(Report Producer/Author: Minsheng Securities, Deng Yongkang)
01 Global: Decentralization of installed capacity, strong growth certainty
Carbon neutrality is a global proposition, and 2050 is the key node
The Paris Agreement points out long-term carbon reduction targets and aims to achieve global carbon neutrality by 2050-2070. "Carbon peaking" refers to the fact that the CO2 emissions of a certain region or industry reach the highest value in history, and then go through the process of continuous decline during the platform period, which is the historical inflection point of CO2 emissions from increase to decline. "Carbon neutrality" means that the emissions of CO2 produced are completely offset by the absorption of carbon sinks, etc., so that the overall total AMOUNT of CO2 reaches a state of equilibrium and does not increase. The Paris Agreement states that the long-term goal of carbon reduction is to control global warming within 2°C, and seeks to further limit the temperature increase to 1.5°C, and it is expected that the world will achieve carbon peaking in 2023 and carbon neutrality by 2050-2070.
Countries respond positively, and carbon neutrality becomes a global proposition. Under the leadership of major powers, all countries have responded to the call for carbon emission reduction, and more and more countries have announced clear emission reduction targets and time to achieve them; among them, Uruguay, Finland, Austria, and Iceland are at the forefront, planning to achieve carbon neutrality in 2030-2040, and relatively developed countries such as Germany, Japan, South Korea, and South Africa are aiming to achieve carbon neutrality by 2050.
The cost of new energy power generation has dropped rapidly, and the economy has been greatly improved
The cost of new energy power generation such as wind power and photovoltaics has dropped rapidly, and the economy has been greatly improved. According to IRENA statistics, in the past decade, driven by policy support and industrial development, the price of renewable energy generation represented by solar and wind energy has gradually dropped to a level comparable to that of fossil fuels, and the installed scale of renewable energy in the power system has become larger and larger. thereinto:
Photovoltaics: Installed costs fell by 81% from $4731/kW in 2010 to $883/kW in 2020; LCOE for new production projects fell by 85% from $0.381/kWh to $0.057/kWh; and global installed capacity rose from 178GW to 699GW.
Wind power: The LCOE of new onshore wind projects fell by 50% from $0.10/kWh in 2010 to 0.05/kWh, and the LCOE of new offshore wind projects decreased by as much as 48% from $0.162/kWh in 2010 to $0.084/kWh in 2020.
The installed capacity is decentralized, and the growth is certain
Overseas markets: Renewable energy has developed into a global consensus, and the certainty of installed capacity growth is strong. On September 17, 2020, the European Union announced that it will increase the proportion of renewable energy in 2030 from more than 32% to 38%-40%; due to the pressure of the emission reduction target, the future European carbon emission reduction target may be raised to 60%. In the United States, Biden plans to invest $2 trillion in climate and the environment to ensure that the United States achieves a 100% clean energy economy, achieves "net zero emissions" by 2050, and rejoins the Paris Climate Agreement.
The cost of kWh has fallen sharply, and overseas photovoltaic decentration has strengthened the certainty of demand growth. According to IRENA, the cost of solar photovoltaic power generation fell by 82% between 2010 and 2019. According to CPIA statistics, the minimum bidding price of photovoltaic projects in 2020 has been as low as 1.32 cents /kWh, and the global GW market (country or region) in 2017-2019 is 9/11/13, rising to 18 in 2020, and is expected to increase to 21 in 2021. The sharp decline in costs, the demand for energy transformation and the rise in electricity prices in some regions have greatly increased the demand for photovoltaics in more and more countries and regions. It is estimated that the global new installed capacity of photovoltaics in 2021-2022 will be 150/230GW, with a year-on-year growth rate of 15%/53%, respectively. (Source: Future Think Tank)
02 Domestic: Centralized and distributed two wings fly together, and the installed capacity is expected to increase high
The denaturing target is to provide anchor points for domestic installations
Based on the 2025 and 2030 non-chemical strategic targets announced by the state, we assume that the proportion of non-fossil energy will increase by 10% on the basis of the strategic target, reaching 22% and 27.5%, on the basis of the average coal consumption of power generation decreasing year by year, and the proportion of wind and photovoltaic power generation increasing year by year, we will take 2020 and 2025 as the base year, respectively, and expect the increase in the amount of photovoltaic + wind power generation required in 2025 and 2030 to reach 1264.5 billion KWh and 1733 billion KWh, respectively。 According to the expected increase in power generation, on the basis of the existing installed capacity of wind power and photovoltaics, it is expected that the average annual scale of new photovoltaic installed capacity is expected to increase to more than 100GW in 2021-2025, while the installed scale of wind power is expected to increase to more than 50GW; it is expected that between 2025 and 2030, the new installed capacity of photovoltaics is expected to reach more than 170GW, and the average annual installed capacity of wind power is expected to reach more than 70GW.
