Suntech Power Holdings Co. Ltd., a manufacturer of PV cells and modules, has entered into a definitive contract with Asia Silicon Co. Ltd. to purchase high-purity polysilicon from Asia Silicon with a total value of up to $1.5 billion over a seven-year period.
The contract provides for the delivery of a volume range of polysilicon each year at fixed prices, using a take-or-pay approach, with delivery beginning in the second half of 2008. A predetermined annual price reduction curve will provide Suntech with high-purity polysilicon at prices lower than any of Suntech's other contracts.
"This contract with Asia Silicon will form a critical element of Suntech's polysilicon supply portfolio, as the average price paid under the contract is so low that we believe that it reflects what is essentially grid parity pricing for Suntech, when combined with our high-efficiency solar cells and world-class low cost of production," says Dr. Zhengrong Shi, Suntech's chairman and CEO.
Asia Silicon is deep in the process of building a state-of-the-art polysilicon plant in Qinghai, China, with polysilicon production capacity targets of 2,000 metric tons by July 2008 and over 6,000 metric tons by the end of 2010.