The Growth of Solar

The dramatic increase in oil prices over the past few years have made people increasingly aware of the need to develop alternative energy sources. As alternative energy has become more popular more and more companies have invested time and money into developing solar cells. Now iSuppli estimates solar cell production will be at the same level as semiconductor production in the next few years. According to iSuppli:

Worldwide investments in the production of Photovoltaic (PV) cells will rise to the same level as those for semiconductor manufacturing by 2010, due to booming demand for solar energy, according to iSuppli Corp.

Global production of PV cells is expected to rise to as much as 12 Gigawatts (GW) by 2010, up from 3.5GW in 2007. By 2010, as many as 400 production lines in the world that can produce at least 1 Megawatt (MW) of PV cells per year will be in place, representing a four-fold increase from about 90 to 100 production lines in 2007. Factories capable of 1GW of annual PV production also will be established in the future to ensure continued strong delivery of PV cells to the market.

“The market for PV cells is estimated to grow by 40 percent annually until 2010, and 20 percent beyond,” said Dr. Henning Wicht, senior director and principal analyst, MEMS and photovoltaics, for iSuppli. “Nearly all market participants plan to increase their sales by a Compound Annual Growth Rate (CAGR) of 40 to 50 percent during the next few years.” Wicht noted that heavy investments will be required to finance the expansion of PV cell production. Each PV factory will require an investment of $500 million and more, will employ as many as 1,000 workers per site, and will generate annual revenue of $1 billion per year or more, putting them into the size, cost and employment range of semiconductor fabs.

The prohibitive cost of solar cells is the polysilicon neccessary for the production of the cells themselves. There is a shortage of polysilicon and many companies are apparently scrambling to develop their own material production facilities or place long term orders with current suppliers to ensure availability. In April Digitimes observed "Current 6-inch solar wafer spot pricing has reached NT$10-10.5, but demand still surpasses supply due to strong demand from the end market, noted the sources." Earlier in May iSuppli outlined some of the polysilicon problems:

Booming global demand for solar energy has spurred a critical shortage of polysilicon used to make Photovoltaic (PV) cells, causing PV suppliers to realign their business structures and strategies and to seek alternative raw materials. Global revenue for PV cells is projected to increase to as much as $22.1 billion in 2012, up from $9.6 billion in 2007, according to a preliminary forecast from iSuppli Corp.

The polysilicon shortage is, according to iSuppli, forcing companies to integrate vertically and bring polysilicon production under their direct control, reduce the thickness of the cells themselves and to cut costs and become more efficient in their production processes.

The rise in the solar cell market has provided many of Taiwans tech companies with tremendous opportunities and even provided a lifeline to others. The development of this industry will be interesting to watch as will the implementation of solar cells in consumer electronics devices.

iSuppli: Solar Cell Investments to Reach Parity with Semiconductor Industry by 2010
Digitimes: Solar 6-inch wafer spot pricing expected to stay at around US$10
iSuppli: Silicon Shortage Prompts Strategy Changes for Photovoltaic Industry