Recently, during the 24th APEC Conference, Liu Yuxi, president of the China Regional Department of LONGi Green Energy, said in an interview: "The current product price of photovoltaic modules has been very low. If it falls below one yuan, it means that it is completely below the cost price."

In the past, the market in the battery conversion efficiency blossomed, but in the price war under the competitive landscape, companies find it more important to preserve their own cash flow, so it will be more willing to put the money for survival, take money for R & D will not be active. Therefore, the vicious price war is very unhealthy, not only to bring internal injuries to the enterprise, but also will affect China's entire photovoltaic industry, harming China's innovation.

From the beginning of 2023 to the end of the current year, PV modules are now selling for 55% of what they were at the beginning of the year, a dramatic drop. Of course, now the seller of the offer fell below 1 yuan per watt is still an isolated phenomenon, but have to make alert to the future trend of the module will go where.

Liu Yuxi disclosed that LONGi signed LTA with many central enterprises and SOEs last year, which is a pioneering move. In fact, at that time, the price of photovoltaic modules was still high, but in order to ensure that the state-owned enterprise projects can be opened and put into operation on time, and at the same time, LONGi also foresees that the price will fall to a certain extent in the future, so it signed a long-term agreement at a lower price. In hindsight, this action proved to be right, just LONGi and many central enterprise customers did not expect that the price will fall so fast, especially after June this year. He said that: the previous decline in prices of PV modules, more factors are the industry's normal overcapacity, supply and demand imbalance, but now it has not only limited to the oversupply of this kind of factors. Upstream plate product prices, now also fell very deep. According to the silicon industry branch data, between October 12 and October 18, the average price of monocrystalline dense material transactions for 80,000 yuan / tonne, only a quarter of the price of the same period last year. At the same time, the mainstream size P-type silicon wafers 2.78 yuan / wafer and 3.68 yuan / wafer or so, only one-third of the price of silicon wafers in the same period last year.

In addition, according to InfoLink data, the current price compared to last year has been completely cut. These links of the product price drop let photovoltaic manufacturers fear, but photovoltaic component link price drop situation is the market people really cold.

What are the reasons for the sharp drop in module prices?

One of the reasons for the significant price drop of photovoltaic products represented by modules is the emergence of a phased oversupply. Market demand can not keep up with the capacity of the photovoltaic industry, the price decline has become inevitable. On the supply side of the product, as this year is in the P-type to N-type alternation period, N-type production capacity in the continuous construction and expansion. At present, TOPCon's capacity planning has more than 1000GW. in the P-type production capacity has not yet completely out of the market, N-type production capacity of a large number of expansion, superimposed on the cross-border photovoltaic players continue to enter the whole photovoltaic industry, the phenomenon of overcapacity is inevitable. At the same time, focusing on the market demand, on the one hand, the module is constantly expanding production capacity, a large number of influx into the market for shipments; on the other hand, China's new PV installations this year, the forecast has been adjusted upward from the original 280-330GW to 305-350GW. According to Chipotle Consulting's prediction, the global PV module production capacity can reach 1,034GW in 2023, of which China's production capacity accounts for approximately 80%, that is, more than 800GW. Although the new installed capacity of PV has climbed, it is not so much to digest so much extra module capacity in the market at once.

From the global market point of view, the European region has appeared component inventory backlog, some data say that as of the end of August, the European group price inventory has reached 80GW. at present, from the energy one grasp the situation, the inventory will not reach 80GW so high, but there are enterprises in the dumping of goods for sale, and there are also a certain amount of European inventory backlog in the port and the relevant dealers in the hands of.

It is worth noting that with the serious imbalance between supply and demand in the market, the competition between PV companies has inevitably become more intense. After all, in the first half of this year there have been most of the PV module business shipments did not meet the target requirements. In order to meet the shipment target for the whole year, the second half of the year, each enterprise began to make efforts in the component, which has through the low price to grab the market situation. In short, in such an environment, the group price price in the short term the probability of upward adjustment is not large.

Module price war started

It is not difficult to see, at this stage, component link has not much profit space to speak of. Photovoltaic industry insiders have said so, but also enough to see how much competition between the current component enterprises white-hot. At present, the integration of the photovoltaic industry chain enterprises can still support the normal operation of the enterprise by virtue of the meagre profits, mainly through the profits of the cell link to make up for component losses. If alone just do PV components, in today's market conditions simply can not earn a cent. After all, an enterprise wants to get long development, must be able to obtain the profit of the operation of the enterprise to maintain. A number of people calculated that the gross profit of the entire component chain has entered the loss. Photovoltaic integration of enterprise gross profit is barely over, but pure component manufacturers have a hard time. 23 October, a photovoltaic enterprise disclosure, three quarter photovoltaic components of the European market shipments accounted for about 50%, accounting for the decline is mainly due to the enterprise initiative to control the inventory; in addition, the domestic market accounted for a significant increase of about 40%; however, the annual shipments downward by about 10%.

The famous component manufacturers believe that the profitability of battery components in the first half of next year will not have much improvement overall, to inventory still need time, the imbalance between supply and demand so that the overall price level may be lower, the conventional products will not be too much difference in premium, differentiated products will still have a certain premium, the second half of next year, there may be some profitability repair.

PV industry chain links of product price cuts, is expected to play a stimulating role in the scale of new PV installations, but due to the relative surplus of supply in the PV market, it will allow a part of the enterprise to be eliminated from the game, and a part of the enterprise choose to slow down the investment.

Back to the original topic, when the component price fell to the cost price near the case, component profits will be further compressed. Then, in such a market environment, those backward production capacity and can not keep up with the rhythm of the market of photovoltaic module enterprises, will also be eliminated out of the game. That is to say, photovoltaic module enterprises are about to face a new round of industry reshuffle, for the technical strength of weak and no financial support for the enterprise, can only drown in the dust of history. Finally, the PV module link can stay, must have advanced production capacity and certain financial strength of PV enterprises. Liu Yuxi also revealed, "We think that in two or three years, this year's PV exhibition is in full bloom, but the future may not be there, and there may even be an extreme phenomenon of 60% to 70% of the enterprises will be eliminated."

Reprinted: Energy One Reference 

Source: Daily Economic News, New Energy Insight, Huaxia Energy Network, Jibang Consulting