#MakeSolarEU: WACKER's role in reshoring solar manufacturing to Europe

Solar technology is an essential cornerstone to master the energy transition and to fight climate change globally and in Europe. PV generated electricity is cheap and will provide not only a sustainable and more independent energy source for Europe, but in particular also an economic advantage in future.

However, to meet proclaimed emissions targets in Europe, annual PV system installations must at least double to more than 85 gigawatts by 2030. At the same time, the bulk of the demand for solar modules in Europe is covered by imports from Asia – a concentration that creates risks for the resilience of the value chain and could affect Europe’s targets, strategically and economically.

Therefore, access to affordable solar modules from a diversity of sources as well as a resilient, sustainable and competitive European solar value chain are necessary to achieve a deployment rate in line with Europe’s proclaimed targets. A resilient European solar industry would also enhance the supply chain and mitigate the risk of supply chain disruptions. 

The biggest challenge is that there are almost no manufacturers of ingots and wafers in Europe, only some smaller cell manufacturers. Another issue is the capacity for hyperpure polysilicon, the basis for every solar cell and every semiconductor chip. Overall, the capacity may not be sufficient, given the ambitious EU targets. At present, neither Europe nor the USA can cover the additional demand for solar cells and modules on their own, as they lack a resilient value chain in the solar sector. We therefore need quick and effective measures to incentivize and support massive investments in a solar value chain in Europe. Europe should do this in an aligned and joint effort together with the USA. Investors and solar companies need a reliable and comprehensible framework of conditions. Only then will they be able to make entrepreneurial decisions. The emphasis here is on the word “entrepreneurial”, because we cannot build a solar industry that only works if it is subsidized in the long term. We need a solar industry that is competitive on its own. 

What is really important to understand is that we can only be successful if we work together with all regions. We should invite foreign companies to invest in Europe. Our goal is not to become self-sufficient or independent. We simply want to remain a player in strategically relevant industries in Europe and gain more resilience. A level playing field that encourages collaboration around the globe will foster Europe’s resilience. A subsidy war with other countries or favoring ultra-low PV prices that will eventually impair the quality and sustainability of PV systems and lead to a loss of knowhow are not the right solution.  

Our products enable sustainable solutions and technologies and, in a broader sense, a sustainable future. They are essential for several emission and energy saving applications such as electromobility, thermal insulation of buildings or wind power generation. But most notably, we are Europe’s largest manufacturer of hyperpure polysilicon, which is the key material for solar cells and semiconductors. We are part of the ongoing energy transition and we are proud to make a significant contribution to this with our products.  

WACKER is a global company that manufactures state-of-the-art specialty chemical products found in countless everyday items. We address key industries ranging from construction, coatings and medical technology to energy, automotive, semiconductors and biologics. Our portfolio counts more than 3,000 products, including polycristalline silicon, of course. Polysilicon is at the heart of every solar cell and the basis for every semiconductor chip. We are the only globally relevant producer of polysilicon in Europe and the largest manufacturer outside of China. 

Overall, WACKER operates two polysilicon plants in Germany and one in the U.S.. Our polysilicon capacities in Europe are around 60,000 metric tons. This makes WACKER a key player for the solar and semiconductor supply chain globally and in Europe. 

WACKER has a more than 100 years old history. Our chemical site in Burghausen was opened in 1914, but research and development of hyperpure polysilicon started roughly 60 years ago. In the late 1950s, we began manufacturing polysilicon on a larger scale. In 2000 we were one of the first to produce polysilicon exclusively for solar applications. In 2011 we ramped up a polysilicon plant at our site in Nünchritz in Saxony. And in 2016 we opened yet another production plant for polysilicon, this time based in Charleston, Tennessee, USA. 

WACKER employs a staff of over 16,000 people globally. Around 2,300 people currently work for the polysilicon division in Europe and in the U.S. 

