No Question of Solar Momentum in U.S.

Much of this growth can be attributed to the success of the photovoltaics (PV) industry. The United States continues to lead the world in manufacturing of both the polysilicon feedstock used in most PV applications and next-generation thin-film technologies. In 2007, U.S. PV manufacturing grew by 74% and U.S. PV installations grew by 48.5% to 150 MW,¹ both among the fastest growth rates in the world.

However, this demand for PV has created a logjam in polysilicon production. In fact, solar surpassed the microchip industry as the biggest client for polysilicon in 2007. Some solar companies are struggling to provide even a third of customer demand. The polysilicon industry has recognized this positive outlook for the solar industry and invested in new production facilities that will come online later this year and in 2009. As many as 16 new polysilicon production facilities could be up by the end of 2009, according to the Prometheus Institute for Sustainable Development (Cambridge, Mass.).

Hemlock Semiconductor (Hemlock, Mich.) has invested $1.5B in the past three years to increase production. In June, Hemlock opened a new production facility in Michigan that will nearly double its annual output capacity of polysilicon to 19,000 metric tons by the end of 2008. It is the largest polysilicon facility in the world.

MEMC Electronic Materials has opened a polysilicon production unit at its Pasadena, Texas, facility. The new unit will add 50% production capacity to the facility, which already accounts for two-thirds of MEMC's polysilicon production.

Seasoned companies are ramping up for thin-film amorphous silicon cell production as well. Oerlikon is opening a new factory in Singapore that manufactures equipment for the production of thin-film silicon solar panels. The company expects to quadruple production capacity by 2009. Another example is new solar panel manufacturing facilities in Germany being built by Applied Materials.

With an end to the shortage of polysilicon, consumers could see the price of solar panel modules fall by as much as one-third by 2010, allowing the solar industry to take another step toward matching the price of traditional fossil fuel energy sources for millions of American families and businesses.

Despite this dynamic growth in every sector of the solar industry, there are dark clouds on the horizon. The Federal Investment Tax Credit (ITC), a major catalyst for growth, is set to expire at the end of 2008, and Congress has been slow to extend it. Without an eight-year extension, most of the solar projects that are in the pipeline today will not be realized, as capital investment dries up and investors turn elsewhere.

Along with the ingenuity and entrepreneurial spirit of the industry, these tax credits are vital to bringing solar to economic scale with current non-renewable energy sources that dominate the market place. Industry and the public recognize the importance of federal support for solar. A June 2008 study by Kelton Research found that 94% of Americans believe it is important to develop and use solar energy, and 77% believe that the development and use of solar should be a major priority of the federal government.

Assuming Congress catches up with public sentiment and the PV industry, all of the cards are lined up to make the U.S. solar energy industry a robust, sustained market that provides millions of families and businesses with a clean, reliable energy source, creates tens of thousands of American jobs, and spurs billions in investment in the U.S. economy. The PV sector is poised to lead the way in a new, solar-powered economy.