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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Ichy Smith who wrote (5138)	11/21/2006 10:43:58 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24232

Silicon shortage hits solar power hopes By Leo Lewis in Tokyo Published: November 20 2006 19:30 \| Last updated: November 20 2006 19:30 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. Average polysilicon prices, which have doubled in the past 20 months, are expected by some to rise by about 30 per cent over each of the next three years. Tokuyama, Japan’s largest producer, admitted last week that its facilities were unable to keep up with demand. Polysilicon, used to make silicon chips and photovoltaic (solar) cells, is in short supply because of the voracious demand of the booming semi-conductor industry and the rapidly expanding solar sector. The latter has grown rapidly through large-scale government-backed solar programmes in Germany and Japan, and solar equipment now consumes about half the polysilicon produced. Global production of solar batteries grew by 47 per cent by volume during 2005, and the pace is believed to have quickened in 2006. One industry estimate suggests that between 2007 and 2009, the global polysilicon supply shortage will be about 9,000 tons a year, or about a fifth of current worldwide capacity. Jeff Osborne, an analyst at CIBC World Markets, said the uncertainty of silicon supply threatened the economics of solar power for the rest of the decade, and predicted that its growth as an alternative energy source would be stunted. “Expectations that the polysilicon supply shortage will ease in 2008 are overly optimistic and we do not expect supply/demand equilibrium until after 2010,” he said. Industry observers are concerned that large solar panel makers such as Japan’s Sharp will be exposed to soaring prices for the material and will have to pass them on to consumers, making investment in solar panels unattractive. Governments may similarly be forced to review subsidy programmes. Merrill Lynch estimates that governments around the world will have to provide subsidies of up to $24bn (€19bn, £13bn) by 2009 to achieve current solar panel deployment forecasts. Newer panel-makers in promising solar markets such as India and China will probably be forced to reduce production to a small fraction of capacity or abandon expansion plans altogether. “Even when new facilities begin to ramp up at the poly-crystal silicon makers in 2008,” said UBS analyst Takaaki Muramatsu, “utilisation may not fall below 100 per cent; thus the product shortage could continue.” A prolonged shortage could cause what one analyst described as a “substantial delay” to solar power’s forecast turning-point around 2018, when production costs had been forecast to fall far enough for it to be competitive with prevailing energy prices without subsidies. Copyright The Financial Times Limited 2006 ft.com