Centralized and distributed two wings fly together, and the domestic installed capacity is expected to increase at a high rate
Centralized photovoltaic power plants: In 2021, the province will issue a guarantee/market scale of 82/28GW respectively (not counting the wind and solar undifferentiated projects); at the same time, the first phase of the large-scale new energy project 100GW has been started at the end of 2021 (of which the wind and photovoltaic projects will have a production capacity of 28.8GW in 2022, and the photovoltaic capacity will reach 10GW in 2022), and the second phase of the list has also been reported, and it is expected that the installed capacity of domestic centralized photovoltaic power plants will reach 45-50GW in 2022.
Distributed photovoltaic power plants: In terms of distribution, the improvement of the time-sharing electricity price mechanism for residents and the carbon peak action plan for urban and rural construction will promote the development of distributed photovoltaics; while in terms of household photovoltaics, the county has promoted 676 demonstration county projects, and the current project declaration has exceeded 150GW, which will support the sustained high growth of household photovoltaics; it is expected that the installed capacity of domestic distributed photovoltaic power plants will reach 40-45GW in 2022.
03 Status: The game is over, and the demand inflection point has arrived
The price game is over. Overall, the expected change in the downstream demand of photovoltaics is the most core factor determining the stock price of photovoltaics, since 2021, the price of raw material polysilicon materials continues to be at a high level, to a certain extent to inhibit downstream demand, with the price of each link loose, and the industrial chain to inventory is nearing the end, accompanied by the new production capacity of silicon materials have been released, this round of industrial chain price game caused by the imbalance between supply and demand caused by macro policies has basically come to an end.
The demand inflection point has arrived. With the gradual release of silicon supply, superimposed domestic reloading & overseas rushing, the current demand is continuing to improve, in the past two years, photovoltaic continues to cross the node of parity and industrial chain price game, photovoltaic demand will be expected to usher in a high boom cycle.
04 Analysis of each link of the photovoltaic industry chain
Main industry chain: silicon powder → polycrystalline silicon material→ silicon wafer → cell → module → power station;
Auxiliary industry chain: 1) auxiliary materials: EVA, backplane, photovoltaic glass, frame, silver paste, conductive agent, cutting wire, etc.); 2) equipment: single crystal furnace, polycrystalline furnace, microtome, etc.; 3) power station: inverter, bracket, combiner box, junction box, etc.
The industrial chain accelerates the expansion of production to match the high demand
From the perspective of supply and demand of the industrial chain, in 2022, silicon materials are still the shortest in the relative supply of the main industrial chain, but in comparison, the capacity expansion of silicon materials will alleviate the supply pattern of silicon materials in 2021 to a large extent, so the decline in industrial chain prices brought about by the decline in silicon prices throughout the year has become a trend.
Silicon materials: New production capacity will start production in Q4 2021, and leading manufacturers will lead the acceleration of capacity expansion
Starting in 2021Q4, including Tongwei Baoshan, Daquan Xinjiang, Poly GCL Xuzhou and other silicon material production capacity began to be put into operation. According to the statistics of the silicon industry branch, we expect that the silicon production capacity will reach 1.05 million tons by the end of 2022, and it is expected that the supply of silicon materials will reach 850,000-900,000 tons in 2022, of which the expansion of leading manufacturers is faster than the industry, and the overall supply is 40% higher than that of 21 years, which can support the installed demand of 270-275GW. At the same time, in addition to Tongwei, Daquan, GCL-Poly and other manufacturers are still accelerating expansion, including Hesheng Silicon, Xinyi Solar and other manufacturers have also joined the competition for silicon production capacity expansion, and according to the planning of several manufacturers, they have done industrial extension to upstream silicon powder.
Granular silicon, that is, polysilicon produced by the silane method, is one of the main technical directions for the production of polysilicon. Due to the difference in components of silane and trichlorosilane, it creates a better precondition for the application of silane method, silane contains 87.5% silicon, while trichlorosilane contains only 20.7%; And the exhaust gas produced after the decomposition of silane is mainly hydrogen, which is easier to recycle than the exhaust gas of trichlorosilane method technology, so the material turnover of silane decomposition and tail gas recovery is small; Silane decomposition temperature is low, low power consumption; It facilitates the continuous production of fluidized beds, creating conditions for the search for lower-cost polysilicon production technologies in areas with high electricity prices.
