The last few years have been a tribulation for manufacturers working within the greater solar industry. A “race to the bottom,” funded in part by major subsidies from the Chinese government, made the industry financially unsustainable for many. With prices in freefall, competition became increasingly fierce, which meant that many simply weren’t able to maintain their business. Others needed to implement compelling plans for simply staying in business, much less flourishing.
Founded in 2006 and based out of San Jose, Calif., Silicor Materials is one of the companies on the forefront of that battle. Terry Jester, CEO of Silicor Materials, says that 2014 is likely will be a “year of stabilization” for the industry, with prices on the silicon spot market rising in December to a 14-month high. January has since seen prices hit $20/kg, with many projecting further rises through the rest of this year.
Jester adds: “On the manufacturing side, several of the top-tier players are reporting increased production and shipments, and improvements in their average selling prices. However, even with improved profitability, manufacturers are hesitant to boost capacity. This means the supply of silicon will remain tight; utilization rates in 2014 are expected to be greater than or equal to 95 percent, and sales of scrap silicon are at their highest levels since 2009. It’s no wonder some analysts are forecasting a silicon shortage by the middle of the year.”
Clearly, there are challenges and concerns abound, but Silicor Materials, in many ways, is turning inward to implement the necessary practices rather than simply trying to respond to volatile markets. In order to make that possible, the company is implementing some philosophies most often seen in another industry altogether: the foundries of Big Steel, which has a long history of adopting new technology and ways of thinking to improve margins and stay in business. Among these ideas is the “mini-mill,” which is used in 60 percent of all steel production in the U.S., and, today, in Silicor Materials’ silicon manufacturing.
John Correnti, a former Nucor CEO and a current member of Silicor Materials’ board of directors, was one of the minds behind the mini-mill concept, which replaced energy-intensive blast furnaces with electric arc furnaces. This significantly reduced Nucor’s energy use, and even improved the efficiency of steel production — by directly influencing the bottom line, the mini-mill helped Nucor become the largest steel producer in the U.S.
And it has much the same potential in the solar silicon industry. Fortunately, Jester says, the silicon industry is still in “its infancy” compared to steel, and so there is much to learn, and a great deal of opportunity to innovate. For Silicor Materials, the silicon represents the highest cost input when it comes to module production, largely due to roots in the semiconductor industry, which has, for decades, built to electronics-grade specifications via what’s known as the “Siemens process.” This involves four phase changes: solid to liquid, liquid to gas, gas to liquid and liquid to solid.
But in the solar industry, electronics-grade silicon is over-engineered, too costly and doesn’t provide any benefit. Silicor’s process, according to Jester, involves “dissolving about 97 percent pure metallurgical-grade silicon into an aluminum smelt. From the liquid alloy, the silicon hardens, and the remaining aluminum is poured out and sold separately as a master alloy. Most of the remaining aluminum on the silicon is removed from an acid bath and drained out. Additional aluminum is then skimmed off the top, yielding solar silicon.”
This process only requires two phase changes (solid to liquid, and liquid to solid), which means Silicor uses 25 percent less energy getting the job done. They are also creating two aluminum byproducts — aluminum-silicon alloy and polyaluminum chloride — which they are using to establish relationships with companies in the aluminum alloy and water treatment industries, respectively.
Perhaps most importantly, the mini-mill philosophy means that solar cells made with Silicor’s silicon are capable of achieving in-line conversion efficiencies of greater than or equal to 17 percent. That’s comparable with cells made with electronics-grade silicon, but at a cash cost of roughly $9/kg, compared to $17-25/kg for top-tier silicon. All of that equates to no degradation or lack of performance compared to the most expensive materials.
All of this means that via innovation, and learning from industries that have gone through similar periods of contraction, Silicor Materials is ready to jump on any major market shifts toward the better. Will that happen any time soon?
Jester is confident that the solar industry will continue to perform well in the years ahead, saying, “The solar industry is growing at an unprecedented rate, and is rapidly gaining traction on other renewable energies. A recent Bloomberg New Energy Finance analysis found that for the first time, solar growth is outpacing that of wind. The study projected 36.7 GW of new solar PV capacity in 2013, compared with 35.5 GW in wind installations. Further, global solar module shipments are forecasted to increase 69 percent from 2013 to 2017 which is a 14 percent compound annual growth rate.”
Even though the market’s future is looking much brighter than it was a few years ago, the companies involved at every level are in a position to innovate now rather than wait until it’s too late. Jester says, “We’re a young group, and thus have many lessons to be learned before we can achieve massive global adoption.”
For now, Silicor is trying to maintain its position by focusing on its goal of securing a commercial-scale manufacturing facility, which will help it move into another phase of process optimization and cost reduction. They may be young, but they’re certainly not without experience. And because they’ve thrived during the massive price war of the last few years, they’re in a great position to prosper as the market turns toward the better.
Truly, despite the amount of public attention the industry receives, solar is still very much a young business and method of producing a large amount of energy, particularly for a manufacturer. There is a lot of settling necessary yet before the industry truly finds its footing. But with prices low, and efficiencies higher than ever, solar is increasingly becoming a viable option for not only utilities, but also manufacturers who install arrays on the roofs of their facilities, for example, to take advantage of space that otherwise only collects heat in the summer. Perhaps your next solar investment will have a little bit of Silicor’s uniquely-developed silicon inside, powering the next generation of the energy landscape.