Recent development and trend prospects of the global photovoltaic industry chain

1. The global photovoltaic industry has high development potential, supporting the demand for photovoltaic industry chain products to remain high level;

2. China's photovoltaic products have the advantage of industrial chain linkage, and the export has high competitiveness;

3. The core components of photovoltaic are developing in the direction of high efficiency, low energy consumption and low cost, and cell conversion efficiency is the key technical element for the photovoltaic industry to break through the bottleneck;

4. Need to pay attention to international competition risks. While maintaining strong demand in the global photovoltaic application market, the international competition in photovoltaic manufacturing industry is intensifying.

From the perspective of the manufacturing side of the photovoltaic industry chain, in 2022, driven by the demand of the application market, the production scale of the manufacturing end of the global photovoltaic industry chain continued to expand.

According to the latest data released by the China Photovoltaic Industry Association in February 2023, the global installed capacity of new photovoltaic capacity is expected to be 230GW in 2022, a year-on-year increase of 35.3%, which will further expand the manufacturing capacity of the photovoltaic industry chain.

For the whole year of 2022, China produced a total of 806,000 tons of photovoltaic polysilicon, up 59% year-on-year, and according to the industry's conversion ratio between polysilicon and modules, China's module output corresponding to usable polysilicon in 2022 was about 332.5 GW, an increase of 82.9% over 2021.

From the perspective of production layout, Chinese mainland is still a place of production capacity gathering, with wafer production capacity accounting for 98% of the world's total wafer production capacity, cell production capacity accounting for more than 85%, and module production capacity accounting for about 77%.

In recent years, the global industrial center of gravity has also shifted further to Chinese mainland, and in 2022, the production of silicon wafers, cells and modules in Chinese mainland accounted for more than 80% of the world's total output, showing a rapid growth momentum.

Europe: According to data released by the European Photovoltaic Association, the 27 EU countries will add 41.4 GW of new PV installations in 2022, a year-on-year increase of nearly 50%, and optimistically expect that the annual installed capacity of PV will approach 120 GW in 2026.

Among them, Germany ranked first with 7.9 GW of new installed capacity in 2022, followed by Spain with 7.5 GW of new installed capacity. Germany is expected to add more than 10 GW of new installed capacity in 2023 and a cumulative 62.6 GW between 2023 and 2026.

Spain expects to add 51.2 GW of installed capacity between 2023 and 2026, with cumulative installations increasing from 26.4 GW in 2022 to 77.7 GW.

In December 2022, the German parliament approved a new tax relief package for rooftop PV, including VAT exemption for PV systems under 30 kW.

The newly amended German Renewable Energy Act (EEG) stipulates that from 2023, Germany allows all photovoltaic components of the original photovoltaic power plant, including modules, inverters, etc., to be traded in with new ones, as long as the land is not increased, there is no need for a lengthy approval process. It is expected that the total installed capacity of photovoltaics in Germany will double after the implementation of the new policy.

Brazil: Brazil's total installed PV capacity reached 22 GW in 2022, with 9.0 GW of new capacity, a significant increase of 73.3% year-on-year, according to statistics cited by Fitch citing Brazil's Ministry of Mines and Energy.

Affected by the distributed generation law introduced in January 2022, Brazil will begin to collect grid usage fees for small distributed projects in 2023, because local distributed projects in Brazil account for more than 65% of the overall installation, this bill significantly affects the market and forms a large-scale rush to install, making Brazil one of the hottest markets for photovoltaic installations in 2022.

India: According to research data from Indian PV consultancy JMK, 13.96 GW of solar PV systems were installed in India in 2022, an increase of nearly 40% year-on-year. Among them, utility-scale PV was 11.3 GW, a year-on-year increase of about 47%, and some rooftop distributed PV and off-grid/distributed capacity.

Japan: According to statistics from Fitch and the U.S. Energy Information Administration (EIA), in 2022, Japan's installed PV capacity reached 77.6 GW, a year-on-year increase of 4.4%, and the new PV installed capacity was 3.1 GW.

In January 2023, Japan's Tokyo Metropolitan Assembly voted to adopt a revised ordinance that requires solar panels to be installed in new homes in Tokyo from April 2025, obliging owners of large residential buildings and one-family homes of less than 2,000 square meters to install solar panels on their roofs.

In addition, Japan's Ministry of Economy, Trade and Industry will implement a policy from fiscal 2024 to purchase electricity generated by companies through rooftop PV at a high price, and plans to adopt a fixed-price purchase system (FIT), and the purchase price is expected to be 20% to 30% higher than the purchase price of ground-based PV electricity.

China: According to data from the National Energy Administration, in 2022, China's photovoltaic installed capacity will be 87.41 GW, a significant increase of 59.3% year-on-year, and the growth rate will increase by 45 percentage points, and distributed photovoltaics will become an important growth point for photovoltaic installations; The China Photovoltaic Industry Association expects that the domestic installed capacity will be 95-120 GW in 2023 and 100-125 GW in 2025.

