Silicon is currently the most important raw material for the manufacture of PV panels. While PV manufacturing is high-tech, the technology that represents 80 percent of the global market has been around for 25 years and is fairly cookie-cutter using almost identical production processes. Unless PV manufacturers have secured a low cost polysilicon supply at a lower price than their competition, everything basically remains the same. This is why PV manufacturers choose to try to place long-term orders for polysilicon to ensure cost stability in their supply of polysilicon.
With the high spot prices of 2008/2009 and lack of available material, many polysilicon companies announced expansion of their production capacities for 2010. But now, as polysilicon prices continue to fall after the Feed-In Tariff rate cuts in Germany and Italy, producers must operate their silicon plants at the highest levels of productivity to remain profitable.
Silicon Demand
Polysilicon is actually the raw material for two industries. At present, the consumption of the semiconductor industry is 2/3 of the total polysilicon output, with the remaining 1/3 used for PV cells. Polysilicon wafers in the electronics industry are used for semiconductor silicon chips so the silicon must meet strict purity specifications. Polysilicon and monocrystalline silicon dominate the PV market and is processed with the scraps of silicon eliminated in the semiconductor industry and does not need to be ultra pure like silicon wafers used for electronic devices.
In May 2008, a Koncept Analytics report noted the solar industry was consuming more than half of the worldwide polysilicon production at that time. The solar market demand had created a supply gap in the polysilicon market resulting in spiraling prices of polysilicon and solar cell manufacturers were rushed to enter long-term contracts for polysilicon to hedge against rising prices. At the time, the polysilicon market was dominated by seven major producers, including Hemlock, Wacker, REC, MEMC, Tokuyama, Mitsubishi, and Sumitomo representing over 90 percent of the global polysilicon market.
After 2008, South Korea-based OCI emerged with the production reaching 17,000 tons by the end of 2010. And other companies have followed.
Polysilicon Plant Projects
With the planned projects already announced, polysilicon production capacity will see a continuous rise in 2012 and beyond due to polysilicon demand for use in both PV panels and semiconductors led by the U.S., East Asia and the Middle East. In the U.S. alone, 10 projects totaling $7.7 billion are under development to add polysilicon capacity that will represent about 24 percent of the value of the $32 billion worth of polysilicon projects worldwide under development.
- Tokuyama Corporation is expanding its polycrystalline silicon operations to raise its current global share from about 5 percent to 10 percent, while maintaining its current global share of silicon for semiconductors of 20 percent. Tokuyama plans construction of an additional polycrystalline silicon plant at the Samalaju Industrial Park in Sarawak, Malaysia that will have an annual production capacity of 13,800 tons/year by January 2015. When completed, Tokuyama’s total annual production capacity will be 20,000 tons/year in Malaysia, combined with capacity of the plant under construction.
- In May 2011, South Korea-based polysilicon producer OCI Company placed a $228 million order for GT Solar’s polysilicon production equipment. The equipment will be incorporated into OCI’s new 20,000 metric ton production plant to be completed by late 2012. When the plant becomes fully operational it is expected to increase OCI’s total polysilicon capacity to 62,000 tons/year. OCI also plans to invest $8.40 billion through 2020 to increase its productivity to over 110,000 tons/year.
- On July 5, 201,GT Solar announced it had received orders from another two customers in Asia for production equipment totaling $81.7 million. Recently, GT also reported that it had received a $460.4 million order for its advanced sapphire crystallization furnaces from a new, unnammed market entrant.
- In April 2011, South Korea-based Hankook Silicon Company announced it had achieved 3,200 tons/year capacity with the first phase of its polysilicon plant in Yeosu, Korea where it plans to produce 14,500 tons/year by 2013. HKS has also signed a long-term agreement to supply Taiwan-based Neo Solar Power Corporation with 11,000 tons of polysilicon.
- In May 2011, Isofoton and the South Korean company HKS announced their Silicio Energía Project in Spain will have a capacity of up to 10,000 tons/year, making the company the fifth-largest polysilicon manufacturer in the world to date.
- Hemlock, as well as Wacker, are also building polysilicon manufacturing plants in Tennessee.
Polysilicon Production Techniques
Polysilicon is manufactured by extracting silica from sand or quartz and putting it through a series of chemical processes. While PV manufacturing is high-tech, the technology that is used by 80 percent of the industry has been around for over 25 years. This means that within the solar industry chain, including polysilicon companies, solar wafer companies, raw materials suppliers and equipment manufactures, the weak link and cost reduction target is the cost of silicon.
Manufacturers spend a great deal of time and energy fabricating blocks of polysilicon, only to see up to half of the material lost during wafer production. Because of this, thinner silicon and more efficient ways of slicing silicon or fabricating silicon wafers is seeing some major R&D efforts. This has spurred a handful of alternatives to the standard Siemens production process. While none of these will challenge the Siemens process in the short term, one process is getting a lot of attention: upgraded metallurgical-grade (UMG) silicon.
