Q-Cells cozies up to suppliers and investor

German solar leader Q-Cells has signed a long-term supply agreement with Elkem Solar of Oslo for silicon to protect growth in its core business until 2018.

Under the terms of the agreement, Elkem Solar will supply Q-Cells AG with fixed quantities of metallurgical silicon starting in 2008. In addition to a base volume of 800 tonnes in 2008, 2,800 tonnes in 2009 and 2,400 tonnes per year from 2010 to 2018, Q-Cells AG has an option to procure an additional quantity of up to 1,600 tonnes in 2010 and between 2,500 and 5,000 tonnes per year during the remaining years of the agreement, subject to Elkem Solar expanding further.

The total quantities of silicon to be supplied under the agreement are expected to be sufficient to manufacture over 10 GWp of solar cells.

The base quantities represent approximately 50% of Elkem Solar's currently planned production volume.

In a statement, Q-Cells said the agreement "will enable it to continue to expand its strong position in the photovoltaics market and to put itself in an excellent position for the future."

In a related development, Q-Cells has also announced its intent to acquire 17.9% of REC (Renewable Energy Corp.) ASA, Høvik, Norway, from Good Energies, the world's largest manufacturer of polycrystalline silicon and silicon wafers and one of the world's leading PV companies.

REC is one of Q-Cells' key suppliers. By investing in REC, Q-Cells said it's "demonstrating that the company remains convinced of the huge importance of Siemens type polycrystalline and Fluidized Bed Reactor (FBR) technology for the production of solar cells."

At the same time, Q-Cell's main shareholder Good Energies is increasing increased its investment in Q-Cells.

As part of a non-cash capital increase, Q-Cells will issue 34,323,579 new shares to Good Energies, thereby increasing its share capital to €109,053,307. Once the deal has been completed, Good Energies will hold 29.9% of the company's voting shares and 49.55% of its total share capital.

Good Energies is a high profile investor in the European photovoltaics and wind sectors.