IN DEPTH: Wacker's US price choice
Cheap electricity was “the most important” factor in Wacker Chemie’s decision to base its newest polysilicon factory in the US rather than Germany, said Ewald Schindlbeck, Wacker’s president for polysilicon.
He also admitted that the physical location of such facilities is largely irrelevant.
Schindlbeck’s acknowledgement that US power prices – hammered down in recent years by the shale gas boom – played the decisive factor in its decision comes against a backdrop of increasing handwringing in Germany over the cost of the country’s Energiewende, or energy transition.
Munich-based Wacker announced in 2010 its plan to build a 15,000-tonne polysilicon factory in the US state of Tennessee, with more than 600 jobs to be created. The plant’s timeline was subsequently pushed back by 18 months to give the global PV market time to recover, but is on track for completion in 2015.
At $2bn, the Tennessee plant represents the single largest investment in the company’s history.
There were other things the US had going for it as Wacker made its decision, including a well educated workforce, Schindlbeck says. “But for us, the most important thing was the price of electricity, [whereas] in Germany we do not have the best conditions at the moment.”
Being located in the fast-growing US market for PV is only an “indirect” benefit, he adds, since polysilicon is easily and cheaply shipped around the world.
“The idea was never that we were going to sell directly into the US, because if you look around, there are maybe two or three small [US-based] companies who need the polysilicon for wafering,” Schindlbeck says.
“There’s nothing left [of the US wafering sector] and I’m rather sure that the chances are poor that such companies will ever come back to the USA.”
Wacker is among the world’s largest suppliers of PV-grade polysilicon, selling some 38,000 tonnes last year.
Wacker’s critical view of the German power market – and its endorsement of the US sector – will rankle many within the German renewables sector, which is pushing back against the idea that energy-intensive companies should be spared of their contribution to the country’s Energiewende.
In many cases energy-intensive companies – including in the chemicals sector, where Wacker operates – are exempt at present from the surcharge that pays for renewables subsidies in Germany. The issue is one of many energy-related topics of importance to Germany’s federal election scheduled for September.
Pierre-Pascal Urbon, chief executive of German PV inverter giant SMA, says it is critically important that "not too many companies are allowed to opt out" of paying the renewables surcharge, lest too much of the brunt fall on consumers – eroding public support for the Energiewende.
A recent study found that German households account for 25% of the country’s electricity consumption but cover 35% of the renewables surcharge, and the gap is rising. Electricity prices for industry are 15% more expensive in Germany than the EU average, though much of the difference boils down to taxes which have nothing to do with renewables.
Separately, Wacker's Schindlbeck confirmed that polysilicon prices have bottomed out after several years of painful decline, and there’s “a chance” that Wacker will be able to increase prices for its customers during the second half of the year.
“We’re running at full capacity,” he says. “Supply and demand are getting more balanced again – at least on the poly side.”