It is expected that in 2023, the cumulative installed capacity of photovoltaics will surpass hydropower for the first time and become the largest source of non-fossil energy power generation. According to incomplete statistics from the Photovoltaic Industry Association, a total of 18 PV-related policies were released nationwide in January 2023. Among them, there are 3 national policies and 15 local policies.

The policy content involves promoting the progress and industry application of smart photovoltaic technology, and encouraging and supporting industrial and commercial users of 10 kV and above to directly participate in the electricity market; Guide the balanced development of solar photovoltaic, energy storage technology and products to avoid overcapacity and vicious competition.

United States: The U.S. PV market is one of the few markets experiencing a recession, with new installed capacity in the U.S. solar capacity estimated to be 23% less in 2022 than in 2021 as trade restrictions with China hinder imports of key low-cost components and materials in PV equipment.

For enterprises in the photovoltaic industry chain, in the context of high downstream installed demand, the head manufacturers have shown a more stable performance growth rate.

2022 is a big year for "cross-border" photovoltaics for major listed companies, and from the performance disclosed so far, most "cross-border chasers" have not yet realized the benefits of photovoltaic business. The head photovoltaic enterprises have scale advantages and first-mover advantages, and continue to expand production capacity, which makes the pressure of photovoltaic companies and second- and third-tier manufacturers who enter the market later.

The large-scale and low-cost integration may make the profits of some links more concentrated, the trend of the strong and the strong is becoming more and more obvious, and the reshuffle trend of small manufacturers may gradually appear.

China: In December 2022, China's PV module exports bucked the trend and rose slightly, ending the downward trend since the July export peak.

The annual export data performed well, with PV module exports reaching 154.8 GW in 2022, an increase of 74% over 2021; The export value was 42.375 billion US dollars, a year-on-year increase of 65.45%.

The peak of exports was from May to July in the middle of the year, and then the overseas market slowed down due to the large number of imports in the first half of the year, and the pulling force slowed down, and the export volume of modules continued to decline until November, and stopped falling in December.

Europe: In 2022, European countries imported 86.6 GW of PV modules from China, accounting for 56% of China's PV module exports, and a significant increase of 112% compared with 40.9 GW in 2021, making it the fastest growing and largest regional market for China's module exports in 2022.

In 2022, affected by the conflict between Russia and Ukraine, the rapid rise in traditional energy prices has prompted European countries to actively promote energy transformation, and the installation demand for photovoltaic equipment has increased significantly, with major countries such as Germany, Spain, Poland, the Netherlands, etc., and many countries with small demand in the past also experienced multiple growth.

Asia-Pacific: The Asia-Pacific region imported 28.5 GW of PV modules from China in 2022, an increase of 27% compared to 2021. Major demand countries include India, Japan and Australia.

Americas: Total module imports from China reached 24.8 GW in 2022, up 50% from 2021, with 80% of the increase coming from Brazil.

Middle East: Typical countries are the United Arab Emirates and Saudi Arabia, both of which showed significant growth in PV module imports from China in 2022.

Among them, the UAE imported 3.6 GW of photovoltaic modules from China, an increase of 340% compared with 2021, making it the largest importer of Chinese modules in the Middle East; Saudi Arabia imported 1.2 GW of PV modules from China, a significant increase from less than 0.1 GW in 2021.

In addition to modules, China's cumulative cell exports in 2022 will be 4.003 billion US dollars, a year-on-year increase of 40.66%; The cumulative export of inverters was 8.975 billion US dollars, a year-on-year increase of 75.11%.

The trend of began in high level and going high level continued throughout the year. Although the first quarter is usually the off-season for installations in Europe and China, recently, the new polysilicon production capacity has been continuously released, resulting in a downward price in the industrial chain, effectively alleviating downstream cost pressure, and stimulating the release of installed capacity.

At the same time, overseas PV demand is expected to continue the trend of "off-season-off" from February to March as January. According to the feedback of head module companies, the trend of module production after the Spring Festival is clear, with an average month-on-month increase of 10%-20% in February, and a further increase in March.

From the beginning of the second and third quarters, as supply chain prices continue to decline, it is expected that demand will continue to rise, and until the end of the year, there will be another large-scale grid connection tide, driving the installed capacity in the fourth quarter to reach the peak of the year.

Industrial competition is becoming more and more intense. In 2023, the intervention or impact of geopolitics, big country games, climate change and other factors on the entire industrial chain and supply chain will continue, and the competition in the international photovoltaic industry will become more and more fierce。

From a product point of view, enterprises increase the research and development of efficient products, which is the main point for improving the global competitiveness of photovoltaic products;

From the perspective of industrial layout, the trend of the future photovoltaic industry supply chain from centralized to decentralized and diversified is becoming more and more obvious. According to different market characteristics and policy situations, it is a necessary way for enterprises to enhance global competitiveness and reduce market risks.

