PHOTOVOLTAICS Polysilicon – the raw material an entire industry depends on. Photo: Wacker Chemie Solar silicon: the new “black gold” When will silicon shortages relax? Established manufacturers are expanding their capacities. New companies are increasingly launching production of silicon and wafers. Headmost: Chinese players. But is this enough? fter the broad overview on cell and module could break up towards 2009 and 2010. “We believe manufacturers in the issue 4/2008, SUN & that the really serious projects will more or less elimi- WIND ENERGY now turns towards the down- nate the silicon shortages. However, an excess of capac- stream products. S&WE surveyed the silicon ities will likely not arise. Market researchers are forecast- industry on the worldwide production sites ing that the worldwide silicon production will reach Aand capacities for 2007 and 2008. In total, a number of 100,000 tons in 2010 and we think that this volume will 29 companies participated in the survey that are either definitely sell”, said Raymund Sonnenschein, CEO of already producing silicon or will launch production be- Joint Solar Silicon, Germany. fore the end of the year. Another 10 companies indicat- ed to launch production after 2009. Major players expanding capacities With the boom of the PV sector, even the chip indus- try’s silicon “waste” that is still useful for solar cell pro- Today, the four largest manufacturers are looking on in- duction fails to meet the demands. In consequence, so- creases of their capacities. U.S.-American Hemlock in lar silicon demand and supply have been dispersing. 2007 and 2008 almost redoubled its capacities from Accordingly, a sellers market has emerged in the last 10,000 to 19,000 tons and is planning an expansion years where manufacturers of downstream products to 27.500 tons until 2010. At Norwegian REC Silicon, were well-advised to enter long-term supply contracts. capacities in the range of 13,500 tons will be added in But in some corners of the sector confidence has mean- Moses Lake (Washington) and Butte (Montana) until while arisen that the bottlenecks in the silicon supply 2009. According to the company, more capacities will 114 Sun & Wind Energy 5/2008 PHOTOVOLTAICS follow before the current expansion period ends. In the Canadian Bécancour, there will be a brand new silicon factory launched. Although the size has so far not been determined, the plant will be of similar dimensions as the production site in Moses Lake, the company in- formed. Expansion has also been an issue for Wacker Chemie from Germany that currently produces a capac- ity of 10,000 tons. Until 2010, Wacker will redouble its capacities to more than 22,000 tons. More defensive expansion plans are held among the established Asian manufacturers. Japanese Tokuyama began expansion of the Higashi plant in the Yamaguchi prefecture in 2007 and plans to go from 5.200 tons to 8.200 tons until the beginning of 2009. High silicon prices attract Asian companies High prices and profit margins have also attracted new companies that are now trying to enter the silicon pro- duction sector. Most of these newcomers come from Asia. “Nearly 60 Chinese enterprises have meanwhile in- vested in polysilicon products and announced that the Ready for wafer production. output would not fall below 300,000 tons per year after Photo: Evergreen Solar expansion”, said Hu Yuncheng, Superintendent of Emei silicon: Supply, Demand & Implications for the PV In- Semi conductor Material Institution. Although silicon dustry” by the U.S.-based Prometheus Institute for Sus- production asks for a lot of expertise, it has only taken tainable Development, the Russian company Nitol two or three years of planning for several new compet- would need more investors for expansion of the 3,600 itors to enter the market and to be able to launch their tons factory. Others fail for reasons of technical imple- production until the end of the year. mentation. “There are dozens of companies that speak It is interesting to note that most of these new com- of progress. We believe that few of them will ultimately panies rely on the prevalent and mature Siemens pro- succeed in mastering the technological and financial cess. “This technology is used in 75 % of the worldwide challenges”, said Travis Bradford of Prometheus Institute installed capacities”, explained Peter Fath, Chief Tech- who is responsible for the study. nology Officer at the German engineering company Interesting has been the question of how an expan- Solmic, on occasion of the 5th Solar Silicon Conference sion of the capacities will in mid-term affect silicon pric- in the Chinese Shenzhen. One such example is the wa- es. That rarity of goods ultimately leads to higher prices fer manufacturer LDK Solar that has expanded the busi- is a principle that applies as much to the silicon market ness area on the downstream silicon production stage as to any other markets. In the last years, the price for and is currently building a factory in the Chinese Xinyu silicon on the spot market has seen high increases. But in the province of Jiangxi. Before 2008, a capacity of prices have soared also for long-term supply contracts. 