Basic knowledge of photovoltaic power generation

New Year Outlook for Big Consumption | Can the photovoltaic industry in 2024 “turn around from bad to good”?

New Year Outlook for Big Consumption Can the photovoltaic industry in 2024 turn around from bad to good

Can the photovoltaic industry in 2024 “turn around from bad to good”? At the end of 2023, Shen Wenzhong, director of the Solar Energy Research Institute of Shanghai Jiaotong University, summarized the market’s concerns about overcapacity in 2023 as “no need to panic” and predicted that the photovoltaic industry will be able to return to a thriving situation in the next year or so. He said: “The photovoltaic industry goes through a development cycle every five years, and overcapacity is an inevitable product of the development of the market economy.”

After the continuous decline in prices in the industrial chain and stock prices, can the photovoltaic industry in 2024 turn around? Is it true that “investors’ negative emotions from worry, pessimism, panic, to despair in the photovoltaic power generation sector have been released”? What are the market supply and demand conditions and the predictions of leading companies?

photovoltaic industry supply and demand pattern

With the continuous release of silicon material supply, the nominal capacity of all links in the photovoltaic main industry chain will reach nearly 1000GW by the end of 2023. Even considering the capacity utilization rate discount, it is inevitable that the overall supply and demand relationship of the industry will officially return to the “total surplus” state in 2024.

However, it should also be noted that with the tightening of IPO/refinancing and the “exit” of cross-border photovoltaics, the actual implementation of the planned capacity in 2024 is still uncertain. Guojin Securities stated in its latest research report that the probability of long-term, highly homogenized vicious overcapacity in the industry is significantly decreasing.

“With the continuous bottoming out of photovoltaic profits and the tightening of financing, the commissioning of projects in various links of the industry chain has been delayed. For example, even the leading companies in the industry have recently postponed or reduced the commissioning of some battery cells and polysilicon projects.” A photovoltaic industry insider told the first financial reporter.

The reporter of China Business News noted that in the last two months of 2023, photovoltaic enterprises that announced the postponement of production included Beijing Yuntong (601908. SH), Nenghui Technology (301046. SZ), Oujing Technology (001269. SZ), Jingshan Light Machinery (000821. SZ), Daquan Energy (688303. SH) and other enterprises in various links of the industrial chain.

Since the second half of 2023, there have been more financing termination events in the photovoltaic industry. For example, on November 6, 2023, King Kong Photovoltaic (300093. SH) terminated the original plan to raise 2 billion yuan for the annual production of 4.8GW high-efficiency heterojunction batteries and 1.2GW module projects. On September 27, 2023, Tongwei Co., Ltd. (600438. SH) terminated the original plan to raise 16 billion yuan for the investment of 400,000 tons of high-purity crystalline silicon projects.

Whether the projects of cross-border photovoltaic enterprises announced in 2023 can be promoted as scheduled in 2024 still needs further observation. According to the research report of Guojin Securities, by the end of 2023, the planned capacity of TOPCon (full name Tunnel Oxide Passivated Contact solar cell) of “old players” and new entrants in the photovoltaic industry reached 495GW. However, from a structural point of view, the planned capacity of non-integrated, non-listed, and cross-border enterprises is about 231 GW, accounting for nearly half (48%).

Since the third quarter of 2023, many cross-border enterprises such as Royal Group (002329. SZ), Sunflower (300111. SZ), Letong Shares (002319. SZ), and Aowei Communication (002231. SZ) have terminated or reduced investment in TOPCon, HJT (full name Heterojunction Technology) and other photovoltaic services projects. The industry predicts that the actual implementation of some planned capacity in 2024 may be lower than the expected plan.

Research in the photovoltaic industry focuses on energy storage.
Research in the photovoltaic industry focuses on energy storage.

The most recent example of the termination of cross-border photovoltaics occurred on October 19, 2023. In its reply to the Shenzhen Stock Exchange’s inquiry letter, the dairy company Royal Group stated that considering that TOPCon batteries are heavy asset investments and still require a large amount of capital investment in the future, and the current industry competition is fierce, the company decided to invest limited resources in the core business of ensuring the company’s future sustainable development. Therefore, the investment in the TOPCon high-efficiency solar cell factory project was adjusted accordingly, and the control of the subsidiary Anhui Green Energy (TOPCon project investment entity) was transferred.

