The 15th International Photovoltaic Power Generation and Smart Energy Exhibition & Conference (SNEC 2021) was held from this June 3rd to 5th in Shanghai, China. At the event, EnergyTrend and other energy news outlets had the privilege of interviewing Polaris Li, President of Seraphim Energy. Li was kind enough to share his views on various topics related to the development of the PV industry, including the recent wave of price hikes, the technological paths taken by manufacturers, and the trend toward larger wafers.
Major Disruptions at Polysilicon Production Plants Caused Demand and Prices to Surge, but This Wave of Price Hikes Is Expected to Moderate in Q4
The PV industry has been anything but calm during the first half of this year. Just as manufacturers and project developers are preparing to reach grid parity, prices are also surging in the upstream sections of the supply chain. Quotes on the whole have been raised significantly for polysilicon, thereby creating enormous challenges for actors in the midstream and downstream sections.
Regarding the latest wave of price hikes, Li said that in addition to rising polysilicon prices, rising international freight costs as well as fluctuations in the exchange rate with the US dollar are also compounding the pressure on manufacturers. In particular, the hikes in international freight costs have been shockingly large, increasing by 5-10 folds in the past year. From a wider perspective, the driving forces behind the price upswing include geopolitics and the COVID-19 pandemic.
When specifically focusing on the polysilicon market, Li said: “Looking at the current situation, I do not believe that the sharp rise in polysilicon prices is caused by a supply shortage.” He pointed out that PV installations in China during the first half of this year are projected to be relatively on par with the amount that was recorded for the first half of last year. Also, in the overseas markets, polysilicon prices have not risen substantially even though there has been a general demand recovery following the initial impact of the pandemic. Li asserted that this wave of price hikes in China mainly has to do with the recent events that disrupted the operation of local polysilicon production plants. An example would be the earthquakes that struck Yunnan and Qinghai in late May. Another possible factor behind the price upswing is the panic buying from actors in the downstream sections.
Li added that the latest wave of price hikes is detrimental to the PV industry and works against the implementation of policies for capping carbon emissions and achieving carbon neutrality. However, Li also predicts that the panic buying in the downstream will subside, and then polysilicon suppliers will gradually activate their newly added production capacity between late Q3 and early Q4. Hence, the price upswing will start to ease by Q4. Li further commented that the current price rally is temporary, and the long-term trend of declining polysilicon prices remains unchanged.
To cope with the surge in polysilicon prices, Seraphim maintains close cooperation with actors in the upstream and downstream. Furthermore, Seraphim continues to lower the costs of its modules through technological improvements. The company’s slogan for this year is “58421”. It means raising the per capita output to 5.8MW, lowering the per watt manufacturing cost to RMB 0.04, reducing the BOM cost of each module by around RMB 2, and reducing the non-BOM cost of each module by around RMB 1.
Growth of Wafer Size Is Almost at Its Limit, and Compatible Wafer Size Has to Reach 230mm at Minimum When Investing in New Equipment
Seraphim exhibited modules from its S3, S4, and S5 series at this year’s SNEC. The three series respectively adopt 166mm, 182mm, and 210mm wafers. During the interview, Li also shared his thoughts on the general trend in wafer sizes.
PV wafers have now reached 210 mm in size, and Li said the size may keep growing to 230mm in the future. However, 230mm is very close to the limit of how big a wafer can get. Li said that further increases in size also depend on other factors such as the sizes of shipping containers and international freight costs. Additionally, larger wafers mean greater wafer loss during processing. This is a problem that the industry has to address as well. All in all, Li believes that the size of a PV wafer will unlikely increase above 300mm.
Even if wafers become larger, Seraphim has already implemented measures to adapt to this trend. Li said that the investments that his company has made in module manufacturing have come to hundreds of millions in RMB. Furthermore, due to compatibility issue with larger wafers, Seraphim had to painfully carry out two rounds of large-scale equipment replacement. Li added that his company took a very careful account of compatible wafer sizes in its recent equipment purchases. All pieces of new equipment must accommodate at least 230mm so that a single production line is capable of manufacturing products in different sizes.
Over the past several years, PV wafers have grown from 156mm, 158mm, and 166mm to 182mm, 210mm, and even larger sizes. “However, larger wafers do not translate to higher conversion efficiency for PV cells, and this development is quite worrying,” said Li. He noted that even before the trend of increasing wafer size took off, the average conversion efficiency of cells had actually been rising by 4-6% annually. Hence, the increase in wafer size has yet to bring about a significant corresponding increase in conversion efficiency.
Given this situation, Li believes that as the growth in wafer size approaches its limit, the industry will probably need to turn its attention back to cell-level technologies and new materials that can serve as an alternative to crystalline silicon for the base of PV cells.
