Even if only some of the announced projects go to the next stage, capacity expansion is growing at an unprecedented level across multiple geographies. There are bound to be some bottlenecks as the supply chain gets established and companies rush to acquire basic equipment, components, and materials.

Sure enough, there have already been price increases of one of the key materials for amorphous silicon (a-Si) thin film modules, silane gas. Monosilane (SiH4) gas is used in the chemical vapour deposition process to form the sub-micron layers on glass that absorb photons and form the basis of a thin film PV panel.

Next to glass, process gases are the priciest component in a thin film module’s bill of materials, representing up to 20% of costs. The range for silane in the module BOM is 3% to 6%, depending on the OEM, according to Dean O’Connor, head of solar at Linde Electronics. Silane’s contribution can be between 2% and 4% of module cost.

No shortages, just jitters

Are the recent price jumps an indicator of a shortage of material? PV Manufacturing News sought an answer by asking several key players in the thin film PV supply chain.

«Recent jitters in the supply chain have caused several silane sellers to announce price increases lately, taking advantage of the climate of supply concern around silane,» is Applied Materials’ view on the situation according to its spokeswoman.

It is a temporary thing as Applied Materials sees it. «There is more than enough supply even today and prices will go down as these ‘jitters’ clear out,» comments Applied’s spokeswoman. It is an «inventory issue», according to Kurt Levens, REC Silicon’s VP Business Development and Planning who did not comment on the specifics of the current price increases.

Speaking in general terms, Levens said that «usage patterns» among end-users and the gas suppliers can get out of step, leading to «excesses or shortages» in the supply chain.

Praxair offers further insight into recent price increases: «Costs for raw materials like silane have gone up, energy prices too. The cost of packages for containers and trailers has also gone up,» explains Ken Spall, VP Business Development Photovoltaics at Praxair Electronics.

How long will the higher prices hold? «Higher prices are to be expected when demand exceeds supply. This is basic economics. Higher prices are not going to be forever, but certainly they will be higher over the next 24 months,» states Christophe Fontaine, Group vice-president of electronics for Air Liquide.

Silane containers from LindeGas companies are not expecting a quick drop in costs. «The conditions that caused the price increases haven’t changed and are not expected to change over the next few years. The TF display market is expanding due to flat screen TV sales, there is not a surplus of silane in the market, and there’s a growing number of thin film PV fabs starting up,» says Linde’s O’Connor.

«We are cautious on our commitments and we hope our competitors are doing the same. If I was a PV producer, I would be making sure to secure my supply of silane over the next 24 months,» adds Fontaine.

Applied Materials expects prices to fall in the next two years. «We have been managing the supply chain in helping them prepare for the ramp and we believe that there will be adequate supply and supplier mix by 2010 to drive prices down, and provide enough silane to meet demand,» says Applied Materials spokeswoman.

REC Silicon does not see dramatic changes ahead. «Prices have been stable over the past 20 years. We would expect that to continue,» said Levens.

Silane Market Dynamics

It is worthwhile taking a closer look at the silane market. The gas is already a hot commodity in the fast growing flat panel display market, as well as semiconductors. The advent of thin film PV is expected to expedite that growth rate.

There are just five silane fabs selling into the merchant market. The top three are REC Silicon, MEMC, and Denal. Their product is distributed by gas companies, such as AirLiquide, Praxair, and Linde who often take on the responsibility of on-site installation, supply, and increasingly, maintenance too.

«A lot more silane is used in thin film than is traditionally used by wafer based PV cell manufacturers, much larger quantities,» points out Fontaine.
It’s a difficult molecule too making the barriers to market entry are high, which makes some established gas suppliers believe they have a larger role in the thin film value chain.

«A new paradigm is emerging,» says Linde’s O’Connor. «We see ourselves moving from supplier to partner. We can help to drive costs down and are already involved in R&D with Malibu,» says Linde.