2024 photovoltaic industry market prediction

In 2023, Chinese photovoltaic companies handed in a brilliant report card. In terms of installed capacity, according to data from the National Energy Administration, my country’s new photovoltaic installed capacity in the first 11 months of 2023 was 163.88 GW, a year-on-year increase of 149.4%.

However, can the photovoltaic industry maintain such high growth every year?

“Global photovoltaic demand will continue to grow in 2024, but the growth rate will slow down, and it is expected to increase by 20% based on the market in 2023.” LONGi Green Energy (601012. SH) predicted at the third quarter performance briefing in 2023 that there are still many accumulated projects in the implementation process in China, so the domestic market demand will continue to grow. The overseas market has maintained a growth rate of about 20% to 30% for many years, and there is a certain degree of uncertainty in the US market due to anti-circumvention and other control measures.

Li Xiande, chairman of JinkoSolar (688223. SH), said: Because the shipment volume in 2023 far exceeds the original expectation, it will bring pressure to the growth in 2024. I think the growth in 2024 will not be as fast as in 2023, but the market demand will still grow, estimated to be between 20% and 30%.

According to the latest information from the First Financial reporter, JA Solar (002459. SZ) will exceed 100GW in the production capacity of silicon wafers, batteries, and modules in 2024. In 2024, the company has 30GW of crystal pulling, 30GW of slicing, 30GW of batteries, and 10GW of module integrated production capacity projects under construction at the domestic Ordos base, 5GW of battery projects under construction at the overseas Vietnam base, and 2GW of module projects under construction at the US base. After these projects are implemented, the company’s production capacity of silicon wafers, batteries, and modules will exceed 100GW.

TrendForce predicts that the neutral forecast for global new photovoltaic installed capacity in 2024 is 474GW, a year-on-year increase of 16%, which is significantly slower than the growth rate of 59% in 2023.

InfoLink, a third-party industry organization, said that to ensure energy autonomy, some countries have begun to restrict the origin of photovoltaic products in recent years. With the significant decline in the price of photovoltaic modules, the growth of the photovoltaic market in 2024 is still optimistic, and it is expected that the demand for modules in 2024 will still maintain an increase of about 15% to 20%.

“Overall, the growth rate of new global photovoltaic installations is expected to slow down in 2024 and return to rational growth.” TrendForce analyzed that the current insufficient grid capacity and wind and solar power consumption problems have become a key point that restricts the high growth of photovoltaic demand in various countries. The global photovoltaic installation potential can only be further released after the grid completes the phased upgrade or the energy storage installation is increased. “

The International Energy Agency (IEA) predicts that by 2024, in the global photovoltaic industry supply chain layout, all links of my country’s photovoltaic industry chain will continue to dominate the global capacity increase and stock, and the proportion is expected to rise further.

At the end of 2023, Gao Jifan, chairman of Trina Solar (688599. SH), publicly stated during the photovoltaic industry annual meeting that my country’s photovoltaic industry has some deep-seated problems in the process of accelerating its high-quality development, such as fighting alone and disorderly investment, which has led to the industry’s hot and cold and hot alternation.

Many companies whose main business is not new energy have crossed over into the photovoltaic industry, resulting in an accelerated overcapacity. These new companies have technology, talents, and photovoltaic power station operation and maintenance management Insufficient capacity has led to major operational problems. Some companies even stopped production the day they went into production, and are now in a dilemma.

Looking ahead to 2024, Gao Jifan made a series of suggestions, such as suggesting that large state-owned energy companies should no longer adopt the bidding method of low-price winning. Overseas accounts for 60% of global market demand, and low-price winning is rare. He also suggested that industry associations and chambers of commerce organize photovoltaic companies to conduct self-inspection and self-correction, consciously regulate sales behavior, strengthen industry self-discipline, and avoid falling into a loss-making “price war.”

The photovoltaic industry is key to renewable energy solutions
The photovoltaic industry is key to renewable energy solutions

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