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PV – Polysilicon prices to drop sharply from early 2023, says Rethink Energy

With millions of tonnes planned, up from today’s global capacity of 880,000 tonnes, investment costs are running into tens of billions of dollars, the most likely outcome being another decade of overcapacity and prices rising at marginal production costs.

The findings are set out in a research paper published today (Tuesday 16) entitled ‘Rethink consults polysilicon crystal ball – finds instant solar solution’Th August) as part of the Rethink Energy Forecasting Service.

Even if no new factories start construction by this point in August 2022, those already in the works, committed with investment, four times more than global production, and high polysilicon prices over the past two years offer a nightmare.

A recent claim by wafer maker LONGi that it could manufacture 1,000 GW per year by 2030 is not far from Rethink’s own predictions. Before long manufacturing solar panels are overtaken by grid integration as the most pressing constraint on the energy transition.

“If you look at the data coming out from organizations like China Minmetals Corporation and China Photovoltaic Association, you can see that capacity utilization of existing factories is almost 100 percent and new factories are ramping up successfully in record time,” he said. Andries Wantenaar, solar analyst and head of research at Rethink Energy reports.

Solar supply chain price data collected over the past two years show that price increases for solar modules are set to continue for the rest of this year, guided almost exclusively by polysilicon prices, little affected by changes in production costs, and largely guided by opportunism in the seller’s market.

Module price impacts from non-polysilicon components such as glass, backsheets, silver paste and more have been minimal throughout the pandemic-lockdown-restart period.

Companies announcing polysilicon factory plans are looking to secure domestic supply of actors from all existing Chinese players to downstream solar manufacturers, electronics-grade and industrial-grade silicon.

As for remaining Western polysilicon production capacity, some of which was shut down during the 2018 to 2020 price downturn, will be brought back online, the ability to weather the coming storm will depend on a combination of tariffs, restrictions and production incentives. It really will take a combination of all three to sustain a fully vertical silicon-based photovoltaic supply chain anywhere outside of China — as contained in the Biden Administration’s inflation-reduction act.

The same can be said for India, where module and cell manufacturing is being at least partially re-shored, but the necessary policies to recover the wafer and polysilicon supply chain segments have yet to be implemented.

If Indonesia’s plans for a 200,000-ton polysilicon production capacity are followed through, similar will be required. On the upside, both countries could become exporters to Western wafer factories, in a scenario where Chinese solar panels are completely excluded from the US, EU or other countries.

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