Upheavals in the Chinese Polysilicon Market May Lead to Further Solar PV Cost Reductions

New standards for polysilicon manufacturers may cause shakeup in the market but ultimately drive down costs, analysts say.

In late January, the Chinese government released its “Polysilicon Industry Access Standards” specifying rules and restrictions for polysilicon manufacturers relating to site selection, energy consumption, environment protection, project capacity and more.

Specifically the standard states that any new solar polysilicon manufacturing facility must adhere to the following:

  • Facilities need to have an annual production capacity of at least 3,000 tons;
  • Facilities may not be situated within 1,000 kilometers (620 miles) of any nature reserve, headwater areas or major residential areas;
  • The electricity consumption of the solar-grade polysilicon reduction must be less than 80kWh/kg and further reduced to lower than 60kwh/kg by the end of 2011
  • The recycle rate of silicon tetrachloride, hydrogen chloride, and hydrogen in the reduction tail gas shall be not less than 98.5 percent, 99 percent and 99 percent, respectively.

Finally, solar polysilicon production lines whose integrated electricity consumption is higher than 200kWh/kg must be eliminated by the end of 2011.

Chinese solar industry experts expect serious fall-out to occur. According to Meng Xiangan, deputy director of China Renewable Energy Society, although the standard is necessary for the long-term and stable development of the industry, a majority of companies may not meet requirements due to technology and capital difficulties. Small and medium-sized firms not meeting the requirements will be forced out.

Dou Zeyun, an analyst at Ping An Securities said that even though the standard may slow down China’s ability to grow its supply chain for the solar industry, ultimately it will increase the quality of the country’s polysilicon and significantly reduce production costs, driving long-term and healthy development of the country’s PV industry.

Several players within the sector concurred, adding that the standard will change China’s production pattern of polysilicon and bring about a reshuffle and consolidation of the industry. The weak will be forced out, while the strong will remain with their position further strengthened.

For 2011, industrial analysts said cutbacks in PV subsidies in some countries in Europe (most notably Germany, Italy, the Czech Republic and France), may have an adverse effect on polysilicon sales. However, this will be offset by rapidly declining costs for polysilicon-related raw materials. 

 

Image: courtesy www.futureatlas.com via Flickr.

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Nanjing Shanglong Communications Liu Yuanyuan is Director of Operations and Co-Founder of Nanjing Shanglong Communications. Liu Yuanyuan previously held the position of office manager at the London Financial Times' China translation and editorial bureau in Nanjing overseeing 33 translators, editors and IT support personnel. Ms. Liu brought her many years experience of delivering, under deadline, more than 200 English-language news summaries of articles selected from Chinese-language newspapers and newswires daily as well as supervising the timely completion of 500,000+ word English-to-Chinese translation and localization projects to her role as co-founder and general manager at Shanglong. Ms. Liu joined Shanglong in 2002. In 2006, she added China Business News Service to the product suite – the service provides a continuous flow of well-researched and documented news articles to trade publishers and industry-specific websites looking to supplement their content with the latest news from China in their sector. She manages Shanglong's staff of translators, editors, desktop publishing specialists and support staff, selected from the top universities across China and well versed in the art of translation and in the technology of DTP. Ms. Liu graduated from the People’s Liberation Army Institute of International Relations - China’s elite military academy responsible for the training of the country’s foreign language specialists.

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