Just in time for peak oil, Rethink Energy predicts that there will be a surge of new polysilicon production capacity coming online in the next two years, leading to a glut of solar panels by 2025.
The production capacity of solar panels is expected to exceed 1,000 GW per year by 2030. Pledges made by several dozen companies should see production capacity triple over the next three years. An expansion to nearly 4 million tons of solar-grade polysilicon production capacity will have been announced just in the last few weeks alone. Running at two-thirds capacity utilization would be enough to manufacturer 900 GW of photovoltaics each year.
2025 is also the predicted year for massive EV take-up as manufacturers bring greater supply to market. “The polysilicon shortage will continue to limit worldwide solar installations until mid-2023, in which year 250 GW of polysilicon solar will be commissioned. The price of polysilicon will take at least five years to return to the record low of 2020, but will then decline even further,” says Andries Wantenaar, solar analyst with Rethink Energy and lead author of Polysilicon manufacturing forecast to 2030.
The shortage was caused by several factors, according to the report, with low-cost Chinese production in the years preceding the pandemic that pushed many companies out of business being cited as one of the main reasons, since there was practically zero investment in new production capacity from other countries in an effort to remain cost-competitive. In 2020, with lockdowns crushing demand, the industry’s profits dropped to zero, with polysilicon prices hitting record lows of $6 per kilogram during the pandemic.
Rethink Energy expects that with the price rebound for polysilicon and profitability returning to the sector, factories will increase production of solar modules and we can expect that by 2023 there will be greater supply coming to the market. This may lead to a LCOE reduction of up to 12%.
During the past two years, underlying demand has not been met. “Production capacity will more than quadruple this decade compared to the scale seen in 2020,” says Wantenaar, who points to the mass adoption of the fluidized bed reactor (FBR) granular production process. “China’s dominance of the industry will go from strength to strength, but India will build and shelter domestic production under protectionist policies and the US may do likewise depending on the Biden Administration’s upcoming spending bills.”
Thanks to the shortage caused by increased demand without increased supply, prices for polysilicon have soared to around $40 per kilo, with cost impacts influencing the entire “solar value chain” from March to the end of 2021, when prices increased by 13% for modules and cells, 54% wafers, and 177% for solar-grade polysilicon. Profits, meanwhile, have been boosted as much as 300%, prompting massive expansion plans outside of China.
As Tony Seba frequently comments – it is the confluence of technology changes that creates the greatest disruptions. A glut of solar panels arriving at the same time as a ramped supply of batteries and electric vehicles will create a massive acceleration of uptake. Here is a major step in the rEVolution. (Please note: Rethink Energy is not affiliated with RethinkX).
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