Polycrystalline silicon is a semiconductor and therefore the key starting material for the solar and semiconductor industry. It is used to manufacture solar crystals and wafers for the production for solar cells. So it is polysilicon with its semiconductive properties that enables the production of electricity in PV cells and modules. Finally, the individual cells are assembled into PV modules. It is worth to mention here that WACKER is a global technology leader in terms of cost, energy efficiency and quality. We produce the purest polysilicon available in the market, perfectly suited for n-type solar products. With this kind of material, the industry is able to produce solar modules which offer the highest possible efficiency rates. One can say that our hyperpure material is key to the clean energy of the future. 

The purity of our poly is definitely one of our key USPs in both solar and semiconductor applications. WACKER’s high-purity polysilicon enables highest solar cell efficiencies and improves the overall performance along the whole solar value chain. And purity is paramount for semiconductor manufacturers. It enables the production of leading-edge chips. However, quality and purity are not our only assets. Highest ethical and social standards, sustainable supply chains and particularly climate-friendly production processes are equally important to us. By improving the efficiency of our deposition technology and by increasing the performance of our reactors, we were able to continuously reduce the energy consumption and carbon footprint of our hyperpure polycrystalline silicon. One kilogram of our hyperpure polysilicon saves more than 7,000 kilograms of CO2 emissions during the entire lifetime of a solar cell.Today we are a sustainability leader in solar and semi and we will further strengthen this position in the upcoming future.   

WACKER plays a key role for future megatrends such as climate protection, sustainable energy, and digitalization. With our products, we are a facilitator and a driving force for these trends. A good example is our polysilicon. Without this material, there would be no solar cells for the energy transition, no electronic devices for inverters and no power management systems for electromobility. Without the ever improving quality of our polysilicon, there would be no path forward for the constant improvements in solar cell efficiencies and faster computer chips. Enabling sustainable products and technologies such as photovoltaics and semiconductor technologies offers for the tremendous opportunities for our business. And WACKER has several other products in its portfolio which contribute to these megatrends as well. 

On the other hand, chemistry is energy-intensive, intrinsically so, because in chemistry molecules are broken down and reassembled. That requires large amounts of energy. Our globally largest production site in Burghausen, for example, accounts for 0.5 percent of Germany's electricity requirements. Although our plant is among the most energy-efficient in the world, energy prices remain the key issue on which everything else turns. The price of electricity in Germany is at least twice as high as in the relevant competitive regions of the USA and China. Under these conditions, it is impossible to operate the first stages of the solar value chain in a commercially viable way. And this applies to several other manufacturing processes as well. At current electricity prices, we will not see any investments in the solar value chain in Europe. 

The Inflation Reduction Act is a straight-forward program, providing tangible benefits to companies willing to invest in the U.S.. That said, WACKER is currently not eyeing additional investments for the PV value chain going beyond what we have already announced. Particularly, we are not considering to shift existing production capacities from Europe to the US. However, when it comes to adding new production capacities, this may be different. We always consider all options before taking an investment decision and the IRA might make a difference here. Currently, there are no specific plans to this end. However, if the conditions for an investment become commercially attractive and viable, we could very quickly decide and move forward with new investments, also for the PV value chain.

The chemical sites we operate in Germany feature a highly integrated closed-loop production system which has been optimized over decades. These sites have benchmark efficiency. For example, our polysilicon is up to 50 percent better in terms of CO2 emissions than our Asian competitors. One year’s production of WACKER solar-grade polysilicon avoids more than 450 million metric tons of CO2 emissions globally.  

The European commission has repeatedly pointed out that Europe’s solar PV capacities should reach at least 40 percent of the annual deployment needs by 2030. WACKER’s annual production capacity in Europe is currently 60,000 tons of polysilicon. If this were all used for solar, it would correspond to at least 25 gigawatts of solar production capacities. Given the importance of our polysilicon for the European and global semiconductor value chain, a substantial part of this volume is already consumed by the semiconductor industry. However, our long term vision is to continue to play a major role in Europe’s current and future energy transition. As a polysilicon manufacturer operating two world class production facilities in Germany, we are ideally positioned to support the commission’s goals and to play a vital role in the European Green Industrial Plan, if the framework is set properly. 

