An explosion at a silicone packaging workshop owned by Hoshine Silicon – one of the largest silicon metal and silicone producers in China’s Xinjiang Uygur autonomous region – could put further pressure on the solar industry that has already seen price hikes because of shortages in polysilicon.
|Domestic and global demand for solar panels remains high. Photo: Shutterstock |
In a notification to the Shanghai Stock Exchange after the explosion occurred last Tuesday, Hoshine said its main production had not been affected by the incident. The trial production unit affected by the fire and the subsequent explosion is one of Hoshine’s two major manufacturing bases.
Nevertheless, solar manufacturers are already seeing input costs rising as a result of a raw silicon shortage, and are now concerned that further investigations of the incident could lead to interruptions in production.
Polysilicon, or polycrystalline silicon, is a key component of solar panel construction. After air and water, silicon is the most important non-carbon substance in the world, with most of the world’s supply used for the production of solar panels. Hoshine Silicon accounts for around 30 per cent of the Chinese market and almost 25 per cent of global supply, according to Chinese media.
Polysilicon prices have been rising and shortages continue to loom, with the industry forcing panel suppliers to slow production, while the price and supply situation has been steadily worsening since last year. Market research firm Energy Trend reported that polysilicon prices have hit an all-time high of $20.69 per kg and there is no sign that supply will catch up anytime soon.
Vietnam, home to many panel makers like Trina Solar and JinkoSolar, depends fully on the import of polysilicon, mostly from China. However, so far there has not been an official announcement on the prices of solar panels due to the fire incident. Chinese-invested solar manufacturer JinkoSolar predicted that polysilicon prices are not expected to drop for at least six months.
Nguyen Thuy Ngan, branding director of locally-invested SolarBK told VIR, “All solar panel makers in Vietnam could be affected due to a shortage in polysilicon, and incidents like the recent explosion could put more pressure on stakeholders both upstream and downstream because their supply chains are tied to factories like the one in China.”
Ngan added that her company has been trying its best to ensure raw material supply for production and expects no break of its output.
According to a report by global research based management consulting firm TechSci Research, Vietnam’s solar equipment market is forecast to cross $3.7 billion in value by 2025. Market growth can be attributed to the increasing electricity demand from industrial and commercial operators as well as residential end-user segments, rising investments in solar energy, and favourable regulatory scenarios.
Vietnam’s electricity demand has grown by around 30 per cent since 2000 and is expected to continue growing over the next decade. By 2025, the solar market is anticipated to witness robust growth on account of increasing investments and a government focus on reducing carbon emissions.