Close Attention and Cautious Participation in TOPCon, HJT, and Perovskite
Li is a major advocate of slow progresses in terms of technology roadmap, and believes that investment in technology roadmaps should depend on the overall development orientation of the industry, otherwise businesses may experience catastrophes from incorrect decisions.
Li commented that the competition of wafer sizes has essentially come to an end amidst the current post-PERC era, and everyone is starting to once again focus on technology, with TOPCon and HTJ being the future directions. On the whole, it should be relatively easier in achieving TOPCon in the short term as the existing production line of PERC can be directly transferred to TOPCon after simple transformation, which is the advantage of TOPCon. As for HJT, the apparent advantages lie on the higher efficiency, where the theoretical efficiency can arrive at 27-28%, as well as the straightforward craftsmanship, though it does come with a comparatively higher cost.
“We are keeping a close eye on both TOPCon and HJT, but we are still riding the fence, and have yet to decide which route to take,” commented Li.
In addition, Seraphim also continues to pay attention on the possible subversion of new technologies to the industry, including materials outside of silicon substrate. Li mentioned perovskite in particular during the interview. According to the relevant data, the efficiency of perovskite has elevated from 2% to 20% over the past 5-6 years, and endured 13,000 hours of verification under a stable performance. Li believes that the actual cost of perovskite will be even lower seeing how the mineral has achieved such results, and considers perovskite to be a development direction worthy of attention for the industry.
In Li’s opinion, it is not essential to pursue the increase of power for PV modules, where higher power does not necessarily mean better performance, since the PV industry still relies on electricity as the end product, which is why the reduction of the overall electricity cost should be the focus instead. Li believes that polysilicon materials are not the only option, and the adoption of polysilicon or perovskite should depend on the price of each kWh.
However, Li also pointed out that polysilicon remains as the most economical and affordable solution solution right now, which is verified from extensive applications, and said that “polysilicon will still be the mainstream solution within the short term, but the market is certainly not going to inform you when it is comprehensively replaced”.
Production Bases Flourish as Capacity Expands More Than Fivefold under the 14th Five-Year Plan
Seraphim has also stipulated a new 5-year plan subsequent to the drafted contents of the 14th Five-Year Plan.
As revealed by Li, Seraphim plans to expand its capacity by more than five times to 30-35GW amidst the 14th Five-Year plan. The company has initiated an extensive development at an overall capacity of 8-10GW in Yingshang of Anhui this year, with equipment installation for the first phase scheduled to begin in July, and the capacity of the first phase will be 2GW.
Furthermore, Li commented that the “3060” Project is a national project, and PV installations will be seen everywhere in the future. To reduce transportation cost, Seraphim will be establishing 3-4 large production bases among major logistics centers in the country, and forming 5-6 satellite industry bases within 500km of radiation radius of the bases, in order to assemble an arrangement of production and distribution in close proximity around the country.
While drastically magnifying on the domestic capacity, Seraphim will also implement partial capacity arrangements for the overseas markets so as to avoid both the anti-dumping duty and the countervailing duty on one hand, and respond to the precise requirements on local production proposed by a number of countries or regions on the other. However, Li commented that the company will not be planning for a significant capacity arrangement in overseas, and the primary expansion will be happening within the country.
Li pointed out that Seraphim is going to further emphasize the development in the domestic PV market owing to the vast scale and the sizeable potential in the progress of distributed energy, and will reinforce its domestic sales team in the next 2-3 years by integrating the abundant experience accumulated in overseas with the current development status in the country in order to construct a domestic distribution network of distributed energy that will expand on the distribution channels of the products.
It is understood that Seraphim has been cultivating in the overseas market for many years after it was founded in 2011, before marching towards the domestic market in 2017, and now accounts for over 30% in domestic sales.
Welcoming the Golden Decade of PV Industry from Concentrated Cultivation on Modules
The industry is interested in knowing whether Seraphim will shift towards the development of hydrogen or upstream and downstream modules, now that the company is solidifying in the market.
Li commented accordingly that there are no relevant plans right now. “I believe that professionals should be responsible for professional affairs, and Seraphim will remain focused on the cultivation in the module field”. Li believes that vertical integration is a double-edged sword, where the development among each segment of the PV industry is often fluctuating, and that a comprehensive concentration on one single task may create a higher degree of efficiency.
Looking ahead to the future, Li is optimistic towards the PV module field and the development prospects of the entire PV industry, and commented, “I believe that the PV module market has seen a new beginning since this year, and the proposal of “emission peak” and “carbon neutrality” by the country will facilitate a golden decade for the PV industry in the next 10 years”.
Li also forecasted a geometric market growth to occur within the next 2-4 years when PV prices fall to a certain level that prompts the public to initiate installations spontaneously.