China-based Trina Solar (NYSE: TSL) announced that it has canceled plans to build a $1 billion polysilicon plant that was revealed in December of 2007, with a target completion date by the end of 2012. Favorable changes in the polysilicon market has led Trina to believe that it can now obtain sufficient polysilicon on the open market to meet its production requirements. 21 new firms started manufacturing polysilicon during 2007.
Trina also announced on 4/2/08 that it has entered an eight-year polysilicon supply agreement with GCL Silicon Technology Holdings Ltd.for enough polysilicon to produce about 2.6 gigawatts worth of solar modules. Trina has now secured about 95 percent of its estimated polysilicon requirements for 2008.
Trina previously had said that it was targeting solar module production capacity of 350 megawatts of annual capacity by the end of this year. Trina announced in late October 2007, that it had launched production on its new multicrystalline module line, complimenting its monosilicon module line.
In a somewhat related announcement Fluor Corporation said that it has been awarded the contract for engineering, procurement and construction management (EPCM) services by LDK Solar for its $1 billion, 15,000MT polysilicon plant in Xinyu City, Jiangxi, China.
High purity silicon ("Polysilicon") is the key feedstock for almost all solar cells and modules produced today. The solar PV industry and semiconductor manufacturers are the two main consumers of polysilicon. In 2000 the solar industry consumed only 10% of the world's silicon supply. In 2006 the PV industry consumed more than half of the world's available supply of polysilicon for the first time ever.
So Trina sees that it can obtain enough silicon from the open market, such that its own production facility is not needed. Its recent agreement with GCL will supply nearly all of its silicon needs for the next eight years. Meanwhile silicon suppliers such as LDK Solar continue to expand production. Does this mean that the silicon supply shortage is over? My opinion is that, at this moment, there is not enough silicon production to allow the much needed expansion of the PV solar cell industry, but that facilities under construction will probably allow for some expansion. The trend to use more thin film silicon PV and non-silicon PV will reduce requirements for silicon. How much is enough? This will depend on whether solar PV modules can reach the price target of under $1.00 per Wp that have been promised by some. In the meantime there is a market demand for more modules than can currently be produced at relatively high prices (Solarbuzz currently lists $3.74/Wp (€2.36/Wp) as the lowest price for thin film solar modules).