June 26, 2006
Solar Silicon Shortage to End in 2008: Executives
By Georgina Prodhan
FREIBURG IM BREISGAU, Germany -- A shortage of silicon, a key material in making solar panels, is slowing the growth of the solar energy sector but the problem is set to ease by 2008, executives told a conference.
Sales of photovoltaic solar panels are growing by around 35 percent every year as more countries implement incentives for this source of renewable energy, and solar panel producers are struggling to keep up with demand.
But volumes of silicon produced for the $15 billion a year solar sector are rising and solar cell makers say they will be able to go a lot further toward meeting soaring demand caused by a need for cleaner energy, record oil prices and government subsidies.
The chief executive of Deutsche Solar, the silicon wafer arm of Germany's SolarWorld, told an industry conference in this southern German town that temporary materials shortages were normal for such a fast-growing industry.
"The silicon shortage is not new. If you have growth of 35 percent, as we have had and as we expect for the next 5 years, you will have bottlenecks," Peter Woditsch said.
He said he expected silicon production to more than double in the next two years as companies such as Hemlock and MEMC of the United States and Germany's Wacker Chemie expand their production capacity.
His comments may help ease concerns among investors in the solar sector. Solar wafers, cells and panels maker SolarWorld from Germany said in May it was sold out for 2006 and 2007. Its shares, even though they are up 160 percent in the last 12 months, are down 38 percent since the May warning.
Silicon is the key ingredient in a photovoltaic cell that transforms energy from the sun into electricity.
Solar cell makers currently compete with the electronics sector for silicon supplies, with about half of the 40,000 tonnes expected this year to go the solar industry.
Makers of microchips need smaller amounts and greater purity of silicon, and are prepared to pay more for it than solar companies are.
Solar companies have responded by cutting the amount of silicon they use by slicing silicon wafers more thinly, slicing silicon ingots more efficiently with less wastage, or developing new technologies that require less silicon or none at all.
One of the companies aiming to avoid silicon is Shell Solar, which pioneered so-called thin-film technology and is betting on a variant based on copper indium di-selinide (CIS).
"CIS is at least as good as polycrystalline silicon," Franz Karg, the company's head of photovoltaic development, told the conference. But he admitted CIS was not yet commercial.
Germany's Wuerth Solar started mass production of CIS thin film a year ago and says it will be producing at full capacity, churning out 200,000 modules annually, by the end of the year.
Bernhard Dimmler, the company's head of technical development, predicted the technology could be producing solar power as cheaply as 0.5 euros ($0.6) per watt by 2015. This compares with around $2.30/watt for solar cells now.
The traditionalists like Deutsche Solar, however, say they are not wasting time and money on reduced silicon technologies when traditional silicon solar panels continue to fall in price by between 5 and 10 percent every year.
"Silicon is available in 25 percent of the earth's crust, so there is no need for a silicon shortage," Woditsch said.
(Additional reporting by Lucas van Grinsven in Amsterdam)