A look ahead for the solar industry
According to Burroughs, the price could fall further, leading to even lower production costs for solar panels. “In the next few years, more polysilicon plants will come up and prices will be low. Daqo (one of the global leaders in the sector) has confirmed that its cash costs (production costs without depreciation) will be approximately $4.5/kg in its new facilities , so there is room for further decline. We forecast a price of $9-10/kg most likely by the end of 2024,” he says.
A significant shift in market sentiment may also occur as China comes under serious attack over the labor environment in Xinjiang and the dire human rights situation of the Muslim population there. The controversial document was recently adopted UFLPA, signed by US President Joe Biden, which imposes an embargo on everything mined, produced or imported from the Xinjiang Uyghur region of China. The largest polysilicon capacities in China, and in the world, are located precisely there – those of the companies GCL, Daqo, Xinte and Xinjiang East Hope New Energy Co. Which means that there is demand for non-Chinese polysilicon in the US, although it is probably hard to find at the moment because of the small European and US capacity. The largest non-Chinese enterprise concentrated in the polysilicon industry is Wacker Chemie and has two facilities – in Tennessee, USA, and in Germany
The most serious problem at the moment may be the cheap electricity that a polysilicon enterprise needs. In China, this is the case with the affordable coal in Xinjiang, with the IEA report showing that the difference in the price of electricity for the industrial sector in China compared to the global one is 30% in favor of the Asian country. The average price for last year in China was 70 euros per MWh, while in Europe much more because of the energy price crisis. This is another case that shows that if Europe wants to develop its industry, it will have to lower the cost of production through cheap and affordable electricity. For production, mining and processing of polysilicon, 40% of the price is determined precisely by electricity.
It will probably be years before there are solar panels on the market that China does not contribute to the production of. And specifically, the demand for non-Xinjiang polysilicon is almost doomed for the time being.
