SAN JOSE, Calif. Fueled by a new national renewable energy policy, China is moving towards a huge solar production ramp on all fronts of the domestic supply chain: polysilicon feedstock, wafers, cells and modules.
Enacted last month, China’s renewable energy program is a $3.5 billion plan that aims to boost domestic solar production to 500 megawatts (MW) of annual capacity by 2010, said Jesse Pichel, an analyst with Piper Jaffray Inc., in a report.
China plans to expand its solar capacity to 3-gigawatts (GW) in 2020 and by 60-GW by 2050, Pichel said.
“Solar demand in China is expected to increase significantly over the next several years driven by the Chinese renewable energy program enacted in February,” he said. “In addition to labor costs that can be less than $200 a month per worker, Chinese solar companies also benefit from lower SG&A, R&D, peripheral costs, and tax rate.”
In aggregate, China’s module capacity of 450-MW will rise to 1200-MW by 2008. The 200-MW of domestic solar cell making capacity will rise to 1200-MW by 2008, according to the analyst.
Wafer capacity of 100-MW in 2005 will grow to about 800-MW by 2008 thanks to the production ramp of domestic polysilicon suppliers as well as large poly supply contracts beginning in 2008.
“There is also an expanding solar manufacturing equipment industry that provides equipment at a fraction of the cost of equipment made overseas,” he said. “The current generation of Chinese manufactured solar equipment includes module lamination, wafer etch/bath, and mono-crystalline wafer pullers. Also there is a growing list of lower cost wet-chemistry suppliers for slurry and aluminum paste.”
Three Chinese polysilicon manufacturers dominate the domestic landscape, but the material remains in short supply. “Domestic poly production will not address near-term poly needs, as most production will not come online until 2008,” he said.
“Sichuan Xinguang is still under construction with initial production in 2007, and 2008 planned capacity of 1,250 metric tons,” he said. “LSCS now has capacity of about 300 ton, and plans 2007 capacity of 1,000 metric ton. ESM currently has annual polysilicon production of about 100 tons.”
Spot polysilicon prices are now as high as $200 per kilogram, and many Chinese solar OEMs will happily pay $170/kg to secure polysilicon, he said.