Image source@Visual China
文 | 奇偶派，作者 |叶子，编辑 |钊
Looking back at the end of the year, if you want to summarize the 2023 of PV in two words, I think "rapid development" and "extreme involution" may be more appropriate, and if you look forward to 2024 of PV in one sentence, then "the year of gently stepping on the brakes after involution competition" is also very appropriate.
From the perspective of the macro industry, in the past year, the industry's prosperity has maintained a momentum of rapid growth with the promotion of the dual carbon goal and the improvement of related new energy demand.
Specifically, at the 2023 annual meeting of the photovoltaic industry held on December 15, Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, said that driven by strong market demand, the installation forecast for 2023 was raised for the second time this year.
From the data point of view, from January to October, the output value of photovoltaic manufacturing exceeded 1.3 trillion yuan, the output of silicon materials, silicon wafers, cells and modules increased by more than 70% year-on-year, and the new installed capacity of photovoltaic power generation was 142.56GW, a year-on-year increase of 145%, while in the power industry statistics released by the National Energy Administration, the installed capacity of solar power generation also increased by nearly half year-on-year.
Driven by such strong demand, the China Photovoltaic Association has raised its forecast for new global PV installations from 305-350GW to 345-390GW, and China's PV new capacity forecast from 120-140GW to 160-180GW, and the forecast for 2024 has become more optimistic.
Source: PV Information
However, with the rapid development of the industry, there is a situation of "extreme involution" and overcapacity of players in the industry. Who would have thought that when the entire industry is still in full swing on the upward channel, the profitability of related companies is not only difficult to talk about optimistic, but even many players have to leave the market because they have lost all their chips.
Shi Zhenwei, chief analyst of SMM PV, told reporters that in the first half of next year, the PV market will be the most fierce time. For some companies, it will be a question of survival, not profitability.
Even Qu Xiaohua, chairman of industry giant Canadian Solar, bluntly said at the 2023 Bloomberg New Energy Finance Forum, "The photovoltaic industry is now in the 'strongest involution in history', and everyone should not expect PV to have a particularly high single-watt profitability next year." ”
So, what is the price fluctuation and development of each link of the photovoltaic industry chain from top to bottom in 2023? How will the capital market react? From the perspective of technological development, what are the biggest changes between 2023 and previous years? And looking forward to 2024, what are the advantages and disadvantages that can be seen at the industry level? In the three different technical routes, where are the respective development goals and technical difficulties?
PV 2023: From expansion and involution to clearance
Looking back at the past year, the PV industry has experienced a process of "blind expansion, overcapacity, and painful depletion", whether it is silicon materials and wafers in the upstream of the industrial chain, or cells and modules in the midstream.
Specifically, in the past 23 years, whether it is the eight giants in the industry that have been deeply cultivated for many years, or the new players who want to take advantage of the opportunity of technological iteration to cross the border to the table, they are all driven by huge interests to expand production far beyond the growth rate of demand. However, after the disorderly expansion of production in the Great Leap Forward, it was followed by overcapacity at the level of the whole industry chain, which set off a cliff-like decline in prices, and also triggered the extreme involution of the industry, which intensified throughout the year.
From a more micro perspective of the industrial chain, this is true.
The upstream polysilicon and wafer end are the first to enjoy the dividends of the industry, and they are also the first places to feel the cold winter.
From 2019 to 2020, China's polysilicon production capacity and output were at a relative low point, which led to a huge mismatch between supply and demand at the beginning of the new PV cycle, which led to a rapid rise in prices and accelerated the construction of related polysilicon production capacity. However, polysilicon, as the heaviest asset in the PV industry chain, has taken too long from inception to production and shipment, which has greatly reduced the sensitivity of buyers and sellers to volume and price demand, and at the same time the price continues to be high, the future demand and production capacity are completely divergent.
As a result, polysilicon production capacity began to increase in 2021, and it is expected to more than double its production capacity in 2023 compared to 2022.
However, demand does not change with the change in supply, and the danger of price collapse is quietly approaching when polysilicon production capacity shows an irrational and unpredictable growth trend as the number of entrants increases, and the first polysilicon companies to make a lot of money.
In terms of prices, after a brief rebound at the beginning of 2023, polysilicon prices continued to accelerate their downward decline, bottoming out briefly in June and then falling again on November 8, falling below 60,000 yuan/mt.
Polysilicon prices in 2023 Source: Polaris Solar PV
In addition, wafers, which are also upstream wafers, have also closely followed the price trend of polysilicon, and except for the two leading companies LONGi and Zhonghuan, which can maintain profits, the other companies are in a state of continuous loss.
However, after a downward trend of more than a year, the current product prices are already below the manufacturing costs of most non-first-tier manufacturers, and the possibility of a significant drop in polysilicon wafer prices is very small, except for the industry-level black swan.