And they are making investments accordingly. Air Liquide is expanding materials handling centers in Japan, Taiwan, and China, as well as buying more containers for its distribution fleet. Praxair is building a new silane transfill plant in South Korea, while Linde has a JV with Nippon Sanso with a recently opened plant in Germany, under the Linde Nippon Sanso Group banner.

All three told PV Manufacturing News about R&D efforts on-site with customers to help them get closer to grid parity.

Silane Fabs Pump Up the Volume

Intermediary suppliers are clearly anticipating future demand, what about the silane fabs?

REC Silicon, by far the largest silane producer, is forecasting an overall 30 percent growth for silane (CAGR). It is increasing production to serve internal and external polysilicon customers and to boost supply for the merchant market.

«We are dedicated to the merchant market. We don’t play the spot market. And we don’t view our silane output as surplus,» says Kurt Levens, VP Business Development and Planning told PV Newseletter.

It is currently expanding production and if all goes according to plan it will be capable of producing 29,000 metric tons annually in 2010.

Silane production is supported by the operations and internal processes the company established back in 2002 when it created a business unit dedicated to the merchant market.

REC Readies For Growth

EC Silicon has an indirect sales model, marketing to end users so that can understand their requirements and plans. The gas suppliers, whose names Levens declined to disclose, are the sales channel partners.

«It is self-serving to say this,» he concedes, «but end users need to understand where the silane is coming from.» Levens points to REC Silicon’s large size, its ability to scale production, and its business model which seeks to establish deep relationships with end-users.

That also means long term contracts. Levens comments on the practical reason for that: «It’s possible to balance production given enough lead time on gross amounts.»
Moreover, it makes new investments a less risky proposition. It shares the risk, so to speak. «The last thing we want to do is invest irrationally,» says Levens.

It is a view echoed by Praxair’s Ken Spall who suggested that the key is to view silane as a «strategic» material. «Make long term contracts with reputable suppliers to get your supply in the short and long term,» says Spall. By getting such contracts in place, it should «make sure the producers invest capital accordingly».

Denal Expansion

Expansion is also under way at Denal, the number three silane producer in terms of current output, which is at 500 tons annually at its plant in Omi, Japan.

The Denal plan is to double production to 1000 metric tons annually by end of 2010. By 2011 annual capacity will be about 1500 metric tons, with the ability to add another 500 metric tons, if required, according to Christophe Fontaine, Vice-President Electronics of Air Liquide. (Denal is a joint venture between Air Liquide and Japan’s Denka Group).

All this means building at least one, possibly two new plants The plants will exploit new design know-how and the dates provided include consideration of the amount of time it takes to construct, qualify, and certify new infrastructure.

«Depending on the market development, the construction projects may take place in parallel. All the new plants may not be located in Japan. We are also considering another Asian location, in addition to Japan,» says Fontaine.

The Toolmakers’ View on Silane Supply

The third group involved in silane’s supply and demand dynamics is the toolmakers, large companies like Applied Materials, Ulvac, and Oerlikon Solar, as well as smaller, quick-growing equipment suppliers such as Energo Solar.

They are all stimulating demand for silane with their thin film turnkey fabs.

Oerlikon Solar says it stays close to silane suppliers to understand factors that might impact supply and costs. «If the market gets big, fast, there could be short term price increases. We monitor and meet with gas suppliers on an informal basis to ensure that they understand that success for all is based on the right prices and the right amount of supply. And from what we hear, the gas companies are well aware that they have to increase production.»

«Once they [gas suppliers] see volumes, you could expect prices to accommodate that,» says Oerlikon Solar.

Energo Solar, which sells smaller thin film lines, says, «We are concerned that silane gas prices are going up. But because we use less of it comparing to other OEMs, we are less sensitive [to price changes],» says Ruurd Boomsma of Energo Solar in Switzerland. (See Energo Profile to find out more about its solution’s silane consumption.)

Industry insiders’ commentary makes clear that long term contracts are one way that rapid growth can be managed, regardless of whether the cause of recent price hike was due to too little silane being produced, too little stored in inventory, or too few containers and packages available for shipping the gas.