Taiwan's Solar Power Industry

It doesn't get much play in the mainstream press, but one of the hottest industries in China right now is the solar power industry. Commonwealth Magazine had a report on the issue last month:

So just what is it about solar cells that is proving to be such a powerful draw? And how has it come to pass that so many new players in Taiwan and China have arisen to join the solar energy fray like mushrooms after a rainstorm since Motech Industries formally entered the field in 1999?

“If you have the capital to buy turnkey [manufacturing] equipment from overseas, it’s an immediate gold mine,” says Motech CEO Y. Simon Tsuo, who has been in the vanguard of Taiwan’s solar energy industry. The proliferation of mainland Chinese companies scrambling to enter the solar energy field is akin to flowers blooming everywhere, Tsuo says.
In June of this year, Tatung Group-invested Green Energy Technology Inc. and U.S. giant Applied Materials Inc. announced an agreement for cooperation in the solar energy sector.

Driving along the highway in China’s Jiangsu Province that runs from Jiangyin through Wuxi to Nanjing provides something of a glimpse of the future, as glistening in the sunshine on the rooftops of many of the residences in the small towns scattered along the route are solar cell-powered water heaters.

Solar cells are not only coming into wide use among the residents of small-town southern China; domestic Chinese companies producing them have rapidly proliferated as well. The manufacture of solar cells has indeed become the hottest money technology in China.

Even without the solar power boom in China, Taiwan would still have considerable presence in the solar cell manufacturing industry (see Table 1). “The [chief] consideration in our industry right now is speed,” Gintech’s Kuo says candidly, observing that companies can waltz right in to the solar power industry and are able to immediately turn a profit, precisely because the industry is facing a shortage of upstream materials. “If you can get your hands on the polysilicon raw materials, you’ll have endless business,” Kuo asserts.

To understand the scramble for scarce raw materials, one must take a look at the solar cell chain of production. Building one solar power generation unit requires a lengthy process, including securing the single crystal silicon or polycrystalline silicon for wafer production, as well as wafer slicing, solar cell production and final assembly. But there are currently only about eight foreign firms involved in the production of the needed polysilicon raw materials, and production capacity has been expanding at a snail’s pace. Thus the current dilemma manufacturers face is “whoever gets the raw materials is who will make the money,” Sino-American Silicon Products Inc. chairman Lu Ming-kuang concedes.

Taiwan has about a 3% share of the world solar market, according to the information for the upcoming Solar Photovoltaic Tech exhibition in October. The site notes:

According to the latest data compiled by Solarbuzz, 1,744 MW of solar energy generation capacity was installed globally last year, growing by 19% from the previous year. The market has officially set a new record of US$10 billion in annual revenue. Demand for solar power batteries is still growing, and according to Solarbuzzby, production by 2011 is reach US$31.5 billion . Production capacity of the global solar energy industry soared 33% growing to 2,240 MW in 2006 from 1.656 MW in 2005. Of all the producing nations, Taiwan and China lead the way for best performance.

And last year the market share of Taiwan solar product enjoyed strong export growth. According to Taiwan’s Industrial Technology Research Institute (ITRI), Taiwan’s photovoltaic industry is very well positioned due to its strong background in semiconductor manufacturing. Links between the two technologies have helped Taiwan lead the way in the development of its solar energy industry. Taiwan’s geographical location also makes it highly suitable for solar energy generation. In 2004, the world market for solar power transformers was worth US$606 million, and Taiwan held a 2.93% share. All the indicators say Taiwan is on the bright road to the future.

The government here, recognizing the importance of the industry, is taking steps to promote it:

The Bureau of Energy under the Ministry of Economic Affairs recently proposed a plan for the development of the local photovoltaic industry. The target is to expand the industry's annual output value to NT$213 billion (US$6.66 billion) by 2015. This is approximately 30 times the industry's projected 2006 production value of NT$7 billion.

The Bureau of Energy has adopted four major strategies in order to achieve this target. One strategy is the provision of assistance for the development of the local polysilicon industry in order to help domestic photovoltaic companies solve the chronic shortage of polysilicon materials - which is the major bottleneck to the industry's development at present.

Another strategy is to promote the development of polysilicon production technology, by recruiting retired technicians from abroad, by attracting foreign polysilicon suppliers to set up factories in Taiwan, and by investing in the development of such technology. In order to help manufacturers develop high-efficiency, low-cost polysilicon solar cells, the government in Taiwan will further provide subsidies to high-tech products that focus on the manufacturing technology for thin-film silicon chips.

The third strategy is the provision of assistance for the development of next-generation solar cells. The fourth strategy is the offering of help for the development of techniques for the testing and inspection of photovoltaic modules, photovoltaic area networks and photovoltaic production equipment.

Most significantly, the government in Taiwan is following the example of other governments by devoting efforts to the development of the local photovoltaic market. The aim is to boost Taiwan's output of photovoltaic power to 21 megawatts by 2010, up from just 1.2 MW in 2004. In order to achieve this goal, the Bureau of Energy is encouraging city governments to build solar-energy-related structures, to construct solar-energy demonstration buildings at transportation hubs, to subsidize households in the installation of solar roofs, and to establish emergency solar-power-generating facilities in mountain villages and on offshore islands. Meanwhile, the government is also working to enact a Statute for the Development of Renewable Energy with the aim of boosting the development of solar and other renewable forms of energy.

The leading makers of polysilicon for photovoltaic cells are US firms, and the US solar market has rebounded thanks to initiatives from California, despite a decade of neglect at the Federal level that handed our lead to Japan and Germany. This promises to be a gigantic market in the future -- after all, we have to have some use for all those deserts global warming will create....

[Taiwan]