Polysilicon Market Update_150331_Goran Bye-Bruno Ceccaroli

Polycrystalline Silicon Market,
Selected Updates
©AMMS | 31 March 2015
Gøran Bye
Advanced Materials
Management Solutions, LLC
(AMMS)
Bruno Ceccaroli
MARCHE AS
Gøran Bye | Advanced Materials Management Solutions, LLC (AMMS)
Goran.Bye@AdvancedMaterialsManagement.com
www.AdvancedMaterialsManagement.com

About this presentation
2
• The purpose of this presentation is to provide selected updates on the global market for
polycrystalline silicon as industry data for 2013 and 2014 has become available.
• The updates should be seen in conjunction with the article:
Solar grade silicon: Technology status and industrial trends
by Gøran Bye and Bruno Ceccaroli,
Solar Energy Materials & Solar Cells 130 (2014) 634–646
(http://dx.doi.org/10.1016/j.solmat.2014.06.019)
• In the original article, the authors indicate that...
…the polysilicon industry will continue to grow with the photovoltaic industry provided that cost and price
reductions in PV and polysilicon can continue, which the authors believe to be the case
…it is difficult to argue for a long term polysilicon price above US$20/Kg, and they believe future price will be
set top‐down by the market and not as a function of supply (as in the past)
…the polysilicon supply side will consolidate (back) to a limited number of larger players as these can exploit
economics of scale from de‐bottlenecking and incrementally expand existing capacity
…China will be the most important market for, and potentially producer of, polysilicon
…there will be a need for significant new capacity, potentially already from 2017, to serve the future growth of
PV and to replace non‐sustainable existing capacity
…the only apparent challenger for TCS/Siemens as dominant technology seems to be Silane/FBR – especially
for greenfield developments, upgraded MGS may display even better economics, but is generally unavailable
Gøran Bye | ©AMMS | Polysilicon Market Update | 31 March 2015

About the authors
3
• Advanced Materials Management Solutions LLC (AMMS) was established in 2009, to leverage the accumulated knowledge of a number of
professionals from the photovoltaic, silicon materials and other advanced materials industries. AMMS delivers a wide spectrum of services ranging from
strategic advice to operational involvement. AMMS engages with both companies and investors in renewable energy, photovoltaic, silicon materials and
associated industries.
• The company's principal is Mr. Gøran Bye, who has many years of active participation in the target industries. Associated with the firm are a number of
other professionals with deep and wide experience.
• AMMS' particular strength is the combination of width and depth of knowledge and experience. Having been for years, and indeed continuing to be,
integral and active parts of the industry, AMMS' resources have amassed a valuable insight that stretches from the strategic, via technology and down to
the details of how to set up operations to squeeze the most return out of the considerable production assets that go into polysilicon and related materials
and products.
• The professionals under the AMMS‐umbrella have a wide net of contacts and relationships in both the photovoltaic‐industry in general and the polysilicon‐
industry in particular, and amongst the analysts and investors following it. And they do enjoy a certain respect and trust based on achievements in the past
and soundness of previous decisions made.
• Since its inception, AMMS has provided services to many investors and businesses in the target industries.
• Dr. Bruno Ceccaroli incorporated MARCHE AS as a Norwegian based, private investment holding company. Through MARCHE Ceccaroli has contributed
to the foundation and the development of several high‐tech startup companies within material technology i.e. n‐TEC AS (carbon nanotubes), Isosilicon AS
(silicon and other light stable isotopes), Polysilan AS (specialty silicon gases) and Combined Properties Materials AS (silicon‐carbon composite materials).
MARCHE is constantly evaluating new investment cases. A selection requirement is our ability to contribute to the case with technology and competency.
• In 2007 MARCHE extended its activities to provide industry and technology advices.
• Business and technical areas: Metallurgical grade silicon, polysilicon, solar grade silicon, solar cells, solar energy value chain, advanced materials
• Activities: Support companies to develop technology and business strategy, to select technology, take active part in advisory boards, manage R&D
projects, execute due diligence studies.
• Clients: More than 30 worldwide clients during the past 7 years including large industrial companies, investments funds, startup companies, board
of executives.
• MARCHE’s principal is Dr. Bruno Ceccaroli, docteur‐ès‐sciences in nuclear chemistry; has international business/industrial experience in at least three
regions: France, Norway and North America including more than 25 years in the silicon and solar industry; has written several popular articles and chapters
in handbooks on solar grade silicon industry.