At present, under the premise of having a production capacity of 10,000 tons of granular silicon, GCL-Poly has started the production capacity of 20,000 tons in Xuzhou in 21Q4, at the same time, GCL-Poly and Wuxi plan to cooperate on the research and development project of 300,000 tons of granular silicon production and downstream applications, and the first phase of the design capacity is proposed to be 60,000 tons; in addition, Tianhong Ruike also plans to expand the production capacity of 80,000 tons of granular silicon, and the current granular silicon is used as an dopant in the downstream silicon wafer production process, adding possibilities to the silicon technology route. (Source: Future Think Tank)
Silicon wafer: single crystal market share of nearly 90%, technology iteration is nearing the end
Single replacement is nearing completion. In 2019, the penetration rate of domestic monocrystalline silicon wafers has reached 65%, surpassing polycrystalline wafers for the first time and according to CPIA, the penetration rate will be further increased to 85% in 2020. Considering that although polycrystalline silicon wafers are inferior to monocrystalline in terms of conversion efficiency, due to the relatively low price, it is expected that there will still be some demand (such as India and other markets), which is unlikely to be completely replaced by monocrystalline, so the monocrystalline revolution in 2020 is basically coming to an end.
Today's large silicon wafers are more likely to be improved by the process. Because the single crystal technology has a more subversive technology in the front-end rod and the back-end slicing link, so in the past few years, the industry in the process of monocrystalline replacement, master the know-how silicon wafer enterprises are relatively few, which also leads to the supply and demand of monocrystalline silicon wafers has been in a tight state, the leader with a strong cost advantage to obtain a higher steady-state gross margin level. In 2019, the industry began to emerge with larger size technologies such as M6, M10 and G12. Large-size silicon wafers mainly involve front-end thermal field, single crystal furnace mouth transformation, etc., from a technical point of view, more performance is the improvement of the process, the boost to the supply side is relatively limited.
Battery: Perc's dividend period has passed, and the next generation of technology is coming
Photovoltaic cells are mainly divided into P type and N type, the difference between the two is that the raw material silicon wafer and cell preparation technology are different. P-type silicon wafer, the raw material of P-type battery, is made by doping boron in silicon material, and the manufacturing process is simple and the cost is lower. PERC is the primary P-type battery preparation technology. N-type battery raw material N-type silicon wafers are made of phosphorus doped in silicon materials, compared with P-type, N-type batteries have the potential for high conversion efficiency, low attenuation and lower LCOE, but at the same time the manufacturing process is complex and the cost is higher. The main preparation technologies are TOPCon, HJT, IBC, etc., and the further combination and upgrading of the three technical routes in the future will form the next generation of N-type battery technology, such as: IBC and HJT will continue to combine to form HBC technology, etc., IBC and TOPCon will continue to combine to form TBC technology.
Components: The concentration of the industry continues to increase, and the leading voice is enhanced
The component link was previously less concentrated. Due to low technical barriers, light assets and other reasons, the module link has always been the worst link in the main photovoltaic industry chain, and although the industry concentration is gradually increasing in recent years, the speed is relatively slow. In 2019, the industry CR5 was only 42%, and the top five enterprises LONGi, Jinko, JAO, TRW and Oriental Risheng had market share of 7.4%, 11.7%, 8.5%, 8% and 5.9% respectively, and the industry competition pattern was relatively scattered.
The expansion of leading production has accelerated, and the right to speak has been enhanced. The technical change in the component link is small, and the core competitiveness depends on the channel, brand and supply chain management capabilities, especially in the case of excessive supply and demand in the industry, the leading strong shipping ability and significant competitive advantage. Looking forward to 2022, the industry leader expansion plan and shipment plan continue to increase significantly, Jinko, JSE, LONGi, Trina plan shipments or reach 200GW, the industry CR5 is expected to increase to more than 80%, the industry leader due to years of accumulation of brand, channel advantages, superimposed integration after the cost and supply chain advantages, is expected to continue to complete the market share increase.
EVA particles: the industry supply will ease in 2022, but it is still the most scarce part of the auxiliary materials
With the expansion of production of Sierbang, Zhejiang Shihua, Yunenghua and other manufacturers, through supply splitting and demand calculation, we expect that the supply and demand tension of EVA particles this year will be alleviated under the situation that the global photovoltaic installed capacity is 230GW this year. However, the largest supply of a single quarter should be installed at 65GW, which is still the most scarce link in photovoltaics, and it is expected that in the second half of 2022, with the quarterly increase in photovoltaic demand, EVA particles may return to the tight balance between supply and demand.
