SolarTec shelves plan for photovoltaic plant in Singapore

It finds gap in raw materials supply chain; opts for solar glass plant in M'sia
Chen Huifen, Business Times 17 Mar 08;

SOLARTEC is shelving its plan to build to build a S$100 million photovoltaic power plant in Singapore. The German solar company is setting up a US$140 million solar glass-making facility in the town of Kulim in the Malaysian state of Kedah instead.

In town for its pre-IPO fund-raising recently, SolarTec CEO Erich Merkle said his company had identified a gap in the supply chain while sourcing for raw materials for the production of photovoltaic (PV) panels in Germany.

'We were looking into the market and we found out there was not one company that was able to supply the glass totally,' said Dr Merkle. 'So you would have a patchwork of different suppliers. And we think this is not a very good situation, because we would have different glass quality every time. We thought, 'well, wouldn't it be better to go into glass production?' '

While there are many glass makers in the market, Dr Merkle reckons there is none that specialises in producing the totally flat, float glass types solely for the thin-film PV industry. Many are traditional manufacturers focused on supplying to the booming construction and automotive sectors. They may occasionally produce small quantities of solar glass at the request of customers.

The situation is posing a challenge because the type of glass required thin-film PV panels is different from conventional glass. Glass used for buildings, for example, would keep the light transmittance rate low to keep heat and glare out of the building. However, the glass used in PV panels would have to be ultraclear, with a high transmittance rate and low iron content to extract as much solar energy as possible.

'Before the market really exploded, there was always a way to get enough glass,' said Dr Merkle. 'The solar glass that was used in the market was the capacity of one float glass line in 2006. But now with the market growing at a rate of 50 per cent every year, we will need the capacity of 80 lines in 2020. So this is a huge increase in demand.'

Generally, one production line can produce about 16 million square metres (in surface area) of float glass (glass sheets made by floating molten glass on tin) per year - enough to fill roughly 25-30 containers a day. SolarTec said it will start its glass plant in Malaysia with an initial production line, and bump it up to two as demand grows.

The company has already started its first dedicated solar glass manufacturing factory in the town of Forst in Germany. Apart from the location being close to raw materials such as sand, sodium carbonate and natural gas, the choice of Malaysia for the second site is also driven by the prospect of a ready customer in First Solar Inc, which is building a 100MW solar module factory scheduled to start operations this year.

'In Singapore, there is no market at present,' said Dr Merkle. 'There may be a market in 2-3 years, when REC (Renewable Energy Corp) has started their investment. We may start the next line in Singapore - but then, it's no problem either to deliver from Kulim to Singapore.'

But SolarTec is not giving up on its original plans to build a PV power plant in Singapore either. It will look into setting up a plant to make next-generation thin-film solar panels after the Kulim factory is operational. Solar glass production has become a priority partly because it constitutes more than 50-60 per cent of the material cost for making thin-film PV modules.

'If you can get good- quality solar glass, you can make highly efficient thin- film modules,' explained Dr Merkle. 'So the price of solar electricity may drop. And with bigger production volumes, the prices may come down even further.'

Headquartered in Munich, SolarTec posted revenue of 42 million euros (S$90 million) last year, with a net profit of 6.3 million euros.