Silicon shortage hits solar power hopes

The fragile economics of solar power could be thrown into jeopardy by a severe global shortage of the basic material used to convert the sun’s rays into electricity.

Industry experts warn that a worldwide shortage of poly-crystalline silicon will not ease in 2008, as some expect, but could continue for at least another five years.

Solar projects will either have to be abandoned, or governments will have to pay billions of additional dollars in subsidies.
The warning comes despite recent capacity expansion announcements at the world’s largest poly-silicon producers.

This week sees the start of negotiations between Japan’s polysilicon makers and industrial buyers around the world, with prices expected to surge.

Recent months have seen a flurry of announcements of investments in renewable energy projects as concern about global warming, associated with the burning of fossil fuels, has risen up the international agenda.

A Merrill Lynch report on the solar sector cites recent isolated polysilicon transactions at “unsustainable” prices of about $200 a kilogram – nearly 500 per cent higher than in 2004.

Financial Times