6,000 tons will be reached. Xiaofeng Peng, Managing While the first capacities have already been added and Director at LDK expects that a range of 100 to 350 tons more factories have begun to launch production, a of silicon is already realistic for this year. In total, the price decrease for silicon seems not to exist. One reason production capacity will after completion range at for this could be that far from all of the planned capac- 15,000 tons per year. This would enable the company to ities have gone on stream. Expansion is also an issue for enter the ranks of the world leaders of silicon produc- the downstream products of the value added chain tion such as Hemlock, Wacker and REC Silicon. Another such as ingot, cell and module production, which means newcomer is DC Chemical that has in March completed that the rising silicon production is accompanied by an a manufacturing in Gunsan, South Korea, with an annu- even stronger demand. Still, chances are that the mar- al capacity of 5,000 tons and already plans an expan- ket might relax. According to the Silicon Price Index that sion of up to three times the current volume in the next was published by U.S.-American market researcher New year. But also PV Crystalox that is today known as ingot Energy Finance in August this year, the silicon prices and wafer manufacturer has decided to enter the sili- might drastically fall in the next year. As expected, the con production. Next to the wafer production in Erfurt, average silicon prices for forward contracts might de- Germany, a factory with an annual silicon capacity of crease by 43 %. In the opinion of New Energy Finance, 900 tons will go on stream in 2009. The next step will be independent provider of information and research to the expansion to 1,800 tons per year. investors in clean energy and the carbon markets, this trend should continue until 2015. Prices per kilogram Financing and technological expertise silicon could then be below US$ 67 until 2013. But not everybody has been optimistic of the price But not all manufacturers with plans to enter silicon development. Critique has mainly been directed at the production are successful. According to the study “Poly- silicon manufacturers that today seem to expand their Sun & Wind Energy 5/2008 115 PHOTOVOLTAICS plant would require to move into different location “, said Sonnenschein. Solarworld has for now secured the largest part of the silicon supplies though long-term contracts. As re- cently as August, the Group had signed a contract worth about US$ 580 million with the South Korean DC Chem- ical to regulate the supply of polysilicon between 2010 and 2016. In the future, the S&WE silicon world map will prob- ably be filled with further locations. From interviews with potential manufacturers, it became clear that the expansion in 2008 is not yet closed and that more ca- pacities will be added in the next few years. At the same time, the amount of silicon needed per Watt will de- crease as the share of thin-film technologies on the to- tal market is steadily growing and wafer slices get in- creasingly thinner. Wafer: much more than a slim difference Opening ceremony of new Joint Solar Silicon production S&WE is for the first time giving a comprehensive over- in German Rheinfelden. capacities only as far as could already be sold through view of the world’s wafer manufacturers. Of the 127 sur- Photos (2): JSS existing long-term contracts. Both, the silicon shortag- veyed, 52 provided information on their capacities be- es and the high prices, are in the long run preserved. tween the years 2007 and 2008. However, as not all par- So far, manufacturers continue to profit from the ticipants were able or willing to specify MW amounts, high and lasting price levels and list a promising turn- the results are not on the whole comparable and in- over and revenues. Compared to the first quarter, the clude numbers of item, tons and, in the case of BP So - Wacker silicon division was able to raise sales by 24 % in lar, even surface in square decimetre. Similar to the the second quarter. Looking back at the year-ago quar- module, cell and silicon industry, the wafer manufactur- ter, sales almost redoubled to US$ 281 million. The com- ing sector has in the last few years seen profound pany is now confident that the existing long-term sup- changes with new companies entering the market and ply contracts will generate an income of US$ 1.2 billion trying to push aside former market leaders.