Increases in wafer size are one recent technological development that demonstrates the accelerating rate of change currently underway in the solar manufacturing industry. In mid 2019, Zhonghuan Semiconductor very publicly pushed for wafer sizes to increase to 210mm. And while doubts linger as to whether a shift to such a large cell format is feasible, several key players had at least implied their support to Zhonghuan as 2019 drew to a close. What is abundantly clear is that change is afoot, surprising many in the solar industry.
Two of the largest independent solar cell manufacturers in the industry today, Tongwei and Aiko Solar have announced that they intend to deliver cells based on the 210mm wafer format to customers, with planned capacities of 10 GW and 5 GW, respectively. The two, neither of which has module production capacity, both appear to be opening a clear path for the 210mm format, which seemed merely a pipe dream only months ago.
Wafer size increases are nothing new, and Longi’s 166mm format appears to provide a significant performance improvement at a limited cost increase. By contrast, the 210mm proposal requires entirely new investments in production equipment, with all the associated risks. However, with 210mm supply likely to be forthcoming, some of the major module producers may indeed decide to switch to the larger format.
After years of rapid development and fierce competition, China has the largest PV manufacturing base globally. But there has also been significant consolidation across much of the supply chain. In polysilicon production, the top five Chinese producers were responsible for around 80% of output from the country in 2019. On the wafer side, the massive expansion plans announced by Longi, Zhonghuan and JinkoSolar in 2019 – with new capacities of 50 GW, 25 GW, and 25 GW, respectively, to come online by the end of 2020 – will likely see the three supply the vast bulk of demand. If they execute on these plans, the three companies will supply more than 90% of the Chinese market by the end of 2020 and around 80% globally. In module manufacturing, the top 10 manufacturers, including nine Chinese module makers and Korea’s Hanwha Q-Cells, supplied around 65% of demand in 2018, increasing to almost 70% in 2019.
However, according to BloombergNEF, in the solar cell sector, the top five producers had captured only around 50% of the market in 2018. Even in the first half of 2019, the top ten supplied less than 60% of the overall market. This indicates that there is still room for consolidation among the cell production ranks and the investment in new lines indicate that consolidation will reach historical highs over the next two years.
China’s largest cell producer, Tongwei, made a lot of progress in 2019. With the commissioning of its largest production facility in March, the company reached 20 GW of cell capacity by the end of the year. An additional 10 GW investment is currently underway, pushing capacity to 30 GW by the end of 2021.
Aiko Solar, another rising solar-cell star, made more aggressive expansion plans with money from capital markets. The recently listed company is already operating three production bases in China with a total cell capacity of 9.2 GW, and plans to expand to 22 GW, 32 GW, and 45 GW by the end of 2020, 2021, and 2022, respectively.
And Longi, the mono giant that is primarily focused on wafer and module production, has extended its vertical integration process by adding more cell capacity. In keeping with its tradition for bold moves, the company reached 10.25 GW of cell capacity in 2019 and plans to hit 25 GW by the end of 2020.
Cooperation and integration
There used to be two kinds of solar cell makers in China. The first type was the vertically integrated module makers like JA Solar, Jinko, Canadian Solar, and Trina. These companies tend to utilize their cell capacities for their own module lines, not only because of cost, but primarily because it gives them more flexibility in dealing with their customers.
The other type of Chinese cell producer has traditionally been pure-play; that is, an independent cell maker with no module lines. Tongwei, Aiko Solar, and Runergy are the largest of these types of producers. However, there is a swarm of other small cell manufacturers of this kind in China. One feature of such producers is that they have all been cautious not to move into the module sector and directly compete with their customers.
Beyond the vertically integrated players, the supply chain developed in such a way that Longi and Zhonghuan provided wafers; Tongwei, Aiko Solar, and other cell makers bought wafers from those two and produced cells. And then downstream module makers purchased the cells they required, at least partially, from the cell makers – a truly harmonious process.
However, this balance has been unsettled by Longi’s push into cell production. For the first time, there will be a solar PV giant with capacities in the tens of gigawatts, vertically integrated from ingots, to wafers, cells, and module production.
This development will no doubt frighten Longi’s competitors in the module segment, as well as its vendors, customers, and partners.
Tongwei, for one, has repeatedly expressed dissatisfaction with Longi’s encroachment into “its turf” of cell production. This development may even result in Tongwei entering into wafer production – an area in which Longi has already made massive investments.
Aiko Solar, a p-type monocrystalline cell maker, was previously a strategic partner of Longi, but has now quickly embraced the 210mm wafer format, in spite of Longi’s promotion of 166mm. In testament to the strategy, on Jan. 10, Aiko Solar announced that its entire Zhejiang production base will be equipped for 210mm cell production, to the tune of 5 GW of capacity.
Beyond wafer size, there is also divergence in technology. While Longi believes p-type PERC technology has the potential for further improvement, maintaining its competitive position for two-to-four years, others are not so optimistic. For the next generation of cell technology, p-PERT may be abandoned for n-type technologies including TOPCon, IBC, and HJT – potentially leaving Longi in the somewhat unlikely position of being isolated from a technology perspective.
When Zhonghuan Semiconductor launched its 210mm M12 wafer in August 2019, few would have seen it as being the start of a PV production contest of major significance. But it appears that battle lines are forming. And an increasing number of companies are forming rank around the push to 210mm.
Risen, one of China’s biggest module producers, released its latest product with 210mm cells in December 2019, and also announced a strategic cooperation deal with Zhonghuan. The company believes the bigger cells are the best choice for its upcoming HJT technology.
Traditional module giant Trina Solar also appears to be responding positively to the 210mm proposal. It is deploying n-type TOPCon technology, and its lab has revealed how it believes large cells with passivated contact technology can be effectively deployed in module. Trina has presented panels using 50 1/3 cell pieces, interconnected with multi-busbar technology. This, Trina suggests, allows 210mm cells to be deployed with higher power, lower cell-to-module losses, and low hotspot risk. The company argues that this combination will come to dominate the technology landscape over the next three to five years.
In terms of cell cutting, GCL announced in January that its R&D team had achieved a breakthrough in the cutting of 210mm mono wafers and that yields had been greatly improved. With modifications of existing cell cutting tools, reported breakages were minimal for some continuous 51 cuts.
A group of 210mm users is forming and will challenge the current market structure with new and powerful products. The question is, how will Longi respond?
It doesn’t seem easy for the company to either fight back or change direction. Having such confidence in the M6 (166mm) format, it made a big bet in terms of its wafer capacity. According to public statements, Longi has around 65 GW of wafer capacity finished already finished or under construction. The original target to reach this capacity was set for the end of 2021, but Longi is now ramping up wafer capacity to 80 GW by the end of this year.
It appears Longi was convinced that both the new n-type technologies like HJT/TOPCon and the 210mm format would not become mainstream in the next three years. With its market strength, Longi perhaps believed it had time on its side, and could calmly prepare for the next technology switch. The move to 210mm wafers seems to have disrupted Longi’s plan.
In the pursuit of ever lower LCOE, technological disruption has seen leapfrog development within the PV industry. Old giants caught on the wrong side of these developments have suffered as a result. The fortunes of manufacturers like Suntech, Yingli, and LDK are evidence of this.
No one would treat Longi simply as another one of those old giants, but it seems there is a hot contest ahead in the solar cell sector. A hidden battle is underway.