• Source: Global Times
• [02:39 October 20 2009]

China will strengthen the regulation and control of its export of solar polysilicon wafers and related energy products, which have given rise to "concerns over national energy security," a senior government official said on Monday at a press conference highlighting production overcapacity.

More than 98 percent of the polysilicon wafers China produced last year, which are capable of 2,000-megawatt power outputs, are exported, according to the Industry Department of the National Development and Reform Commission (NDRC), the country's economic planning agency.

"The production of 1 megawatt polysilicon wafers consumes 2 million to 3 million kilowatt hours of power," Xiong Bilin, deputy director-general of the NDRC, said. "In this sense, exporting silicon wafers is the same as exporting energy, which is unaffordable to China, a country short on energy."

Xiong suggested that the government further encourage independent innovation in the production of polysilicon wafers, a key component of solar cells, to enhance the competitiveness of the industry and promote the domestic use of solar silicon wafers.

The remarks were made at a briefing in Beijing, where 10 government bodies attended and expressed their desire to curb production overcapacity in six industries, including polysilicon.

Li Junfeng, deputy director of the Energy Research Institute under the NDRC, noted that the polysilicon industry is facing overcapacity problems in terms of a limited domestic market.

"Most of the direct or indirect products are exported, and the domestic market only accounts for a very small share," Li said. "In this sense, the production capacity is much higher than consumption."

According to a report by the China Electronics Materials Industry Association, the production capacity reached 30,000 tons by June and was expected to reach 100,000 tons in 2010, which, if realized, will exceed twice the global demand.

A leading semiconductor analyst, who spoke on condition of anonymity, told the Global Times that the problem of overcapacity should be measured by the high cost and low quality of polysilicon products made by many manufacturers, rather than the large output.

Polysilicon production, a high power-consuming industry with environmental risks, has expanded very fast in China since 2006, driven by a rising demand in the global market.

Most domestic polysilicon producers, however, are not State-owned. In terms of cost and quality, Chinese-made polysilicon does not enjoy any competitive edge, compared with the seven dominating manufacturers in Germany, Japan and the US, he added.

Yao Feng, a spokesman for Wuxi-based Suntech Power Holdings, a leading company in China's photovoltaic industry, said on Monday that the remarks by the NDRC were a sign that the government will regulate the polysilicon industry, which is good news for the development of the domestic photovoltaic industry.

Yao suggested that the government will support high-tech polysilicon producers with a lower cost of capital and environmental impact by setting some industrial standards and encouraging domestic consumption through some favorable polices such as an annulling export-tax refund.

In the National Outlines for Medium and Long-Term Planning for Scientific and Technological Development (2006-2020), solar energy is listed as a priority theme. The National Medium-and-Long Term Renewable Energy Development Plan has listed solar Photovoltaic power generation as an important poin for development.

Qiu Wei and An Baijie contributed to this story