Addressing ESG in an ultra-low-cost surroundings – pv journal Worldwide

pv journal: The PV module market has lately been outlined by very low costs. How is Longi faring on this surroundings?

Haimeng Zhang: Pricing is on the prime of our minds, presently. If individuals maintain dashing in to provide extra whereas demand stays the identical, the value turns into unsustainable. If everyone seems to be shedding cash, possibly a correction isn’t too far-off. We’re wanting very carefully at the place every of the gamers are at, how way more ache they’ll endure, and after we could begin to see some indicators of sanity. The business must appropriate to one thing like $0.12/W to $0.13/W. In the event you get as excessive as $0.15/W, you’ll have a fairly good margin to put money into R&D however with $0.12/W to $0.13/W, you may solely get by.

A colleague from one other firm lately requested me ‘why do you promote at $0.11/W when you possibly can promote the very same quantity at $0.20/W?’ This has stayed with me. Excessive price was beforehand a barrier to photo voltaic adoption. We managed to scale back that price over time and Longi performed a key function in that. And now this over-competitive value setting is unnecessary – it doesn’t increase the market. The price of photo voltaic isn’t a barrier anymore. Obstacles now are power storage and the grid, but we proceed to decrease the value of photo voltaic. It helped prior to now but it surely doesn’t assist anymore. And a few are nonetheless considering that approach – that if we decrease the value, we get extra demand. However that isn’t the case anymore.

What must occur to get again to this stage of $0.12/W to $0.13/W?

No less than some gamers must be weeded out. Some capability must go offline, significantly within the polysilicon section. These factories depend on large furnaces, processes that can’t simply be stopped and began, so that they don’t need to scale back manufacturing. They’re shedding money and constructing stock and that may’t final ceaselessly. Even within the subsequent few weeks, issues may begin to flip. As quickly as some polysilicon makers begin considering ‘neglect it, I simply don’t have the money to lose,’ that may set off a series response.

Consumers and regulators are more and more involved about ESG practices. How has this affected Longi’s enterprise?

Expectations are rising. US and European inventory exchanges, in addition to the Hong Kong Inventory Alternate have obligatory ESG reporting. Longi is listed in China so there may be nonetheless no obligatory reporting for us. Nonetheless, we now have our annual sustainability report that primarily covers all ESG sides. Traders anticipate this, as do regulators, significantly within the US and Europe. And more and more our clients do as nicely.

One space we take a look at rather a lot is carbon footprint and environment-specific impacts. We now have our first, what we name, ‘zero carbon manufacturing unit’ in China. The thought is to make use of hydropower and photo voltaic on-site to utterly decarbonize the manufacturing course of. With some certification our bodies, although, we now have run right into a problem: the hydro in China isn’t counted as zero carbon power. They work on the typical power combine for the area fairly than project-specific information. We need to push for some change in that methodology. We additionally need to work with the utility offering that hydropower to us and persuade them to get certification. However as an area Chinese language firm they don’t seem to be strongly motivated to work on certification from European entities that their electrical energy is inexperienced.

We now have these challenges however the route is obvious. We have to decarbonize our manufacturing. The plan is to provide you with a really low-carbon product, significantly for the European market, within the very close to future. Zero carbon could be an overstatement however it’s a vital discount to the footprint in scope 1 [direct] and scope 2 [energy supply] emissions and we’re not solely shopping for carbon credit to offset. Scope 3 [emissions from other suppliers in the value chain] is trickier however we work with suppliers and supply coaching for them to grasp our clients’ wants.

Are there prices related to one thing like a low-carbon module? How will this product evaluate with others available on the market?

Decarbonization must happen at system stage and we’re continuing with this, step-by-step, beginning with our personal factories then working with our upstream suppliers. We’ll display with a product that photo voltaic manufacturing will be successfully decarbonized. It might initially come at a better price and we can even must work with our clients on how we share these prices. It’s a collective effort for the entire provide chain.

Proper now, the power used to provide a photo voltaic panel is round 0.4 kWh/W. Over its lifetime a photo voltaic panel generates on common 40 kWh/W, primarily based on 1,500 hours per 12 months for 25 years. That’s 100 instances the profit.

One thing like 90% of your complete worth chain for photo voltaic manufacturing is in China and China represents half of the world’s PV demand – which means practically half of that manufacturing is bought abroad. These emissions from manufacturing are counted in China whereas the profit goes to a different nation.

The following step is to wash up this 0.4 kWh as a result of China needs to turn out to be much less carbon intensive. A number of years in the past, we stated we wished to do ‘photo voltaic for photo voltaic.’ However photo voltaic doesn’t give us round the clock power. Hydro, nuclear, or power storage are wanted for this to come back collectively.

Integrating recycled supplies can be an vital a part of sustainability in manufacturing. Has Longi made any progress right here?

For now, it’s solely the module body. We’re working with suppliers to make use of recycled aluminum supplies for this. There are additionally some good recycled-material choices out there with light-weight metal frames.

There are different smaller influence areas. Recycled materials will be built-in into among the metals utilized in cell processing. However for us it is vitally tough to make use of different recycled supplies and really tough for recyclers to extract supplies from waste modules and attain the required purity. That pertains to the module design and making merchandise simpler to recycle is a driver in additional decreasing the carbon footprint.

In our view, recycling isn’t enterprise as a result of the module is used for 25 years or extra and the quantity of steel, significantly valuable metals like silver, in a module is shrinking so the worth in recycling that module is restricted and on a really very long time horizon.

We additionally understand that it’s one thing we now have to do. Perhaps not for decarbonization but it surely’s required by regulation and it’s what our clients care about. So we’re developing with measures to make our modules a lot simpler to recycle. Making it simpler to dismantle [products] is the first driver. As a result of, beforehand, once you attempt to take a module aside loads of the elements are broken and it turns into tough to get better something helpful.

We’re working with the business to provide you with design requirements in order that recyclers can deal with the modules extra simply. At the moment that is largely centered on avoiding hazardous supplies or these which can have environmental impacts when the module is decommissioned.

Now can we discuss in regards to the ‘social’ a part of ESG?

The most important situation right here is round supply-chain compelled labor. This can be a very delicate matter and the completely different governments in China, the US, and Europe have their very own views and necessities on PV module suppliers like us.

As a personal enterprise, attempting to adjust to these completely different units of rules is loads of work. What we do is section our practices for various regulators and clients. For the USA, if they are saying ‘we don’t need sure materials,’ there may be at all times affordable doubt as a result of regardless of traceability documentation you can’t inform the distinction between this silicon and that silicon. All of them look the identical.

The burden of proof is on us and it isn’t at all times provable. So we now have constructed a complete provide chain outdoors of China, starting with polysilicon produced in Europe. Then there is no such thing as a doubt by any means. This comes at a better price but when clients within the US are keen to pay it, then so be it.

That section can be out there to clients elsewhere however to my data none of our European clients have been keen to pay that additional price. They like to go together with traceability. We offer the complete documentation: the place the silicon originates, the place it’s processed. We make it possible for we now have licensed, audited documentation overlaying all of this.

For now, we offer full traceability documentation to these clients that ask for it. The following step can be to supply it routinely so the shopper doesn’t even must ask. We’re planning this for all clients in Europe. They scan a QR code and have the complete documentation. There are further prices for this and we thought of charging a charge for purchasers who require it however with our scale that is unnecessary. When you amortize that over the quantity that we’re delivery to Europe it’s a really small price, so we offer it totally free as a part of customer support angle.

These are the primary three segments. Different areas even have some necessities and we ask them to decide on the extent of traceability that they want.