A company called Daystartech has released a new type of photovoltaic cell which, unlike almost all the cells currently in use, does not include silicon.

As demand for clean energy continues to grow, the solar industry forecasts millions of photovoltaic systems will dot the landscape by the end of the decade. However, a severe shortage of the silicon used in the systems threatens to dampen solar’s growth.

According to a recent solar-energy report from the nonprofit Energy Foundation, the U.S. solar industry could grow by more than $6 billion per year if the technology becomes cost-competitive with electricity from fossil-fuel sources.

Technology improvements are expected to reduce some of the cost difference over the next five years, but the federal government also needs to increase tax incentives for producing and purchasing solar energy, according to Energy Foundation Vice President David Wooley.

“They took it from a pathetic level to laughable and ridiculous,” said Wooley, referring to the current federal funding level for solar energy.

Wooley recommends a federal incentive plan similar to Germany’s, which gives a rebate to customers for each hour of electricity produced by solar energy. The production of solar energy grew by 152 percent in Germany last year, compared with 27 percent growth in the United States, according to a report issued earlier this month by consulting firm Solarbuzz.

Solarbuzz reports that new solar capacity increased in 2004 by 62 percent over the previous year to 927 megawatts, but the industry could have difficulties finding the raw materials needed to match that growth in 2005.

“There is a definite shortage of silicon out there right now,” said Gary Homan, vice president of Hemlock Semiconductor, which manufactures polycrystalline silicon that is used in semiconductors and photovoltaic cells.

Homan said that from 2000 to 2004, silicon manufacturers could not justify capital investments because the price for their products in the solar industry had dropped to less than $30 per kilogram, or below many companies’ costs. Demand for silicon from semiconductor manufacturers and the solar industry has increased sharply since then, and the price has nearly doubled, Homan said.

Companies in the spot silicon market (covering the purchase of smaller amounts for short-term needs) are now willing to pay up to $80 per kilogram of silicon — if they can find anyone to sell it to them, Homan said.

Hemlock Semiconductors is incrementally increasing production by 30 percent in 2005, but silicon producers such as Hemlock cannot catch up with demand without building new facilities.

“It takes three years to build a new polysilicon plant,” Homan said, so the shortage of silicon could last until 2008.

Semiconductor manufacturers are able to outbid solar companies for the available silicon because the material makes up a much smaller portion of their production costs, Homan said. “We are getting into a pricing war” between industries, Homan said.

Competition will likely increase, as the semiconductor industry is expected to grow by 10 percent in 2007 and 15 percent in 2008, according to analyst firm Gartner.

“The solar industry has been living off the scraps of the computer industry. This is not a recipe for success,” said Ron Pernick, founder of alternative-energy consultancy Clean Edge.

Increasing silicon production to meet the expected growth in solar cells would take hundreds of millions of dollars in investment, according to Pernick. He said silicon manufacturers would be more inclined to make large-scale investments if the federal and state governments established subsidies for solar energy.

Pernick’s Clean Edge collaborated with the Solar Catalyst Group, an industry advocacy consortium, on a report outlining a 10-year plan for public and private investment to make solar energy cost-competitive.

If enough silicon is available, a $5 billion federal investment over 10 years could help grow the solar industry to produce 9 percent of the total U.S. electricity needs, according to the report.

California Gov. Arnold Schwarzenegger has plans to shore up the electricity capacity of his power-hungry state by providing funding for solar energy. He has asked state legislators to approve funding that would encourage the installation of solar panels on 1 million rooftops by 2018.

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