Boom Times Ahead for Solar Energy?

December 17, 2008 – Vol.13 No.39

BOOM TIMES AHEAD FOR SOLAR ENERGY?

Dropping solar prices plus a solar friendly president-elect plus new solar technologies could equal a tidal wave of clean energy.

First the supporting news.

Dow Corning and its joint ventures Hemlock Semiconductor Corporation and Hemlock Semiconductor LLC (together known as Hemlock Semiconductor) have announced a multibillion dollar plan to supply the global solar and electronics industry with additional silicon. The gutsy and timely move could add as much as 34,000 metric tons of polysilicon per year to the world supply chain.

The investment will include an expansion of the company’s current polysilicon facility in Hemlock, Michigan and a completely new silicon-making shop in Tennessee.

Up to $1 billion will be spent to expand current operations in Michigan to add up to 13,000 metric tons of capacity at the site. For the job-hungry state up to 300 permanent new jobs, as well as keep more than 800 construction workers busy during construction, which, by the way, will start immediately. The Michigan expansion is expected to begin supplying polysilicon in 2011.

Hemlock Semiconductor LLC's new production facility in the Volunteer State will be built in Clarksville. Initially, the Tennessee site will have the capacity to manufacture approximately 10,000 metric tons of polysilicon but have the ability to expand production up to 21,000 metric tons. Upon completion of the initial investment, the Clarksville site is expected to employ more than 500 people, and will employ up to 800 when expanded. Construction of the site will employ 1,000 construction workers during the next five to seven years. Apparently it takes considerable time to build silicon plants, but like the Michigan project construction will start immediately.

And that’s not all the good news from Dow Corning and its Hemlock ventures. The company will also begin manufacturing high purity monosilane, a key specialty gas used to manufacture thin-film solar cells and liquid crystal displays (LCDs). This investment will include the construction of a new plant next to Hemlock Semiconductor Corporation's polysilicon manufacturing site in Michigan.

The investment in additional silicon supply shows considerable faith in the prospect for growth in the solar sector, considering that the cost of polysilicon is dropping.

According to New Energy Finance’s quarterly Silicon and Wafer Price Index the price of silicon in 2009 will head to lower levels. NEF says “the weighted average price for polysilicon for delivery in 2009 under contracts signed in 2007 and 2008 was $113/kg, compared with $165/kg for silicon for delivery in 2008, a reduction of 31.5 percent.

“At the 2008 contracted silicon price of $165/kg, silicon contributes an estimated $1.52/W to the current crystalline silicon module price of around $4/Watt – or just under 40%. A silicon cost reduction to $113/kg in 2009 would therefore lower module prices for the majority of the market volume that uses contracted silicon by 12 percent.”

New Energy Finance goes on to say that low cost polysilicon,“... may pressure crystalline silicon module manufacturers to reduce their selling prices by more than the reduction in costs in order to retain their edge in the market. New Energy Finance analysis, based on the historic cost experience curve, suggests that current silicon-based solar module prices of $4/Watt could drop to $2.60/Watt by the end of 2009, a reduction of 35 percent, before leading manufacturers started making losses on marginal sales.“

New Energy Finance attributes the plummeting cost of solar in part because of an oversupply of silicon in slow economies combined with unavailable credit to finance new solar projects. But, more interestingly, the growth and popularity of thin-film solar is taking away from sales of traditional crystalline solar products. Some thin-film solar products use the same monosilane gas Dow/Hemlock will begin making. (Other thin-films use chemistries such as copper-indium-gallium-selenide (CIGS). )Thin film solar is favored for large scale projects where available real estate isn’t an issue but overall cost is. Thin-film requires more space for a given output since its solar conversion efficiency is less than monocrystalline silicon photovoltaic cells.

The sentiments from New Energy Finance are echoed and amplified by Solar Plaza, which organizes trade missions to solar manufacturers. Solar Plaza predicts even greater drops in silicon for solar to less than $100/kg, soon. Like New Energy Finance, Solar Plaza says the popularity of thin-film silicon solar is part of the reason but so is the still growing economy of China. There solar photovoltaic industries have continued to grow and flourish with new companies still popping up and throwing a barrage of solar products in the world marketplace.

Solar Plaza thinks only the fit in the solar industry will survive in the new lower cost regime.

So, add the NEF and Solar Plaza inputs together and combine the result with Dow’s new additional silicon supply and the bottom line should be solar prices kept low for some time to come. Good news for the expansion of solar worldwide. (Bad news for companies with high cost structures.)

However, there are three wild cards out there. One would force solar prices up, the others down.

A major government-subsidized solar program from the incoming Obama administration could make solar very popular and in demand making prices rise.

Another wild card is the growing interest of Concentrator Photovoltaics (CPV). Barely a blip on the radar screen now CPV uses a fraction of silicon solar for much better efficiencies than conventional solar. Fewer solar cells needed for the same desired output obviously reduces the demand for solar cells, thus keeping costs down.

Then there’s concentrated solar thermal power (CSP). Will large scale solar projects move away from photovoltaics altogether towards mirrors and solar heated steam to generate electricity?

Altogether it looks as though busy times are ahead for solar. Governments just have to figure out how to get the cash for investments flowing again.

Links:

Hemlock Semiconductor Corporation
http://www.hscpoly.com

New Energy Finance
http://www.newenergyfinance.com

Solar Plaza
http://www.solarplaza.com