World Bank unit taps growing solar market

By Lesley Wroughton

WASHINGTON (Reuters) - A World Bank investment in a Russian polysilicon producer this week will help expand supplies of the key ingredient used to make solar cells and bring down costs of solar energy, an official said on Friday.

The bank's International Finance Corp this week announced it had brought a $50 million equity stake in Nitol and provided a $25 million loan to the company to help establish new production facilities in Usoliye Sibirskoye, in southeastern Siberia.

Lance Crist, a senior manager in IFC's oil, gas and chemicals division, said the investment was part of IFC's strategy to support the growth of renewable energy amid concerns over global climate change and soaring oil prices.

Nitol's projected output of 3,700 tonnes of polysilicon a year is about 9 percent of last year's global supply.

Growth in solar energy -- which has been in excess of 30 percent a year -- has caused shortages of polysilicon and pushed prices to over $400 per kilogram on the spot market right now from just $30 a few years ago.

Before the recent solar energy boom, most polysilicon was used to manufacture semiconductors. The new polysilicon production is largely being reserved for solar cell makers, meaning its availability to solar cell makers will triple between 2007 and 2009, according to studies.

Crist said the investment will help Nicol expand their existing petrochemical business and increase supplies of polysilicon.

"What makes Nitol interesting is it is an existing chemical producer which produced a number of intermediates that go into producing polysilicon as well as other traditional petrochemicals," he said.