Siberia: Solar Power’s Next Heartland?
Posted by Keith Johnson
Guy Chazan reports, February 7, 2008
Source: The Wall Streets Journal
http://blogs.wsj.com/environmentalcapital/2008/02/07/
siberia-solar-powers-next-heartland/?mod=googlenews_wsj
Nitol Solar wants to become one of the world’s biggest producers of high-purity silicon, the main ingredient of solar cells. That’s pretty ambitious, considering it only started making tiny amounts of the stuff last month. But these are strange times. Nitol is selling 25-30% of its equity in an IPO in London next week and its advisers say it’ll have no trouble raising $250-300 million. That would give the company a total market cap of as much as $750 million. Not bad for an outfit whose main asset is a Cold War-era chemical plant in the depths of Siberia.
Nitol couldn’t pull it off without the world’s thirst for ultra-pure polycrystalline silicon. Global production is dominated by a handful of players, such as Wacker Chemie AG and Hemlock Semiconductor Corp. To secure enough supply, makers of finished solar panels like Solarworld AG have signed long-term supply contracts with the likes of Wacker, often for 10 years or more.
High-purity silicon is such a hot commodity because it’s incredibly hard to make. Silicon makes up a quarter of the earth’s crust by mass. But for solar panels it has to be 99.9999% pure. To achieve that, you need to react silicon with hydrochloric acid to form gaseous trichlorosilane, or TCS, which is then separated in a reactor. TCS is extremely corrosive and highly-flammable — deterring most people from going near it.
Nitol’s plant in Usolye-Sibirskoye has been producing TCS since the 1970s and last month the plant began making high-purity silicon. Nitol says it will be making 3,700 tons a year by 2010. Already it has sold deliveries through 2015, to panel makers like Suntech, Trina and DC Wafers. Nitol says its forward order book is worth $1.5 billion.
It’s those forward contracts and the promised revenue stream that Nitol hopes will pique investors’ interest. That and its low energy costs, cheap raw materials and plentiful land for expansion (we’re talking Siberia, after all). In a market where silicon is gold dust, they might be right.