Poly-silicon shortage holds back PV growth

Silicon demand by PV industry surpasses demand from semiconductor manufacturers

The manufacturing of Photovoltaic (PV) systems is one of the fastest growing energy related sectors in the world, with an annual growth rate of more than forty percent. Interestingly, this growth has not been restrained at the demand-side but rather at the supply side. The poly-silicon industry simply cannot keep up with the growing demand.

Silicon is one of the most common mineral elements on earth. But despite its abundance, the production of refined metallurgical silicon, used to manufacture semiconductors and PV cells, is expensive, complicated, and energy intensive. It is very difficult to ramp up production quickly, and the industry was unprepared for the recent surge in demand. In 2006, demand from the solar PV industry surpassed demand from the semiconductor industry for the first time.

Silicon and PV industry joining forces

Shell sold its crystalline silicon PV business at the beginning of 2006, to focus entirely on thin-film technology. The sale was due in part to silicon supply disruptions. Many other PV manufacturing companies entered into long-term supply agreements with silicon producers to help mitigate the risk of making huge capital investments to enhance production.

Widespread expansion in production capacity is currently ongoing. HSC, one of the world largest manufacturers of poly-silicon, is upgrading its plant in Hemlock, Michigan from the current 10,000 metric tons per year to 14,500 metric tons by 2008 and 19,000 in 2009. Not only is the worldwide production capacity growing, there are also significant efficiency improvements being made to the silicon refining process. These investments are expected to bring down poly-silicon prices in the next few years. The knock-on effect will result in a decreasing manufacturing cost for solar PV cells.