Most of the world's solar panels use polysilicon, but as the race heats up to find the most efficient and cheapest way to harness the sun's energy, cadmium telluride (CdTe) and its biggest supplier, Canada's 5N Plus Inc, are coming under the spotlight.
Given the emphasis on cheaper solar power, more companies plan to enter the thin-film market currently dominated by First Solar.
And, as the market for low-cost thin-film panels grows, industry experts say First Solar, the biggest producer of thin-film panels that use CdTe, will look to buy 5N Plus to secure its supply of the semiconductor material.
CdTe has a 10-15 percent cost advantage over the more widely used silicon, but tellurium, a tin-colored component of CdTe and a byproduct of the copper industry, is not widely available.
Apart from 5N Plus, the few other CdTe suppliers include China-based Apollo Solar and Vital Chemicals, PPM Materials based in Germany, Japan's Nikko Metals, and Honeywell International's Honeywell Electronic Materials.
Analysts say annual global demand for CdTe will reach about 260 metric tons by year-end, virtually all of which can be produced by 5N Plus. Demand could hit 800 metric tons by 2013.
A SLUGFEST FOR CdTe SUPPLY?
Favorable government regulations and the lower cost of CdTe panels have prompted firms such as GE Inc, Q-Cells and privately-held Abound Solar to get interested.
GE plans to build 30 megawatt (MW) in 2011, but will then likely look to expand its capacity. Abound Solar has secured a $400 million grant from the U.S. Department of Energy and plans to build over 840 MW by the end of 2013.
For First Solar, buying 5N Plus would help keep costs in check and rivals at bay at a time of supply constraints and increasing demand for tellurium.
First Solar said on Thursday it was adding capacity to meet growing demand — opening two new plants which, with other expansions, will nearly double production capacity to above 2.7 gigawatt (GW) in 2012.
