Author: Wen Yu, Editor: Xiao Shimei
On May 14, the United States announced tariffs on $18 billion of goods imported from China, and new energy industries such as electric vehicles, lithium batteries, and solar cells were the main targets, of which tariffs on photovoltaic cells were doubled to 50%.
Chinese Internet people are accustomed to seeing this behavior as a manifestation of the United States' inability to compete, but ignore an important industrial background of the United States' attack on China's PV, namely:
U.S. PV is becoming bigger and stronger.
[Production capacity is soaring]
This ferocious comeback of US PV began in 2022.
In August of this year, Biden signed the Inflation Reduction Act (IRA), which proposed to issue $737 billion in subsidies over 10 years, of which $369 billion will be used to combat climate change and improve energy security.
According to previous calculations by Bloomberg New Energy Finance, the IRA's subsidy for the entire U.S. solar industry chain can theoretically reach 17 cents/watt, which is basically close to the production cost of Chinese companies. In other words, even if the cost of American companies is much higher than that of Chinese companies, and there is no market competitiveness at all, they will be very profitable after subsidies.
First Solar, for example, achieved a net profit of $831 million in 2023, of which at least $700 million came from subsidies, while in 2022, the company's net profit was a loss of $44.166 million.
The high-intensity subsidies have completely activated the production enthusiasm of US PV companies, and since 2022, the PV production capacity in the United States has been soaring.
In 2022, the U.S. only had about 8GW of local module production capacity, and by 2023, this figure will rapidly increase to more than 13GW, and according to Wood Mackenzie, according to the currently announced plan, the U.S. module production capacity will exceed 120GW in 2026, which is three times the domestic PV installation demand that year.
Before 2022, there was almost no wafer and cell production capacity in the United States, but according to InfoLink, by 2025, the production capacity of polysilicon, wafers and cells in the United States will reach 25GW, 11GW and 24GW, respectively.
In this regard, the Solar Energy Industry Association (SEIA) previously proudly wrote in a report: We thought that the goal of 50GW of photovoltaic module production capacity in the United States by 2030 was out of reach, but now, this goal has been basically achieved.
One potential consequence of this is the decoupling of PV from China by the United States.
In the past, when the United States photovoltaic could not be self-sufficient, so even if the heart of China's photovoltaic soaring feel unhappy, will be based on the consideration of interests in the suppression of leeway, now the wings are hard, China's photovoltaic has naturally changed from "little sweet" to "Mrs. Niu", according to the United States has always not stressed the style of martial arts, it is inevitable to chase and intercept Chinese photovoltaic enterprises, the tariffs are just a starter, and the greater risk may be still behind.
After the anti-dumping and anti-dumping campaign in 2011, the proportion of PV modules imported by the United States from China has dropped from a high of 50% to less than 3% of its total PV imports, but since then the United States has been importing more than 70% of its total PV imports from four countries, including Vietnam, Malaysia, Cambodia and Thailand, to more than 70% by 2022.
▲Image source: Finance Magazine
The U.S. Department of Commerce determined that Chinese PV companies were circumventing tariffs by completing production in Vietnam, Malaysia, Cambodia and Thailand, and therefore should also impose high tariffs on PV products in these four countries. Considering that the United States was not yet self-sufficient at the time, Biden issued a waiver in June 2022 to allow the four countries' PV products to continue to be freely exported to the United States. This exemption policy will expire in June this year, and according to the actual development of PV in the United States, as well as a series of remarks by American politicians some time ago, the future of the exemption policy may not be optimistic.
For a long time, there has been a mainstream voice that the United States cannot do without Chinese PV, and now the sustainability of this view clearly needs to be reassessed. While increasing subsidies and suppressing Chinese companies, the ultimate intention of the United States is very clear, that is, it hopes that its own photovoltaic can catch up, so as not to completely become a spectator on the wall in this energy revolution.
The answer is, yes.
【Be wary of overtaking in corners】
Looking at the history of photovoltaic development, in the past 30 years, the industrial focus has shifted many times, and Japan, Germany, and China have all held the highest bull's ear. To explore the causes behind it, two factors are crucial, one is the intervention of state forces, and the other is the switching of technical routes.
In 1993, the Industrial Technology Research Institute of Japan launched the large-scale "New Sunshine Plan", in which amorphous silicon photovoltaic cell technology was listed as a major development project, and it planned to invest about 500 billion yen to support its development. By 2003, only four Japanese companies, namely Sharp, Kyocera, Sanyo and Mitsubishi, accounted for nearly half of the world's photovoltaic cell production.
In 2004, Germany amended the "Renewable Energy Act", and enterprises using photovoltaic power generation can receive subsidies of 40-50 euro cents per kilowatt-hour of electricity, and the enthusiasm of the German photovoltaic industry was completely ignited, and soon replaced Japan as the new center of photovoltaic in the world. The outbreak of the German photovoltaic market also helped Chinese companies complete the early primitive accumulation, and Suntech, Yingli, Saiwei and so on all started from that time. After the 2008 financial crisis, subsidies in Europe and the United States declined, and China bucked the trend and strongly supported the photovoltaic disaster, and the scepter of the global photovoltaic industry has since been handed over to China.
Now that the United States has launched an unprecedented photovoltaic subsidy program, it is naturally hoped to reproduce history and overtake in corners again, and the development of technical routes has indeed given this realistic possibility.
The decline of PV in the United States is largely due to the decline of thin-film cells, with the thin-film route and the crystalline silicon route historically going back and forth, with the former having two highlight moments, in 1988 and 2009, with market shares of 30% and 17% respectively. First Solar in the United States has always focused on thin-film cells, and in 2008 it lowered the cost of thin-film cells to US$0.98/W, when the price of polysilicon had soared from US$25/kg in 2003 to more than US$400/kg in 2008, causing the cost of crystalline silicon cells to rise sharply. The competitiveness of thin-film batteries began to emerge, and the industry even predicted that the market share of thin-film batteries could reach 30% by 2012.
