China's 2005 Renewable Energy Law called for the country to increase its renewable energy consumption to 10 percent of the total by 2020. Without sufficient supply of domestic polysilicon, this goal, as well as solar cell export goals, will be difficult to meet.
China's Solar Energy Industry: Polysilicon 2007-2011
Susan Myers and LY Yuan | THT Research
|China's 2005 Renewable Energy Law called for the country to increase its renewable energy consumption to 10 percent of the total by 2020. Without sufficient supply of domestic polysilicon, this goal, as well as solar cell export goals, will be difficult to meet.|
|By Susan Myers and LY Yuan, THT Research|
Humble beginnings: semiconductor waste
China's solar energy industry began in the mid-1980s when Semiconductor companies in Wuhan, Ningbo, Kunming, Xining, Chengdu and other Chinese cities began manufacturing solar cells using a P-N knot diode process with waste raw material from wafer production.
Equipment acquisition: 1985-1990
During the early stages of industry development, China companies began to acquire solar cell manufacturing equipment.
By 1990, Chinese companies had established a primary solar cell industry with a total of 4.5 MWp manufacturing capacity.
Technology advances: 1990-2000
Beginning in 1990, the industry entered a decade of development.
Following the period of equipment import and technology adoption, the industry leaders began to adapt and innovate solar technology. Production of solar cells increased as technology and manufacturing processes developed and improved.
By 2000, the industry could almost fulfill China's domestic market demand, although there was very little export.
2000: Rapid growth and development of solar energy supply chain
Beginning in 2000, China's solar energy industry entered a period of rapid growth:
Between 2003 and 2006 market demand in Europe (especially Germany) began to grow rapidly. Wuxi Sun Tech and Tianwei Yingli Solar expanded their capacity to meet demand, and more companies began to build solar cell manufacturing production lines.
Table 1: China solar cell capacity,
With solar cell manufacturing as its starting point, China began to develop a comprehensive solar industry supply chain, which includes polysilicon material, ingot or wafer manufacture, solar cell manufacture, cell module and cell system, etc. In addition, the solar cell industry supply chain brought with it the development of related industries such as materials, equipment, and components for solar cells.
The rest of this whitepaper will focus on China's efforts to advance its solar energy industry by developing and promoting an independent supply of polysilicon, the raw material for the industry.
Global polysilicon industry overview
In 2006, global polysilicon material production stood at about 36,000 tons, with the top seven manufacturers contributing over 90% of production. Of that, over 18,000 tons of polysilicon were supplied to the solar industry, with the rest supplying the semiconductor industry.
Because of rapid development of the world solar industry, the shortage of polysilicon material is becoming increasingly tight.
As a result of the tight global polysilicon supply, polysilicon prices are rapidly increasing. From 2001 to 2003, the semiconductor polysilicon purchase price was about US$40 per kilogram and the solar grade polysilicon price was about US$25 per kilogram in China.
In 2005, the average contract price of polysilicon was over US$50 per kilogram and the average retail price was over US$100 per kilogram. In 2006, the contract price was about US$100 per kilogram and the retail price was over US$300 per kilogram in China.
Currently, polysilicon manufacturing is dominated by seven global leaders. The output of these companies has long lagged behind solar cell demand for numerous reasons, including technology and market monopolization and time required for production expansion. The polysilicon shortage has become the bottle-neck of the solar industry development.
We do not expect the shortage of polysilicon to be resolved before 2011. The shortage not only limits the development of solar cell production, but increases solar cell manufacturing costs, thus having an overall seriously negative effect on the development of the global solar industry.
China polysilicon industry overview
At the end of 2006, China's polysilicon production capacity was about 500 tons.
Table 2. China polysilicon capacity
However, production only reached around 230 tons, while demand reached 4,380 tons. As a result, over 95% of China's polysilicon demand was imported in 2006.
Table 3. China polysilicon production
and demand, 2004-2006 (tons)
Development potential of China polysilicon industry
If China is to develop the capacity to fill its polysilicon demand, it will need to overcome several obstacles:
The major challenge of China's solar energy and information technology industries is developing polysilicon manufacturing technology. The major international polysilicon manufacturers who monopolize the advanced technology required for polysilicon production have to date not been willing to transfer production technology to China. As a result, China polysilicon manufacturers have been forced to invest in developing their own production technologies.
Nevertheless, several Chinese companies have begun investing in polysilicon production technology and capacity expansion.
As of 1Q07, Luoyang Zhonggui and Emei Semiconductor have begun their planned polysilicion manufacturing capacity expansions.
Sichuan Xinguang Silicon Industry began manufacturing solar and semiconductor polysilicon on February 26, 2007 and now has the largest polysilicon production line in China. As a result, China is on its way to becoming the fourth country to achieve polysilicon manufacturing capacity of over 1,000 tons per year, following Germany, Japan, and the United States.
Other polysilicon production projects are also currently under way in China, including construction projects at Yunnan Qujin, Hubei Yichang, and other companies.
If all of the currently planned projects come to fruition, China's polysilicon manufacturing capacity will reach 12,660 tons in 2011 and China's polysilicon shortage will be resolved.
Table 4. China polysilicon vendors'
production (tons): 2004-2011
Table 5. Polysilicon construction plans and planned capacity
We expect China's government to continue to support the development and expansion of polysilicon local technology development and production. China's 2005 Renewable Energy Law called for the country to increase its renewable energy consumption to 10 percent of the total by 2020. Without sufficient supply of domestic polysilicon, this goal, as well as solar cell export goals, will be difficult to meet. Going forward it appears clear that polysilicon will remain a good investment in China in the near future.
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