Global demand from the solar power industry for silicon – the raw material for making solar panels – is set to outstrip demand from microchip manufacturers for the first time this year.

Green demands for more solar power, which relies on silicon for the manfacture of photovoltaic cells, have pushed up the price for the element by 40 per cent this year to $1,600 (£790) per tonne.

The result is a global shortage of the highly refined crystalline polysilicon, even though it is produced from raw materials as common as sand. This is pushing up prices and forcing the world’s biggest producers to invest heavily in new refining and production capacity.

Solar Buzz, the research and consultancy group, said that the booming sales of refined silicon to the solar industry grew to an expected 23,102 metric tonnes this year, up 12 per cent from 20,719 tonnes last year.