China polysilicon manufacturer Daqo New Energy Corp is aiming to bring the cost of producing the raw material for PV panels down to $6.80/kg by early 2020.
In a press release announcing the completion of the latest stage of the poly maker’s bullish expansion strategy, the Chongqing-based company said a combination of economies of scale and a related deal for cheaper electricity supply – together with a modernization program – would mean it could further bore down on its production costs.
Having opted to ride out difficult conditions in its main, domestic market – prompted by the Chinese government’s abrupt decision in May to rein in solar subsidies – by going for scale, Daqo today announced completion of the latest phase of its ambitious production capacity expansion plan.
Construction and installation of Phase 3B of the company’s factory in Shihezi, in Xinjiang province, has been completed and pilot production has started. Daqo says the expanded facility’s full 30,000 MT production capacity will be up and running by April, at which point the local power supplier to the production line will reduce the cost of electricity by around 18%, ensuring Daqo will be able to produce polysilicon for $7.50/kg, the company says.
Will local utility support equate to state subsidy?
Daqo says its annual capacity will reach 35,000 MT by the end of June, having launched a “debottlenecking” program to modernize its chemical vapor deposition (CVD) furnaces and upgraded other production equipment.
The company then plans to start the first of two Phase 4 upgrades to further expand poly production capacity, with Phase 4A already under construction and due to enter pilot production in the final quarter of next year. Daqo says full output from that expansion will be reached in the first three months of 2020, taking its annual production capacity to 70,000 MT and triggering another fall in its electricity bills which will enable it to hit the $6.80/kg mark.
Quite what US President Donald Trump will make of the potential state support being shown to the poly maker by its local utility at a time when his re-election campaign will be in full swing remains to be seen.
Daqo has never strayed from its ambitious expansion plans despite the storm unleashed by the Chinese policy decision to curtail solar subsidies in May – a development which has stoked fears of PV oversupply on the world stage.
However the company did not escape entirely unscathed, and announced in September it would halt the production of silicon wafers entirely due to developments in Beijing, a decision which cost it an estimated $21.6 million in fixed asset impairment and restructuring costs and which affected 430 MW of wafer production capacity and around 450 employees in Chongqing.
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