PV‐GROWTH, PRICE AND COST DEVELOPMENTS
Polycrystalline Silicon Market, Selected Updates
4

PV growth and geographical diversification continue:
2013: ~40 GWp / 2014: 41~47 GWp (US$ 100+bn global market)
5
Detailed geographical breakdown TBD
• In the past, annual PV‐installations have proven to exceed
most industry forecasts even in “crisis‐years”
• Europe’s declining volume is more than outweighed by other
geographies
• Rather than attempting accurately to forecast future growth
in PV‐installations, we have chosen to devise two scenarios
that may serve as descriptions of lower and higher boundaries
for the market developments over the next ten years
• Higher growth scenario: prolonging the historical growth
trend from 2003 until 2025
• Lower growth scenario: assuming a flattening of annual
growth to 15% 2015‐2020 and 5% 2021‐2025

Cost reductions continue along the established trend;
PV is steadily becoming more competitive;
continued growth is dependent on continued price reductions
6
$0.10
$1.00
$10.00
$100.00
1
10
100
1,000
10,000
100,000
1,000,000
ModulePriceinUS$/Wp
Cumulative PV Module Production in MWp
PV Experience Curve
Module Price vs. Cumulative Product
Trendline 1975-2004
1980, 20 MWp,
US$ 12.40/Wp
Start of feed-in
tariff in
Germany
1990, 274 MWp,
US$ 6.45/Wp
2000, 1,452MWp,
US$ 3.50/Wp
2008, 15,773 MWp,
US$ 3.75/Wp
1975, 2 MWp,
US$ 47.80/Wp
2012, 98,000 MWp,
US$ 0.79/Wp
Sources of analysis/chart: PrincetonTechResearch/Paul T. Leming; and AMMS
Sources of data: ARISE Technologies Corporation, PVNews, Solarbuzz, PTL estimate
2014, 172,000 MWp,
US$ 0.63/Wp
• PV growth is driven by
attractive economics
to system owners as
prices are reduced
• 2008‐14 price
development is
dramatic, but in fact
brought module ASPs
back to the experience
trend

Continued growth is dependent on continued price reductions; it is
difficult to argue for long‐term polysilicon price above US$ 20/Kg
7
• For PV‐modules at USD 0.55/Wp to…
• …sustain polysilicon prices on or above
USD 20/Kg; and…
• …yield 10% gross margin (5.5 USD‐
cents/Wp gross profit pool – ingot
through module)…
• …You have to believe that…
• …silicon usage can be reduced to 4.5
grams/Wp or less, and that…
• …conversion cost – ingot through
module – below USD 0.405/Wp is
achievable…soon

POLYSILICON INDUSTRY DEVELOPMENTS
8

China’s growing prominence in polysilicon, 2014:
Chinese firms consumed ~90% and produced ~50% of global
volumes to PV; prices vacillate around US$ 20/Kg as predicted
9
• In 2013, China introduced tariffs on polysilicon imports. Wacker( GER): 0%, OCI (KOR): 2.4%, REC Silicon, Hemlock Semiconductor &
SunEdison (all USA): 57%. At first glance, the reported import prices seem to reflect the differences in tariff levels for the exporters.
• However, one could speculate that the tariffs to date in practice have had no significant effect on import prices, because:
1. the general price dip in late 2012 and 2013 is the result of the price pressures on PV and excess supply in the market.
2. around 75% of the 2013‐14 imports exploited the tariff loophole of Export Production Zones (EPZ) to avoid tariffs – e.g. none
of REC’s volumes into China in 2014 suffered the punitive levies.
3. REC heavily discounted FBR‐material in 2012‐14, FBR was a significant share (60%–72%) of the volumes from the USA.
• China announced the intention to close the EPZ‐loophole from Sept. 2014, with some transition time for existing supply agreements.
By Nov. more than 70% of imports had been made through EPZs. In Dec. the EPZ‐share fell to ~55% (Jan. 2015: ~65%).
• It is difficult to predict how this will develop, but REC has announced a change in sales strategy to shift volumes from China to other
geographies – indicating that even so ~20% of their 2015 polysilicon sales will be subject to Chinese tariffs.

