Qatar to build silicon plant

The Qatari Government has teamed up with a major German solar technology company to build a $500 million (Dh1.83bn) plant to produce raw materials for panels. The move could place Qatar in contention with Abu Dhabi to take the lead in supplying the region's burgeoning solar market. SolarWorld, one of Germany's largest solar technology companies, announced yesterday it would take a 29 per cent stake in the plant at Ras Laffan Industrial City, which will have capacity to produce 3,600 tonnes annually of polysilicon, the raw material used in crystalline solar panels.

If the partners decide to invest in additional plants to transform the silicon into panels that produce electricity, they would compete directly with plans by Masdar, the Abu Dhabi Government's clean energy firm, to open its own panel manufacturing line in the emirate using a different technology. SolarWorld, a vertically integrated manufacturer that makes raw materials, assembles panels and markets them globally, indicated it had plans for such plants in Qatar after the polysilicon facility opens, scheduled to be in the third quarter of 2012.

"Here, a forward integration along the entire solar value chain - all the way to the finished solar power module - could be implemented," the company said. But without regulation by GCC governments to support solar panel purchases, the market will remain negligible, analysts say. It costs much more to generate electricity from solar panels than natural gas, the prevailing power source, so without subsidies or some other form of financial support, utilities and homeowners have no economic rationale to buy panels.

The Qatar plant's silicon output would be likely to be exported outside the region, said Martin Simonek, a solar power analyst at Bloomberg New Energy Finance. "Everything about silicon is about selling it as cheap as possible because there's enormous pressure from competition," he said. "Silicon manufacturing is intensive in energy - in Qatar, the energy is much cheaper than in Europe and a little cheaper than in China."

Two separate panel manufacturing plants in the UAE have been delayed in the past year. Masdar PV, a subsidiary of the Abu Dhabi Government firm, was to build a plant at Taweelah. Rainer Gegenwart, the company's chief executive, said in January construction had been delayed because the Abu Dhabi Government had not yet created the regulations to support a domestic market. In Dubai, a firm called Solar Technologies was supposed to start construction on a solar panel plant at Techno Park. Construction was delayed because of the economic crisis, the company said last month, and has yet to begin.