Hanwha’s REC Silicon plant restarts as US-China tension eases

REC Silicon ASA, a US-based polysilicon maker, in which Hanwha Solutions Corp. and its affiliate have a 33% stake, has restarted operations after a hiatus of four years and eight months amid signs of a thaw in US-China relations.

Polysilicon manufacturer REC Silicon recently resumed operations at its factory in Moses Lake, Washington State, with an annual production capacity of 16,000 tons.

REC Silicon operates another polysilicon plant with an annual production capacity of 2,000 tons in Butte, Montana.

The plants stopped operations in March 2019 amid escalating trade disputes between the US and China. The factories recently restarted operations as the two countries' government officials sought to improve their bilateral relations.

Hanwha Solutions, the energy unit of South Korea’s chemicals-to-financial conglomerate Group, and affiliated Hanwha Corp. together control a third of REC Silicon with an equity investment to ensure a stable procurement of polysilicon, a key solar cell material.

Polysilicon or polycrystalline silicon is a raw material used by the solar photovoltaic and electronics industry.

Hanwha Group has been actively pursuing renewable energy, including solar, wind and hydrogen, as its key growth drivers.

Hanwha runs its solar business in the US through its affiliate Hanwha Q CELLS Co., the largest solar module maker there.

10-YEAR SUPPLY DEAL

In September, Hanwha Solutions signed a deal with REC Silicon to receive polysilicon for 10 years from 2024. The specific supply size will be determined later depending on production volumes.

The restart of REC Silicon’s Washington plant will help the Korean company establish a stable US value chain for its solar cell business from polysilicon procurement to the production of ingots, wafers and modules.

The timing is significant as demand for non-Chinese raw materials, including polysilicon, is rising, prompting solar cell makers to race for key minerals in the renewable energy and electric vehicle battery sectors.

Polysilicon from REC Silicon will be supplied to Hanwha’s Solar Hub factory, which makes ingots, wafers and modules in Georgia. The 3 trillion won ($2.3 billion) factory, currently under construction, is scheduled to start operations in April.

QUALIFIED FOR US TAX CREDIT UNDER AMPC RULE

The polysilicon produced at REC Silicon’s US plants qualifies for tax benefits under the Advanced Manufacturing Production Credit or AMPC program related to the US government’s Inflation Reduction Act (IRA), which favors non-Chinese firms.

Hanwha Solutions said it expects to gain from the AMPC program with profits from the sale reflected in its earnings from 2024. A company official said it expects a tax credit of $3 per kilogram of polysilicon sold.

According to solar cell market tracker PVinsight, polysilicon prices averaged $7-$9 a kilogram in the third quarter, down from about $18 in the first half.

The US government, which aims to achieve carbon neutrality by 2050, plans to raise the ratio of solar power to 40% of its electricity generation by 2035 from 34% this year.

In the US, Hanwha Solutions operates a 1.7 GW solar cell module plant in the state of Georgia through its unit Q CELLS.

Hanwha said it is considering additional investment in the US market and expects significant policy support.

Write to Mi-Sun Kang at misunny@hankyung.com

In-Soo Nam edited this article.