a few years ago," he
said. Grid parity, speculated to arrive within the next decade,
is the tipping point at which solar power is cost-competitive
with other sources of energy on electricity grids.
Dietrich sees solar power being increasingly used for
off-grid applications as the cost of producing solar cells and
modules drops. "I think people will come up with packaging
solutions for solar systems that likely will be very attractive
and maybe make it much easier to use for remote locations and
places in developing nations that are starved for electricity
today," he said.
Timminco, through its wholly owned Becancour Silicon Inc.
subsidiary, commissioned its first 3,600-tonne-a-year
solar-grade silicon plant at the start of this year in
Becancour, Quebec, and expects new facilities there to boost
capacity to 14,400 tonnes by the second quarter of 2009.
Dietrich warned of one potential bottleneck for the silicon
industry a shortage of the silicon metal usually used as
feedstock in the production of solar-grade polysilicon.
One such supplier of raw silicon metal is Ferroatlantica SL,
Madrid, Spain. Edward Hopkins, general manager at the company's
Medina, Ohio, office, agreed that a shortage of silicon metal
could materialize, putting price pressure on the whole supply
chain. He puts some of the blame on U.S. and European
anti-dumping action against raw silicon metal from China and
"There is very little investment going on in Western World
silicon metal production at this time," Hopkins said. One of
the few exceptions is New York-based Globe Specialty Metals
Inc., which plans to reopen its Niagara Falls, N.Y., production
facility by late next year to produce about 25,000 tonnes of
metallurgical-grade silicon annually.
"That expansion will help feed U.S. and Canadian demand
increases, while new smelters and modernizations of some older
ones in China will help to push up overall worldwide supply,"
Hopkins said. However, he warned that some inefficient and
highly polluting smaller production facilities in China could
be closed as the government cracks down on energy waste and
pollution. "There are literally thousands of small producers in
China, and the new gain from new smelters vs. the closure of
older ones will be the big question mark," he said.
In the United States alone, demand for raw silicon for solar
applications will increase by more than 20,000 tonnes in the
next three years, Hopkins predicted.
A spokeswoman for Wacker Chemie AG, Munich, Germany, a
manufacturer of polysilicon, said the best remedy for any
supply shortfall in silicon is for the industry to concentrate
on increasing the efficiency of solar cells.