Feeding the PV habit Silicon feedstock refers to the silicon prime material currently used in about 90 % of PV cells produced. It would be a brave analyst who would characterize the worldwide silicon feedstock market and the upstream features of the PV production chain on the basis of a single year’s figures, especially as these are difficult to reconcile comprehensively. Nevertheless, the latest IEA PVPS Trends report confirms a tightening of supply of high purity, low cost feedstock silicon for solar photovoltaic cells: to produce 1 MW of silicon PV cells typically requires some 12,5 tonnes of feedstock; in 2004 IEA-PVPS countries accounted for around 8 900 tonnes of feedstock against some 1 109 of finished cells. The US was the main producer of feedstock silicon for PV cells, with 5 100 tonnes in 2004. Germany and Japan also featured as suppliers via their production of electronics grade silicon. The US is a significant net producer for the global PV industry with Japan, and Europe to a lesser extent, reliant on imported feedstock. Further downstream, Japan and Australia show a need for wafers for cell production, while the US and Europe are net producers. Of course, the picture is not as bleak as the simple equation above might suggest. While there are relatively few actors engaged in the upstream activities, the full analysis must also consider feedstock held by manufacturers at year’s end, material being sourced from electronics industry scrap in non-PVPS countries, wafer production in the non-PVPS countries, recycling and unreported contracted sawing of wafers as well as in-house use of ingots. All the same, it is clear that pressure is on cell manufacturers to secure silicon supply contracts (as well as to use materials more efficiently) and on upstream producers to step-up their production. There are a number of research activities underway worldwide that are investigating low cost routes to the production of PV grade silicon feedstock. Demonstration plants have been commissioned by a number of companies to improve processing and investigate new technologies. The strong demand for PV in a number of countries has also seen the major companies announce dramatic expansion plans. Of course this does not happen overnight, and in the meantime one would expect to see market prices for crystalline silicon PV products adjust to changing demand and supply balances, and a renewed interest in other PV technologies.

The IEA PVPS Programme has published its tenth annual survey report analyzing the trends in the PV applications and markets in the participating countries, production in those countries, national policies and programmes plus a snapshot of the situation in emerging PV markets outside of the PVPS countries.

The report – Trends in photovoltaic applications: survey report of selected IEA countries between 1992 and 2004 – is largely based on the individual national survey reports provided by each country together with information provided by other sources within the IEA PVPS Programme. Information includes national market frameworks, public budgets, the industry value chain, prices, economic benefits, new initiatives, electricity utility interests, standards and codes and a technology overview.

By the end of 2004 the total installed capacity of PV in the PVPS countries reached just under 2,6 GW. The 770 MW installed during 2004 – 94 % of which was in Japan, Germany and the US – represented a record growth rate of 42 %. Grid-connected PV represents by far the largest share of installed capacity, due to the massive public support programmes in many countries. However off-grid applications account for the majority of the annual market in over one third of the PVPS countries and are significant in the non-PVPS countries.

Some interesting issues arose during 2004: budgets for market stimulation decreased for the first time in a decade while RD&D expenditure continued to increase; there were both unprecedented surges in market growth and collapses of domestic markets – the consequences of political decisions on national programmes; and evidence is emerging that the long-awaited concept of the self-sustaining grid-connected market might not be as far away as once thought, if the right environment is created and price forms only part of the equation.

The strong demand for PV products created a number of challenges for the PV industry worldwide – some met with confidence and others that may have implications for the demand / supply balance in coming years. In the PVPS countries annual photovoltaic cell production rose by 62 % in 2004 to 1 109 MW and cell production capacity increased by 39 %. Module production capacity rose by a staggering 70 %.

However this confidence was somewhat tempered by a considerable tightening of supply further upstream in the production value chain. Price movements reflected this: on average, both off-grid and grid-connected systems showed a slight increase in prices over the previous year, with two thirds of the PVPS countries showing price increases and one third decreases. A couple of countries showed dramatic price increases for grid-connected systems, reflecting reported significant rises in module prices.

This year’s report contains more information on the upstream production issues (see box on feedstocks), markets and production in non-PVPS countries (see article Asia means business) and the popular topic of public support measures (see table below).

Trends in photovoltaic applications is available as a 32 page printed color report and can also be downloaded from the publications' section of this website. Individual national survey reports plus non-PVPS country information can be found in the countries' section of the website. International and national figures and tables are available for download, all free of charge.

Information

• For further information, please contact your national Task 1 representative

The latest edition of the trends report provides a useful overview of alternative market support measures.
Notes: In practice, support measures can involve a combination of the above, and will usually function more effectively when this is the case. Funding issues are significant and are critical to the success of any mechanism. PV funding needs to be stable over time, separate from political interference, transparent and clearly targeted.

	Enhanced feed-in tariffs	Direct capital subsidies	Green electricity schemes	Renewable portfolio standards
Target audience	Grid-connected PV customers with business cash flow requirements e.g. housing developers, investors, commercial entities	PV customers with limited access to capital e.g. households, small businesses, public organizations.	Residential and commercial electricity customers.	Liable parties, typically the electricity retailing businesses.
Implementation	Typically administered by the electricity industry billing entity.	Requires considerable public administrative support to handle applications, approvals and disbursements.	Commercial business operation of the electricity utility; some public administrative support for accreditation of projects.	Public administrative support via a regulatory body.
Economic and political considerations	Method of internalizing the externalities associated with traditional energy supply	Up-front capital cost is seen as the main economic barrier to the deployment of PV. Can be used for both off-grid and grid-connected support programmes.	The ‘good public policy’ aspect of government involvement in selective, customer-driven, electricity business commercial activities raises some interesting questions. Utility projects may better realize the network benefits of PV.	Can be seen as a distortion in the functioning of the electricity market, especially if overly prescriptive.
	There are varying political perceptions regarding the use of public funds or funds generated by the electricity industry.
Potential effectiveness	Function of the size of the enhancement.	Can be very effective as a simple but blunt approach to deployment – but not necessarily cost-effective.	Becoming commonplace and well understood with regard to renewables in general.
Problems	Less predictable where specific results, such as limited capacity installed or rates of deployment are being sought. Can result in overheated markets on the one hand if rates are too high, but also to negligible impacts if rates are too low.	Often seen as too simplistic and not encouraging broader consideration of customer energy usage or willingness to pay for PV. Also criticized for inflating system prices and subsidizing more affluent consumers.	Less predictable where specific results are being sought. Unless PV specific, usually characterized by a broad, least-cost approach favouring hydro, wind and biomass.	The general requirement for renewable energy may simply encourage the lowest direct cost renewable energy options (and not PV) for consideration by the liable parties.
Solutions	Clearly target this approach on specific, limited market segments.	Explore willingness to pay and social equity issues. Clearly reduce subsidy rate over a period of time.	Encourage / create demand for PV specific electricity.	Consider a portfolio approach to the RPS, or at least PV specific measures.

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