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Solar supply chains need to be localised

The pandemic has demonstrated the downside of relying on one global centre of production and long-distance supply chains

The disruption to global solar supply chains caused by Covid-19 highlights that new, local alternatives are needed for the industry to ensure that solar remains a reliable source of power.  

“Solar is China,” says Steve Hanke, chairman of the supervisory board of speciality metals and mineral products producer Advanced Metallurgical Group (AMG), which trades on the stock market in Amsterdam. “If you shut China down, solar shuts down. It is the same story  for rare earth [elements].”

China dominates in the production of silicon metal, which is needed for silicon wafers used for solar panels. Only two companies in the West produce silicon wafers, and one of them, Elkem in Norway, is Chinese-owned.

“If you shut China down, solar shuts down” Hanke, AMG

The initial supply-chain disruptions were “severe, with sharp declines in production in the first quarter”, says Rishab Shrestha, senior analyst at consultancy Wood Mackenzie in Singapore. Labour shortages slowed down production and logistical challenges delayed module delivery, he says. The situation is now improving for most countries, but there is still a long way to go to return to pre-coronavirus levels of activity, he adds.

Hanke traces China’s lead in solar technology to its higher education in mining, metallurgy and material science, fields where its schools are world leaders. In solar technology education, it has both “quantity and quality”, he says.  

Even a model that relied less on China would still have faced a fair amount of disruption because of the global pandemic, Shrestha says. But, he adds, there would have been a reduced risk of everyone being affected at the same time.

Vanadium

The IEA says the pandemic is hurting but not halting global growth in solar power capacity. Additions are forecast to decline from 109GW in 2019 to about 90GW in 2020, before a partial rebound in 2021.

According to a paper from Ken Koyama, managing director at thinktank the Institute of Energy Economics in Tokyo, renewable energy after Covid-19 will take on greater importance as a means of economic reconstruction. Yet, he notes, recession and lower electricity consumption will hurt the profitability of renewable energy investment, which also faces competition from lower fossil fuel prices.

The chief problem with solar power, Hanke says, is finding ways to store it. The best batteries for doing so, he says, use vanadium. The biggest such batteries are found in Dalian province in China. “If you are going solar, China is playing the fiddle.”

The AMG solution is based on recycling vanadium from spent oil refinery catalysts. The company’s vanadium subsidiary is the world’s largest recycler of these catalysts. The approach avoids disposing of the catalysts by burying them, which is itself a source of environmental hazards, Hanke says.

19GW – Decrease in additional solar capacity between 2019 and 2020

The company is doubling its capacity in Ohio with a new plant at Zanesville being added to the existing facility at Cambridge. The combined capacity, Hanke says, will be “the equivalent of the world’s largest vanadium mine.”

AMG says that its process has the industry’s lowest air, water and solid waste emissions, as well as the highest industry conversion to saleable products ratio. The Zanesville plant is scheduled for completion in 2021.

The company stated in May that its major expansion projects in vanadium and lithium are continuing on schedule despite Covid-19. Hanke adds that AMG plans to expand its recycling technology to new geographies.

Governments, Shrestha notes, were attempting to localise solar supply chains even before the pandemic. The need to do so has been underlined, he says, particularly in countries with ambitious solar targets such as India and South Korea. Government support, he argues, will be needed to make local solar supply chains a reality.

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