Although current market conditions are challenging, WACKER is well positioned strategically and financially. We remain committed to our growth and business targets. By 2030, our sales should exceed 10 billion euros. Similarly, we want to strengthen our profitability. Groupwide, we are aiming for an EBITDA margin of more than 20 percent by 2030. In relation to capital employed, our goal is to earn twice our cost of capital. We are still investing systematically in our future growth. At the same time, we focus strongly on sustainability. We are minimizing our consumption of resources and reducing greenhouse gas emissions. By 2030, we want to cut our absolute CO2 emissions by 50 percent compared with 2020. We want to reach net zero by 2045 at the latest. 

As one of the world’s leading polysilicon producers, we have sufficient capacities in Europe and the USA to meet current market demand for solar applications. Should demand increase significantly, we would be ready to discuss capacity expansion measures. However, in order to make investments in additional solar silicon capacities we need a viable business case which depends on three prerequisites: capital expenditure incentives through EU and / or national programs, attractive costs – namely for electricity – and customers who are prepared to sign long-term supply contracts with us at economically attractive terms. On the semiconductor side, we appreciate the EU Commission’s support of our investment to improve our production technology for semiconductor polysilicon. With this we will be able to reach the next quality level and serve the semiconductor industry with even higher purity material.

The electricity costs remain a key issue for the European industry, even if spot market prices have recently declined due to lower industrial production and, as a result, diminishing power demand. But on average they are still too high. And they are unpredictable compared to those in the US and China. In both countries, producers in the PV value chain benefit from long-term stable energy prices in the range of 3 cent/kWh and below which enable attractive business cases. For re-shoring a European PV industry – especially the energy-intensive polysilicon and wafering production steps – it is mandatory for a sustainable investment case that electricity prices must be available at an internationally competitive level and secured for a longer period time. In this context, the Ecodesign directive of the European Commission has the potential to encourage a shift towards more sustainable PV products and to help creating a level playing field if designed properly. Experts of the Fraunhofer Institute for Solar Energy Systems ISE emphasized that the proposed calculation method based on the kilowatt-hours of a module leaves room for manipulation. Why? Because there are several uncertainties in terms of lifetime, degradation and green energy certificates compared to the carbon footprint calculation based on the kilowatt-peak number of a module as proposed in the globally recognized EPEAT eco-label for solar installations (Electronic Product Environmental Assessment Tool). We should standardize and harmonize our approaches with existing and proven ones as much as possible.  

The PV industry has achieved significant technology improvements recently. Generally, the aim is to increase energy yields, reduce costs and to further increase the overall competitiveness of photovoltaics compared to other sources of electricity generation. One of the most recent developments is the fast adoption of so-called n-type technologies in the market. N-type solar cells and modules provide higher efficiencies at lower costs compared to p-type PERC technologies. The latter dominated the market until 2023. Our ultrapure polysilicon is ideally suited to produce these high-quality n-type products which enable faster energy transition at highest efficiencies and at lowest possible overall costs. 

That very much depends on how quickly policy makers in Europe are willing to make decisions and to implement concrete measures in the next weeks and months. The goal is ambitious, but feasible, provided that the framework conditions are right and appropriate funding programs are put in place swiftly. The biggest obstacle is the fact that most ingots, wafer and cell manufacturers are not located here, but in Asia. And these countries are continuously ramping up new capacities. So the goal to build an industry in Europe which has to be competitive with a region in which the entire value chain already exists on a very large scale is quite challenging. If we really want to make progress in Europe, we need a clear framework of conditions for companies and investors quickly.  

The establishment of a European solar value chain which complements global capacities makes sense for many reasons: from an environmental, economic and social perspective. All in all, it is a positive business case for the whole economy that will pay off in the long run and increase Europe's resilience. This makes it all the more important to create the right conditions now. In essence, these are above all the massive expansion of renewable energies and, for the transition phase, ensuring internationally competitive prices for electrical power in the form of an industrial electricity price.