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A New Blow to the Solar-Energy Supply Chain

A New Blow to the Solar-Energy Supply Chain

Tongwei Co. halted output at a polysilicon factory in southwest China because of flooding, the latest blow to the solar supply chain that has seen rare cost increases this summer due to disruptions.

Tongwei, the world’s No. 3 polysilicon producer last year, said it isn’t clear when the Sichuan province plant will restart, and didn’t say whether it sustained damage. The facility can make 20,000 tons of polysilicon annually, which would have been about 4% of global output last year, according to data compiled by BloombergNEF.

The move could further pinch the solar supply chain, which is in the midst of a rare period of rising costs after a July 19 explosion at a polysilicon plant in Xinjiang cut global supply of the material used as the building block for photovoltaic power.

“A short-term price rise driven by this event is possible,” said Yali Jiang, an analyst with BloombergNEF. “But further price rises may lead to project delays considering the already high upstream prices.”

Prices for the conductive material have surged by 56% since July 15, according to PVInsights. Wafer and cell makers have since boosted prices to pass along some of the increased cost. Any further impact on prices may depend on the duration of the outage.

LONGi Green Energy Technology Co., the world’s biggest solar wafer maker, said Tuesday that it signed a five-year contract to purchase 124,800 tons of polysilicon from Asia Silicon (Qinghai) Co. The contract is worth about 9.5 billion yuan ($1.37 billion), while detailed purchased prices will be discussed on a monthly basis, it said.

China has been battered by severe floods since early June, affecting more than 63 million people, according to a posting on the Ministry of Emergency Management’s website.

National Business Daily reported the suspension of Tongwei’s plant earlier Tuesday.

©2020 Bloomberg L.P.

With assistance from Bloomberg