A top solar material producer is planning its first factory outside China but may pass on the United States because of high costs, according to the company’s chief executive.

GCL Technology Holdings, the world’s second-largest manufacturer of polysilicon, wants to tap into higher prices overseas and serve foreign customers, according to Lan Tianshi, the company’s joint CEO. Countries around the world are trying to develop their supply chains for solar panels to compete with China’s dominance in the sector.

While the United States took a major step forward in that regard with last year’s passage of the Inflation Reduction Act, building a factory there is still at least five times more expensive than in China, and construction times are bogged down by regulatory requirements, according to Lan. Nothing has been decided, but GCL has been focusing its search efforts on Europe, the Middle East, and BRICS countries, he said in an interview.

“U.S. policies are attractive, but not attractive enough,” Lan said.

GCL’s reticence on the United States stands in contrast to three top Chinese solar equipment makers that have announced plans for U.S. factories since the passage of the IRA, which includes $374 billion in new climate-related spending and is designed to boost domestic renewable manufacturing capacities.

Suzhou, Jiangsu-based GCL plans to build a foreign factory through a joint venture with a local industry leader, and is likely to make announcements by the end of the year, Lan said. Given the higher prices of polysilicon outside of China, its overseas factory could reap double or triple the profit of Chinese facilities, he said.

GCL’s operations in China include a polysilicon plant in Xinjiang, where the United States and others have accused the government of human rights abuses against the ethnic Uyghur Muslim population, and of forcing them to work in factories against their will. China has repeatedly denied the claims, saying these are part of a conspiracy to undermine domestic industries.

The United States last year passed a law forbidding the import of goods from the region unless companies can prove they weren’t made with forced labor, slowing the flow of solar panels to the country. Lan said GCL stands with the Chinese government on human rights issues but will adapt to its buyer’s needs when it comes to manufacturing locations.

“We greatly respect others’ views on us and their choices of the supply chain,” Lan said. “Wherever we build our factories and wherever our products go, on a broader scale, they are all efforts to fight climate change.”

Polysilicon is a highly refined form of silicon found in common sand and is melted and sliced into thin squares that are eventually formed into solar panels. Prices of the material surged to the highest in a decade last year as demand surged beyond the capacity of existing factories. GCL cashed in on the rush, with its net income more than tripling in 2022.

Prices have fallen this year as new factories come online and could drop to as low as $10 to $13 a kilogram in the second half compared to about $39 at last year’s peak, according to BloombergNEF. Lan acknowledged the drop in prices but said he expects them to be more resilient than expectations – between $17 and $20 this year – because of strong demand for high-quality material.

“Polysilicon makers will return to a relatively normal profit margin this year as the unbalance between supply and demand begins to ease,” Lan said.

The company is also betting on a somewhat unique production method. Most polysilicon is produced using what’s known as the Siemens Process, requiring massive amounts of heat and caustic chemicals to remove impurities, creating material where less than one atom in every million is something other than silicon.

GCL’s fluidized bed reactor technology uses far less energy, making it cheaper and more environmentally friendly. Competitors have accused the end product of being lower in quality, but Lan said it’s now pure enough for the most advanced solar panels and even some lower-end semiconductors. The company could enjoy three to five years of relatively high return rates with the self-developed technology because of protections from intellectual property laws, Lan said.

Copy the Story Link

« Previous

Working from home? You may spend less time on career development.

Next »

Long-awaited trial over future of CMP electricity corridor gets underway