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Despite rising import tariffs and an impending investigation by the U.S. Department of Commerce, U.S. production of solar-grade polysilicon is expected to keep pace with the growth of the domestic photovoltaic supply chain. Solar module manufacturing in the United States has increased fivefold since the passage of supporting legislation in 2022. During that time, 70 new solar manufacturing and energy storage facilities have come online and 47 are under construction, according to the Solar Energy Industries Association (SEIA). Solar manufacturers have announced $36 billion in investments in the U.S. starting in 2023, which will create more than 44,000 jobs. These announcements would bring total annual solar module capacity to more than 50 GW, plus 49 GW of cells, 24 GW of wafers, and 13 GW of ingot production. Assembling modules from imported cells has been the initial goal, but fully made in America ??solar energy would require American polysilicon. Currently, the country only has two operating polysilicon plants, but President Donald Trumps willingness to implement tariffs, coupled with the expected increase in demand for photovoltaic energy, could make polysilicon production an attractive proposition. The SEIA estimates that developing polysilicon production plants, a technical challenge, takes about five years. Marius Mordal Bakke, vice president of solar research at Norwegian consultancy Rystad Energy, said REC Silicons Moses Lake factory in Washington state took two years and about $150 million to restart after shutting down in 2019. It is ceasing production again after struggling to meet the purity requirements of the latest silicon cell technologies. Moses Lakes largest shareholder, Hanwha Solutions, terminated a 10-year supply agreement due to its inability to meet requirements at the correct levels. Hanwha, also the parent company of photovoltaic manufacturer Qcells, had planned to supply its US factories from the facility. Instead, it will source polysilicon from the Malaysian factory of South Koreas OCI. REC Silicon, which continues to produce silane gas in Moses Lake, must wait to find alternative suppliers of polysilicon. Its possible theyll resume production, as the investment required would be much lower than starting a new project, Bakke says. American incentives Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance (ULCSA), said that polysilicon production “ties up capital for a long time before you have a product.” Chinese polysilicon giant GCL has dropped the option to manufacture in the United States in 2023. Co-CEO Lan Tianshi said U.S. production was at least five times more expensive than in China, even taking into account Inflation Relief Act (IRA) incentives , and regulatory requirements that delay construction. U.S. policies are attractive, but not attractive enough, he said. Germany-based Wacker Chemie and Hemlock Semiconductor are currently the only two U.S. producers of solar-grade polysilicon. Wacker has a plant in Tennessee, while Hemlock, owned by U.S.-based Corning Inc. and Japans Shin-Etsu Handotai, has a factory in Michigan. Tennessee-based Highland Materials announced in 2024 that it had secured $256 million in 48C Advanced Energy Project Tax Credits to build a polysilicon plant. Its location and expected commercial operation date have not yet been announced. Domestic demand Bakke estimated that the 33,000 metric tons (MT) of annual production capacity at the Wacker and Hemlock plants would be sufficient to supply about 13 GW of solar modules, based on the 2.5 grams of polysilicon required per watt of module generating capacity. However, next-generation cells could require only 2 grams per watt or less, thanks to a focus on thinner cells and reducing production waste. According to polysilicon market watcher Bernreuter Research, several factors have led to the decline in polysilicon consumption per cell: decreasing wafer thickness, reduced cutting losses, increased cell efficiency, and the use of half-cut cells. The research firm noted that polysilicon consumption per gigawatt of PV module capacity in 2023 was only a quarter of what was needed per gigawatt in 2006. U.S. polysilicon facilities will also be able to increase their production capacity as demand grows. If we consider the US as a 40 GW to 50 GW market, and we factor in 20 GW of thin-film [non-silicon-based] solar modules, we have enough Western polysilicon to cover US wafer/cell production. Duty President Trump has issued an executive order adding an additional 10% tariff on goods from China, effective February 4, 2025. This means that solar energy resources, including polysilicon, imported from China are now subject to 60% tariffs under Section 301 of the U.S. Trade Act of 1974. This will increase prices for solar-grade Chinese polysilicon. However, it should not significantly impact solar prices, as the United States imports very little polysilicon, and the little it does import comes from Germany and Malaysia. “For future trade, it would still be profitable for newly established U.S. ingot and wafer makers to buy Chinese polysilicon, even with the tariff, as long as it complies with UFLPA regulations,” Bakke said, referring to the Uyghur Forced Labor Prevention Law, which affects imports from the Xinjiang region, home to a large polysilicon production base. An industry note from Roth Capital Partners indicated that President Trump could soon launch a new investigation on behalf of the U.S. polysilicon industry to determine the effect of imports on national security, a move that could further drive up import prices. Rystads Bakke said non-Chinese polysilicon prices were hovering between $18 and $25 per kilogram. Chinese polysilicon cost just over $5 per kilogram in February. |