▲Image source: Oriental Securities Research Institute
However, the good times were short-lived, and the price of polysilicon plummeted due to surplus soon after the financial crisis, and the cost advantage of thin-film cells was lost. Since then, China has pushed the cost reduction and efficiency increase of the crystalline silicon route to the extreme through the efforts of the whole industry chain, while the thin-film technology that American companies are betting on has gradually been reduced to the marginal route, and the market share of the industry is now less than 5%. In retrospect, if it weren't for that plunge in polysilicon prices, thin-film cells might not have been defeated in a devastating way.
In the past few years, although the United States has been completely crushed by China in terms of commercialization, it has not given up in terms of technology, among which the CdTe (cadmium telluride) technology led by First Solar has always been the most mature thin-film battery route, and this technology has now ushered in a certain dawn of development.
Building photovoltaic integration (BIPV) is a track with great prospect and imagination, and in the practical application of BIPV, cadmium telluride batteries are largely better than crystalline silicon cells. For example, the cells of crystalline silicon cell modules are thicker and relatively independent of the packaging material glass, with poor flexibility and difficult to process into arc shapes, while thin-film cells are relatively thinner and more malleable, can be bent arbitrarily, and are easy to process into arc shapes with a smaller bending radius, which are more widely used in BIPV. For example, the building itself has a demand for natural light, so there are certain requirements for the light transmittance of BIPV modules, and thin-film cells also have better light transmittance than crystalline silicon cells.
Industrial Securities has previously calculated that the total long-term installed capacity of BIPV is about 1500-2000GW, and the corresponding market size will reach 7.5-10 trillion yuan. According to the China Photovoltaic Association, the global installed PV capacity in 2023 is expected to be only 345GW to 390GW. In other words, BIPV can theoretically recreate N photovoltaic industries on the basis of the current market size, which is equivalent to giving thin-film batteries a second life.
From 1954 to 2016, the heterojunction technology broke through the 26% efficiency mark, crystalline silicon cells have gone through 60 years of research, and it took only 10 years for perovskites to break through 26% efficiency in the laboratory. At this rate of iteration, it may not take many years to achieve commercialization.
Perovskites themselves are a type of thin-film cell, and the U.S. hasn't been completely left behind in this area, with First Solar just last year completing its acquisition of Swedish perovskite company Evolar AB, which has developed a unique perovskite solar cell technology that can provide 25% more conversion efficiency than conventional solar cells.
Whether it is policy subsidies, tariff barriers, or technical route switching, it is good for the U.S. photovoltaic industry. As a defender, China has only one choice, which is to do its best and prepare to meet the challenge.
[Looking forward in unity]
In the past few years, there have been some discordant and irrational behaviors in China's photovoltaic industry.
From 2020 to 2023, the whole industry has invested a total of about 3 trillion yuan in core specific links such as polysilicon, silicon wafers, cells, and modules, to auxiliary materials such as photovoltaic glass, adhesive film, and steel wire. According to the statistics of the China Photovoltaic Industry Association, in 2023, China's polysilicon, silicon wafer, cell and module output will reach 1.43 million tons, 622GW, 545GW and 499GW respectively, with a year-on-year increase of 66.9%, 67.5%, 64.9% and 69.3% respectively.
In the first quarter of 2024, the total operating income of 120 photovoltaic listed companies was 314.369 billion yuan, a year-on-year decrease of 15.47%, and the net profit attributable to the parent company totaled 13.5 billion yuan, a year-on-year decrease of 71.98%, and more leading enterprises have already suffered huge losses - Tongwei Co., Ltd. had a net loss of 787 million yuan in the first quarter of this year, LONGi Green Energy had a net loss of 2.35 billion yuan in the first quarter, and TCL Zhonghuan had a net loss of 880 million yuan in the first quarter.
ON THE OTHER HAND, FIRST SOLAR IN THE FIRST FISCAL QUARTER OF THIS YEAR HAD A TOTAL REVENUE OF $794 MILLION, A YEAR-ON-YEAR INCREASE OF 44.83%, AND A PROFIT OF $237 MILLION, A YEAR-ON-YEAR INCREASE OF 455.95%. As of 2024Q1, the company has 78.3GW of orders in hand, with a total order size of US$23.4 billion.
Just a few days ago, First Solar successfully surpassed the market value of LONGi Green Energy, becoming the world's largest company in the photovoltaic field by market capitalization. In the context of China's absolute dominance over the world's photovoltaic industry, such a situation is completely unexpected and may be difficult to accept.
Today, the global industrial competition is no longer a contest between enterprises, but a competition with the country as a unit, the ineffective involution of domestic photovoltaic enterprises has affected their own development to a certain extent, and in the end it is our own strength and resources that are damaged, and we should quickly get rid of the trap of internal friction, unite to look forward, and put more human, financial and material resources into the planning and construction of the future, rather than just staring at the current one-third of an acre.
On the other hand, as long as domestic photovoltaic companies can walk on the right track of development, even if the United States is menacing, the initiative in the future will still belong to China. So far, China's global market share in polysilicon, wafers, cells, modules and other sectors has reached 70%, or even more than 80%, with the most advanced technology, the most complete production and manufacturing capacity and the most abundant industry development experience.
In short, pressure and resistance are objective, we need to maintain the necessary sense of crisis, and at the same time, the future and advantages are also clear, and we should have confidence and enthusiasm.
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