A factory purchase helped Nitol Solar become Russia’s top polysilicon producer, but the firm’s future depends on Dmitry Kotenko making his own luck. Erik Jaques reports
Dmitry Kotenko cuts a dashing, if somewhat anomalous figure in Russia’s hydrocarbon-heavy industrial landscape.
From the deepest – though not quite as dark as you would expect – Siberian hinterlands, the 39-year-old CEO of Nitol Solar is plotting a gung-ho charge into the renewable energy sector by giving the world’s solar photovoltaic (PV) big guns what they really, really want: polysilicon – the magical conducting ingredient in solar cells, and a major manufacturing headache.Yet in just a few years Nitol has emerged from nowhere to master the tricky art of churning the stuff out cost-efficiently.
The first commercial deliveries were shipped only two years ago, but already there’s an order book bulging with long-term contracts worth more than €1bn, and an impressive array of investors on board, including the International Finance Corporation, the state-owned Rusnano (the Russian corporation of nanotechnologies) and China-based Suntech, which is the largest solar module manufacturer in the world and also one of its main clients.
Currently the biggest polysilicon producer in Russia, Nitol will ramp up its annual output capacity from 300 metric tonnes to 3,800 – giving it around 5% of the global market – when its facilities are given a €450m overhaul later this year. A further 1,500 metric tonnes per year is likely to follow shortly after.
The 3,500-strong company also has plans to branch out into monosilane, one of the main feedstocks for thin-film solar modules, and may consider moving up the solar manufacturing value chain to produce its solar cell wafers.
Then there’s the ambitious notion of presiding of over a high-tech industrial park in Irkutsk, the region of Siberia where Nitol’s production plant is based. To this end, Rusnano recently announced plans to create a €295m plant to produce titanium dioxide, which is used for solar batteries, paint materials, laminated paper, and plastic.
“You don’t have any doubts about the success of Nitol’s plans,” says Alla Famitskaya, FSU (Former Soviet Union) regional director of SEMI, the global industry association for the manufacturing supply chains of microelectronic, display and photovoltaic industries. “It is an extremely well-organised company: it has strong management, is thoughtful and shows real planning. It looks like everything is predicted, and you always feel strength when you talk to their top management. This should sound normal, but in Russia it is not; people are not yet accustomed to such professionalism, especially in vast areas like Siberia.”
Buoyed by a potent combination of perspicacious leadership, credible space-race and chemical industry scientific chops, and access to cheap Russian energy, Nitol is starting to stand out in the excitable solar energy arena.
“Nitol has all the ingredients to become a world-class producer of polysilicon,” says Suntech Power Holdings investor relations director Rory Macpherson.
It’s all a far cry from when the Kotenko formed the company in 1998, acronyming the mission statement New, Innovative, and Technological without any sense of what it would do.
A successful foray into chemical and petrochemical trading followed, but without truly justifying Nitol’s aspirational monicker. Then in 2004, a serendipitous restructuring took place. Usoliekhimprom, a company whose products Nitol had been selling, was acquired – and so too was its dilapidated, 70-year old chemical factory. Ostensibly a dud asset, its inauspicious façade was hiding dazzling trump card: the capacity to produce trichlorosilane, a key component in the industrial production of polysilicon.
Solar-grade polysilicon has to be 99.9999% pure, a feat achieved via a reaction with hydrochloric acid to form gaseous trichlorosilane that is then separated in a reactor. A forbidding compound, trichlorosilane is corrosive, highly flammable and extremely difficult to work with, but Nitol’s new factory had been successfully doing it since the 1970s.
Kotenko and his partners realised they were onto something; a comprehensive development programme was launched, Nitol was given the “Solar” suffix, and the rest is rapidly evolving history.
“I have been fond of industrial and technological aspects since my youth and as a result I was drawn towards solar energy, which is a young dynamic industry,” explains Kotenko, a PhD science graduate and London Business School alumni. Pre-Nitol his career had spanned banking and a stint as a commercial director of an aluminium plant. “Working in this field is a particular challenge in
Russia, and it is very satisfying to know we are actively contributing to the development of this industry here.”
While PV currently represents less than 1% of Russia’s total renewable energy, itself only 0.7% of the country’s total energy production, there are signs the government is willing to look beyond its hydrocarbon blinkers.
“Both President Dmitri Medvedev, and Prime Minster Vladimir Putin, recently stressed the importance of the sector and the need for the state to support PV industry growth,” Kotenko points out.
In 2007, amendments to federal law introduced a system of compensation for large renewables projects, and last January the government approved the Policy for Renewable Energy Development, which aims to raise renewables in the country’s energy mix to 4.5% by 2020.
The programme envisages support measures, including feed-in tariffs, though clear mechanisms to implement this programme are yet to be developed.
“All stages of the PV production chain – from quartz mining and polysilicon production to PV system installation and services – are already represented in Russia,” says Kotenko. “We possess the necessary natural and human resources, as well as the R&D base to develop, with increased government support, a world-level PV manufacturing sector.”
There’s no paucity of sunshine either – some parts of Siberia and regions in the south of the country bask in as many as 300 sunny days a year.
Partly thanks to Nitol’s lead, Famitskaya estimates that there are now 15 PV-related projects ongoing in Russia, five of which are polysilicon-based.
Although immensely proud of the influence Nitol is starting to wield in the motherland, Kotenko has ambitious designs on the international markets, which have become more intriguing and cutthroat than ever before.
In 2008, spot prices for polysilicon stood at a dizzying $400/kg. This plummeted to $80/kg last year as supply outstripped demand for the first time, partly due to major PV user Spain scaling back its feed-in tariff and a maelstrom of adverse recessionary impacts.
Market analyst iSuppli predicts that prices will halve again to $35/kg this year, and continue falling until around the $22/ kg mark in 2012, with a recovery mooted in the following year.
Nitol has the sureity of long-term agreements with companies like Trina Solar (China), Evergreen Solar (USA) and Motech Industries (Germany), but the company is also relishing the prospect of a new era of competition.
Cheaper prices will mean PV becomes more readily available, and economies of scale will push generated electrcity toward grid-parity – the point where solar electricity rivals or becomes cheaper than conventional sources – in many parts of the world. Survival will favour the innovators, those with standout efficiency and quality – all traits ingrained in the Nitol modus operandi.
“I aim to get maximum results based on an efficient combination of available resources and market demand,” says Kotenko, quietly confident.
Erik Jaques, CNBC Business
