New wave of polysilicon expansions bode well for PV market expansion


Independent of which market research data you prefer to trust, the PV market demand has basically more than doubled in the last 12-months. Roughly, 17GW was installed last year and simply taking a stab at demand this year would mean installations could reach between 20GW-25GW.

With consistently strong demand over the last couple of years and again this year, concerns over critical supply of polysilicon have resurfaced. Poly supply has become tight, even though expansions in capacity have been ongoing over the same period of PV demand growth.

Prices have fallen as new entrants have ramped production and the established major suppliers also continue to add new capacity. Indeed, in-house poly production has proved popular with the likes of LDK Solar and others as they pursue fully integrated business models.

Yet tight supply in the second-half of 2010 meant poly pricing stabilized. As the majority of leading PV manufacturers were ‘sold-out’ throughout the year and many already claiming the same will happen this year, there could be justification coming from the supply chain that we could heading for another period of poly shortages and rising prices.

It would be tempting to rush off and create the attention seeking headline, “Polysilicon shortages return: price rise to impact PV growth.”

However, looking at the recent wave of capacity expansions that have been announced, I find it hard to understand why we should see polysilicon shortages through 2014.

What we may have is just a very short-term bottleneck, where supply, though expanding, hasn’t been able to meet the more than 100% growth in PV demand. Growth is not expected to be anywhere near 2010 levels in 2011, and so poly supply should easily catch up with PV demand this year.

The confidence I have in poly production expansion is based on several key developments that were not in existence when we had the significant shortages and US$450/kg spot prices of 2008.

Firstly, the established major producers, such as Hemlock and Wacker, are in the midst of major capacity expansions that not only provide new supply, but high-quality product that is becoming increasingly important for many PV manufacturers seeking the greatest gains in cell efficiencies.

Secondly, we have a number of new entrants that over the past few years have been ramping significant new capacity and have importantly demonstrated that they can deliver high-quality product and scale operations rapidly. This aspect did not exist in 2008.

Hemlock is on track with a new massive poly plant to produce 36,000MT per annum by the end of 2012, up from 12,300MT in 2008. Wacker is on the same trajectory with planned annual production of 35,000MT at the end of 2012, up from 13,300MT in 2008. Indeed, Wacker noted in January this year that it had sold 30,000MT metric of polysilicon in 2010.

However, last week, Wacker’s Head of Investor Relations, Joerg Hoffmann presented to a packed room of investors at the Jefferies 11th Global Clean Technology Conference, held in New York, further capacity expansion plans that were intended to retain Wacker’s 20% market share in poly. The annual poly production run rate has already reached 32,000MT and is planned to reach 57,000MT in 2014.

According to Hoffmann’s presentation, Wacker has options at current production plant locations to expand production capacity to up to 150,000MT, should demand dictate.

On the other side of the world, new entrant GCL-Poly has announced in mid-February that it would invest approximately US$2.3 billion on further polysilicon and wafer capacity expansions over the next few years.

At the end of 2010, GCL-Poly’s annual production of poly reached 21,000MT. In 2011 this will rise to 25,000MT. However, the latest investment will see capacity reach 65,000MT by the middle of 2012.

On the wafer side, capacity reached 3,500MW at the end of 2010. In 2011 the target is to reach 6,500MW.

Capacity expansions at another new entrant, OCI were outlined late last year and are also significant over the short-term. It wouldn’t surprise me to see further capacity announcements from OCI in 2011.

Other smaller players are also planning expansions. AU Optronics is investing US$230 million in Japan’s M.Setek to boost poly and wafer production.

Stalwarts such as MEMC are also planning a major increase in wafer production.

Across the poly playing field, large and small, old and new are making investments in polysilicon production expansions. Having observed the polysilicon production market for two decades I can safely say there has never been a period in that time that comes close to the investment levels were are currently experiencing.

According to a recent report from investment firm, Jeffries International polysilicon spot prices of US$65- US$70/kg are currently common, while long term contract prices for 2011 of $50/kg are typical.