90% of PV‐systems are built on polysilicon, and PV consumes 90%
of all polysilicon
10
Fraunhofer
Institute for Solar
Energy Systems ISE:
Photovoltaics
Report
Freiburg, 24
October 2014

Supply/demand balance in 2014–16 (US$ 5.5‐7bn global market);
demand grows and capacity is (re‐)started;
net new capacity needed from 2017 and onwards
11
Demand estimate is disregarding:
1. PV‐installations that are not silicon based
2. Electronic semiconductor demand
3. Changes in value chain inventories (we have reason to believe that current value chain inventories may be
sufficient to offset the apparent need for new capacity in 2015 and 2016 in the historic growth trend scenario)

The polysilicon industry is indeed (re‐)consolidating: based on plans
to cancel or execute on expansions – announcements still appear to
be of varying veracity – three capacity tiers emerge towards 2018
12
Not a complete list of “believable suppliers”;
the authors have made judgement calls on the accuracy and timing of some expansion initiatives

SOLAR SILICON TECHNOLOGY DEVELOPMENTS
13

By 2018, TCS/Siemens will remain the dominant technology, but
Silane/FBR may be ~20% of total capacity
14
• For capacity to become operational by 2018, it should currently be identifiable as idled
capacity to be restarted, or as an expansion or a new‐build initiative. The above identified
initiatives commenced before Silane/FBR generally had proven itself viable and while the
technology was proprietary to a few producers and thus may not be valid as indicators of
preferred technology for future capacity initiatives.
• The interesting question is whether Silane/FBR will overtake TCS/Siemens when the large
new capacities needed 2018–2025 are built and put into service. For this to become reality,
FBR’s claims of superior economics must be substantiated and the technology become
more generally available.

Side by side cost comparisons for greenfield capacity indicate an
advantage for Silane/FBR over TCS/Siemens – but incremental plant
upgrades and de‐bottlenecking somewhat skew the picture
15
Best InClass
TCS/Siemens HC,
existing/
debottlenecked
TCS/Siemens HC
greenfield, PRC ?
Best InClass
uMGSexisting
Most advanced
uMGSgreenfield,
PRC ?
Best InClass
SiH4/FBR already
existing
SiH4/FBR
greenfield, PRC ?
-
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
190
200
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
CapitalExpenditureperKilogramCapacity(USD)
Variable cashcost of production, finance cost & maintenance;but excluding SG&A
(USD/Kg)
USD 27.50 per Kilogram
Cost lines assume:
10 years' straight line depreciation; maintenance expense = 4% of initial capex; financial cost = 4% of 50% of capex
Sources: Industry announcements; REC presentation dated May 17, 2012; Elkem Solar; AMMS estimates

Technology developments and status seem to follow our previous
predictions
16
• As stated above crystalline silicon is and will remain (at least until 2020) the workhorse of
the PV industry with 85‐90% market share.
• Within crystalline silicon, there is a healthy competition between single crystal and
multicrystalline. Both classes of substrates show a constant development toward improved
performance. The current PV market strongly influenced by the construction of large
centralized power plants stimulate both families of technology. A shift toward more urban
disseminated PV‐systems may favor one or the other.
• A trend is the continuous decrease of the specific material consumption (Si g/Wp). State of
the art is close to 6 g/Wp. Thick and thin film cells architectures predict lower material
consumption. However, these technologies are premature as compared to the sliced
substrate technology and we cannot see any significant influence of such within 2020.
• Polysilicon by the simplified, relatively lower energy TCS/Siemens is the dominant
technology, a position this technology will keep at least for the earlier part of our forecast
period (until 2018‐2020). However, we conclude that silane/FBR will increase its share
because of lower cost and energy/CO2 footprint. Finally, the year to come will be decisive
for UMG silicon to penetrate the market. The merge between Elkem Solar and REC Solar
and the resulting vertical integration is expected to give an answer to this interrogation.

POLYSILICON SUPPLY AND DEMAND BALANCE –
CONCLUSION: STILL A BRIGHT FUTURE AHEAD
17

Continued price reductions are necessary to realize PV‐growth;
cost reductions for PV force prices on polysilicon downwards;
current & future price level is below production cost for some
18

Polycrystalline Silicon Market,
Selected Updates
©AMMS | 31 March 2015
谢谢
Gøran Bye | Advanced Materials Management Solutions, LLC (AMMS)
Goran.Bye@AdvancedMaterialsManagement.com
www.AdvancedMaterialsManagement.com
Gøran Bye
Advanced Materials
Management Solutions, LLC
(AMMS)
Bruno Ceccaroli
MARCHE AS

Polysilicon Market Update_150331_Goran Bye-Bruno Ceccaroli

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