Sharp bets US$30m on solar power
By Simon Burns, 3 November 2006 09:34 AEST Systems & Components
Sharp will soon expand its solar cell output by a factor of six, said the Japanese electronics manufacturer.
The company claims that the move will make it the world's largest manufacturer of solar power generation products.
New production lines will start rolling at the company's solar cell facility in Southern Japan later this month.
After the expansion, Sharp's total annual production capacity of pholtovoltaic solar cells will be enough to generate 600 megawatts of power, up from 100 megawatts today.
Solar panels with 600 megawatts of generation capacity would be enough to provide power for a city with a population of almost half a million.
Although Sharp does not publicly release details of its income from solar products, analysts from Nomura Securities have said that the company's "other electronic parts" business, which includes solar cells, saw strong operating profit growth of 22 percent in the first quarter of the Japanese financial year.
The same business unit went on to report a seven per cent rise in revenue in the most recent quarter, bringing its total quarterly revenue to US$1.27bn.
"Photovoltaic systems are increasingly being used in Japan for industrial applications and are being installed on new residential construction in collaboration with home builders," Sharp announced.
"In Europe and the US, demand is expected to expand even further in the future, centred on industrial and commercial uses, thanks to the introduction of subsidies and implementation of policies mandating power buy-back programs by utilities."
However, following rapid expansion in global output of profitable solar cells, the industry is facing a shortage of the basic raw material, processed silicon.
Sharp claims that it is "working to make solar cells even thinner and improve thin-film solar cells which use minimal amounts of silicon, as well as establish highly efficient production systems and expand and upgrade its production lines ".
Solar cells currently offer such attractive profit margins that manufacturers of other electronic components are paying tens of millions of dollars to refit production lines to make solar cells.
In spite of the wide variation in cell size and function, there are substantial similarities between many of the basic manufacturing techniques used to make silicon-based solar cells and those used to make other semiconductor products where multiple identical components are laid out in an array.
For example, cut throat pricing and intense competition in the LCD panel market have pushed some second-tier LCD makers to attempt a switch to solar panel production.
Similarly, DRam memory chip makers have also refitted plants to make photovoltaic cells.
Last month, media reports from Taiwan claimed that two local solar cell makers were seeking investment of almost half a billion dollars to expand production.
crn.com.au
“Right now, I’d say we are in a correction phase for solar stocks,” says J. Peter Lynch, a private investment banker focused on renewable energy for alternative energy companies. “Wall Street said, ‘Jeez, these solar stocks have really run up,’ but then the light suddenly went on about the polysilicon shortage, and the stocks corrected by about 20 to 25 percent. The logic behind it is, ‘Whoops, we went too far.’”
Ironically, polysilicon is made from one of the most common materials on earth: sand. So the problem isn’t so much a lack of raw material as a lack of production capacity for refining sand into polysilicon, the material that enables panels to capture solar photons and turn them into electricity. Burned by past downturns, polysilicon producers have been reluctant to invest in infrastructure that would increase capacity. Last year, though, convinced that long-term polysilicon orders were for real, companies like U.S.-based Hemlock Semiconductor, Norway’s Renewable Energy Corporation, and Germany’s Wacker-Chemie each committed hundreds of millions of dollars for new capacity. But with a lag time of about three to five years between commitment and production, the new polysilicon plants won’t impact the solar industry until 2008 and beyond.
So for now, shortages are still putting the breaks on solar-industry growth and pitting the solar sector in a fight against the massive semiconductor industry, which now uses more than half of the 30,000 metric tons of polysilicon produced each year to make everything from PCs to cell phones to gaming systems. Nevertheless, the solar industry is poised to hit a significant milestone soon: sometime in the next two years, more raw silicon will be going to solar panels than to electronics chips.
Even when new production capacity comes on line in 2008, analysts say polysilicon will remain very much in demand because much of the additional output is already spoken for. Solar cell maker Evergreen Solar (ticker: ESLR) recently signed a supply contract with Renewable Energy Corp. (ticker: REC) through 2014 for polysilicon from its yet-to-be-completed new facility. Other solar companies are expected to forge similar arrangements, according to analysts.
Hence, traditional solar-panel makers, such as Sharp Corporation and BP Solar, are hard at work designing thinner products that use proportionately less polysilicon; a number of smaller companies are also exploring ways to reduce—or even eliminate—the need for polysilicon. “There is a core group of firms making cells that use a fraction of the silicon needed for conventional solar cells,” says Jesse Pichel, senior technology analyst for investment-banking firm Piper Jaffray. Evergreen Solar, for example, relies on “string ribbon” technology, a manufacturing technique that creates long, 3.2-inch-wide ribbons of silicon that can be cut to shorter lengths for individual applications.
Evergreen claims the process produces more than twice the solar cells per pound of silicon than traditional manufacturing techniques. And Energy Conversion Devices (ticker: ENER) says its thin sheets of solar cells also use less silicon. The manufacturing process deposits the silicon in a gas form onto slender 14-inch-wide stainless-steel sheets, which feed off a roll into the company’s solar-cell manufacturing machine.
Other companies are selling solar products using “thin-film” technologies that eschew silicon altogether. DayStar Technologies (ticker: DSTI) and the private firms Miasole and HelioVolt Corporation combine the highspeed manufacturing advantages of thin-film techniques with solar cells created from a combination of copper, indium, gallium, and selenium (known as CIGS). MiasolŽ says only a fraction of this silicon alternative is needed to create the same energy-producing capacity of a conventional solar cell, saving on materials costs. (See “Ventures in the Sun,” in Plenty’s December/January 2006 issue.)
This all sets the stage for intense competition that’s likely to persist long after the polysilicon shortages subside. Upstarts like Energy Conversion, Evergreen, and the CIGS backers are ramping up their capacity to compete head to- head against the established solar-cell companies. Hmm…Upstarts challenging the establishment? Sounds like just one more sign that the solar industry is well on its way to moving beyond the growing-pains stage toward becoming a mature sector with a bright future
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