Falling silicon prices hurt Hemlock, but help solar installers

Published January 18, 2013

Posted Jan 15, 2013 in the Nashville Business Journal by Jamie McGee

While the oversupply and price decline of polysilicon has hurt the prospects of Hemlock Semiconductor, it has helped those companies further along on the solar supply chain.

Steve Johnson, president of solar panel design and installation company LightWave Solar, based in Antioch, said the roughly 20 percent decline in silicon prices in the past five years has allowed him to drop his installation charges by the same amount over the past six months. His business has grown each year since opening in 2006, increasing as much as 40 percent in 2012, he said.

"It's not great for Hemlock," he said. "Our costs have fallen. … Cheap silicon is good for us."

Hemlock, a provider of silicon-based material used to make solar products, announced Monday it will layoff about 100 employees in Michigan and 300 in Clarksville in response to a saturated polysilicon market and the threat of tariffs on its products sold in China, one of Hemlock's largest markets.

The U.S. solar industry is growing, with installed capacity more than doubling in 2011, reaching 1,885 megawatts, a number exceeded in the first three quarters of the 2012, according to Solar Energy Industries Association. The growth is due in part to a 20 percent drop in installation prices stemming from better efficiency and lower component costs, according an association report.

The rapid growth could eventually bode well for suppliers, such as Hemlock, if and when the demand outpaces supply, Johnson said.

"As the industry grows, there will be more demand for silicon," he said, adding that silicon was significantly more expensive when Hemlock began planning its plant. "Right now, no one is going to build the silicon plants. … As installations exceed supply, prices will run up again. That may be years down the line."

Johnson said it is important for the U.S. to continue to focus on new energy methods that do not have the recurring costs associated with fuel and coal.

"With solar, the fuel is free," he said, adding that the costs include the equipment and maintenance. "Your cost is in our equipment. Once that investment is made, you are all set."

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