How did the silicon shortage situation catch so many by surprise?

Dear Scott Sklar, I am having a hard time understanding how this so called “shortage” of raw materials used in the production of photovoltaic cells, manifested itself in the PV industry so quickly and with very little warning. It would almost seem suspicious of a marketing ploy to increase investor returns. For years, all I read was how PV module prices were getting better (which the prices stayed relatively the same, it was the technologies in production that produced better quality PV modules and longer warranties that got better) now in the course of one year, 2005, there is a “shortage” of raw materials and PV module prices are going through the roof. Can you shed some light on this for me? Sincerely, Thomas S, Castalia, NC Thomas,

I appreciate the dismay that constrictions in the silicon market has driven up prices of photovoltaics and delayed supplies, but it was no surprise to anyone tied to the photovoltaics industry. The issue was raised and addressed by US manufacturers when I was still running the Solar Energy industries Association in 2000, and in 2001, the National Institute of Science and Technology (NIST) announced an award to a Dow Corning team: Develop industrial refining processes to produce low-cost, high-purity silicon feedstock in virtually unlimited commercial quantities for the solar cell industry. NIST stated in 2001, “The solar cell industry depends on purified silicon, and continued growth depends on having an unlimited source of pure silicon feedstock at costs at least five times lower than currently available. Currently, solar cell makers rely on the silicon “waste” of the microelectronics industry, whose quality is far superior to what the solar cell industry needs. However, the demand for this waste soon will outstrip the supply. Without new sources, photovoltaics prices will rise substantially.” Several companies have grown to increase photovoltaics manufacturing using different non-silicon technologies including UniSolar (MI) using triple junction thin films, First Solar (AZ) using CdTe, and Konarka Technologies (MA) using light sensitive dyes via nanotechnology. But the industry was not prepared for the triple whammy – Germany and Japan markets growing so quickly with California and a host of other US states (NY, NJ, PA, MA, CT, etc.) coming fast behind – a rapid increase of petroleum and natural gas prices coupled with natural disasters including the Pacific tsunami, Hurricane Rita, and Kasmir earthquake – which drove 25 percent growth rates even higher. Recent announcements by REC (Europe) SGS (USA), and others to expand solar silicon production is good news for the global PV industry, so many of us believe the silicon shortage will begin to abate in 2007. Other tactics such as greater use of hybrids with photovoltaics such as small wind, has begun to alleviate PV supply shortages in certain niche markets. But the bottom line is that the free market does address these issues, not always smoothly, and the world will see solar grade silicon in full supply for the global PV industry’s next growth spurt. And non-silicon PV along with solar thermal electric will increase even more substantially as well. So don’t get unnerved with these market perturbations which impact all emerging high growth industries. – Scott Sklar Q&A note: see RenewablEnergyAccess articles on this same topic.
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Scott, founder and president of The Stella Group, Ltd., in Washington, DC, is the Chair of the Steering Committee of the Sustainable Energy Coalition and serves on the Business Council for Sustainable Energy, and The Solar Foundation. The Stella Group, Ltd., a strategic marketing and policy firm for clean distributed energy users and companies using renewable energy, energy efficiency and storage. Sklar is an Adjunct Professor at The George Washington University teaching two unique interdisciplinary courses on sustainable energy, and is an Affiliated Professor of CATIE, the graduate university based in Costa Rica. . On June 19, 2014, Scott Sklar was awarded the prestigious The Charles Greely Abbot Award by the American Solar Energy Society (ASES) and on April 26, 2014 was awarded the Green Patriot Award by George Mason University in Virginia.

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