Two weeks ago, the New York Times published an article based on work by Horizon Advisory, accusing China’s polysilicon manufacturers of using Uyghurs as forced labor. GCL-Poly, East Hope Group, Daqo New Energy, Xinte Energy and Jinko Solar were all accused of working with the state to accept and indoctrinate workers transferred from other locations in Xinjiang.
The explosions at GCL’s and Daqo’s polysilicon factories in Xinjiang in the middle of 2020 knocked out 12% of global output by itself, demonstrating how concentrated the global industry is there; China has 82% of the global output, and Xinjiang is most of that. Given that Uyghur labor is partly migratory outside of Xinjiang, it won’t be possible to dodge allegations just by sourcing polysilicon from other provinces.
Since the publication of the accusing report by Horizon Advisory which revived these allegations just ahead of Biden’s inauguration, Bloomberg and America’s Solar Energy Industry Association have also boosted the claims. So has First Solar, which is America’s biggest domestic solar manufacturer, and doesn’t use polysilicon in its modules.
Chinese solar panels currently make up perhaps 10% of ongoing US solar development, but it’s unclear whether Biden will reinforce or remove Trump’s import tariffs which exclude most of them. Those which have made it in are bifacial, sneaking through via the controversial and much-contested bifacial exemption to the tariffs.
There’s several reasons for polysilicon production to be located in Xinjiang. The main one is proximity to production of the raw material, which is metallurgy-grade silicon, but in a rural and remote province, you also have cheap labor and cheap electricity – electricity can account for over 25% of the total cost of production.
Polysilicon is one of the most capital-intensive and least profitable parts of the supply chain, which is why China and Xinjiang can be expected to continue dominating global supply into the future, including supplying foreign cell and wafer manufacturers as they do now.
The forced labor allegations won’t be enough to build rival polysilicon industries outside of China by themselves. They might however tip the balance of Western decisionmakers in favor of higher import tariffs on Chinese modules, or provide rhetorical backing for such policies, even if the main motivations are economic or protectionist.
India was already angry at China over border disputes, and is planning to raise import tariffs to exclusionary levels once its domestic manufacturing is ready to take over, whenever that might be. It is the USA and Europe whose policies may be tipped towards extra tariffs. By rejoining the Paris Climate Accords, the USA may have already reclaimed a leadership role on renewable energy, and could lead the EU in raising duties. For that matter, South Korea is highly reliant on Chinese imported cells, and could use US leadership on the issue as a shield for raising import duties if it wants to boost its domestic solar industry.
The Biden campaign called China’s policies in Xinjiang ‘genocide’, but the new Biden Administration is also planning to fund a solar and renewable energy boom across the nation. You can ban Xinjiang’s cotton and tomatoes as the Trump Administration did last week and just buy them elsewhere, but this is much less true for polysilicon and the panels that use Chinese polysilicon. Horizon Advisory’s report has struck while the iron’s hot, but the appeal of China’s cost-efficient products may yet prove too great.