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Thursday, June 09, 2005

Solar's Rise Leads Industry Into Silicon Shortages

After fighting for credibility, investor and consumer attention, environmental protection, and overall market growth, the solar industry faces another battle as it deals with the ongoing shortage of silicon. Solar is on the rise seeing an increase in demand last year for new installations between 25-30%. The majority of the recent boom in solar technology has taken place internationally, with German and Japan leading the charge with a combined rate of 69% of worlwide installations in 2004 with the United States coming in at 9%.

So where's the problem? The problem is in the lack of the industry's key ingredient -Silicon. The majority of today's solar PV market uses silicon as the base material but silicon is a shared material. Itis utilized by both the computer and the solar industry, with resulting supply constraints from shortages in the amount of sand and quartz being converted into silicon, forcing prices to continue to rise and supplies to run short. Compounding the problem is solar's use of second quality silicon, basically using what the computer industry rejects, therefore solar PV manufacturing is reliant upon another industry's waste stream. According to SolarBuzz, despite a 62% increase worlwide in installations during 2004, the worldwide supply position for silicon feedstock is insufficient to meet anticipated levels of demand.

Unfortunately for the industry, Solar PV companies have little choice but to wait out the current shortages and hope that silicon manufacturers expand their capacities sooner rather than later. Another potential solution is in the development and marketability of non-silicon based solar cells, bypassing the silicon dependencey altogether. One thing is for sure, the solar industry cannot continue along its current path, changes in either the process or supply stream need to evolve to meet the demands of this growing market to ensure that the solar industry's future remains bright.