Polysilicon output doubles, sending solar prices plummeting

Semiconductor companies raced to dig up more silicon in the wake of cleantech subsidies. Then the global recession hit. Now, solar cell firms are reeling from evaporating margins.
Written by Andrew Nusca, Contributor

For years, people have been hoping that the price of solar panels will come down to be within reach of the average homeowner.

Be careful what you wish for.

The top five producers of polycrystalline silicon have more than doubled output, according to a Bloomberg report, forcing prices of solar cells and microchips to drop precipitously, slimming profit margins to razor-thin levels.

What was once $475 per kilogram three years ago is now priced at just $33. Worse, the industry is expected to produce 28 percent more than will be consumed next year, following a 20 percent glut in 2011.

The commodity is driving down prices for semiconductors and photovoltaic solar panels, the latter of which uses 90 percent of the material's supply. (To be clear, this affects solar cells far more than microchips; microprocessors use only small amounts of the material.)

This seems great for consumers on paper, but the reality is that prices are dropping so swiftly that it's putting manufacturers in the U.S. and abroad out of business -- to the point where the biggest solar cell manufacturers are seeking mergers and acquisitions and semiconductor firms are halting production, according to the report.

Why the boom before the bust? Silicon has been used in the technology for years, but the enactment of government policies favoring clean technologies made raw semiconductor materials scarce. Firms ramped up to meet the demand; the global economic downturn soon followed.

Photo: Wacker

This post was originally published on Smartplanet.com

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