They forecast that average prices in 2011 are heading towards US$40- US46/kg in the second half of the year. In 2012 prices should be as low as US$35-US$40/kg and as low as US$30/kg in 2013.

With the current wave of expansions completed in 2012, it will be 2013 and beyond when the full force of the poly expansions will impact pricing and so Jeffries pricing forecast for that year seems very reasonable indeed.

Of course prices could be lower than this but we have to remember that production costs of US$25/kg are only seen with the large-scale producers. Pricing pressure will probably slow as we near production cost levels.

The current wave of capacity expansions will deliver significant lower cost per watt for PV manufacturers over the next few years and that will drive grid parity in major markets much sooner than some may think.

Poly shortages, regardless of continued strong PV demand are highly unlikely and will for now be a distant memory. This all bodes well for the PV industry should growth in demand continue.

23 August 2022
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil, on August 23–25, 2022, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry. In 2021 – despite the Covid-19 pandemic – Intersolar South America welcomed more than 28,000 visitors and over 1,000 conference attendees over 3 days. 200+ providers showcased their products. Combining local and international expertise, Intersolar South America brings together the PV and solar thermal sector to discuss the current status and strategic trends for Latin American PV markets, as well as technology innovations and new business opportunities. Overall, distributed generation is still driving momentum in the Brazilian market. Get 10% off with code 38LCF6KN
6 September 2022
Intersolar Mexico sits at the cross-section of photovoltaics, solar heating & cooling technologies, and energy storage. The event serves as the industry’s go-to source for invaluable technology trends and premier B2B contacts in the promising Mexican solar market. From September 6–8, 2022 Intersolar Mexico together with the co-located The GREEN Expo® and Aquatech Mexico will take place in Centro Citibanamex, Mexico City.
7 September 2022
The demand for rooftop solar PV is soaring, driven by falling costs of the technology against energy crises that are gripping countries globally. But while an increasing number of households turn to solar to generate their own electricity, there is now a need for more specialist equipment, technologies and services to ensure the solar transition can reach as many customers as possible. Delivering these is now a major challenge for rooftop solar installers. This webinar will analyse the characteristics of the rooftop solar market, discussing how the products, logistics, installation and servicing of solar systems has evolved in line with consumer demands.
14 September 2022
Join us in London for 2 days as we look at the UK’s new landscape for utility & rooftop solar. Understand the new opportunities within this GW-plus annual market!
15 September 2022
Bifacial PV modules will be the dominant solar PV technology globally within one or two years; in the utility-scale sector, their market share is already above 70%. This webinar will provide a clear view on the successful implementation of bifacial technology, maximizing system performance and minimising LCoE.
19 September 2022
RE+ 2022 is the umbrella event that includes SPI, ESI, RE+ Power, and RE+ Infrastructure. As North America's largest renewable energy event, it's a catalyst for industry innovation that's supercharging business growth in the clean energy economy.

Read Next

August 9, 2022
The passing of the Inflation Reduction Act (IRA) could bolster opportunities for Clearway Energies, according to Roth Capital Partners.
August 9, 2022
Solar tracker maker FTC Solar and energy contractor AUI Partners have teamed up to provide solar tracking solutions for distributed generation (DG) projects under 20MW within an eight week time frame.
PV Tech Premium
August 9, 2022
PV Tech Premium examines the current and emerging counter-theft technologies and strategies sites should employ to boost their security and reduce their potential losses if an incident does occur.
August 9, 2022
Investment firm Exus has acquired 100% of the shares of Riacho da Serra Energia, and the project-related assets, from Decal Renewables and Upside Value.
August 9, 2022
Renewables developer and operator Leeward Renewable Energy (LRE) has started the construction of a 196MW solar PV plant in London, Ohio.
August 9, 2022
Chicago has entered into an agreement with Constellation for the purchase of renewable energy to supply its facilities by 2025.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
September 7, 2022
15:30 AEST (UTC +10)
Solar Media Events
September 14, 2022
Solar Media Events
October 4, 2022
New York, USA
Solar Media Events
October 11, 2022
Virtual event