After upstream polysilicon and wafer prices collapsed, midstream cell and module makers also followed polysilicon into the trap of overcapacity and price collapse after enjoying the dividends released by short-term cost pressures.
On December 15, the announcement of the winning candidates for the second centralized procurement of photovoltaic modules in 2023-2024 showed that a total of 15 companies were shortlisted for the winning candidates, among which the module price of Hengdian Dongci, which has the lowest comprehensive unit price, is only 0.891 yuan/W, which has fallen below the 0.9 yuan mark, and looking back at the level of 1.8 yuan/W-1.9 yuan/W at the beginning of the year, the price of such modules has already been more than halved.
A market source from a second-tier module company commented: "It will continue to fall, and it is not impossible to fall below RMB 0.8/W next year." ”
Behind the downward price data is a major reshuffle among module manufacturers, with a PV listed company telling the media: "Now that module prices are so low, it may be that some companies are clearing their inventories. The module price chaos should only continue for a while, and now it can only be said that every company is struggling, and after this period of time, prices should be able to return to normal, and if the module remains at the current price, no company can hold on. ”
However, as long as there are no large numbers of players at the table, the PV downward cycle will never end, but due to the deep involvement of capital, the first half of 2024 will be the time when the market is at its most fierce and prices bottom out.
At a time when corporate earnings are being severely squeezed and the industry is in the liquidation stage, investors in the capital market have also voted for the photovoltaic industry with their feet.
According to Black Eagle PV statistics, after the disclosure of the latest three quarterly reports, fund companies held a total of 5.22 billion shares of 120 photovoltaic listed companies, a huge drop of 49% compared with the peak in June last year, and the market value of institutional holdings also dropped from the peak of 491.5 billion yuan to 141.1 billion yuan, a decrease of 71.29%.
However, the peaks and troughs formed by market sentiment under the hype will never become a bellwether for the development of an industry, and the same is true for the photovoltaic industry - even in the clearance stage, excellent companies are still accelerating the integration of expansion and iteration of related technologies.
The PV industry is slightly different from some mature cyclical industries, as an industry that promotes long-term development through technological iteration, overcapacity is always a structural problem, and the public statements of various companies continue to support this view.
Recently, JA Solar responded to relevant questions in the investor communication platform, saying that from the perspective of the development history of the photovoltaic industry in the past 20 years, technology and product iteration are fast, and cost-effective products are usually in a state of insufficient production capacity. Li Zhenguo, founder of LONGi, also said that from the perspective of development in the past 10 years, overcapacity is always phased, and with the continuous progress of industry technology, the competition is becoming more and more fierce, which has also accelerated the elimination of backward production capacity.
Therefore, the leading enterprises almost unanimously believe that even if the current photovoltaic industry is in the stage of overcapacity, it is only a structural overcapacity and a phased overcapacity, and it is still a blue ocean for products with higher photoelectric conversion rates, waiting for photovoltaic companies to explore.
As a result, enterprises that have long been prepared for the "winter" still maintain a relatively fast pace in related expansion investment, among which LONGi and JinkoSolar ranked the top two in terms of expansion investment of 56.687 billion yuan and 56 billion yuan, and the total expansion of production announced by 8 industry leaders in 2023 totaled nearly 300 billion yuan.
However, what has changed greatly from the professional layout and production in the past is that in this round of crisis, enterprises are clearly aware of the cost advantages brought by integrated production. After all, among independent polysilicon and modules, except for those leading manufacturers with excellent cost control, the relevant profits have long been negative. The integrated expansion of production up and down the industrial chain can greatly reduce production costs, financial costs and management costs, and at the same time open up the upstream and downstream industrial chains, so as to standardize the relevant product details, reduce research and development costs, and become a guarantee for future development.
Source: Tongwei related technical personnel
At the same time as the style of expansion is shifting towards integration, new cell technologies will continue to be explored in 2023.
Among them, after two years of competition, TOPCon took the lead in breaking through in the confrontation with HJT, and kicked off the prelude to large-scale mass production in 2023.
According to the company's expansion plan in 2022, the agency expects that the overall production of TOPCon will be around 300GW in 2023. However, according to the statistics of the media based on public information, since 2023, the domestic production capacity of TOPCon has reached 433GW, including 327.5GW of TOPCo cells and 105.5GW of modules, which greatly exceeded expectations. Those companies represented by JinkoSolar that took the lead in eating crabs have also fully enjoyed the excess dividends brought by the new technology, and have even recovered the production cost of the production line within the year.