Inverter: The proportion of distributed drive string inverters continues to increase
The proportion of string inverters continues to increase. In 2020, the photovoltaic inverter market is still dominated by centralized inverters and string inverters, and the current string inverters can be applied to both high-power power power station scenarios and low-power distributed scenarios, while superimposing its characteristics of easy installation, etc., and the penetration rate is gradually improved. Since 2017, with the continuous increase in the proportion of distributed photovoltaics in the total installed capacity of photovoltaics, further catalytic string inverters have been shipped rapidly. By 2020, the shipment volume of continental string inverters will account for 65%.
The share of Inverter enterprises in China has increased. According to Wood McKinsey statistics, in 2020, among the world's top ten inverter manufacturers, Chinese manufacturers accounted for six places, including Huawei, Sunshine Power, Gurui Watt, Jinlang Technology, Shangneng Electric and Goodway, accounting for more than 60%; of which Huawei's market share was about 23%, ranking first, and the market share of Sunshine Power was 19%, a slight increase year-on-year. In addition, three Chinese companies, SUCH as TBEA, Shouhang New Energy and Kehua Data, have also entered the top 20.
05 Analysis of key enterprises
LONGi Shares: The integration strategy continues to advance, and R&D and production expansion go hand in hand
Accelerate the expansion of production capacity and consolidate the leading position in the industry. 2021Q1-Q3 company module shipments of about 27GW, of which exports 25-26GW. Single 3 quarters of module shipments 10GW left right, basically flat month-on-month, of which the export scale of about 9.0GW, the company since 2020 for the first time to become a module shipment leader, the current leading position is stable, with the module industry concentration continues to increase, it is expected that in 2022 the company's module production capacity will exceed 80GW, shipments will exceed 60GW, continue to strengthen the leading position; at the same time, the company's silicon wafer and cell production capacity is still expanding, the integration strategy continues to advance.
Focus on research and development, leading the next generation of technology. On December 31, 2021, the company announced that it plans to raise 7 billion yuan through convertible bonds for the 15GW annual output of high-efficiency monocrystalline cell projects and the annual output of 3GW monocrystalline cell manufacturing projects. According to the company's official website information, in April 2021, the conversion efficiency of single crystal and double-sided N-type TOPCon batteries in the LONGi Battery R&D Center reached 25.09%, which is based on the commercial size of monocrystalline silicon wafers TOPCon cell efficiency exceeded 25% for the first time, breaking the world record. In October 2021, the company's HJT cell conversion efficiency reached 26.30%, which is currently the highest efficiency of the global crystalline silicon structure cell; at present, the company has R&D reserves in all cell technologies including HJT, Topcon, T-BC, etc. In 2022, the company is expected to further form a differentiated advantage in the field of batteries and continue to strengthen the company's moat. (Source: Future Think Tank)
JA Technology: Vertical integration is steadily advancing, and the prosperity is accelerating
The expansion of production continues, and vertical integration continues to advance. In 2021, the company's rapid pace of expansion, following the planned investment of 10 billion yuan at the beginning of the year in the Yangzhou Economic and Technological Development Zone to build 10GW of batteries, 10GW of module projects, in March and invested 5 billion yuan in Baotou Industrial Park annual output of 20GW of crystal, 20GW of slice projects, by the end of 2021, the company's silicon wafer, cell and module production capacity reached 30/30/40GW. By the end of 2022, the company will steadily promote the vertical integration strategy, and it is expected that the company's silicon wafer, battery and module production capacity will reach about 40/40/50GW by the end of 2022, and the integration rate will reach about 80%.
The photovoltaic boom is accelerating, and it is expected to achieve a rise in quantity and profit. Throughout the year, the price of photovoltaic silicon materials fell, the price of the industrial chain caused by the decline, the demand outbreak is the trend, 21 years of silicon material enterprises significantly expanded production, it is expected that the effective supply of silicon materials in the industry for 22 years is 85-90 million tons, an increase of 40% over 21 years, can support the installed demand of 270-275GW, the annual price decline in silicon materials triggered the downward price of the industrial chain, and the certainty of demand outbreak is high. 22 years of photovoltaic installed capacity demand is expected to be more than 230GW, a growth rate of more than 50%. The company is expected to fully benefit from the profit elasticity brought about by the price reduction of silicon materials and the high demand increase, and realize the increase in volume and profit.
Excerpts from the report:
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank]. Future Think Tank - Official website