Domestic photovoltaic installations will return to the right track, with rapid growth in foreign demand, approaching the era of parity
After the "11.2" meeting of the Energy Bureau, the prosperity of the photovoltaic industry has significantly rebounded. Adjusting policies will provide impetus for the sustained and steady development of the photovoltaic industry. In 2019, we conservatively estimate that the new scale will be around 40GW. The export data of photovoltaic products in 2018 is impressive, and it is expected to maintain this growth trend in the future. The growth in the markets of India, the United States, and Europe is considerable, and the demand for foreign markets is expected to be around 80GW in 2019.
1、 The domestic market will return to normal in 2019
2018 is destined to be an extraordinary year for the photovoltaic industry. From the "5.31" new policy to the "11.02" energy bureau meeting, the photovoltaic industry has experienced huge fluctuations, with industry chain prices generally dropping by about 30%. The new policy of "531" for photovoltaics has lowered the prices of the industrial chain in a short period of time, easing the pressure of subsidies and inadvertently accelerating the arrival of the era of affordable grid access.
In 2018, the cumulative newly installed capacity was 44.26 GW, a year-on-year decrease of 19.7%, including 23.3 GW for centralized and 20.96 GW for distributed. It can be seen that after "5.31", the domestic installed capacity has significantly slowed down, and the highlight is the further increase in the proportion of distributed systems.
The National Development and Reform Commission and the Energy Bureau recently issued the "Clean Energy Consumption Action Plan (2018-2020)", which requires significant achievements in clean energy consumption in 2018 and the basic solution of clean energy consumption problems by 2020. According to the action plan, it is necessary to ensure that the national average utilization rate of photovoltaic power generation is above 95% and the curtailment rate is below 5% in the next three years. The photovoltaic curtailment rate has significantly decreased in the past three years and entered a reasonable range.
We believe that the country's determination to continue promoting the development of new energy and the consumption of new energy electricity remains unchanged. The correction of "5.31" has been unanimously recognized by the entire market. Currently, the electricity price adjustment policy and construction scale plan have given the market clear expectations. These adjustment policies will provide impetus for the sustained and stable development of the photovoltaic industry.
2、 The export data is impressive, and the overseas market space is vast
According to CPIA data, the total export value of photovoltaic products in 2018 was 16.11 billion US dollars, a year-on-year increase of 10.9%. The export of components reached 41GW, a year-on-year increase of 30%. Silicon wafers and solar cells have been affected by price declines, resulting in a decrease in export prices and an increase in both module export value and export volume, with the proportion also rising from 71.9% to 80.6%.
Indian market: At the end of July 2018, the Indian Ministry of Finance officially ruled on the investigation of safeguard measures for solar cells, imposing a two-year protection tax on battery components imported from China and Malaysia. Among them, the tax rate from July 30, 2018 to July 29, 2019 was 25%, the tax rate from July 30, 2019 to January 29, 2020 was 20%, and the tax rate from January 30, 2020 to July 29, 2020 was 15%. The implementation period of this policy is only 2 years, so the motivation for Chinese manufacturers to build factories in India is not strong. Meanwhile, this policy only applies to China and Malaysia, while some manufacturers currently have expansion plans in Indonesia and Vietnam, and related products will not be subject to tariff restrictions.
India is a populous country with abundant sunshine resources, but lacks electricity. India is vigorously developing solar energy and other clean energy sources at an unprecedented pace. The Institute for Energy Economics and Financial Analysis previously predicted that an additional 11 GW of installed capacity is expected to be added in 2019, making it the second largest market in the world. Meanwhile, India is expected to achieve a cumulative installed capacity of 100GW by 2020. But India has limited domestic production capacity and heavily relies on imports from China. According to CPIA data, over 90% of India's newly installed capacity in 2017 relied on imports for components, with over 80% imported from China.
The US market: The trade protection measures of the "201" bill are specifically divided into two parts: photovoltaic cells and modules. For photovoltaic cells, the United States exempts tariffs on the first imported cells within 2.5 gigawatts each year. After the total import volume exceeds 2.5 gigawatts, special tariffs will be imposed, with the tax rate decreasing from 30% in the first year, 5% annually, and 15% in the last year. In the next two years, with the gradual reduction of deduction tax rates and component prices, the outlook for the US market remains optimistic.
In 2018, the US market added 10.6GW of photovoltaic installed capacity. It is expected that the total installed capacity of photovoltaics in the United States in 2019 will be around 12GW. In the next five years, the installed capacity of photovoltaics in the United States will double. By 2023, the annual installed capacity in the United States will reach 14GW.
European market: On September 3, 2018, the European Union ended its five-year anti-dumping measures against China and lifted the Minimum Price Restrictions (MIP) clause targeting China. In 2018, the overall installed capacity in Europe was 11 GW, with a significant increase in demand. The IEA predicts that the new energy installed capacity in Europe is expected to double, and it is expected that the decrease in component prices will stimulate an average of 3-5 GW of new installed capacity per year.
3、 Approaching parity, high-efficiency batteries remain the core of cost reduction
After the new photovoltaic policy in 2018, both domestic module prices and BOS costs have significantly decreased. Currently, modules have gradually fallen into the range of 2 yuan/W, and system costs have gradually entered the range of 4-4.5 yuan/W. For large power plants with confirmed installation capacity, using high-power components can reduce the number of components used, and correspondingly reduce the construction and installation costs of ground piles, brackets, DC cables, combiner boxes, and photovoltaic field areas. We believe that for large-scale ground photovoltaic power plants, priority should be given to high-power and high-quality components to better reduce BOS costs.
At present, the average electricity prices for residential, industrial, and commercial electricity in China are 0.52 yuan/KWh, 0.61 yuan/KWh, and 0.83 yuan/KWh, respectively. Photovoltaic has achieved parity on the user side. In terms of power generation, domestic leading projects have played a positive role in promoting it, and electricity price is the most weighted indicator in project bidding (accounting for 35%). Overall, the average on grid electricity price of the third batch of leaders is 0.427 yuan/KWh, with an average subsidy of 0.081 yuan/KWh. The average subsidy reduction is 0.365 yuan/KWh, with an average subsidy reduction of over 80%. Golmud and Delingha have reported the lowest electricity prices of 0.31 yuan/KWh and 0.32 yuan/KWh respectively, both lower than the local desulfurization coal price of 0.3247 yuan/KWh. The parity on the power generation side has shown signs of improvement.
Among the first batch of affordable grid projects in China recently, photovoltaic power generation projects account for about 15GW. At present, it seems that the "Three North" ultra-high voltage supporting photovoltaic projects have been able to achieve parity.
We believe that the future path of cost reduction will still revolve around efficient batteries. PERC technology has a simple structure and easy production line transformation. It only requires adding two steps of coating and laser marking on the existing process basis. The technical difficulty is relatively small, and the equipment investment cost is low. It is the first choice for efficient battery paths in the industry. At present, P-type cells have an absolute advantage in PERC cells, but P-type components suffer from light decay. N-type components have no light attenuation and significant advantages in efficiency and stability. The demand for component efficiency and stability in the future market will continue to increase, and N-type is more suitable for producing efficient batteries, which is an important development direction for improving battery efficiency. According to data from the Ministry of Industry and Information Technology, the market share of N-type single crystal cells will increase from 3.5% in 2016 to 30% in 2025. In recent years, a number of efficient crystalline silicon cell technologies such as wet process black silicon (MCCE), back passivation (PERC), heterojunction cells (HIT), full back electrode contact crystalline silicon photovoltaic cells (IBC), and N-type double-sided have emerged, opening up channels for future cost reduction.
