China Shoots for Solar Self-Sufficiency, Amidst Criticisms

Although China may currently be the world’s factory for solar, having overtaken Germany as the world’s largest producer of solar cells—last year it produced 1,200 megawatts’ worth of solar cells, as opposed to Germany’s 875—it has started to take on the mantle of polysilicon production as well.

In its quest to achieve rock-bottom prices of solar-energy generation, China has 33 polysilicon projects underway, with hundreds of billions of RMB worth of investment pouring in. Should all of these projects meet their targets, China would be producing 140,000 tons of polysilicon a year. That’s 60,000 more tons than the projected global demand by 2010.

This massive production is due also in part to economies of scale. A prices of raw materials are right now, combined with the costs of meeting safety and environmental protection standards, these Chinese companies need to produce 10,000 tons annually in order to be truly profitable. Because polysilicon purportedly represents over 70 percent of the cost of solar battery production, the silicon shortage’s effect on Chinese solar companies is nothing short of painful. With retail prices of polysilicon rocketing up to 3,412 RMB ($500 US) per kilogram, self-sufficiency appears to be the only way to economic survival. For a country that presently imports 95 percent of its polysilicon, what’s the other recourse?

Naturally, warnings of polysilicon oversupply have arisen. Some argue that this would lead to a “mini-glut” and depression in prices, which, coupled with increased competition from other solar companies, does not bode well for solar cell producers. But this is good news for consumers, right? Solar technology would cost less, making it more appealing to buyers. That photovoltaic installation you’ve been on the fence about for a year will be more affordable than before, making it a more feasible (and attractive) investment. Perhaps, in the future, these Chinese polysilicon producers might very well give the solar industry the boost it needs.