The three departments jointly issued a document to regulate how China's photovoltaic industry wins for win-win

The "inner volume" intensifies

The "inner volume" of the photovoltaic industry has intensified, the price of silicon materials has soared, the upstream and downstream profits of the industrial chain are disparity, and the problems of uncoordinated industrial development are difficult to solve, and how the photovoltaic industry "moves steadily and far" has aroused concern from all walks of life.

Photovoltaic leading enterprise LONGi Green Energy (601012. SH) Chairman Zhong Baoshen recently publicly claimed at the 2022 Photovoltaic Industry Supply Chain Forum: "Due to strong market demand, there is a capacity mismatch and mismatch between various links in the photovoltaic industry chain. The photovoltaic industry is still in the adolescent period, so everyone's expectations for the development speed of the industry are not particularly accurate, so it will lead to an imbalance between the various links of the industrial chain. ”

Structural problems in the photovoltaic industry have also attracted the attention of regulators. On August 24, the General Office of the Ministry of Industry and Information Technology, the General Office of the State Administration of Market Regulation, and the General Department of the National Energy Administration jointly issued a document to promote the coordinated development of the photovoltaic industry chain supply chain.

Three-sector "regulations"

On the 24th, the "Notice on Promoting the Coordinated Development of the Photovoltaic Industry Chain Supply Chain" (hereinafter referred to as the "Notice") jointly issued by the three departments proposed that the industrial layout should be optimized based on long-term goals. Including rationally guiding the pace of upstream and downstream construction and expansion according to the development characteristics of each link of the industrial chain, optimizing the layout of industrial regions, and avoiding industrial convergence, vicious competition and market monopoly. Optimize the business environment, standardize the market order, support all kinds of market entities to participate in market competition on an equal footing, and guide all kinds of capital to reasonably participate in the photovoltaic industry according to the dual carbon target.

"Not only our module companies, but also the executives of various photovoltaic companies are happy to see it, and hope that the entire industry can develop in an orderly manner." Eastern Risheng (300118. SZ) a marketing executive told reporters, "In fact, before the three departments issued the document, the downstream including the photovoltaic industry association has been spoken, but frankly speaking, it is more difficult to control, the price performance is still partial to market behavior, and indeed the current demand is far greater than the supply." ”

The heat of the upstream of photovoltaics has attracted a lot of cross-border capital. "Regarding the phenomenon of cross-border photovoltaics in all walks of life, individuals are actually not very optimistic, and now it is a bit like in 2015 when they all do Internet +, but unless these cross-border enterprises really have production capacity, they still stay on the concept." The marketing executive added.

The "Notice" also proposes that system docking should be strengthened and full-chain cooperation should be deepened. Specifically, we should strengthen the reserve of new projects such as polysilicon, coordinate the procedures, and steadily accelerate the release of production capacity and orderly expansion according to downstream demand. Encourage silicon material and silicon wafer enterprises, silicon wafers and batteries, modules and inverters, photovoltaic glass and other enterprises, module manufacturing and power generation investment, power station construction enterprises to cooperate in depth, support enterprises through strategic alliances, sign long orders, technical cooperation, mutual participation and other ways to establish a long-term cooperation mechanism, guide the upstream and downstream to clarify the quantity price, ensure supply, and stabilize expectations.

A senior practitioner of the photovoltaic industry said in an interview with First Finance and Economics: "The documents issued by the three departments have given a good warning to the cross-border 'crazy' influx of capital into the photovoltaic field, which helps to avoid waste and excess of resources caused by repeated investment and backward production capacity investment, and regulates and guides capital into other real industries and promotes economic development." In addition, it also gives all photovoltaic companies a warning, while attaching importance to the economic profits of enterprises, it is more important to pay attention to the win-win situation of the entire industry. ”

"The current layout optimization, consumption, and coordinated development of upstream and downstream industries in the photovoltaic industry also need further overall arrangements." Hu Qimu, chief researcher of The China Steel Economic Research Institute, said, "From the perspective of industrial layout, it is necessary to optimize the layout of the photovoltaic industry from the height of establishing a unified national market, break the market segmentation and local protection, allow resource elements to flow fully, and achieve efficient allocation of resources." From the perspective of the industrial chain, the price of raw materials in the upstream of the industrial chain has continued to rise sharply since the epidemic, which has both the problem of insufficient start of raw materials and the factors of hoarding and speculation in the circulation link. The excessive growth of upstream raw material prices is not conducive to the sustainable operation of photovoltaic enterprises, and it is necessary to promote the coordinated resumption of production of the industrial chain, and the in-depth cooperation between upstream and downstream entity enterprises, standardize the circulation order, avoid blockages in the industrial chain, and reduce operational efficiency. ”

Upstream and downstream collaboration challenges

In fact, in order to cope with the dilemma of the "inner volume" of the domestic photovoltaic industry, various photovoltaic companies have opened "self-help" and sacrificed "chess pieces" such as expansion and layout integration, with the intention of hedging the operational risks brought about by the rising cost of silicon materials through the coordinated development of upstream and downstream.

