China Grabbing Huge Share of Solar Silicon Production

April 28, 2022

Familiar story.

Technology invented in America almost fully taken over by China.
Above, a 1956 snapshot of a dazzling technological prospect. Director Frank Capra (It’s a Wonderful Life) understood the possibilities and importance in the Bell Telephone Hour production. Capra also understood from doing this series the prospects of global warming and climate change – so significant that at the end of this clip, the actors relate the failing to harness the sun will mean “the end of the machine age”.
Today’s war in Ukraine is bringing home vividly the dangers of dependence on foreign producers for critical energy resources – and should be ringing alarms in global capitols as China steadily locks up the key feedstock for solar panels, as well as a host of other electronic devices.

National security, as well as a concerns about Chinese trade and labor practices, need to be factored in to our energy transition – but there also has to be a recognition that new domestic manufacturing plants will take years to build up, and the need to ramp up carbon free energy is critical right now.

Solar Power World:

German-based polysilicon producer Wacker Chemie has fallen to fourth place in the list of the world’s top polysilicon firms, which means the Top 3 producers are now all in China. Tongwei, GCL Technology (previously GCL-Poly Energy) and Daqo New Energy now lead the rankings, published by Bernreuter Research.

Tongwei surpassed Wacker in 2020, and GCL moved into second place in 2021. Each of these two Chinese companies exceeded an annual output of 100,000 metric tons (MT) for the first time in 2021, and each will reach a production capacity of 370,000 MT after massive expansion by 2023.

“Wacker will take a similar course as former market leader Hemlock Semiconductor did a decade ago,” said Johannes Bernreuter, head of Bernreuter Research. “The company is increasingly focusing on expanding its leading position in the electronic-grade polysilicon market for semiconductors; at the same time, it is abandoning more and more market share in the rapidly growing solar-grade sector.”

With Wacker shifting focus away from solar, the company will be overtaken by two more Chinese manufacturers, Xinte Energy and East Hope, within the next year. This will mean the world’s Top 5 solar-grade polysilicon producers will be from China in 2023.

When U.S.-based Hemlock Semiconductor lost its top position in 2012, China had a share of just 30% in global polysilicon production. By 2021, this share had already risen to 76%, and to even more than 80% in the solar-grade sector. Since a gigantic expansion wave is currently underway in China, the country’s share in the global polysilicon output will grow even further: to more than 90%. In wafer, solar cell and module production, the Chinese industry has already reached such or still higher market shares.

“Russia’s invasion of Ukraine has opened the eyes for what it means to be economically dependent on a dictatorial regime. Western governments should not make the same mistake with China,” Bernreuter said. “It is high time to establish non-Chinese solar supply chains. China has demonstrated what the ingredients of success are: low electricity rates for power-hungry polysilicon and ingot production, loan guarantees for private investment, cost-efficient equipment manufacturing and strategic foresight.”

.

The top 10 polysilicon manufacturers for 2021 include:

  1. Tongwei (China)
  2. GCL (China)
  3. Daqo New Energy (China)
  4. Wacker (Germany/United States)
  5. Xinte Energy (China)
  6. Xingjiang East Hope New Energy (China)
  7. OCI (South Korea/Malaysia)
  8. Asia Silicon (China)
  9. Hemlock (United States)
  10. TianREC – joint venture of Shaanxi Non-Ferrous Tianhong New Energy and REC Silicon (China)

I’m bookmarking the article below that charts the path that brought us here.

Solar Power World:

In 2011 when SolarWorld Americas made its official complaint to the Dept. of Commerce citing unfair trade practices by China, the U.S. manufacturer participated in every step of solar panel manufacturing — it melted and shaped polysilicon into ingots, sliced the ingots into wafers, doped the wafers into cells and finally assembled the cells into finished solar panels. The company had just started a significant investment into advanced mono-PERC solar manufacturing when SolarWorld’s locked-in polysilicon supply contracts were priced considerably higher than what China was offering, said Desari Strader, then-head of government affairs for SolarWorld Americas.

“They were beating us on the cost of production,” Strader said of Chinese suppliers at the time. “We had just finished ramping up [to mono-PERC]. Of course the Chinese could come and dump [cheap panels] in the U.S. It was super easy. Then everyone is screaming that you can’t compete with [Chinese module prices.] Yeah, you’re right. We can’t compete with slave labor.”

The Xinjiang province of China has long been associated with alleged human rights abuses. The United States and many other international democracies believe that China is forcing those of the mostly Muslim Uyghur population into labor camps in the Northwest portion of the country. The situation is being described as an ethnic and religious genocide of the Uyghur people. Xinjiang became a polysilicon manufacturing hotspot in the late 2000s, after China established an economic plan that prioritized solar and polysilicon development, and subsidized local manufacturing. Soon enough, Chinese companies were churning out cheap solar panels, boosted by state-funding — and possibly forced labor.

“If 30% of the cost of a panel is your polysilicon, and you’re not paying wages, [of course] they were beating us on the cost of production,” Strader said.

Strader said that once there was no way to avoid American-made SolarWorld modules (with high-priced polysilicon contracts) being more expensive than Chinese imports, SolarWorld moved forward with the court case to protect not only its investment in cutting-edge PERC technology, but also American solar manufacturing.

An opposition group called the Coalition for Affordable Solar Energy (CASE) quickly formed, fronted by SunEdison founder Jigar Shah (who today works at the Dept. of Energy). CASE membership said that any duties on imported solar modules would increase system prices and hurt the growing solar installation workforce — which was significantly larger than the U.S. solar manufacturing pool.

“SolarWorld is looking to single-handedly kill U.S. solar jobs, which are primarily in solar installation, not in solar cell or panel manufacturing,” Shah said in a statement back then. “The government shouldn’t reward or protect one German company that is not fitting into the thriving global solar industry. It also should not punish the American companies that have found a job-creating niche in that same industry. The prosecution of this trade case is not going to solve the problem of promoting American manufacturing — it will just disrupt the industry.”

SolarWorld responded to the backlash (in Solar Power World in Dec. 2011): “While subsidies are not inherently improper, it is illegal for a nation to use them to ramp up domestic production to grow well beyond the needs of domestic consumption and then dump exports at prices below production costs into a foreign economy with the effect of destroying that foreign economy’s market and industry.

“Such is precisely what China is doing.”

Bloomberg:

The rising demand for solar energy threatens to increase the risk of forced labor in the supply chain, which often includes raw materials produced in China’s Xinjiang region.

An analysis conducted by the Rights Lab at the University of Nottingham and supported by the British Academy warns of a handful of consequences if the solar industry doesn’t quickly find a way to make sure there’s no forced labor in its supply chains. Without intervention, the increase in demand for solar energy is likely to worsen conditions for workers, it says. 

Alternatively, a haphazard response to forced labor could slow the roll-out of solar energy, making prices higher and limiting progress toward net zero goals. Or supply chains could split, with some goods able to certify fair labor practices and others not, an outcome that might not address the overall problem, the researchers say.

The findings once again put China’s role as a major supplier of renewable energy technologies in the spotlight. A little less than half of the world’s polysilicon, the ultra-conductive material that makes up solar panels, is produced in Xinjiang — a region that’s home to Uyghur people and other ethnic minorities. 

Advocacy groups and a panel of United Nations experts expressed concerns that those groups have been subject to mass detention. As many as 3 million laborers in Xinjiang are transferred each year as part of government-sponsored labor programs, according to a Bloomberg News analysis of official data.  

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