Metallurgical-Grade Silicon
Until 2008, the source of solar grade silicon for PV cells was the excess waste poly crystalline silicon from processing ultra pure (99.9999+) silicon crystal 'ingots' for electronic integrated circuits.
Lately, a number of makers of ferrosilicon have been turning their 99.7 percent metallurgical silicon directly into 'solar grade' silicon. The UMG solar-grade silicon is then cast into ingots as the starting point for PV cells and modules. There is no commonly used process for producing UMG and the current producers guard their proprietary process closely to maintain a competitive advantage. In October 2010, Suntech and California-based Calisolar Inc. announced their intentions to build a UMG silicon production facility in Ontario that will use such a proprietary process to generate 2,600 tons/year. The facility is scheduled to be completed by the end of 2011.
While UMG has a lower level of purity than semiconductor-grade polysilicon, it is less expensive to manufacture. As UMG processing techniques advance, it is expected that the performance gap between UMG and semiconductor grade polysilicon will narrow.
Lifecycle Will Impact Costs
The most commonly used PV panels are silicon-based and share many of the same materials and manufacturing processes as semiconductors. And like semiconductors, many key components as well as end products in PV manufacturing are environmental pollutants. In fact, the silicon semiconductor industry has had a history of environmental difficulties dating back twenty years when residents of Silicon Valley in California sued five semiconductor manufacturers for polluting the groundwater, forcing a costly clean-up by the companies.
The San Jose, California-based Silicon Valley Toxics Coalition was created in 1982 to push the first U.S. legislation for environmentally monitoring the semiconductor industry, which led to other similar bills at the state and federal levels. In 2010, SVTC began watching the PV industry and launched the Solar Scorecard to rate solar companies based on how responsible they are through the cradle-to-grave lifecycle of their products, including protecting workers from toxic exposure and preventing hazardous e-waste dumping.
SVTC released its 2011 Solar Company Scorecard on April 5, 2011. Two Chinese PV manufacturers made it into the Top 10 best list of the scorecard, German manufacturers took five of the top spots, and U.S. makers took the other three spots. The top scorer was German manufacturer SolarWorld, with China’s Trina Solar as the runner up. There was a three-way tie for third place among U.S.-based Abound and First Solar, and REC from Norway. Silicon Valley’s SunPower followed close behind.
What is significant to the silicon-based PV industry – and a potential factor in the cost of doing business – is that eleven of the fifteen PV manufacturers representing 46.6 percent of the industry market share that were surveyed reported that they would publicly support a law requiring mandatory take-back and recycling of their PV panels.
Future of PV Manufacturing
Because silicon is the mainstay of PV cells, the manufacturing improvement potential for crystalline silicon PVs and reduced cost is moving toward lowering thickness. Today, it’s about 180 microns, a thickness that has been decreasing by half every ten years. Researchers believe the practical lowest limit is 40 microns, below which the silicon is believed to be too thin to absorb light.
Still, researchers do not believe we have scratched the surface of all the possibilities and surprises yet to be found in using silicon. One approach is an epitaxial growth process which grows a thin layer of silicon using one mm thick templates. The idea is basically to integrate a silicon ingot growth process directly into a module instead of separately growing ingots, cutting thick wafers, forming cells and then building the modules.
For now, the silicon-based PV industry is focusing on scale, technology, power conversion and factory location as the primary way of dealing with manufacturing costs. This is punctuated today by the PV industry being dominated by firms that occupy well-defined positions in the supply chain. But that too is changing, with some companies branching out for more control of the overall supply chain, including owning a piece of the polysilicon feedstock chain that can offset the processing costs by a lower feedstock cost per watt.
Technology Race
The drop in demand for PV panels this year is causing a build-up of module inventory, which in turn is causing companies to focus on reducing those inventories. Suntech Power, the world’s largest crystalline silicon PV panel producer, recently terminated its ten-year wafer supply deal with MEMC at a cost of more than $200 million. Suntech says the cancellation opens the company to obtaining silicon wafers on the open market while saving more than $400 million.
Meanwhile, the next generation of PV technology could make silicon-based seem like an expensive experiment. The basis for development of thin-film technologies seems to be centered around the idea that silicon material costs are too unpredictable to maintain grid parity. While there continues to be a race to produce large new tonnages of solar grade silicon, there have been a number of recent advances in making PVs using other non-traditional materials. The largest U.S. producer of PVs, First Solar, does not use polysilicon, but on cadmium telluride and other companies, like Konarka, are making their PV panels using plastic.
Meanwhile, Rare Earth Solar just announced development of a patent-pending PV technology that uses rare earth elements based on research from the University of Nebraska. The technology is being verified at the National Renewable Energy Laboratory and the company plans to start manufacturing 28 MW of annual PV production starting at $1.80 per watt some time in 2013.
