The company's plan to build the world's largest silicon plant at the Keystone Industrial Port Complex, the former site of the United States Steel Corp., has been touted as a sign of an economic turnaround for the region. AE Polysilicon received plugs from Gov. Edward Rendell, Rep. Patrick Murphy, D-Penn., and Rep. Nancy Pelosi, D-Calif., as well as $2.92 million in financial support from Pennsylvania agencies (see press releases in April and in October).
But possible construction delays are threatening to undermine some of the excitement.
The Falls Township Board of Supervisors has yet to give final land-development plan approval for the project, although it did give a preliminary endorsement at its Oct. 16 meeting (see a video of the discussion by clicking on the date and viewing "Part 2 of 5"), and is not scheduled to discuss the final plan at its next meeting Nov. 27.
And while a press release from the office of Rep. Patrick Murphy, D-Penn., in October said the company -- along with Spanish wind turbine manufacturer Gamesa -- already had moved into the Keystone Industrial Port Complex and created hundreds of jobs, construction apparently has not yet begun.
Edgar Gunther, who writes the Gunther Portfolio blog, said he visited the site last month and saw no sign of AE Polysilicon -- literally no sign with the company's name and no visible construction (see his post, In Search of AE Polysilicon).
At the Oct. 16 Falls Township meeting, an AE Polysilicon representative said the company plans to start production in August of 2008.
Even if the company breaks ground in February, analysts say it takes more than six months to build a plant.
"I would say that's highly unlikely," said Paula Mints, a solar-power analyst with Navigant Consulting. "There are bottlenecks in the people who know how to build plants, materials, construction. It takes a really long time to build anything and it's unrealistic to announce rapid deployment. I mean, come on."
Mints said it takes between 18 and 24 months to build a polysilicon plant, from start to finish including getting permits. At Greentech Media's Solar Market Outlook earlier this month, Prometheus Institute President Travis Bradford said it takes about three years to build polysilicon plants.
If the plant is completed in August as planned, it will have taken AE Polysilicon about 15 months from the time the plans were first announced in April. If the company began three months before the announcement, that would put the timeline at exactly 18 months, the earliest limit Mints gave.
But most construction projects have delays, Mints said. "You're not just going to break ground and, six months later, have something coming out with silicon," she said.
In a worldwide shortage of silicon, a delay could keep solar manufacturers from meeting the demand for solar-power equipment.
Motech did not return e-mail and phone messages asking whether it would be affected by a delay, but in December hedged the announcement of its deal with AE Polysilicon, saying that while it believes AE's technology will prove highly effective, the technology "has not yet been proven, so there are significant technology and implementation risks."
"Because AE is a development-stage company implementing new technology, there can be no assurance that AE will be able to fulfill its polysilicon delivery commitments, and, as with any new technology, unforeseen issues may arise," the press release said.
The contract calls for AE Polysilicon to provide Motech Industries with up to 2,400 tons of silicon annually from 2008 to 2013. The startup also received an undisclosed amount of equity investment from the No. 5 solar-cell manufacturer, according to the announcement.
While more silicon is expected to become available next year, new entrants are having trouble getting enough of it (see Could China Steal the Solar Throne?).
Companies such as Trina Solar and China Sunergy have suffered from lower margins -- and in Sunergy's case, a shareholder lawsuit -- as silicon prices have gone up. LDK Solar also has faced allegations of discrepancies in its silicon inventory (see Trina Solar Shares Fall 20% on 3Q, China Sunergy Troubles Continue, China Sunergy Snags Silicon, New Details Surface as LDK's Stock Continues to Plunge).
AE Polysilicon's plans are seen as potential relief. According to the company representative at the Falls Township meeting, AE Polysilicon plans to produce 1,500 metric tons of silicon in its first phase next year, then ramp up to 12,000 tons annually -- making it the largest silicon plant in the world -- by 2010.
The reason for the apparent delay is a mystery for now. The company didn't respond to multiple calls and e-mails after more than a week. Spokespeople for Rendell and Murphy also failed to return calls requesting comment.