Wacker warns of solar trade war, but still confident about Charleston, Tenn., investment

photo A skyline view with the fluidized-bed reactors and distillation columns at Wacker's site in Burghausen, Germany.


Name: WackerHeadquarters: Burghausen, GermanyFounded: 1914Staff: 16,292 employees at more than 130 production unitsLocal sites: $2 billion polysilicon plant near Charleston scheduled to open in 2015; Polymer sales office grand opening Tuesday in Dalton, Ga.

photo These five structures at the Wacker plant in Charleston, Tenn., each measure more than 200 feet tall.

BURGHAUSEN, Germany - Despite the current cloudy outlook for the solar industry, Wacker officials said Friday they are still confident they have found their place in the sun at the $2 billion polysilicon plant being built near Charleston, Tenn.

Dr. Wolfgang Sturm, senior manager of marketing for Wacker, said ongoing improvements in the quality and efficiency of the photovoltaic components should lower the price and boost the use of solar-generated electricity.

"We see photovoltaics quite positively and we're convinced in their future," Sturm told a delegation of Chattanooga area business leaders here Friday. "Wacker has placed a big bet on that by giving a major investment in Tennessee and I hope you don't think that we're crazy."

For all his long-term confidence, however, Sturm warned that a trade war sparked by the current glut of solar cell production could damage the industry's future. Growing calls for trade sanctions and import tariffs on solar equipment makers could end up hurting the very companies it is designed to help by driving up solar costs and undermining their competitiveness, Sturm said.

In October, the U.S. Commerce Department found that China was selling solar energy cells in the United States below cost and set anti-dumping duties ranging from 18 percent to nearly 250 percent. In response, China is investigating U.S. and Korean solar panel makers and is expected to impose its own sanctions later this spring. Europe also is expected to announce similar anti-dumping measures to try to protect its solar industry, Storm said.

"This is something that has a major negative impact," Sturm said. "Cost is the key issue, and we need to lower our price to make PV (photovoltaics) cheaper. Any duty can only be detrimental overall because it makes solar more expensive."

Over the past three years, the price of polysilicon and solar panels has plummeted because of a global surplus of capacity, but solar is still more expensive in most markets than coal, gas and nuclear power.

With increasingly abundant natural gas inventories opening up from new fracking technologies, the price of gas-generated power is falling even as a weak global economy and energy conservation measures have cut the growth in electricity demand.

In response, Hemlock Semiconductor laid off three-fourths of its staff in January at its $1.2 billion polysilicon plant in Clarksville, Tenn. On Wednesday, the main subsidiary of the world's largest producer of solar panels --Chinese manufacturer Suntech Power -- was pushed into bankruptcy by eight Chinese banks after it shut down most of its production.

Although Wacker slowed the completion of its polysilicon plant in Charleston by 18 months until 2015, the German company has twice expanded its original production plans for the facility. Wacker's Bradley County complex is the biggest privately funded industrial project ever in Southeast Tennessee and will employ more than 650 employees once production begins.

Polysilicon is a key ingredient in the solar panels that turn sunlight into electricity on solar panels being erected on rooftops and in solar farms across the globe. Klaus Millrath, Wacker's director of communication, said Wacker is able to produce purer and increasingly less expensive polysilicon by continually finding and using better chemical technologies.

"We never sleep," he quipped.

Polysilicon is only one of many chemicals produced at Wacker's 10,074-employee facility here, which includes 130 different production processes.

"The byproduct from one plant is the starting point for another," Millrath said. "Everything is connected."

Doubling the solar cell sales should cut prices by 22 percent, as it did in recent year due to economies of scale and product improvements with more production, Sturm said.

Only 0.3 percent of electricity is now generated from solar power, but the International Energy Agency recently predicted up to 50 percent of all power could come from solar generation by 2060.

"Even if it only is 20 percent, there is ample room for far more installations and far more room to bring down the costs," Sturm said.

Solar panels are seen throughout Germany, even though there is less average sunlight here than in most Southern U.S. states.

In Germany, polysilicon production is being propelled by its decision to phase out nuclear power generation by 2021 in response to the 2011 accident at Japan's Fukushima plant. Nuclear power now generates 22 percent of Germany's power. Renewable power from solar, wind, hydro and biomass accounts for 17 percent of Germany's electrical power.

If solar becomes more popular worldwide, Sturm said Wacker could again expand its Charleston facility.

"The initial plan right now is 20,000 tons in Tennessee," he said. "Of course, we could increase that further and expand output to at least 50,000 tons."

Solar power is being buoyed by production tax credits in the United States and other subsidies around the globe. Sturm said such incentives help an industry get started to eventually become more accepted and efficient.

"This is not possible without subsidies, but we are close to it now," Sturm said.

Sister subsidiary Wacker Polymers is also making a bet in the Chattanooga area, as it pushes to expand sales of carpet adhesives in Dalton, Ga., with a new technical center there.

"There's direct rail service from the production plant in Calvert City [Ky.] into Dalton, so our customers have door-to-door service," said spokesman William Toth.

Wacker Polymers will open its new business-to-business showroom on Tuesday, where it will train flooring customers in the use of its products and offer demonstrations to potential clients.

"Hopefully our investment in our customers will breed increased and new business," Toth said.