| Solar Photovoltaic in China: Capacity not Excessive, Quality Determines Market (Part 1) |
|
|
|
|
Follow capacity rhythms
In recent years, China's photovoltaic (PV) market has experienced rapid development and expansion, attracting a stampede of Chinese producers from related fields. Leading Chinese PV companies are all planning and implementing large scale expansion projects. In light of such situation, experts commented that although the PV industry has huge potentials, its technologies and markets are yet to mature, which may lead to the danger of overcapacity. So is this really the case?
When asked about the above possibility, Mr Yan Dazhou from China Enfi Engineering Corp stressed that whether overcapacity exists depends on market demand. According to published policies and planning data, PV demand from the international market in the next 5 years should far exceed projected supply. "China's PV industry is still at an early stage, there shouldn't be any overcapacity issues. But the industry is currently facing issues such as raw materials shortage, talent shortage, policy assistance, technological R&D, domestic market development and product quality. Every aspect of the industry chain, including raw materials supply, requires ongoing policy support from the government", said Mr Yan.
It is an indisputable fact that PV industry has bright future and huge room for growth. Mr Xie Xingmin from High-tech Industrial Development Zone of Luoyang also thought that it is exactly because of such firm belief over the future of PV, lots of private capital have therefore rushed into the industry. The rhythms of market development and capacity expansion will not be synchronised, and this will lead to temporary capacity surplus in a certain period. But over the long term, in the context of the vast market demand, current capacity is far from sufficient.
Vice CEO of Suntech Power, Mr Long Guozhu, said that from a global market perspective, China's PV development has grown faster than many other countries, but there are also some inevitable problems. "I don’t think market size could hinder the development of China's PV industry, I think quality would be a more important issue. As so many companies have participated in China's solar cell projetcs recently, it is possible to see some overcapacity. But given the positive market trend, such capacity surplus in China is just relative, not absolute. If your products are of good quality, it shouldn’t be difficult to sell them", said Mr Long.
Materials still the bottleneck As the PV market is so huge, solar cell manufacturers in China have enthusiastically expanded their capacities, without considering issues such as tightness of raw materials and market bottlenecks. Mr Yan said that the current industry chain is not balanced, exhibiting a "inverse pyramid shape", that is, PV power generation system developments have far exceeded development of upstream raw materials industry. Upstream manufacturers have a higher technical barrier for capacity expansion and slower capacity growth, resulting in a fierce shortage of high-purity silicon materials. Such unsynchronisation between market and industry developemts have directly pushed up the price of solar-grade polysilicon, a major raw material for PV power generation. |
|
|
Yan said that due to the sensitive nature of silicon materials in IT and new energy industries, most developed countries currently consider silicon as strategic resources and restrict the transfer of silicon technologies. In order to support the Chinese silicon industry, the government arranged the establishment of China Silicon High-Tech Co Ltd in 2003, a joint venture between Luoyang Monocrystalline Silicon Co, Luoyang Jinfeng Electric Co and China Nonferrous Engineering Institute. Based on technical capabilities of China Nonferrous Engineering Institute, the JV built a polysilicon production line with annual capacity of 300 tonne in 2005. It is the first Chinese polysilicon production line with proprietary intellectual properties.
In addition, as two other large scale projects, namely Sichuan Emei technological transformation project and the kiloton-per-year project in Leshan, along with a few more new projects in China, will come into market in 2008, China's polysilicon output should reach 3,000 tonnes next year. Many international polysilicon companies are also investing in and expanding capacity at the moment, the tightness of raw materials market should be eased to some extent in 2008.
Having said that, development of China's polysilicon materials industry is not as optimistic as it seems. Due to temporary shortage and high profitability of polysilicon materials, more than 40 companies from various provinces have registered their interests in polysilicon projects, totalling more than 60,000 tonnes per year and worth $80 billion. This could potentially lead to another mania and overheating market.
Polysilicon production systems consist of flammable and explosive materials, with high technical difficulties such as non-standard equipment, complex systems, strict requirement for temperature balance and most importantly, lack of talent. Beginning projects in a hurry, many companies have chosen to head-hunt talents and introduce incomplete technologies and simplified equipment, resulting in risks in technical reliability, system security, environmental damage, investment and IP disputes. Experts have suggested polysilicon companies to take a cautious approach, in order to reduce and avoid wastage. Source: China Electronic News
|
|
| < Prev | Next > |
|---|