"Like other companies in the industry, we are committed to achieving the whole industry chain, and next year we may also be on silicon wafers, forming a complete integration of cells, components, silicon materials, and silicon wafers, and now there is no way to disclose too much." The above-mentioned Oriental Risheng marketing executive told reporters, "We predict that in the fourth quarter of this year, the price of silicon materials may fall, and as some central enterprises complete hard targets, the domestic installed capacity will also recover slightly, at least better than the first 8 months of this year." ”

First Finance and Economics noted that due to the mismatch between supply and demand in the photovoltaic industry chain and the different pace of upstream and downstream expansion, the entire industry has been suffering from "sky-high prices" of silicon materials for a long time. According to the latest data from the Silicon Industry Branch of the Nonferrous Metals Industry Association, the highest price of domestic monocrystalline compound feeding has exceeded 310,000 yuan / ton, an increase of more than 253% compared with the price of 87,600 yuan / ton in early 2021, hitting a record high, which is also the 28th price increase this year.

The soaring price of silicon materials directly leads to the uneven distribution of profits in the whole industry chain, and the voice of "upstream eating meat, downstream eating soil" appears in the industry.

Upstream silicon enterprise Tongwei co., Ltd. (600438. SH), Daqo Energy (688303. SH) net profit in the first half of the year increased by three times year-on-year, and another silicon material company TBEA (600089. SH) earnings for the first half of the year also pre-increased 149% to 162% year-on-year. And downstream companies are not so "lucky", Tuori Xinneng (002218. SZ) net profit for the half year of 2022 pre-decline of 50% to 65%. "Affected by the increase in silicon and commodity prices, the company's component gross profit decreased compared with the same period last year." Tauri new energy analysis in the announcement said.

Xia Jiaxi, vice president of Wuxi Sarkot New Energy Co., Ltd., said that the company's sales have doubled, but the profit margin has dropped by half. This will make many companies reluctant to do production, too tired, gross margin is too low.

Trina Solar Energy (688599. SH) relevant person in charge recently said: "Photovoltaic module manufacturers naturally have both front-end raw materials are spot, and back-end customers are futures attributes. In the early stage, we can see that many component manufacturers signed a long order of 6 to 9 months, and set the price and quantity in advance. ”

"But since 2021, the price of the upstream of the supply chain has been rising, and we have dealt with this industrial chain price fluctuation by quickly adjusting the shipping and signing structure, almost reversing the proportion of long orders and short orders, most of which are short orders and cash orders to ensure profits, and the proportion of long orders is relatively small." The person in charge told reporters.

Ask for markets overseas

Under the background of the intensification of domestic "internal rolls" and insufficient profit margins, photovoltaic companies have targeted overseas markets with high premiums. The European photovoltaic market has become a must-compete place.

"The European market, under the influence of the Russian-Ukrainian conflict, the average price of the entire electricity price is about 4 euros per kilowatt hour, so for them, the installed photovoltaic power generation return is better, and the market demand is strong." Chint Aneng (601877. SH) Power System Engineering Co., Ltd. President Lu Kai said that the European electricity price is relatively high, photovoltaic energy storage can be controlled within 7 to 10 years to return the cost, and the domestic power market reform also needs to continue to advance in depth, and the return cycle of photovoltaic energy storage may be more than 15 years.

"Here to supplement the characteristics of overseas markets, European power generation enterprises, electricity sales enterprises, transmission and distribution enterprises are separated, power generation is completely a market-oriented behavior, so the price of electricity will fluctuate greatly, especially now that the European long-term electricity price agreement (PPA) price is very high, the photovoltaic market demand is strong." Lu Kai further told reporters, "We believe that in the next few months, especially before Christmas, the Demand for European Market is still very large, and September to November will be the peak season for installation." ”

In fact, Europe has not only been the world's second largest photovoltaic installed capacity market, but also the largest module import market, accounting for 46% of the world in 2021. Under the general trend of energy transition and carbon neutrality, European countries including Germany, the Netherlands, Greece, Spain, Portugal, and Poland have reached module imports of GW or above.

PV InfoLink data shows that in 2021, the mainland's photovoltaic module exports to Europe will be 40.9GW, an increase of 54% over the previous year's 26.7GW, accounting for 45% of the overall share of the mainland's photovoltaic module exports.

The proposal of the RepowerEU energy plan in May this year has also added "a fire" to the development of the European optoelectronic market. The EU's plan involves up to 210 billion euros ($221 billion) of funding over the next five years, including increasing imports of renewable energy and liquefied natural gas and reducing energy demand, thereby reducing Russia's energy dependence and accelerating the shift to green energy.

JA Technology (002459. SZ) has publicly stated that overseas orders have increased as demand for europe's independent energy has risen. "The company has been focusing on the European market for many years, and is currently striving for more shipments, which has seen results."

"We expect a small rush in overseas markets before December. But the more to this time, the internal production capacity of photovoltaic companies needs to pay special attention to, the fourth quarter of the photovoltaic market is very strong, the price is good, if their lack of production capacity can not break through, the amount of orders can encounter bottlenecks. The above-mentioned Oriental Risheng marketing executives told reporters. Author: Lu Ruyi

Source: CBN