Point of view:
The Middle East is the entry point into global markets, the falling price of photovoltaic products brings expansion opportunities
Chinese PV companies plan 1st overseas factories in SA
Beyond Oil Sector
While China and Saudi Arabia are working to expand their energy partnership beyond the oil sector, Chinese PV supplier GCL Technology is in deep talks with Saudi Arabia to open its first overseas factory.
GCL Technology co-CEO said the world’s second-largest manufacturer of polysilicon, a key raw material for solar panels, is looking to build a plant in the Middle Eastern country with an annual capacity of 120,000 tons. The plant could be operational as early as 2025, he said.
“Saudi Arabia has mature infrastructure and industrial manufacturing experience.” He pointed out that Saudi Arabia is rich in sunshine resources and can support its transformation from an oil country to a photovoltaic energy producer.
GCL Technology will also consider setting up branches in other countries, but it is currently making the fastest progress in Saudi Arabia.
The company, which has filed for registration in Saudi Arabia, has a team of more than a dozen people on the ground and is in talks with local government officials and a royal commission.
Sino-SA relationship
This is the latest sign of increased energy cooperation between the two countries following the Chinese president’s visit to Saudi Arabia last December.
At the BRICS Forum in August, China also invited Saudi Arabia and other major oil exporters to join the BRICS cooperation mechanism.
Mr. Lan said he and other executives had visited Saudi Arabia and Qatar, both of which are places “where we want to speed up implementation.” He said the company was also considering the possibility of entering Mexico for the North American market, as well as entering the Australian market.
Competition & Survive
At present, Chinese PV companies in the midst of fierce competition are struggling to cope with declining profit margins, Lan said, he expects a wave of consolidation in the PV supply chain, and eventually only five to ten companies will survive.
“In the next two to three years,” “competition, scale and differentiation” in terms of talent, technological capabilities and research and development will reduce the number of players in the industry, Lan said.
GCL Technology is the second largest producer of polysilicon, a key material for solar panels.
Since the beginning of the year, polysilicon prices have plummeted, causing several producers to stop production in June.
Oversupply & Potential Market
BloombergNEF said it expects a serious oversupply of polysilicon in the second half of the year.
However, falling prices for PV products have stimulated demand in China and elsewhere. According to the China Photovoltaic Industry Association, Asia’s largest economy will have a record 140 gigawatts of PV installed capacity this year.
By building new infrastructure in Saudi Arabia, GCL Technology can take advantage of the country’s huge potential market and higher polysilicon prices in overseas markets.
The material could also reach African and European consumers more easily from the Middle East.
