Polysilicon shortages will spur thin film CAGR of 70 percent through 2010, says iSuppli

Polysilicon shortages are not only limiting the potential growth of the PV industry but are continuing to impact manufacturing costs, according to Dr. Henning Wicht, Senior Director and Principal Analyst, MEMS and PV for iSuppli. Costs are rising rather than falling, forcing PV manufacturers to establish their own polysilicon production as well as seek cost saving elsewhere.

“Polysilicon shortages are driving prices up,” noted Wicht. “For companies attempting to expand their PV fabs to meet rising demand, it’s becoming very difficult to secure low-priced silicon.”

Wicht noted that PV companies must pay polysilicon suppliers between 10 and 20 percent of their total contract costs up front to secure availability of the key raw material. This has made cost reduction mandatory for the PV industry.

The alternative of course is not to be dependent on silicon for solar cell production. Wicht pointed out that the growth in thin-film technologies is expected to outgrow the sector. He expects thin-film technologies to rise to 20 percent of the total PV market in 2010, up from 5 percent in 2007. Thin-film PV will grow by a Compound Annual Growth Rate (CAGR) of 70 percent from 2007 to 2010.

In its preliminary forecast, global revenue for PV cells is projected to increase to as much as $22.1 billion in 2012, up from $9.6 billion in 2007. By 2020, about 50,000 megawatts worth of PV systems (MWp) will be installed annually, up by a factor of nearly 20 from 2,538MWp in 2007.

With these projected levels of growth, PV manufacturers dependent on polysilicon are being forced to become more vertically integrated. Cost reductions must also be implemented across the entire PV system supply chain, including polysilicon, wafers, cells, modules and finished systems, noted Wicht.