Fluor seeks to raise exposure to photovoltaics for solar cells

Here comes the sun

30 April 2008 17:44  [Source: ICB]

US engineering and construction giant  Fluor focuses on solar cell material plants to offset the historical cyclical downturn in petrochemicals

Joseph Chang/New York

THE GLOBAL petrochemical construction boom is starting to plateau, but US-based Fluor is looking on the bright side. The company aims to raise its exposure to photovoltaics projects in the coming years to buffer against a chemical downturn.

"While we're currently riding the wave of Middle East petrochemical projects, we want to diversify our project portfolio into other areas like the photovoltaics segment," says Peter Oosterveer, senior vice president and chemical business line leader of Fluor. "Once the cycle turns down, we need something to sustain our current backlog, and the demand for solar cell materials is expanding rapidly."

Fluor has a chemical project backlog of about $6bn (€3.8bn), up from just $430m in 2004. And photovoltaics projects make up around 35% of the backlog. In the next four years, Fluor aims to grow its chemical revenues by 15%/year, with a substantial percentage of the growth projected to come from photovoltaics.

Fluor is currently building ­polysilicon facilities for Norway's REC Silicon, China's LDK Solar, Norway's Elkem Solar and Russia-based Nitol. In addition, the ­company is performing front-end engineering and design activities for several other new facilities.

Demand for polysilicon, the key raw material used in the production of solar panels, is growing at a rate of 40%/year, says Oosterveer.

Solar-grade polysilicon sells for over $350/kg on the spot market, up from about $100/kg in 2006. And long-term contracts are showing record-high pricing.

"There is a huge increase in demand for solar panels. We don't see any of the polysilicon producers holding back," he says.

One of Fluor's largest photovoltaics projects is the construction of a $1.2bn, 15,000 tonne/year polysilicon facility for LDK Solar in Shanghai, China. The project is expected to start initial production towards the end of 2008.

"This is the largest polysilicon project in the world and will add 15,000 tonnes/year of capacity to total worldwide capacity of currently less than 100,000 tonnes/year," notes Oosterveer.

For REC Silicon, Fluor is finishing up a 6,500 tonne/year polysilicon plant based on REC proprietary technology, in New Moses Lake, Washington, US. The project, which will cost $850m, is expected to be completed by the end of 2008.

A second similar-sized facility for REC Silicon is being built by Fluor for completion in the second half of 2010, and ­preparations are underway for the development of a third plant to be built in an undisclosed location.

For Elkem Solar, Fluor is building a 5,000 tonne/year metallurgical-grade polysilicon plant in Kristiansand, Norway, at a cost of €350m. The project is expected to be completed by the third quarter of 2008.

And a smaller facility of 1,500 tonnes/year is under construction in Usoyle, Russia for Nitol. The project, expected to cost about $300m, will be completed by the fourth quarter of 2008.

A majority of the polysilicon facilities Fluor builds for its customers use the well-known Siemens reactor process, which is highly energy-intensive. However, some are developing new technologies and Fluor is working with them on the new cutting-edge processes that may be less energy-intensive.

REC Silicon is developing its proprietary fluid bed reactor technology, which could significantly reduce electricity costs. And Elkem Solar is working on a metallurgical route to producing polysilicon, which would reduce the cost of building and operating a facility.

Despite the breakneck pace of capacity expansions, there is no consensus view on overcapacity, says Oosterveer.

"Virtually all the producers have signed offtake agreements on their new capacity," says Oosterveer.

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