by J. Christoph Amberger, President, TFN
Alternative energy sources are supposed to deliver the
The solar cell industry currently illustrates what happens if sudden increases in demand cannot be matched by supplies. It's pretty basic stuff. It happens with oil, with pig bellies, and with orange juice concentrate. Demand drives up prices. That's how the market works.
The bread-and-butter photovoltaics industry, for one, got caught in a massive raw material supply crunch. Makers of photovoltaic cells depend on super-pure -- that's 99.99999% pure -- polysilicon, which is essential for the manufacture of computer chips and solar cells.
In 2003, polysilicon was going for $32 a kilogram (the equivalent of about 2.2 pounds). This year it has climbed as high as $200. And yes, that's correct: It costs more than twice the money for a smallish bag of sand than it costs to buy a barrel of oil at record price levels.
There are some solar tech CEOs who predict a polysilicon glut by 2010 that will cut prices to less than $40 a kilogram, maybe even $20 as global production climbs to 100,000 tons in 2010, from 35,000 tons now.
(If I were a CEO of a solar technology company concerned about stock prices and jumpy customers, I would say that, too.)
After all, polysilicon is a highly refined product that only a handful of companies can make, and whose plants cost $200 million and take three years to come on line. Worse, the semiconductor makers appear to be hoarding supplies at this point, restricting the reasonable growth rates in the worldwide solar photovoltaic (PV) market for next year.
Accordingly, with the shortages making news headlines, solar stocks have had a rough week. But that's just how traders like it: Volatility spells profits.