The global photovoltaic industry has high development potential, supporting the demand for photovoltaic industry chain products to remain high level.

From a global perspective, the transformation of the energy structure to diversification, clean and low-carbon is an irreversible trend, and governments actively encourage enterprises to develop the solar photovoltaic industry.

In the context of energy transition, coupled with the favorable factors of the decline in photovoltaic power generation costs brought about by technological progress, in the medium term, overseas photovoltaic installed capacity demand will continue to maintain a high prosperity.

According to the forecast of the China Photovoltaic Industry Association, the global new photovoltaic installed capacity will be 280-330 GW in 2023 and 324-386 GW in 2025, supporting the demand for photovoltaic industry chain products to remain high level.

After 2025, considering the factors of market consumption and supply and demand matching, there may be a certain overcapacity of global photovoltaic products.

China's photovoltaic products have the advantage of industrial chain linkage, and exports have high competitiveness.

China's photovoltaic industry has the world's most complete photovoltaic industry supply chain advantages, complete industrial support, upstream and downstream linkage effect, capacity and output advantages are obvious, which is the basis for supporting product exports.

At the same time, China's photovoltaic industry continues to innovate and leads the world in technological advantages, laying the foundation for seizing international market opportunities. In addition, digital technology and intelligent technology have accelerated the digital transformation and upgrading of the manufacturing industry and greatly improved production efficiency. 

Photovoltaic core devices are developing in the direction of high efficiency, low energy consumption and low cost, and cell conversion efficiency is the key technical element for the photovoltaic industry to break through the bottleneck.

Under the premise of balancing cost and efficiency, once the solar cells technology with high conversion performance breaks through to mass production, it will quickly occupy the market and eliminate low-end production capacity. The product chain and supply chain balance between the upstream and downstream of the industrial chain will also be reconstructed.

At present, crystalline silicon cells are still the mainstream technology of the photovoltaic industry, which also constitutes the high consumption of upstream raw material silicon, and perovskite thin-film cells, which are considered to be the representative of the third generation of high-efficiency thin-film cells, have significant advantages in energy conservation and environmental protection, design application, and raw material consumption.

At present, the technology is still in the laboratory stage, once the technological breakthrough is achieved, replacing crystalline silicon cells becomes the mainstream technology, and the bottleneck constraint of raw materials upstream of the industrial chain will be broken.

Attention needs to be paid to international competition risks. While maintaining strong demand in the global photovoltaic application market, the international competition in photovoltaic manufacturing industry is intensifying. Some countries are actively planning the localization of production and manufacturing and supply chain localization in the photovoltaic industry, and the development of new energy manufacturing has been elevated to the government level, and there are goals, measures and steps.

At the same time, some countries have introduced measures to restrict the import of China's photovoltaic products out of their own interests, which has a certain impact on China's photovoltaic product exports.

However, from the perspective of time cycle, it will take at least two to three years for these countries to establish a sound photovoltaic industry chain, during which they still need to import overseas products to support the development of domestic infrastructure.

At the same time, taking into account the matching factors of market supply and demand, before 2025 will be the golden period for the development of the domestic photovoltaic industry, and it is also the expansion window period faced by enterprises.

On the whole, the development situation faced by China's photovoltaic industry can be summarized as: high prosperity on the demand side, advantages on the supply side, vigilance against policy influence, and seizing window opportunities.

The demand side is booming. Triple factors promote PV external demand to maintain a high boom: the reduction of kWh cost enhances the core competitiveness of PV; Low-carbon energy transformation promotes PV penetration; Energy security challenges will boost long-term PV demand in Europe.

There are advantages on the supply side. Three characteristics determine the export advantages of China's photovoltaic products: the technological advantages of China's photovoltaic products are leading the world; The supply chain of the photovoltaic industry is highly concentrated in China, and the production capacity and output advantages are obvious; The vertical integration of Chinese PV companies has led to cost reductions.

Be wary of policy implications. Trade policy is the most important variable affecting China's photovoltaic product exports, it is necessary to pay close attention to the relevant trade policies of the photovoltaic industry chain of various countries, and be vigilant against India, the United States, South Korea and some European countries to sanction China's photovoltaic product exports through anti-dumping investigations, basic tariffs, carbon footprint standards, etc., to protect the healthy development of local photovoltaic enterprises.

Seize the window opportunity. Comprehensively considering factors such as market consumption, supply and demand matching, and international competition, it is expected that 2025 will be a watershed in the development of the industry. Before 2025, enterprises are facing a window period of development, and there are opportunities in the window period; After that, the market growth rate will gradually slow down, the industry will enter a reshuffle period, and achieving technological breakthroughs in the industrial chain is one of the main conditions for improving the core competitiveness of enterprises and products.