This is an excerpt from EERE Network News, a weekly electronic newsletter.

May 25, 2005

Growth in Solar Power Drives Changes in Silicon Supplies

The rapid expansion in the solar power industry appears to be causing structural changes among the suppliers of silicon, the primary material for manufacturing most of the world's photovoltaic solar cells. Since silicon is also used to produce computer chips, the solar cell market has traditionally been a secondary market for silicon—a fact that has occasionally caused supply disruptions for solar cell manufacturers. That situation seems to have reversed itself at Germany's Wacker Polysilicon, which is expanding its polycrystalline silicon production from 5,000 metric tons per year to 9,000 metric tons per year by 2007. According to the company, this time the rise in production is mainly attributable to the solar industry, and although Wacker has been supplying the semiconductor industry for 50 years, it has been increasingly supplying the photovoltaics industry over the past five years. Wacker has even developed a new fluidized-bed process for producing granular polycrystalline silicon, and is currently testing the process in two pilot reactors. See the Wacker press release.

SolarWorld AG, a German solar power company, has taken a multi-pronged approach to the silicon supply problem: It signed a 10-year silicon supply agreement with Wacker in late April, but it has also formed a joint venture with another company to produce a dedicated supply of solar silicon. Test runs began in April at the prototype plant for the joint venture, called Joint Solar Silicon GmbH & Co KG (JSSI). Producing solar-grade silicon from silane, a gas, JSSI expects to supply 800 tons per year of solar silicon by 2007. See SolarWorld's press releases from April 18th and April 25th.

Currently, the world's only dedicated producer of polycrystalline silicon for solar cells is located in Moses Lake, Washington. Solar Grade Silicon, LLC (SGS)—a joint venture of Japan's AsiMI LLC and Norway's Renewable Energy Corporation AS (REC)—produced roughly 2,100 metric tons of solar silicon from silane gas in 2004, capturing 30 percent of the market, according to REC. The company claims that the current supply of solar silicon is less than demand and may remain so through 2007. To help meet that demand, SGS is currently expanding and will produce 2,300 metric tons of silicon in 2005, according to REC. See the REC press release and REC's SGS Web page.