Kevin Drumm is Vice President of Business Development at Dynamic Engineering, Inc. Prior to joining Dynamic Engineering in 2004, he worked for 15 years in the chemical industry in engineering and management positions for firms including UOP, Mettler-Toledo, and Tetra-Laval. Dynamic Engineering is a supplier of process technology to existing and new entrants into polysilicon for the photovoltaic industry. Drumm sees continued growth in new polysilicon production techniques which can reduce the cost of polysilicon by US$10 per kg.
By Jeanny Lim
Could you please update us on the global trends in renewable energy investment? What are the future prospects for investment?
I see continued growth in new polysilicon production techniques which can reduce the cost of polysilicon by US$10 per kg. This will not only result in current manufacturer’s updating technology and enable some new producers to be cost competitive, it will, if transferred downstream, reduce the cost of silicon raw material by 10 cents per watt installed.
How much investment has been made into the renewable energy industry in your country/region? And what are the future prospects?
We operate in the global environment, providing engineering services to polysilicon manufacturers. The investments over the past year have been mostly limited to completing plants already under construction, and expanding and/upgrading production at existing plants. Many companies have put plans for new plants and expansions on hold, waiting to see when the financing of commercial solar installations starts to drive demand. We believe that when the solar demand starts to grow again, many of these global leaders will implement their plans to build those new polysilicon plants.
What kind of correlation is there between the price of raw materials, oil and electricity and the renewable energy industry?
We see a real push/pull here. When oil is cheap, interest drops in some renewables, but investments also drop off in traditional sectors due to the reduced payback in exploration and the reduced amount of profits that chemical and refining companies can plow back into new opportunities. When oil prices dropped, nearly all capital for renewable fuels dried up except from strategic investors (those with a 10-year plus investment horizon) and petroleum companies. When oil prices are high, the money flows in all directions, including to renewable power, such as wind and solar, for the same reasons.
To this point, it is important to remember that we are discussing a correlation of two very different products. Oil is a fuel, which is a stored energy source which chiefly provides for transportation and heat. There are limited traditional reserves. Stored energy sources, such as oil, coal and ethanol can be converted to electricity, which is power, where the price today is often dependent of local demand and, only when generated from fuel, is impacted by the cost of oil and/or coal. Hydroelectric is, of course, a major source for power and is considered a low-growth renewable. The major growth renewables today are solar and wind energy. Technology to effectively store this energy is STILL in its infancy, so the power is most cost effective when supplied on-demand. Electricity prices are relatively stable when compared to oil prices, but demand, and hence prices, are growing faster than population growth. One has already seen the cost of producing electricity from solar drop below consumer grid price in some areas of the world. Demand increase is inevitable, regardless of the price of traditional fuel commodities, and most “experts” agree that in the next five years we will see an explosion in solar demand due as the crossover occurs in more locations.
How much growth do you expect for the renewable energy industry?
We still see major growth opportunities in renewables. For the PV industry we expect 25% YOY demand growth from certain sectors for the next 2-5 years, but somewhere between 2013 and 2015, we expect the solar market to explode and demand to quickly exceed supply. We expect wind energy to parallel solar to some extent, as they have many common drivers. We expect many of the other alternative energies for both fuel and power will not see substantial commercial scale growth until technology catches up in the 2015-2020 time frame.
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