China is pouring billions into new factories which would address the ongoing supply chain issues hounding its solar energy industry, Bloomberg reported.
The new factories will produce polysilicon, a material used to manufacture photovoltaic cells for solar panels. Analysts believe polysilicon prices will continue to be elevated in the first half of the year before falling to historic lows next year.
The new facilities are expected to take 18 to 24 months before becoming operational, followed by a long ramp-up process versus a year for less complicated materials or manufacturing processes.
The boost in production is expected to remove key bottlenecks to the solar value chain and improve supply in the coming years with a drop in prices and adding to global efforts to reduce carbon in the energy mix.
A significant share of the new projects will be located outside of Xinjiang, with the solar industry hit by global trade wars with the United States prohibiting products from the region on labor concerns.
Solar firms are expected to produce polysilicon for 500 gigawatts of capacity annually, up from the 144 gigawatts installed in 2020.