Solar power company to float (From The Oxford Times)

Solar power company to float

4:27pm Thursday 10th May 2007 in Business By Chris Koenig

AN OXFORDSHIRE company is to float on the main London Stock Exchange, 25 years after it first came up with a technique for growing silicon. PV Crystalox Solar of Milton Park, near Abingdon, hopes to raise £54m in the biggest initial public offering (IPO) of shares by a UK renewable energy company.

The move, which means Crystalox would be valued at £500m, is light years away from the 1982 start-up of the company, which this year won its fourth Queen's Award for Enterprise. Its first home was a shed in Wantage, containing just four employees. Now Crystalox, driven by increasing demand for photovoltaic cells to convert sunlight into energy, has two buildings at its Milton Park headquarters and two more buildings in Culham.

Technical director Barry Garrard explained to The Oxford Times: "At the beginning, we were selling small-scale equipment for researchers who wanted to grow crystals.

"Our equipment grows multicrystalline silicon, and not the single-crystal silicon used in the semiconductor industry.

"It is a much cheaper process because it is quicker and less complicated - and it turned out to be ideal for solar cells."

It employs 207 people worldwide, of whom 85 work in Oxfordshire, with the remainder in the company's German and Japanese offices.

Chief executive Dr Iain Dorrity said: "We expect the number of Oxfordshire employees to increase after the IPO, but I can't yet say by how much."

He added that the majority of the firm was owned by managers working in the company. The new share offer is scheduled to be completed by early June. Some existing shares are also expected to be sold.

As The Oxford Times has pointed out before, by taking energy from the sun - which has plenty to spare - it would theoretically be possible to generate enough power in an hour to keep the world supplied with electricity for a year.

The problem has always been cost. Crystalox has pioneered a cost-competitive system involving silicon wafers, which are sliced from ingots to produce the solar-cell material.

The multicrystalline ingots, weighing 270kg each, are produced in Oxfordshire, with 75 per cent then being exported to Japan and the remainder going to Germany, where the company slices them into wafers.

The Crystalox German factory is producing "wire saw" technology for the production of ever-thinner wafers. Now the company plans to expand its facility in Erfurt, Germany, to produce its own polysilicon raw material. The new factory will go into operation in 2009.

Dr Dorrity said: "At present, demand for raw materials outstrips supply. The new facility will give us access to a flexible source of supply under our own control."

He added that Japan controlled 40 per cent of the silicon-chip market and the company has long had a close relationship with Japanese electronics company Sharp.

Kate Hills, of Crystalox, said: "Raw materials will come to England from Germany to be converted to ingots. Then the ingots will go back to Germany, the world's biggest market for PVs, to become wafers; then some of the wafers will again come back to Britain."

She added: "The ingot process remains in Britain because historically this is where the expertise lies." Germany is the biggest market for solar-cell materials because the government there has introduced incentives to tempt people to use solar power. Dr Dorrity said such incentives were in the pipeline here, too.

PV Crystalox Solar turned over £242m for the year ended December 31, 2006, a 32 per cent increase on the previous year. It saw its pre-tax profits jump 56 per cent in the same year to £49m.

Until recently, it seemed that photovoltaic power would never be cost-competitive with "dirty" fossil fuels, but the economics are slowly changing. The trend has been increased by the knowledge that fossil fuels such as oil, gas and coal will become more expensive to extract, as well as concerns that burning fossil fuels is leading to climate change.

Solar power has none of these problems, since silicon is produced from sand, which is abundant - and the sun produces limitless energy.