Polysilicon production already moving out of Xinjiang, but China still dominates
Based on the latest market report for solar energy suppliers from engineering consultancy Clean Energy Associates, significant expansions in polysilicon production are already taking place outside of Xinjiang, China, but China as a whole still dominates.
Read more about the polysilicon and solar battle between China and the United States here.
the “Q2 PV Supplier Market Intelligence Program (SMIP) Report for 2021,Available by subscription, is written by CEA’s Technology and Quality team and includes insights gleaned from in-depth interviews and analysis from many of the solar industry’s leading manufacturers.
Massive pipelines for new polysilicon expansions are still under construction, with more than 1.2 million tons expected online by 2023. While most expansions (72%) are planned outside of Xinjiang, the vast majority (89%) of global polysilicon production is expected to take place within China. Non-China-based polysilicon capacity is expected to exceed 130,000 tons (11% of global capacity) by 2023, with the majority in Germany and the United States.
Most major Chinese polysilicon suppliers are looking forward to expansions of more than 100,000 tons; only Daqo has not indicated a significant increase in new production capacity. Small expansions of established companies such as OCI, Ordos, Youser and others are also underway, although these vendors are overshadowed by the scale of major market players. Xinjiang Jingnuo, a new supplier, announced plans last quarter to develop polysilicon production in Xinjiang and will target 100,000 tons of production capacity if permits are approved by government agencies.
Global Production Expectations for Solar Panels
Through surveys of leading module suppliers, CEA believes that approximately 400 GW of total nameplate module production capacity and nearly 325 GW of nameplate cell capacity could be online by the end of 2021. China and Taiwan are expected to remain the main manufacturing sites, together accounting for more than 85% of global cell manufacturing capacity and approximately 75% of global module manufacturing capacity. Southeast Asia is the second most important manufacturing site for cell and module suppliers, accounting for approximately 9% and 13% of the global cell and module manufacturing capacity, respectively.
Despite this high production potential, wafer, cell and module suppliers faced difficulties due to persistent polysilicon shortages and subsequent price increases. In addition, rising prices of steel, aluminum and copper, along with rising freight costs, further led to higher project costs, resulting in weak demand for most markets in the first half of 2021. Even with these challenges, global deliveries of both cells and modules are expected to increase over the forecast period. Major developers have already started building large production complexes and most have plans to bring new capacity online.
Europe is the newest hotspot for solar energy production
Despite the COVID-19 pandemic, the demand for solar energy in the European Union region has increased to 18.2 GW in 2020, from 16.2 GW in 2019. The region is reviewing various policies and regulations to meet its carbon neutrality target by 2050 which is expected to provide strong benefits to solar and other renewable energy sources. Increasing focus on building a resilient domestic solar PV supply chain and reducing reliance on Chinese imports is expected to attract suppliers to set up their facilities in this region.
However, the European solar energy production ecosystem is currently limited by wafer and cell production, which accounts for less than 20% of total module production. Wacker remains the only polysilicon producer in the region, with few ingot or wafer manufacturers in Europe to buy its polysilicon output. The lack of cost-effective wafer and cell production is also increasing the import of modules from China.
With a module production capacity around 25% of the module demand in the European Union, most installed capacity in Europe can be traced to China.
While solar PV cell and module suppliers keep announcing new plans for capacity expansion, with polysilicon suppliers taking several more quarters to bring new production online, and logistical challenges not expected to abate in 2021, solar PV cells and modules are still running. energy projects in many key markets are at risk of being forced into 2022 and module manufacturers may not meet desired shipment numbers this year.
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