But with the panels that produce the electricity
already popular abroad and a batch of new domestic tax
credits just kicking in, solar suppliers locally and around
the globe are scrambling for stock.
"Those of us with a long vision here
aren't jumping up and down," said Rick Reed, who
has witnessed the fickleness of government incentives
for his industry for 25 years. "But we're sure happy
business is good."
The problem is that while demand for solar
panels is increasing, the ability to meet that demand
hasn't caught up, said Reed, president of the Hawaii Solar
Energy Association.
The pressure could soon become even tougher
in Hawai'i as state politicians push for bigger incentives
for residents to install the panels. Gov. Linda Lingle
has proposed boosting the caps on credits for single-family
homes from the current $1,750 to $10,000. The caps for
businesses would double to $500,000.
With a growth rate of almost 40 percent
per year over the past five years, the solar panel industry
is today worth $15 billion globally, said Rhone Resch,
president of the Solar Energy Industries Association.
And the United States is beginning to catch
on.
Citing soaring oil prices and the need
for more reliable and environmentally friendly fuel sources,
a number of states and the federal government are pushing
rebates and tax credits to encourage people to install
solar panels on their roofs.
In a plan detailed in his State of the
Union speech last month, President Bush outlined a strategy
to increase domestic solar power capacity to up to 10,000
megawatts over the next decade. That's up from a current
capacity of about 175 megawatts, according to the Solar
Energy Industries Association.
Since January, homeowners have been able
to claim federal tax credits for installing solar power
— for the first time in 20 years. And in a bold
move this month, California energy regulators approved
a plan to provide $2.9 billion in rebates for solar panels
between 2007 and 2016.
In addition, major government programs in
Germany and Japan already have got those countries' markets
humming — and demand has quickly outstripped supply.
At the same time, however, the solar panel
industry is being forced to slow down. That's because
popularity has put a squeeze on the supply of the silicon
used as the key ingredient in the panels — as well
as the brains of computers and other high-tech gizmos.
The material used is known as polysilicon,
a form of silicon refined to form crystals that are sliced
into wafers and then used to form the silicon cells for
solar panels. It also is used for microchips in computers
and cell phones.
In 2006, the solar industry is on track
to use more of the silicon than the entire semiconductor
industry, Resch said.
"We've grown to such a point that there
is no available polysilicon feedstock to continue to put
into the solar industry so that we can grow at that rate,"
he said.
Historically, solar energy was only a third
of the market for the polysilicon also used in microchips,
said Lara Chamness, senior market analyst for the trade
group Semiconductor Equipment and Material International.
"But the solar guys are using more
and more of the polysilicon than ever before. So that's
causing a really tight supply situation and prices are
going up accordingly," she said.
Contract prices are coming in at $70 per
kilogram, up from $30 per kilogram just two years ago,
she said.
The big players on the microchip market,
such as IBM and Intel, are aware of the problem, but they
aren't showing any fear, she said. A spokesman for high-tech
giant Intel said his company has long-term contracts with
its suppliers.
And those companies use very little of the
precious material in each of their products, so they can
easily pass on the higher prices to customers, Chamness
said. By contrast, polysilicon is the main ingredient
covering the coffee table-size solar panels.
So with stocks scarce and raw material prices
high, the prices for solar panels have yet to drop.
Polysilicon makers are moving to boost their
supply.
Hemlock Semiconductor Corp., which is majority-owned
by Dow Corning Corp., is the top supplier of polysilicon
to the solar market. It is working to double its capacity
in the next two years with a $500 million expansion at
its Michigan facility.
The unforeseen government incentives for
solar energy as well as the microchip industry's recovery
after the dot-com bubble burst added to the unpredictability,
said Marie Eckstein, vice president of advanced technology
and venture business at Dow Corning.
She said that for now, the shortage is compelling
the solar energy industry, which is still striving toward
maturity, to find different ways to use silicon —
including using less of it.
"I think we're just in startup pains,"
she said.
Reed said he's seen excitement for solar
before. He's also seen it quickly fade when oil prices
drop or when the White House changes hands.
But there are signs that the industry is
maturing, he said, and the ups and downs aren't what matters
anyway.
"At the end of the day, we're saving
the world one roof at a time," he said.
For more solar and renewable energy news [SolarAccess.com]
