Polysilicon and Solar Power Module Prices Plunging
The ecosystem of the domestic photovoltaic industry is in its worst crisis due to plunging prices of polysilicon and solar power modules. Industry insiders believe that the solar power business entered the initial stage of the second restructuring period last year following the first restructuring that continued for three years from 2010. The aftermath of the restructuring is expected to last at least two years.
The price of polysilicon fell to US$8.50 (9,660 won) per kilogram this month from US$17.80 (20,230 won) earlier last year, according to market research firm PV Insight on April 20. Polysilicon producers can make a profit when the price of polysilicon does not fall below US$13 to US$14 (14,775 won to 15,911 won) per kilogram. Companies say that they cannot stay in business unless they relocate their factories to other countries because of their low cost competitiveness.
The situation is similar in the solar power module market, where Hanwha Q CELLS Co. ranks top in terms of global market share. The price of solar power module plunged from US$0.31 (353 won) per watt earlier last year to US$0.215 (244 won) this month. Hanwha Group’s solar power business performance, excluding Hanwha Q CELLS & Advanced Materials Corp., sharply deteriorated last year. Its sales came to 3.38 trillion won (US$2.97 billion), down from 3.43 trillion won (US$3.02 billion) a year earlier, and its operating profit turned from a surplus of 22.20 billion won (US$19.52 million) to a loss of 20.40 billion won (US$17.94 million). In particular, its net loss grew from 43.70 billion won (US$38.43 million) to 336.50 billion won (US$295.93 million) in a year.
Companies point to Chinese low-priced competitors as the main cause of the falling price of solar power equipment. The falling price of fuels for power generation due to the U.S. government’s expansion of shale gas extraction is also a challenge for solar power companies which have a relatively lower generating efficiency than fossil fuels.
On the other hand, some say that the solar power industry will get back on track if it manages to overcome the crisis over the next few years as demand is on a steady increase. In fact, the promotion of the RE100 initiative, which is designed to expand renewable energy, is boosting demand for solar power in advanced markets. Moreover, there are a lot of unexplored fields related to solar power in emerging markets, including Southeast Asia.
Notably, the proportion of the Chinese market, which currently accounts for more than one third of the global solar power market, is expected to decrease in the future and the growth rate of Chinese firms, which have grown based on the domestic market, will slow down as well. Market research firm IHS said that demand for solar power in China will rise from 40 GW this year to 43 GW next year, while that in other countries, including emerging markets, will rise from 27 GW to 31 GW, surpassing the increase of China.