The World's #1 Renewable Energy Network for News, Information, and Companies.

More Polysilicon Plants Still Under Construction Despite Enormous PV Overcapacity – Why?

Contradictory trends are currently pushing the polysilicon industry to simultaneously restrict production volumes while continuing to add new capacity.

The rationale for reducing plant utilization is obvious. Between 2008 and 2012, with production levels substantially higher than demand, polysilicon prices have fallen at an average annual rate of 38 percent per year. In 2012 alone, prices fell 53 percent. As average polysilicon prices fell well below $20/Kg, well below cash costs for most makers, reducing utilization has been is the only way to stem loses.

Despite there being available capacity well above that required by the PV and semiconductor industries, new (large) polysilicon plants are expected to come on line over the next several years. Based on new research featured in the NPD Solarbuzz Marketbuzz 2013 Report, polysilicon capacity is forecast to exceed the most likely PV demand by more than 100 percent for the next few years.

Forecast Polysilicon Capacity versus PV Market Demand

Source: NPD Solarbuzz Marketbuzz 2013 Report

This gap seems to defy logic. So what is motivating leading polysilicon manufacturers such as Wacker, Hemlock, Tokuyama, OCI, LDK, Daqo, Samsung Fine Chemical, Hanwha, Renesola and others to add yet more polysilicon capacity?

The reasons vary by manufacturer and investment phase:

  • Some manufacturers are increasing capacity simply by “debottlenecking” plants or implementing new manufacturing technologies, such as hydrochlorination, to optimize their process and maximize output. (Debottlenecking typically increases productivity and lowers costs.)
  • Other manufacturers are building new polysilicon plants as part of vertical integration strategies. Their goal is to lower downstream silicon costs by bringing an increased percentage of polysilicon requirements in-house.
  • But the main reason the polysilicon capacity pipeline is still backed up is the long lead time to build plants, and the difficultly in stopping investments previously committed to. Polysilicon still seemed like a good bet when many of these projects were started. It may take 2-3 years (or even longer) from the time that a polysilicon plant is launched until it is able to start mass production. Indeed, once land is purchased, site construction commenced, and equipment ordered and delivered, it may be both politically and financially difficult to abandon a project.

It is unclear if (and when) all of this new polysilicon capacity will be ramped up. Wacker and Tokuyama, for example, have already stated they will complete current projects but will delay ramp up until market conditions warrant. And it is very likely that much of the Tier 3 (and even Tier 2 capacity) will be permanently shuttered over the next couple years.

At some point in the future, demand will finally catch up to supply. But unless demand grows faster than currently forecast, either more companies will exit polysilicon production or average plant utilization rates will remain depressed; and the gap between capacity and demand may continue to hinder many polysilicon makers’ ability to return to profitability for several more years.

This article was originally published on the Solarbuzz blog and was republished with permission.

RELATED ARTICLES

Renewable Energy Finance

Clean Energy ETFs Are on a Tear

Eric Balchunas, Bloomberg Green investing used to be synonymous with losing money. But while the S&P 500 Index is up 2 percent this year, and the MSCI All-Country World Index is up 5 percent, clean energy ETFs have double-digit re...

Wheels, Towers and Trees: Unconventional Renewable Energy Technologies in the Pipeline

Andrew Williams, International Correspondent A number of companies around the world are developing novel technologies in an effort to grab a slice of the global renewable energy market.  Although many of these technologies are simple incremental improvements to e...
UK Parliament Clean Energy Leaders

UK Government Names Clean Energy Cabinet Members

David Appleyard, Contributing Editor With the UK general election now over and a majority Conservative Party government in place, the re-elected Prime Minister David Cameron has now named key members of the government charged with steering the UK’s clean energ...
Microgrids

Coast to Coast and Across the Electric System, Microgrids Provide Benefits to All

Dick Munson, Environmental Defense Fund At the most obvious level, microgrids could disrupt today’s utilities and their regulated-monopoly business model, because they challenge the centralized paradigm. In a nutshell, microgrids are localized power grids that ha...
Based in Japan, Charles Annis serves as the Vice President at Solarbuzz. He assisted in launching the solar research business for The NPD Group and developed the Solarbuzz proprietary polysilicon, wafer, and cell manufacturing databases. He conduc...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Sponsor/Exhibitor: MIREC Week 2015

Solectria, Pillar, and Variadores together are co-Silver Sponsors! Come ...

More Power, More Profit Tour - San Diego

Register for the SMA More Power, More Profit Tour for free, in-person sa...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

Boulder County Residents Generate Their Own Energy with Community S...

Despite a soggy afternoon, solar energy advocates gathered at ...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS