Polysilicon purchasing strategies are a critical aspect in PV manufacturers' operations. Get it right and you can be a low-cost module supplier using high-quality wafers and better performing modules. Get it wrong and you ultimately end up bankrupt - like Q-Cells.
Though Q-Cells financial woes came from a varied source of problems, the fundamental issues were carved in stone when it locked itself into un-wielding long-term supply contracts or as the industry call them LTA (Long-Term Contract Agreements) for polysilicon at a time when poly was in chronic short supply and prices hit the stratosphere.
However, as we all know the high and unsustainable prices led to huge polysilicon capacity expansion programs that not only included the historically dominant few players (Hemlock, Wacker, MEMC, REC et al) but also well financed new entries such as GCL-Poly, OCI, LDK Solar et al)
Though paying US$50/kg for poly now seems mad when spot prices are below US$30/kg that wasn’t the case 5-years ago when poly was over US$400/kg on the spot market and supply was almost impossible and quality suspect. Signing up to long-term take or pay deals at US$50/kg seemed like a good deal back then, yet the PV industry has learnt some hard lessons over poly’s market volatility.
However, according to IHS iSuppli the tactical business decisions regarding poly purchasing haven’t got that much easier despite sub-US$30/kg pricing and no fear of material shortages in the next few years.
The market research firm would like the industry to be smarter and eliminate much of the business risks associated with purchasing poly and believes it has developed a solution in the form of its ‘IHS iSuppli Polysilicon Price Index’ (IPPI).
According to the market research firm: “The IPPI differentiates by LTA and spot price, the quality of material being produced, and other variables such as region of production, size of transaction and trading terms. Data is collected via a survey among buyers and suppliers, with the information showing weighted averages covering at least 45 percent of market-wide transacted volumes by month”
An IPPI-type mechanism surely makes sense but perhaps it also needs to be applied to the next step in the value chain, especially multicrystalline and quasi-mono solar wafers.
Currently, and quite bizarrely there is little if any differentiation in the selling price of a solar wafer cut from a single ingot, yet the quality varies by over 1% conversion efficiency depending on where in the ingot the wafer comes from. Applying an IPPI-type mechanism to wafers would be a massive shake-up to part of the value chain that needs to evolve and quickly.