One of the solar photovoltaic industry’s biggest problems right now is a lack of polysilicon needed to make their solar cells. Supply shortages aren’t expected to ease up for another couple years; meanwhile, those who do have solar-grade silicon to sell are making money hand-over-fist.

6N Silicon wants to join the fray with a proprietary manufacturing process of their own, which is capable of improving low-grade silicon enough to be of use in solar (but not enough for semiconductors). Its processes are derived from the metals industry, which works in much larger volumes than silicon manufacturers have ever needed to.

If 6N can live up to its promises, there could be some serious pain down the road for the new silicon-manufacturing plants that are being built to satisfy demand. An oversupply is projected within a couple years, which would only be further aggravated by a lower-priced offering such as what 6N is promising.

That might sound like great news for the makers of solar cells, but the sweet rose of oversupply also contains some thorns for those who would grasp it. Just like silicon manufacturers, the makers of solar cells have been gearing up for heightened capacity for the past couple of years.

A sudden burst of low-cost silicon is likely to shoot through the system, producing an excess of cheap silicon-based cells. That will pull the carpet from beneath manufacturers that have so far relied on being able to charge a premium, and likely knock some players out of the game.

There are also a number of other technologies that might reduce the amount of silicon needed. Applied Materials is working on a thin-film silicon cell that uses a fraction of the silicon usually needed, while a host of competing non-silicon technologies based on various metals, inks and nanomaterials are also in development. Thin-film cell makers like First Solar and Nanosolar are already on the market, but regular silicon photovoltaics still capture the vast majority of sales.

As for 6N, it hasn’t yet lived up to its hopes of making solar-grade silicon without using the waste matter from semiconductor manufacturing. However, it’s likely to be making its silicon in quantity by 2010, the year projected for the beginning of the supply shift.

The $20 million funding was provided by Good Energies, along with Yaletown Venture Partners and Ventures West. The company, based in Missuaga, Ontario, also recently took on a new CEO from the metallurgical industry.