Alternative Energy Solutions

Source: Energy Digital

Date :6/29/2007 3:48:28 PM

Daniel Bastin, president of Alternate Energy Solutions, has found a way to sell millions of pounds of silicon without touching a rock, wafer, or solar cell

Written and produced by James Buchanan & Michael Townsend

As the price of oil continues to climb, and fears related to global warming are borne out by science, silicon — the building block for solar energy — is becoming a more highly valued resource than ever before.

Therefore, it is no surprise that companies that manufacture solar cells and related silicon-based products are searching the world over for more and more of the material.

Further, it is even less surprising that there are businesses seeking to help fulfill that need. That is why Alternate Energy Solutions will deal with hundreds of thousands of pounds in silicon in various forms in any given year. However, they rarely, if ever, touch the stuff.

“We’re not manufacturers; in fact, I won’t even see the products we sell unless they are sent to me as samples,” says Daniel Bastin, president of Alternate Energy Solutions. “What we are, is traders.”

While being a trader doesn’t require large amounts of infrastructure to process the many thousands of pounds of silicon his company will deal with, it does require a somewhat complicated dance with multiple partners.

“Basically, we buy silicon rocks and then sell them to manufacturers who make silicon ingots,” says Bastin. “Then we buy, generally, a portion of that back, and sell it to manufacturers who make wafers to make solar cells with. We buy the wafers and the waste back, because the waste has a use as well, and then sell the wafers to manufacturers who make solar cells. Then we buy back the solar cells and sell them to a manufacturer who makes solar panels.

“One type of solar panel will use 72 cells in a series, which produces between 160 and 200 watts. It takes 36,000 to 38,800 solar cells to make a container of solar panels, which is about 500 to 540 panels,” Bastin explains.

It would seem that as each trade occurs, the silicon would become more processed and generally more valuable and more expensive for him to purchase. While this may be the case, Bastin is not an end point in these interactions, but rather the person in between making connections.

“We make revenue every time we [figuratively] touch the product, which means we make money about eight times throughout the whole process,” he says. “It sounds very simple, the way we are doing it, but there are only four of us located here in Canada, we work out of my house.

“However, building the fiduciary relationships requires having 40 to 50 agents worldwide because it is very hard to source this stuff. There’s a lot of silicon out there, but it’s not pure,” Bastin says. “For example, we could get silicon for pennies per pound from India, but it’s only 95 percent pure, and we need what we call the six nines, which is 99.9999 percent pure. The price for this level of purity is $210 to $270 U.S. per kilo.”

Bastin adds that his company must be sure to keep a watchful eye on the agents his company works with.

“They have their own companies and everyone is trying to make money, and we’ve had to weed them out to find who’s legit,” he says. “We give people a try, but until an inspection is done, a contract is not signed.”

With demand strong, prices fairly high, and the international nature of the market, there are also lot of flash-in-the-pan traders that flare up and provide shoddy service, then disappear almost as quickly, say Bastin.

“These buyers are sending millions of dollars of cash around each month to various agents such as us. But like any other industry, there are scammers and con artists,” he says. “All you need is a couple of these deals each year to make your money and then close down and start up under a new name.

“This is why we set procedures to guarantee our client’s trust,” Bastin continues. “They will get the product to inspect it and visit the factory to test the product before a sale will go through and the product is paid for and delivered.

“The negotiations for the contract can then take another month because I will get a price from the seller, and — of course — the buyer will say it’s too high. So I will go back to the seller and negotiate on the behalf of the buyer. It usually involves a number of back - and - forths, which can go on for a month to a month-and-a-half.”

In total, Bastin says these deals can take up to six months to complete. But this due diligence is worth it, he says.

“Over the past five years we have been doing this business our database has increased significantly,” he says. “Most of our business comes by word-of-mouth, and we also advertise on the websites that exist for businesses such as mine, to help us connect with buyers and sellers in the market.”

Despite the risks, there are real advantages to hiring a trader to facilitate these very large and complicated deals, says Bastin.

“Many buyers are using metric tons of silicon, so they rely on multiple suppliers to make sure they are receiving what they need, and I can help them with that,” he says. “By hiring me, the buyer also doesn’t have to run or staff a sourcing department. We do that for them all over the world.”

Asked how he came to start his company, Bastin says he originally started with a silicon-based company located in China.

“When the company started to promote its products on the Web and wanted to increase its sales in North America they hired me, and I was able to sell more than their factory could keep up with in one month,” he says. “I said, ‘Hey, I’m doing 90 percent of the work and getting ten percent of the profit, so I quit and started my own company.”

Begun five years ago, Bastin says most of the transactions are handled via email. “We don’t have warehouses or any other infrastructure; we just put two ends together,” he says.

Last year, the company’s sales were approximately $25 million.

Looking to the future, Bastin says he sees his company becoming something akin to the Home Depot or Lowe’s of alternative energy products.

“If it all works out we are going to start a retail division next year,” he says. “Basically, we want to target builders and contractors that are working with alternative energy products.”

Beyond the obvious need to reduce fossil fuel consumption, Bastin sees a real market developing for homeowners that want to dramatically reduce their energy consumption, and perhaps even push some electricity back into the grid.

“In Canada, and the U.S. too, utility companies are required to pay for excess power created in a home or business,” he says. “If you have solar panels or a wind turbine and create more than you need, the meter turns the other way, and the electric company has to pay you for that. However, there aren’t really any products available locally.

“What we would do, would be like the auto parts retailer NAPA. The stock would be essentially stored behind a counter, where a customer would make an order and pay for it there. He would drive his truck around, and we will load his truck with his purchases.

“The products we would supply would be for wind and solar generation and all of the supporting products they would need such as inverters, converters, and batteries, all the way down to garden lights, Christmas lights, street poles, and so on,” he says.