GT Solar sees drop in polysilicon prices

NEW YORK (Reuters) - GT Solar, which makes equipment used to produce polysilicon and solar products, expects polysilicon prices to fall to nearly one-tenth their current level in 2010 as production capacity comes on line, Chief Executive and President Thomas Zarrella said on Monday.

"I'm predicting it's going to stabilize (at) around $50 to $60 (per kilogram)," Zarrella told Reuters in an interview.

GT Solar, whose shares have tumbled more than 45 percent since their debut on July 24, sells the equipment that companies use to produce polysilicon, the material used to make photovoltaic solar cells.

Tight supplies of polysilicon have limited the solar industry's ability to increase production, since polysilicon is the key material in about 90 percent of cells that turn sunlight into electricity.

Rising capacity to produce polysilicon is expected to come on line by the second half of 2009 -- nearly a year after many market experts had predicted -- and should reduce spot market levels from the nearly $500 per kilogram at which they have recently been quoted.

Lower silicon prices will translate into lower solar cell and panel costs, he said, likely trimming the costs to $1.25 to $1.40 per watt in the next few years and making solar panels competitive with traditional forms of electricity generation.

GT Solar is also continuing to develop technology that will allow its customers to produce polysilicon more cheaply.

"The guys who are going to do well are the guys who are looking at their costs now," Zarrella said. "We play a key role in that."

GT Solar's initial public offering was widely seen as evidence of a weak market for alternative energy stocks. Those stocks had been among the best performers of 2007, but have suffered with the rest of the energy market and on fears the industry could be moving toward over capacity.

Zarrella said he did not regret the timing of the IPO, and that the company was now able to focus growing the business.

"I'm glad it's behind us," he said.

(Reporting by Matt Daily, editing by Richard Chang)