The consequences of a silicon shortage are limiting the growth of the industry. At some point over the next five years, the solar panel industry will overtake the chip sector. But first there needs to be more output of polycrystalline silicon, the cornerstone material used to produce solar cells that harvest renewable energy from light rays.

Polysilicon isn’t just needed for solar cells. It’s also used in the production of semiconductor devices used in computers, cell phones and other electronic applications in addition to the quickly growing solar energy sector. It is taking time for facilities to increase production to fill the demand, and the shortage is expected to continue until 2010. In the meantime, prices are reflecting the supply problem. In five years, the price for polysilicon has skyrocketed from $40 per kg in 2003 to as much as $400 per kg recently.

The demand for polysilicon is still tight, but the bottleneck may be loosening with a number of new facilities rushing in to increase production. Hemlock Semiconductor Corporation has begun production at its new polysilicon facility that will nearly double its output of polysilicon. Its new facility is part of a $1.5 billion expansion at the company’s Hemlock site and will produce approximately 9,000 metric tons of new polysilicon capacity. That will bring the company’s annual capacity to approximately 19,000 metric tons by the end of this year, making it the largest single polysilicon facility in the world. “Delivering polysilicon from our new facility as quickly as possible was essential to meet our customers’ expectations,” said Hemlock Semiconductor President and CEO Rick Doornbos.

Customers who want to advance solar technology throughout the globe want additional quantities of silicon feedstock, said Mr. Doornbos. In April, Fluro Corporation, a Texas-based company, announced it had won a contract to help build a $1 billion facility in China that will produce at its completion next year 15,000 metric tons of polysilicon per year. Currently, the entire worldwide production is polysilicon is about 100,000 metric tons annually.

Via press release, Fluor, Cleantech; image from HSC

Comments (2)

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written by Bob Wallace , June 10, 2008

The problem seems to be that there is an upcoming surplus of silicon. Too many companies have jumped into production.

The oversupply is expected to bring down the price of panels within the next few years.

Rich
written by Richard Davine , June 14, 2008

Better to have too much than not enough Bob. For a commodity that went up in price 10 fold over a short time I'd jump on the bandwagon too.
I'd very much doubt over production is possible in such a rapidly growing sector.
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