On March 13, the market and investors hailed the first stock to rise above the NT$1,000 (US$31.34) per share mark in 15 years.
Unlike big-names such as Taiwan Semiconductor Manufacturing Corp (台積電) or Hon Hai Precision Industry Co (鴻海精密), the new champion of the local bourse, E-ton Solar Tech Co (益通光能), is a relative unknown.
But the Tainan-based solar cell maker rocked the market with its initial public offering -- for which more than 600,000 investors scrambled for 265,000 shares and a rich return of NT$650,000 -- and it didn't take long for the company to claim the top spot after making its debut on the over-the-counter market on March 8.
PHOTO: LIN CHENG-CHIH, TAIPEI TIMES
The former king of Taiwan's public companies was also a solar cell maker, Motech Industries Inc (
The prevailing market perspective is that E-ton's share price is not reasonably valued, given its small capitalization of NT$251.58 million.
Motech, despite having earned only NT$0.56 per share for the first quarter, saw its share price reach a high of NT$885 last Friday. The share prices for both solar cell makers are pushed up by psychological factors whenever oil prices hit a new high.
Given the declining amount of fossil fuels and the world's hunger for renewable energy, the willingness of investors to jump on the solar bandwagon is understandable.
Other forms of energy -- coal, natural gas, nuclear energy, wind power, hydraulic power and terrestrial heat -- have some problems. Coal and natural gas contribute to the greenhouse effect, nuclear energy poses safety concerns, while wind power, hydraulic power and terrestrial heat are dependent on geographical factors.
In comparison, solar power is clean, safe and can be used almost everywhere, which is why it has become the most feasible and promising energy to exploit.
GENERATING POWER
A solar cell, or photovoltaic (PV) cell, contains silicon mixed with with phosphorous and boron, which create N-type silicon ("n" for negative) that has free electrons, and P-type silicon ("p" for positive) that has free holes.
When the electrons and holes mix at the junction between N-type and P-type silicon, they form a barrier, making it harder and harder for electrons on the N side to cross to the P side. Eventually, equilibrium is reached with an electric field separating the two sides.
When light, in the form of photons, hits the solar cell, its energy frees the electrons and holes. If they roam into the range of electric field, the electric field will send electrons to the N side and holes to the P side, making electrons flow through the path to their original side to unite with holes that the electric field sent there.
Each photon, given sufficient energy, will free exactly one electron, and result in a free hole as well. If this happens close enough to the electric field, or if free electron and free hole happen to wander into the field's range of influence, the field will send the electron to the N side and the hole to the P side. The electron flow provides the current, and the cell's electric field causes a voltage. With both current and voltage, the power is produced.
BOOMING MARKET
Even though the first solar cell was used in a Russian man-made satellite back in 1957, solar power has yet to become a major energy source worldwide.
According to a report by Solarbuzz LLC, a San Francisco-based solar energy consultancy, worldwide PV installations increased by 34 percent to a record high of 1,460 megawatts (MW) last year, up from 1,086MW installed during 2004. But solar energy production accounted for less than 0.01 percent of primary energy demand in the world, which is a far cry from solving the energy crisis.
The cost to produce solar power is also high, at five times to more than 10 times the cost to generate conventional electricity, depending on the country involved.
Nevertheless, solar energy does have a promising market. One major solar advocate is Germany, which took a 57 percent share of the worldwide PV market last year, followed by Japan with 14 percent.
Another push is from the US. California's legislature passed the "Million Solar Roofs Initiative'' in January that budgets US$3.2 billion to subsidize homes, businesses, farms and public buildings that install solar energy systems. The goal is to install 3,000MW of solar power by 2017.
The Chinese authorities are also mulling installing 100,000 solar panels on roofs in Shanghai to generate 430 million kilowatt-hours of electricity.
On the road to solar power, however, Taiwan, has seriously fallen behind, with few shiny solar cells on the nation's rooftops.
TAIWAN LAGGING
"In Taiwan, it is still difficult to use solar energy to power houses or add electricity to the power grid, due to its high costs and immature technology," said Chen Yi-ling (
Countries promoting solar power usually provide subsidies as incentives to encourage installation, and the government has a limited budget for these kinds of projects, Chen said.
The German government, for instance, subsidizes 0.574 euros (US$0.72) per kilowatt-hour to individuals and companies who install solar panels on their buildings. But the subsidies are projected to grow from US$728 million this year to several billion dollars by 2010, a level too high for policy makers to support.
Taiwan's government, however, subsidized several solar PV demonstration systems, whose total capacity exceeded 1MW by the end of last year. The National University of Kaohsiung's system has a capacity of 26.4 kilowatts and reduced the school's electricity bill by more than NT$45,000.
Another demonstration building is the Tainan County Government, which has a capacity of 12.42 kilowatts and now supplies the electricity for the first floor of the county hall.
Even if solar energy takes off here, Chen said, it will be largely in sunny southern Taiwan instead of the north, which has fewer cloud-free days.
Taiwan, however, is the No. 3 country in the world in solar water-heater systems, with the installed area of heat collectors nationwide reaching 1.42 million square meters, according to bureau statistics.
The cloudy prospects for the domestic market have not stopped companies from joining the solar race, currently led by the world's top three solar cell manufacturers -- Japan's Sharp Electronics Corp, Germany's Q-Cells AG and Kyocera International Inc, also of Japan.
So far, Delta Electronics Inc (台達電子), Powerchip Semiconductor Corp (力晶半導體), United Microelectronics Corp (聯電), Formosa Plastics Group (台塑集團), Tatung Co (大同) and a host of companies have entered the market by establishing new companies or investing in related firms.
Competition also comes from across the Taiwan Strait. Suntech Power Holdings Co (
WARNING SIGNS
But these companies all face a common problem -- the shortage of polysilicon, the raw material used for making solar cells and semiconductor wafers.
According to a report by Merrill Lynch, demand for polysilicon is increasing 30 percent annually, while supply has only expanded by 10 percent.
Major suppliers of polysilicon include Hemlock Semiconductor Corp, Wacker Chemie AG, and Tokuyama Corp. They have signed two-to-three-year contracts with their long-term clients, mostly semiconductor manufacturers, and barely have extra capacity for the startups in the short term, said Ho Chiao-ling (何巧玲), an analyst at Industrial Economics and Knowledge Center under the Industrial Technology Research Institute.
"Controlling the raw material is the key to succeeding in this industry, as the shortfall may not be solved by 2008," Ho said.
Tight supply has driven up the price of polysilicon by 30 percent this year, to between US$80 and US$90 a kilogram, compared with between US$50 and US$60 last year, the Merrill Lynch report said.
Intensive competition normally brings down costs, but the rising raw material costs will increase solar cell prices, discouraging installation, said an energy analyst at Yuanta Core Pacific Securities Corp (元大京華證券) who spoke on condition of anonymity.
"In this way, even with the mushrooming number of players in the market, solar panels will still not be economically viable," the source said. "It is possible that solar cell manufacturers' bubble will burst the way the Internet sector did several years ago."
He said investors should be cautious about the risks of investing in solar cell makers, despite the seemingly bright outlook of the market now.
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