A question about silicon for solar PV market
A reader of this blog asked me recently who the major polysilicon suppliers are to the solar PV market, and whether any of these companies were plausible investment plays, given the tight supply and booming demand for silicon in the market.
Renewable Energy Corp. of Norway, Wacker Chemi AG of Germany, Hemlock Semiconductor Corp. in Michigan, Tokuyama Corp. of Japan, and MEMC Electronic Materials Inc. of Missouri are pretty much the main suppliers of silicon to the solar industry, although most sell into other industries as well. There are others emerging in places such as China, likely to serve their own local markets.
MacMurray Whale, energy analyst from Sprott Securities, says the silicon capacity is only growing at 15 to 18 per cent a year, while solar capacity is growing at 100 per cent annually. There are risks for silicon providers that try to keep up with solar growth. Silicon production is very capital intensive, the companies operate under relatively higher overhead and they’re also slow to ramp up, according to Whale, who adds that the silicon producers are also “very conservative” when it comes to capital expenditures. They are also at huge risk of being stung when a downturn hits.
Whale says of all the companies named above, only Tokuyama (Tokyo Stock Exchange) and MEMC Electronic Materials (New York Stock Exchange) are publicly listed.
Thanks to Mac for providing me with this information.
Tyler Hamilton is editor-in-chief of Corporate Knights magazine and a business columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the clean technology and green energy market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper.
February 7th, 2006 at 5:40 pm
It sounds like silicon is not the way to play this market. Thanks for the info Tyler.
February 8th, 2006 at 8:36 pm
We ran a related story this week showing that Shell’s recent divestiture from their crystalline business was largely the result of the silicon shortage. It sounds like SolarWorld is going to do quite a bit more with the old Shell assets anyway. And some even feel that Shell just didn’t have a real interest in the game anyway. – jesse
http://www.renewableenergyaccess.com/rea/news/story?id=43063
February 10th, 2006 at 11:21 am
Just to be clear, it’s the CAPACITY of the PV cell makers that is growing 100%, not the actual shipments of PV. That’s more like 25% to 40% y/y depending on the region.
By the way, playing the Si side is exactly the way to play the trend because they will all see significant demand for some time to come. Especially with price have moved from $9/kg 5 years ago to 1 yr contracts at $85/kg in 2005. Some indication that spot purchases taking place at $200/kg.
February 27th, 2006 at 8:36 am
Please find some more articles about the silicon shortage and the possible effects at:
(article about module shortage in Spain)
(Article about the development of the Chinese PV market; treath: silicon shortage)
Yours, Johan Trip