Longi plans 228 MW PV project, signs $787 million polysilicon supply agreement

Longi has said it will build a 228 MW solar PV project in Majiatan town, Lingwu city, Ningxia Province, China, for an investment of around US$216.7 million.

A spokesperson for the company told pv magazine the plant is expected to be constructed over a period of four months. No further details were available.

Significant

Meanwhile, in an interesting development, China-based Daqo, the world’s fifth largest polysilicon manufacturer, will supply Longi with 39,600 MT of polysilicon between this April and 2020 for use in the production of high-end monocrystalline solar products.

A spokesperson for Longi told pv magazine the contract is worth RMB 4.946 billion (around US$787.58 million). They added that the polysilicon will only be used at the company's Chinese manufacturing sites.

Commenting, Baoshen Zhong, chairman of Longi, said, “This supply agreement with Daqo New Energy will allow us to expand production capacity of our high-efficiency mono-crystalline solar products to meet the growing demand from our downstream customers.”

The fact that Longi has chosen to partner with a fellow Chinese company is significant, not least because Tian Xie, director of quality management at Longi told pv magazine in an interview for our April edition, out today, that quality is an issue when buying polysilicon for monocrystalline ingot and wafer production, and that imported polysilicon can be superior.

“Concerning the quality of OCI’s polysilicon, it is good and better than some other players in China,” Xie said, referring to the contract Longi signed with Korea’s OCI, to buy around 64,600 metric tons of polysilicon over the next three years, for a total cost of just over $1 billion.

Although, he did add, “For the future we can see a lot of improvement in Chinese makers. They are doing a lot of activities to improve the quality of their production, and the quality gap between OCI and these poly makers will become smaller and smaller in the future.”

The news of the deal also answers a question posed by Johannes Bernreuter, head of Bernreuter Research in pv magazine's recent polysilicon and wafer manufacturing ranking, where he said, “Mono wafer producers are mainly importing high-purity polysilicon from Germany and South Korea.

“Regarding the rapid expansions of Longi and Zhonghuan Semiconductor [both of which exclusively produce monocrystalline products], it remains an open question how they will cover their demand for high-purity polysilicon.”

Chinese polysilicon

According to figures provided by Bernreuter Research, Chinese polysilicon capacity at the end of 2016 was 227,500 MT, growing to 319,000 MT by the end of 2017. With several new factories set to come online, this capacity could hit 450,000 MT by the end of 2018.

“In terms of quantity, Chinese manufacturers are making huge progress,” said Bernreuter. “This supports what I have been saying for a while, that the ultimate goal for China is independence from polysilicon imports.”

Overall, monocrystalline silicon enjoys a sizable market share – around 40% by the end of 2017 according to estimates from IHS Markit.

Despite this, Chinese wafer producers will continue to import large amounts of polysilicon. Figures from Bernreuter Research show that China imported 159,000 MT of polysilicon in 2017. Around 45% of these imports came from South Korean producers, with Germany’s Wacker was responsible for a further 30% share, with 11% coming from Taiwan.

Longi’s expansion

In January, Longi announced it would invest CNY 1.95 billion (US$299.5 million) in the construction of a 5 GW solar module assembly plant in eastern China.

The planned facility in Chuzhou, Anhui province, will produce monocrystalline PV modules. Construction of the new factory is expected to take nearly two and a half years to complete, said the company at the time.

Also in January, the Chinese solar PV manufacturer said it would establish a 2 GW manufacturing facility in India, for 1 GW of monocrystalline cells and modules, respectively. The facility is expected to be commissioned by Q1 2019 at the latest.

At the start of February, meanwhile, it announced a three-year roadmap, aiming for 28 GW monocrystalline wafer capacity by end of this year, 36 GW by the end of 2019, and 45 GW by 2020.

Independent solar analyst, Corrine Lin believes Longi’s plans to triple its production capacity to 45 GW could trigger an oversupply problem in the second half of this year.

And last March, Longi agreed to collaborate with Sichuan Yonxiang, a unit of Tongwei, to jointly build a new polysilicon production plant in China’s Sichuan province with an annual capacity of 50,000 MT. Construction on the first phase of the project was slated to start at the end of last June 30, with operations expected to begin this year.

Commenting on the current status of the collaboration, the Longi spokesperson said, “… the first phase of annual capacity of 25,000 MT will come into production within 2018.”

Watch out for the April edition of pv magazine, out today, where editor, Christian Roselund dives into China's monocrystalline boom.

The article was amended on April 3, 2018, at 14.50 to include information from our April edition, and on April 6 at 14.30 to include comment from Longi.