In mid-2022, although the HJT technology that "confronted" TOPCon did not usher in the same hot production scene as TOPCon, in 2023, with the breakthrough of technology, the comprehensive production cost per watt disadvantage compared with PERC cells has been reduced to 0.07 yuan, achieving a significant reduction in production costs and beginning to cross the profit and loss point. In the future, with the achievement of slurry cost reduction and target cost reduction, and the breakthrough of related efficiency improvement technology, there will be more new players and leading enterprises with long-term development to increase HJT, and the market share will continue to increase.
In addition to the mainstream HJT and TOPCon, in early September, LONGi, which has not been settled for a long time, finally announced the choice of route - BC battery. As a platform-based technology, BC can be combined with mainstream cell technologies such as PERC, TOPCon, HJT, etc., and has the advantages of high photoelectric conversion efficiency and appearance, and will make great achievements in the mid-to-high-end distributed residential, industrial and commercial markets with high aesthetic requirements and low price sensitivity in the future.
However, BC technology itself as a metallization mechanism rather than a process structure, which also determines that it can only be a modified technology, and at the same time, the current yield is low and the production cost is extremely high, if there is no technological breakthrough, it may be difficult to become a mainstream technology.
In 2023, the decisiveness of leading photovoltaic companies in the implementation of technology is also intriguing.
In the latest disclosure of the third quarter report, the absolute "first brother" in the photovoltaic field has been gradually caught up by the chaser JinkoSolar, and we can find that JinkoSolar has achieved the same net profit as LONGi Green Energy with lower revenue than LONGi, which has a huge relationship with LONGi's hesitation in the technical route.
As a leading enterprise, although LONGi is facing a huge market demand, it must adhere to the idea of "not leading and not expanding", which also leads to the fact that when LONGi hesitates to choose a route, JinkoSolar is already shipping on a large scale, and when it finally figured out what is leading, the production capacity encountered the problem of climbing.
Li Zhenguo, President of LONGi Green Energy, also admitted at the third-quarter results briefing that the strategic mistake in the second quarter was that LONGi's performance was not so aggressive when competitors were rushing for orders, which had a greater impact on module sales this year. In stark contrast, JinkoSolar reported in its third quarter that it is confident that it will exceed its annual module shipment target of 70-75GW, and if the target is achieved, it will return to the world's first position.
In the future, BC, as a route that cannot really be sold in large quantities and requires a lot of R&D investment, LONGi also said that the 12GW HPBC pro expansion plan in Tongchuan is expected to reach production in November 2025, so LONGi will face the embarrassment of a "window period" in mid-2024, which also means that the general situation like the third quarterly report will be further reflected in the 2023 annual report and even the financial reports of 2024 and 2025.
According to CPIA and other institutions, LONGi's market share (in terms of output) in the wafer industry in 2022 will be 22.5%, higher than TCL Zhonghuan's 18.2%. And the ranking of market share in 2023 has changed. TCL Zhonghuan disclosed in its 2023 interim report that its wafer market share ranks first in the world, surpassing LONGi.
And this is only the change in 2023, in the more competitive 24 years, no matter which company comes to the throne and which leader has no choice but to go bankrupt, it will not be surprising at all.
On the whole, under the influence of the brutal expansion in the past, although there are irrational fluctuations, the photovoltaic industry in 2023 has maintained the continuous landing of high-end production capacity and iterative breakthroughs in technology, and in terms of specific achievements, it is even more remarkable than in the past few years, so after the end of 2023 in the downward cycle, can the photovoltaic industry in 2024 usher in a reversal?
Will PV's 2024 be ahead?
From the perspective of industry development, under the premise that the cost of photovoltaic storage has been greatly reduced in 2023, coupled with the expectation that overseas interest rate hikes will end or start the interest rate reduction cycle, the demand of the photovoltaic industry at home and abroad will be boosted to a certain extent.
As a typical cost-oriented industry, any price fluctuation will cause a huge change in downstream demand, and after experiencing the price involution decline and rapid technology iteration in 2023, the current cost performance of installed photovoltaic is already in a very attractive range, and such a low installation cost has become the biggest support for the demand of the photovoltaic industry in 2024.
In addition to the stimulus of persistently low product prices, the accommodative monetary environment in 2024 will also be the main factor driving PV demand. In the downstream landing link, the construction cost of photovoltaic power plants is large, and it is often necessary to rely on bank loans, and the interest rate cut will directly promote the improvement of the yield of power plants and stimulate the continuous release of demand.
However, under the demand of the macro industry, China's photovoltaic industry will face more uncertainties in 2024.
Among them, the most uncertain is the question of whether domestic demand can ensure the relevant resilience.
Under the premise that the installed capacity growth rate in 2022 and 2023 will continue to be optimistic, and China will contribute most of the increase, the installed PV demand in the mainland in 2024 will almost certainly usher in a significant slowdown.
