Solar firms encounter silicon gap

chicagotribune.com

Solar firms encounter silicon gap

Prices are rising as companies scour globe for materials

By Leila Abboud

The Wall Street Journal

November 2, 2007

After oxygen, raw silicon is the most abundant element on the planet, but a shortage of a highly purified version of the stuff is shaking up the solar-power industry, giving companies that didn't exist a decade ago a chance to challenge longtime leaders.

This refined silicon, the most costly and crucial element in solar panels, has been in short supply for the last four years. There are only about a half-dozen companies world-wide that purify silicon from sand and quartz, and they haven't built new refineries fast enough to keep up with rising demand.

That has left solar-panel manufacturers -- who must also compete with computer-chip makers for silicon -- to grapple with high prices just as politicians and clean-energy advocates are pressing them to cut the steep cost of solar to compete with cheaper, less environmentally friendly fuels like coal.

Most panel makers have signed costly long-term supply contracts for silicon with fixed prices and huge upfront payments, and pay even stiffer prices for silicon on the spot market if those contracted supplies fall short.

At the same time, some have developed a slew of new strategies -- from recycling castoff bits of silicon to re-engineering their production lines to make thinner, more efficient cells. Some are even building or buying their own factories to make the silicon wafers that are sandwiched inside solar panels or purify their own silicon.

Those companies that tackled the problem early have gained ground against more established rivals.

...