Sunnier Future

The Pinch

In the current economic downturn, however, the solar power industry has inevitably also felt the pinch. One Taiwan manufacturer, Gintech Energy Corp., has postponed the construction of a new plant for a year. Sino-American itself has also expressed worries about the possible drop in the demand for silicon wafers used to make solar cells. "In winter, it's natural to see fewer orders because it is not so convenient to install solar panels then in much of Europe and the United States," Hsu says. "So you have to wait until about February. If the demand remains low after that, you'll know that the recession has had an impact on this industry."

Furnaces used for "growing" silicon crystals at a Sino-American Silicon Products Inc. plant in Miaoli. The company entered the photovoltaic field in 2000. (Photo by Huang Chung-hsin)
However, Hsu notes that in contrast with the recession's impact on Sino-American's semiconductor manufacturing branch, the production of silicon wafers used to make solar cells is holding up well. While semiconductor production dropped about 20 percent from the third quarter to the fourth quarter of 2008, solar cells remained stable. "The impact on semiconductors has been immediate and severe," she says. "Semiconductors are used in various consumer electronic products, which people can decide almost overnight not to buy if they've been laid off."

The vast majority of the more than 70 Taiwanese enterprises have entered the field since 2000, but they have already performed impressively. According to ITRI, the revenue of the entire industry, from wafer manufacturers to cell makers to module packagers, reached NT$100 billion (US$30 billion) in 2008, up from NT$7 billion (US$212 million) in 2005, with the cell production sector grabbing the majority share. In 2008, Taiwan ranked fourth worldwide in terms of the power generated by the solar cells it manufactured, accounting for about 16 percent of the global total. The top three spots were held by mainland China, Germany and Japan. "Taiwan has solid strength in manufacturing semiconductors and flat panel displays, experience that is invaluable for the development of the solar energy industry," NTU's Lan Chung-wen says of Taiwan's competitive edge in the relatively new sector.

Motech, which was covered in the August 2008 issue of Taiwan Review, was the world's sixth-largest manufacturer of solar cells in 2007. In terms of production capacity, Gintech, which was founded only in 2005, expects to rank sixth in the world this year, contributing 8 percent of the projected world total of seven gigawatts.

Sino-American, an early player in the industry in Taiwan, began shifting its attention to making silicon wafers for solar cells in 2000 after 19 years of semiconductor manufacturing. The company's decision to diversify its product lines was reinforced as demand for its semiconductor products dropped by 36 percent in 2001 compared with 2000. "The company was thinking about the easiest way to diversify," says Sino-American president Doris Hsu. "Then we decided on the silicon solar cell wafers because we already have the resources needed in this field."

The largest of the seven producers of solar cell wafers in Taiwan, Sino-American started generating more revenue from its photovoltaic operations than from its semiconductor branch in 2006. Initially, Sino-American's biggest clients were Sharp Electronics Corp. and SANYO Electric Co., Ltd., two Japanese giants in the photovoltaic industry, but the Taiwan company is now selling its solar wafers around the world, including in the home market.

Taiwan's solar cell industry is also extending further upstream. In late November 2008, Sun Materials Technology Co. broke ground for a new factory in Litse Industrial Zone in Yilan County that will become the first plant in Taiwan to produce supplies of polysilicon, the major raw material used to make solar cells. "Yilan is developing into a center of the photovoltaic industry on the island, with a complete industrial chain, from upstream suppliers to downstream panel assemblers," says Yang Han-ting, an industrial development specialist with Yilan County Government, which has been promoting the local solar industry for three years. Today, there are nine photovoltaic-related businesses operating in the Litse Industrial Zone, including four solar cell manufacturers.

If everything goes as planned, Sun Materials' plant will begin operations in the middle of this year, annually producing 3,500 tons of polysilicon. The company also plans to open several other such plants in the future. Enterprises like state-owned CPC Corp., Taiwan, a large producer of petroleum and petrochemical products, have shown interest in following suit, a positive development for the solar cell industry in light of the historically high cost and limited supply of polysilicon.

Taiwanese businesses manufacture about 16 percent of the world's total output of solar cells. (Courtesy of Gintech Energy Corp.)
The private sector also realizes the need to innovate in this increasingly competitive arena. For example, Sino-American, which spends more than 3 percent of revenue on research, is developing a new technology to slice silicon ingots into extremely thin wafers. "Silicon is quite expensive, so those who can save on it can gain a competitive edge," Doris Hsu says. Only a year ago, the company produced wafers as thin as 0.22 to 0.24 millimeters. Today, it has the capability of providing 0.18-millimeter products and has demonstrated its ability to reduce the thickness to 0.16 millimeters. "Customers might find such a product too thin to be processed by their existing equipment, but we have to stay one step ahead of them; we have to get the products ready before they are needed in the market," Hsu says.

Gintech, meanwhile, has devoted itself to enhancing the conversion efficiency of its polysilicon solar cells, which can currently convert 15.2 percent of absorbed sunlight into electric power. The company's research and development department expects to increase this to more than 17.5 percent by 2015. Ellick Liao, president of Gintech, points out that researchers around the world are also looking for ways to enhance the longevity of solar module systems. "The life of solar module systems should be extended from the current 22 to 25 years to over 30 years by 2015," he says.

As recently as late last summer, the market for solar cells was booming, both in Taiwan and around the world. But in September, after rising to unprecedented levels, energy prices began to drop as the global economy started falling into a recession. With the cost of natural gas, coal and oil plummeting and companies looking for savings wherever possible, the market for photovoltaic products that generate electricity from sunlight has faced a downturn because prices for the products are still relatively high. Nevertheless, those in government and the industry itself remain bullish on the future of solar power because of the confluence of several indisputable trends: Competition for fossil fuel energy resources will remain strong, especially as a growing mainland China competes for global resources; few new deposits of oil, natural gas and coal are being found worldwide; options for storing nuclear waste remain limited and the public's perception of dangers associated with nuclear power generation has not changed; and because electricity generated via solar technology produces much less pollution and greenhouse gas than fossil fuels.


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