At the National Energy Work Conference held on December 21, the announcement said that 200 million kilowatts of new photovoltaic installed capacity will be added in 2024, but compared with the data of more than 200 million kilowatts installed in the first 11 months of 2023, even if it is not a complete turn back in China, at least it belongs to the degree of lightly stepping on the brakes.
From the perspective of the government's macro-control law, lightly stepping on the brakes on the development of the wind power and photovoltaic industry in 2024 can help the industry better lay a solid foundation, but for enterprises, it is a painful process of squeezing out water. This forces China's photovoltaic industry to continue to go abroad, seek more diverse market channels to eliminate excess capacity, and look for increments in other parts of the world.
However, going to sea is never easy, especially at a time when the international environment is so tense. Just recently, Brazil, China's largest real PV exporter, said it would cancel the 12% import tax subsidy for PV modules within 60 days, in order to protect its domestic PV industry chain.
Source: Catch Carbon Technology
And this is not the first friction encountered by the photovoltaic industry in 2023, in June this year, a senior executive of a Chinese photovoltaic company was taken away by the relevant German authorities when he entered the 2023 Intersolar Europe in Germany. Going back further, even the collapse of the second cycle of China's photovoltaic industry was triggered by the "double anti-dumping" policy in Europe and the United States.
It can be said that 2024 is different from the unilateral decline in 2023, but will be more elusive under the influence of more positive and negative information, and it can even be said that even if the cycle starts to rise again, the opportunity to make money lying down like three years ago is no longer possible.
The performance of leading enterprises is different from the relative pessimism of the industrial side, and they will continue to expand production and accelerate profitability in the process of continuing the trend of clearing and bottoming out in 2023 and then reversing the trend of strengthening.
As mentioned above, in the whole year of 2023, polysilicon prices have been declining due to the release of polysilicon production capacity, which in turn has driven module prices to dive, and by the end of 2023, except for integrated enterprises, the cost of all links has just fallen below the balance line of profit and loss, and boiling frogs in warm water also requires a boiling process, which also means that the clearance stage is far from over, so this price trend will be maintained in mid-2024 until the industry is completely cleared.
Gross profit of each link of the photovoltaic industry chain (yuan/W) Source: Research and Development Department of China Development Bank Securities
However, in this process, the head enterprises will continue to maintain profitability by virtue of their existing advantages (such as integration, etc.), and accelerate the progress of technological transformation and expansion, and the profit inflection point of its statement side will also appear faster than the end of the industry clearance, which also means that in the next one to two quarters, photovoltaic companies will usher in the best allocation opportunities in the capital market that has always liked to "rush", and the valuation of leading enterprises will continue to increase after this round of clearance.
Similarly, the iteration of technology will continue the route of 2023 and continue to move forward.
Under the premise of no disruptive innovation, TOPCon will still become the mainstream in 2024, and the profitability of related equipment manufacturers will continue to climb next year. In 2024, if a large manufacturer expands the production of HJT, it may become the starting gun of the technical route and drive the growth of related companies.
Behind the technology iteration, LONGi Green Energy, which has made a mistake and failed to keep up with the rhythm, has been surpassed by JinkoSolar, whose TOPCon technology is not as good as its There is no such thing as being timid, so HJT route companies such as relevant equipment manufacturers such as Maiwei Co., Ltd. should receive more attention from investors.
In general, from the perspective of the industry, 2024 will face many uncertainties, it is really not a so-called "good year", and there is no general "good expectations" in the past, but the entire industry is under the trend of selecting the best of the best, as long as the development of enterprises and technology iteration will maintain the current trend, it will usher in a cycle turning point in mid-2024, and investment allocation opportunities will appear.
Write at the end
Since the second half of 2023, the fierce price competition in the module sector has completely demonstrated the tragic scene caused by overcapacity in front of the industry and the market.
It is also in this process, whether it is industry capacity or market sentiment, has gradually gone through the worry, pessimism, panic, despair of several stages, after the end of the final clearance stage, the leading enterprises in the photovoltaic industry will usher in the fundamentals and capital market expectations under the resonance of the no-pole Tailai, and this point in time, will not be too far away.
Resources:
1. "Attention!China's largest photovoltaic exporter, to levy 12% import tariff on photovoltaic modules!", Black Eagle Photovoltaic;
2. "Fund Sells 49% of PV Stocks!", Black Eagle Photovoltaic;
3. "2024 PV Industry Annual Strategy Report: Beginning with the End in Mind, Keeping Integrity and Honesty", China Development Bank Securities;
4. "2024 Investment Strategy of Photovoltaic Sector: No Ji Tailai", Guojin Securities;
5. "Big Waves and Sands, Focus on Leading and Technological Innovation Areas", Zhongyuan Securities.