(Bloomberg Opinion) — A major producer of solar equipment is planning its first factory outside of China, but could move to the United States due to high costs, according to the company’s chief executive.
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GCL Technology Holdings Ltd., the world’s second-biggest polysilicon maker, wants to take advantage of higher prices abroad and cater to foreign customers, according to Lan Tianshi, the company’s deputy chief executive. Countries around the world are trying to develop their own supply chains for solar panels to compete with China’s dominance in the sector.
Although the US took a big step forward in that regard with the passage of the Inflation Reduction Act last year, building a factory there is still at least five times more expensive than in China and construction times are shorter. bogged down by regulatory requirements, according to Lan. While nothing has been decided, GCL has focused its search efforts on Europe, the Middle East and the BRICS countries, she said in an interview.
“American policies are attractive, but not attractive enough,” Lan said.
GCL’s reluctance in the US stands in contrast to the top three Chinese solar equipment manufacturers that have announced plans for US factories since the passage of the IRA, which includes $374 billion in new spending related to the climate and is designed to boost domestic renewable manufacturing capacity.
READ: Biden’s landmark climate bill attracts China’s clean energy giants
Suzhou, Jiangsu-based GCL plans to build an overseas 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 higher polysilicon prices outside of China, his overseas factory could double or triple the profits of Chinese facilities, he said.
Xinjiang scrutiny
GCL’s operations in China include a polysilicon plant in Xinjiang, where the US and others have accused the government of abusing the human rights of ethnic Uyghur Muslims and forcing them to work in factories against their will. China has repeatedly denied the claims, saying they are part of a conspiracy to undermine domestic industries.
Last year, the US passed a law banning the import of goods from the region unless companies can prove they were not made with forced labor, slowing the flow of solar panels into the country. Lan said GCL supports the Chinese government on human rights issues but will accommodate its buyers’ needs when it comes to manufacturing locations.
“We highly respect the views of others about us and their supply chain options,” 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 prices
Polysilicon is a highly refined form of silicon found in ordinary sand and melted down and cut into thin squares that are ultimately made into solar panels. Prices for the material rose to the highest level in a decade last year as demand outpaced the capacity of existing factories. GCL took advantage of the rush and its net income more than tripled in 2022.
Prices have fallen this year as new factories come online, and could drop as much as $10 to $13 a kilogram in the second half of the year, compared to $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 expected ($17-$20 this year) due to strong demand for high-quality material.
“Polysilicon manufacturers will return to a relatively normal profit margin this year as the imbalance between supply and demand begins to ease,” Lan said.
New technology
The company is also betting on a somewhat unique production method. Most polysilicon is produced using what is known as the Siemens Process, which requires massive amounts of heat and caustic chemicals to remove impurities, creating a material in which less than one atom in a million is otherwise non-toxic. be silicon.
GCL’s fluidized bed reactor technology uses much less energy, making it more economical and more environmentally friendly. Competitors have accused the final product of being of lower quality, but Lan said it is now pure enough for the most advanced solar panels and even some low-end semiconductors. The company could enjoy three to five years of relatively high rates of return with the self-developed technology due to copyright protections, Lan said.
The week’s newspaper
(All Beijing times unless otherwise noted.)
Monday, April 10
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China to publish March aggregate financing and money supply by April 15
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Cosco Shipping Holdings Shanghai earnings report, 2pm
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HOLIDAY: Hong Kong
Tuesday, April 11
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China inflation data for March, 09:30
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China Ministry of Agriculture (CASDE) monthly crop supply and demand report
Wednesday, April 12
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President Lula of Brazil visits China
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Briefing of the National Energy Administration in Beijing, 15:00
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CCTD Online Weekly Report on China Coal Market, 15:00
Thursday, April 13
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President Lula of Brazil visits China
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China’s first batch of March trade data, including exports of steel, aluminum and rare earths; imports of steel, iron ore and copper; soybean, edible oil, rubber, and meat and offal imports; oil, gas and coal imports; imports and exports of petroleum products, ~11:00
Friday, April 14
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President Lula of Brazil visits China
-
China weekly iron ore port bookings
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Shanghai Stock Exchange Weekly Commodity Inventory ~15:30
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EARNINGS: Tongling Metals
Saturday, April 15
on the wire
Tesla Inc. will build a new battery factory in Shanghai, increasing investment in China at a time of rising tension between Beijing and Washington.
(Updates with journal items)
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