A recent research report from PiperJaffrey analyst Jesse Pichel points out that 94 per cent of all solar modules require polysilicon as a raw ingredient, meaning serious shortages of high-grade silicon will have a dramatic impact on PV growth in 2006. “We estimate a severe polysilicon shortage that will likely cap the growth of the solar manufacturing requiring this technology,” writes Pichel. “Due to this shortage, we believe the solar industry overall will only grow 3 per cent in 2006.” This compares to growth of 30 per cent expected by the end of 2005.
He wrote that most module manufacturers have sold out through 2006 and polysilicon supply contracts are sold out through 2006 and 2007.
That said, he expects the market will grow to $12 billion (U.S.) (or 4,800 megawatts of production) in 2010 from $4 billion (or 1,256 megawatts of production) last year, with thin-film and other non/low-polysilicon technologies capturing a much larger share of the growth. “Within solar power, we favor companies with technology that reduces or eliminates the need for polysilicon,” according to the report, which highlights Evergreen Solar Inc. (string ribbon technology) and Energy Conversion Devices Inc. (cadmium-free thin film technology) as top investment picks. Once ATS spins off its solar group, which includes Spheral Solar Power, I think U.S. analysts will add the company to their list.
BTW: Thanks to The Energy Blog for drawing my attention to this report.
On a related note, I’ve heard that a company in China is building a polysilicon manufacturing plant just for the solar PV market that could add as much as 20 per cent more to the world market’s current capacity. Solar PV executives are apparently making trips to China trying to negotiate supply agreements, but I wouldn’t be surprised if the Chinese government keeps a lion’s share of the supply at home to give the emerging Chinese solar market a competitive edge over foreign rivals. If this plant can come online in 2006, growth in the industry could be much higher than what PiperJaffrey predicts but focused largely on China.