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Solyndra and Silicon Prices

The saga that is the story of Solyndra is guaranteed to stick around through a good part of November, as Energy Secretary Steven Chu has agreed to testify before Congress in the middle of November. If you aren’t familiar with Solyndra, we have written previously about the situation here and here.

Aside from the question of sustainable demand for photo-voltaic cells in the United States (held up partially by state electricity mandates), the Solyndra story is particularly interesting because Solyndra built photovoltaic cells without using silicon, thinking that using alternative materials (namely copper) at a lower cost would give them a price advantage. During this planning and manufacturing stage, the price of copper shot up while silicon prices tumbled, going from as high as $500/ton to $50/ton over the past few years.

Why has the price of copper shot up? Mostly due to increased demand for its use in thousands of industrial processes, especially growing demand from China and India. However, as demand for copper has shot up, strict environmental regulations and permitting requirements have helped to freeze the supply of copper in place, notably in the United States which is the 4th largest global producer of copper.In the United States alone environmental activists have helped to shutter mining projects in Montana, in Arizona,  and Alaska.

Ironically, the environmental left’s radical anti-mining stances may have contributed to the downfall of Solyndra. By keeping the price of copper higher than it would have been had these projects gone forward, the cost of producing solar cells at Solyndra was much higher. Now its not easy to say that this would have saved Solyndra, but a lower copper price certainly would have helped. Policies that overburden resource extraction industries leads to a low supply and high prices, hurting American consumers and businessmen alike.

 

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