Survival of the fittest…and cleanest

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China had a polysilicon production boom sometime after 2008, when investors started flocking east thanks to the high polysilicon prices. Branded as a hot spot for investment, local governments in areas like Wuhan and Xuzhou decided to establish themselves as core areas for polysilicon production. China Research and Intelligence, located in Shanghai, did a market survey at the end of last year and concluded that the projects that took the scene by storm in that period, however, did not see the production daylight due to the lack of funds and technological necessities among other things. The Research Report on China Polysilicon Industry, 2011-2012 done by the China Research and Intelligence went on to further state that the Chinese polysilicon productivity hit 50,000 tons and the output exceeded 30,000 tons last year.
Market leaders like Hemlock and Sumitomo have been ramping up and reports predict that the polysilicon giants will continue to be on an upward spiral. In the face of such aggressive competition, Chinese manufacturers have been trying to catch up. The issue, as the report points out, is that the Chinese polysilicon prices have been generally higher than that of the international market: by a good 20 to 40 US dollars as last October’s spot prices showed. Quality was brought into question as well. Then the Chinese government stepped in with its plan.

Change for the better

Quality and sustainability have become mantras for the Chinese government’s take on the polysilicon production issue. Good mantras indeed. The government hit back with regulations that may seem a little harsh at first sight but make sense on a second look. Any ounce of dubiousness on Chinese polysilicon quality needed to be skimmed off and production had to become competitive and sustainable.
The document that places the cards on the table basically outlines why the government has put a cap on polysilicon production and how it wants things to develop henceforth. The key words that can be drawn from the document: optimization, energy savings, reduced consumption and environment protection. The most glaring detail is the fact that the solar grade polysilicon plants need to have an annual production capacity of at least 3,000 tons. Thereafter the document moves on to state that the electricity consumption of the solar grade polysilicon ought to be less than 80-kilowatt hours per kilogram (kWh/kg) for starters and thereafter, further reduced to 60 kWh/kg by the end of this year. Recycling rates were also considered. It was decided that the recycle rate of silicon tetrachloride, hydrogen chloride and hydrogen in the reduction tail gas ought not be less than 98.5, 99 and 99 percent respectively.
Sieving through the document further brings about other clauses, like the fact that new projects must not be built within 1,000 meters of sensitive environmental conditions, which include farmland protections zones, nature reserves, protected water reserves, dense residential areas and food production zones. Any vulnerable area that has an ecological purpose is a no-go zone. And the government insists on a thorough EIA (Environmental Impact Assessment) before giving the stamp of approval. From an outsider point of view, kudos to the changes being brought forth. The environment, after all, ought not to be a victim of an industry that strives to support a green cause anyway. It would be a total paradox then. However, with the environment and resource sustainability taken care of, where do all these rules leave producers?
It is a rather Darwinian situation. The standards pave the way for a sustainable and stable long-term development of the polysilicon production sector, but at the expense of probably a large percentage of companies who are not ready for these changes. The small and medium-sized firms that cannot cough up the required capital and resources to chalk up the minimum 3,000 tons of production capacity will have to bid adieu to their production plants. Any polysilicon project that consumes more than 200 kWh/kg for solar grade polysilicon will be phased out gradually, by this year to be specific. In a nutshell, if you are not big enough and not sustainable enough, the government will send you packing.

Feedback

The polysilicon situation buzz was definitely felt around the halls of the exhibition grounds during the SNEC PV Expo in Shanghai. pv magazine decided to ask the Chinese suppliers themselves on their take of the situation. Chief Technology Officer Chuan Shui of ProPower Shanghai remains unfazed when asked about his company’s standing amidst the regulations released by the government.
ProPower is already producing the minimum production capacity of 3,000 tons needed to stay in business. That is one rule down. How about energy consumption? Piece of cake it seems. The company uses less than 45 kWh/kg already. According to Shui, the rules set out came more as an inspiration to strive to be better than to be a document that leaves an unpleasant taste behind. Shui adds that Chinese companies have been perceived as being ‘unsustainable’ producers long enough and this is a clear statement being made by the government to turn around. It is to the benefit of the Chinese polysilicon production and market apparently. Additionally, Shui is also confident that Chinese polysilicon prices will start to sink and get competitive, not just because of the new implementations. ProPower for one, has its own production method and this is a third of the cost of the Siemens process.
Pollution has always been a great concern. An article published in the Washington Post Foreign Service a few years back was headlined ‘Solar energy firms leave waste behind in China.’ Not a great marketing slogan for the green sector. The culprit? The by-product of polysilicon production, silicon tetrachloride that got apparently got dumped in the central plans of the Henan Province.
With the regulations this issue is weeded out. The recycle rate for silicon tetrachloride has been set at 98.5 percent. And the added bonuses to the environment have been highlighted before. However, the question remains of whether all Chinese companies which meet the minimum production capacity can actually ensure their facilities meet the other rigid guidelines on energy and recycling.
This is where some companies are seeking a little aid from counterparts who have the know-how to produce in a more sustainable manner. Just before SNEC PV kicked off, Schmid Silicon Technology, Gebr. Schmid GmbH + Co. and Xinjiang Puxing Chengda New Energy Technology Co. Ltd. sealed a contract for a 3,000 ton capacity polysilicon factory and strategic partnership agreement for an integrated solar cell and solar module factory. From the German Schmid side, the optimized monosilane technology will be offered to facilitate the lowest production costs possible and the potential for further dramatic cost reductions in the future.
Other successful producers in China like GLC-Poly have also been ramping up aggressively aiming to achieve ‘not less than 25,000 megatons by the end of this year and up to 65,000 by mid 2012’. Promotion of cleaner and more sustainable production in the country are also being heralded by initiatives such as Sino-German Solar Cleaner Production Initiative, better known as econet China initiative (see pv magazine, 01/11). GLC sits on the bench that backs this initiative as well.

Right direction

When reviewing how the situation is developing post-standard announcement, it seems that Chinese polysilicon production is rolling in the right direction. The standard is a necessity for the long-term and stable development of the industry without a doubt. Yes, there will be casualties as a result of its implementation, but the bigger picture still paints a better scenario for the future of Chinese polysilicon.