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Solar Companies Are Scrambling to Find a Critical Raw Material (bloomberg.com)

Posted by msmash on from the current-situation dept.

Solar manufacturers are being battered by higher costs and smaller margins, after an unexpected shortage of a critical raw material. From a report, shared by an anonymous reader: Prices of polysilicon, the main component of photovoltaic cells, spiked as much as 35 percent in the past four months after environmental regulators in China shut down several factories. That's driving up production costs as panel prices continue to decline, and dragging down earnings for manufacturers in China, the world's biggest supplier. "There's just not enough polysilicon in China," said Carter Driscoll, an analyst who covers solar companies for FBR & Co. "If prices don't come down, it will crush margins."

11 of 134 comments (clear)

  1. The market corrects by OrangeTide · · Score: 3, Informative

    If the processing becomes profitable enough then factories will open up, perhaps outside of China. The finance situation has made poly-Si briefly (and artificially) cheap. If there is demand then people will pay more and investment can start again. Right now it's just too cheap to bother investing in a factory.

    --
    “Common sense is not so common.” — Voltaire
    1. Re:The market corrects by Rei · · Score: 4, Interesting

      I bet Silicor really regrets not building their new Iceland plant (they backed out because the price of polysilicon just couldn't support it). They had a really cool technology; I wouldn't support the building of an old-fashioned silicon producer near me (we have a couple in the country; they're pretty terrible), but I supported them. Basically it's based around aluminum alloying; they dissolve impure silicon in aluminum, then cool it (settling it out as flakes, which they skim), then etching away residual aluminum from the flakes with hydrochloric acid. It's then re-melted one more time to separate out any residual aluminum. In addition to the silicon, the process byproducts are silicon-rich aluminum alloys (which are worth more than the original aluminum) and polyaluminum chloride (used in water treatment).

      --
      The most exciting phrase to hear in science, the one that heralds new discoveries, is not âEureka!â(TM), but
    2. Re:The market corrects by Bruce+Perens · · Score: 4, Informative

      Your economics are false because they work if you only count the return on excess solar power production, rather than replacement of grid power. In general a solar system will reduce your daytime power cost. They do this at the full retail price the power company charges. If you can't sell power back to the grid AND you can't store power for night-time use economically, then you lose out on your night-time power costs. But not day-time.

      Solar lease has poor economics where it is not possible to sell power to the grid, but that's because solar lease is an expensive way to get solar power. Ownership is better.

      --
      Bruce Perens.
    3. Re:The market corrects by ShanghaiBill · · Score: 4, Informative

      Are you sure the processing can be done in a clean, let alone profitable, way?

      It can and is done cleanly. Polycrystalline silicon is manufactured worldwide, including in the US. Outside China it is mostly higher quality "electronics grade" rather than lower priced "solar grade", but it is routinely done with more stringent pollution controls than was previously acceptable in China.

      Collecting the volatiles, and cleaning up and recycling the wastewater has a cost, but if everyone is required to do it, the cost can be pushed downstream to the panel manufacturers, and they will pass it on to their customers. This is not a solar showstopper, but it will make panels a bit more expensive.

      Does anyone else think it is silly that something made in factories is called a "raw material"?

    4. Re:The market corrects by Solandri · · Score: 3, Insightful

      Power companies are reluctant to allow you to sell power back to the grid because then you aren't paying the distribution costs (construction and maintenance of the wires, transformers, infrastructure like switching and monitoring equipment, etc. which lets you sell back power to the grid). In the areas where these costs are taken into account, the sell-back price is usually around half the retail price, which dramatically lowers the economic viability of solar. Ignorant solar proponents cry foul at this, demanding they be paid full retail price as if all that wiring, maintenance, and power regulation is free.

      If you can use all the power generated by your PV solar installation, or store the excess in batteries for use during night or bad weather, and you can get the economics of solar to work, then good for you. But if you're trying to use the power grid as your battery, then you can't run your cost/benefit analysis using retail electricity prices. Also note that the maintenance costs per house are fixed. Whether you need to draw power from the grid just one day out of the year, or every day out of the year, you still need the same wiring to your house. So we're not talking about a discount per kWh here. We're talking about a fixed cost per household. (Actually the electrical utilities should just separate out their bill into generation and transportation costs like water and gas companies do.) We're running into the same problem with EVs - they wear out the roads just like ICE cars, but they don't pay the fuel taxes to maintain the roads. California just enacted a tax on EVs to help pay for this road maintenance.

      All that said, FWIW, in the cost analyses I've done, the local price of electricity is a much bigger factor than utilization. In places with high electricity prices (e.g. Hawaii) and good weather, the payback time for a PV solar installation can be as low as 5-7 years with subsidies, about 10-12 years without. (I should mention that the most cost-efficient energy system I found was geothermal heating and cooling. Where you run your heating and air conditioning with a heat pump using the ground as a heat sink instead of the air. For the desert region of Southern California, the payback time I calculated for that was as short as 3 years, and that's without subsidies.)

    5. Re:The market corrects by Anonymous Coward · · Score: 4, Insightful

      Fossil fuels are only cheaper if you keep the waste products off the books. Put all the emissions in there, the costs of smog, PM5 pollution, carbon, increased medical spending of people living downwind from coal plants, increased asthma rates, etc. and solar starts to look pretty god damn good.

      Talk about subsidy - the coal industry gets a pretty damn good subsidy in the form of medicare payments paying for the damage they cause through normal operation, which doesn't even touch on the effects of carbon / climate change (if you're into that kind of thing).

  2. "environmental regulators in China" by SuperKendall · · Score: 5, Interesting

    How horrific does the pollution from a plant have to be before regulators in China shut it down? It really makes you wonder how much pollution from this process was being overlooked.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  3. The Chinese Killed The Market In The First Place by Anonymous Coward · · Score: 5, Interesting

    6 years back I was working on a project for a polysilicon plant in the USA, it got shelved and the plant never built when the Chinese started flooding the market with cheap silicon. If this new development keeps up I wonder if the company that was going to build that plant will attempt to restart the project where it left off as most of the engineering design was already done.

  4. A highly purified material by thinkwaitfast · · Score: 4, Informative

    is not a raw material.

  5. California Virtue Signaling by Zorro · · Score: 3, Insightful

    No reason it couldn't be done in Silicon Valley.

    Only problem is California likes to shift its pollution to other countries and states so they can maintain the illusion of being green.

    We just ignore the fact that it REALLY runs on coal powered electricity from Utah and solar cells from China.

  6. 59% tariff on US polysilicon by Mspangler · · Score: 3, Informative

    RECSilicon, Wacker, and Hemlock would be very pleased to sell the Chinese polysilicon. All the Chinese need to do is drop the 59% tariff they put on it.

    REC can make polysilicon for less than $11/kg. Take the tariff off and they could restart the other half the plant in 3 or4 months. Currently itâ(TM)s shut down due to oversupply outside of China, which is caused by the Chinese tariffs. 80% of the demand is in China, but less than 80% of the polysilicon production is in China.

    By the way, this particular trade war trade war was started by Obama.

    P.S. RECâ(TM)s quarterly report has more information on the trade war. You can browse the old ones to see how it developed over the years.