The photovoltaic industry's "involutionary" production expansion wave has caused controversy, and hidden worries have emerged?

The photovoltaic market continues to be vigorous, and the "involution" expansion of the photovoltaic industry has caused controversy.

Data from the China Photovoltaic Industry Association shows that from the beginning of 2021 to November 2022, there are more than 480 planned photovoltaic production expansion projects in my country. Under the background of "double carbon", the demand for photovoltaic installed capacity is more certain to rise. According to analysis and judgment by CITIC Securities, in 2023, my country's newly installed photovoltaic capacity will reach approximately 140 million kilowatts. Especially with the release of new production capacity in silicon materials and other sectors starting in 2023, costs have gradually fallen. The installed capacity of ground power stations, which was previously suppressed by low yields, may recover. The proportion of installed capacity is expected to increase. It is expected that the year-on-year growth rate of ground power stations is expected to reach 80%. Distributed is also expected to maintain a growth rate of nearly 40%.

The wave of production expansion has triggered concerns about overcapacity

Strong demand has prompted companies to rush to expand photovoltaic production.

It is reported that Hengdian DMC continues to expand its production of photovoltaic modules. At the end of November 2022, Hengdian DME announced that it planned to invest 10 billion yuan to build a new high-efficiency battery with an annual output of 20GW in Yibin, Sichuan, with a total investment of approximately 3.554 billion yuan. At the same time, the company also announced the construction of a new high-efficiency module project with an annual output of 5GW in Lianyungang, Jiangsu, with a total investment of approximately 899 million yuan, and the two investments totaled approximately 4.5 billion yuan.

In addition, giants such as Longi Green Energy and JinkoSolar are aggressively expanding production, and cross-border players such as Shijing Technology are also entering the photovoltaic market in a big way. As more and more companies join the ranks of photovoltaic production expansion, industrial competition has intensified, causing the photovoltaic industry to worry recently that the wave of photovoltaic production expansion may lead to the risk of overcapacity.

Since the end of last year, all photovoltaic industry chains have been gradually reducing prices, with the most obvious performance being components and cells. Some people think that this is due to the wave of price cuts caused by the oversupply of the photovoltaic industry. This statement has some truth. In early January this year, silicon materials ushered in a wave of price cuts. The Silicon Industry Branch of the China Nonferrous Metals Industry Association stated that this was due to the high inventory status of silicon wafer companies in the early stage. The actual and expected demand for silicon materials weakened significantly. During the same period, silicon material companies expanded. The production increase is still continuing to be released, which shows that the oversupply situation in the silicon material market has led to a sharp decline in silicon material prices recently. Of course, with the iteration and self-adjustment of production capacity, the prices of silicon materials and all aspects of photovoltaics are bound to usher in steady development.

Looking back on history,The photovoltaic market has also seen overcapacity caused by the wave of production expansion. In 2012, the global photovoltaic new market growth rate was only 6%, and the global polysilicon production capacity exceeded 400,000 tons, while the actual output and demand were only 236,000 tons and 230,000 tons, far below the production capacity level. Affected by this, photovoltaic products have declined sharply, production capacity utilization has been seriously insufficient, and enterprises have difficulty in production and operation.

Photovoltaic companies have both difficulties and opportunities

Photovoltaic is a technology-intensive and capital-intensive industry. The technical barriers of photovoltaics are relatively high and are not easy to break through. One is the silicon material link, and the other is the cell link. In addition, the photovoltaic industry is rapidly updating and iterating, and the technical routes chosen by each enterprise are also different. If an enterprise invests a large amount of money and has a biased judgment on the development trend, without the low cost and competitiveness brought by leading technology, the enterprise will are facing great risks.

Of course, there is no need to be too pessimistic about photovoltaic overcapacity. On the one hand, the current global photovoltaic development is still in its early stages and has huge potential for future development. my country's photovoltaic development "going global" situation is improving, and it has a strong competitive advantage in the global market, accounting for more than 70% of the global market. Industry insiders said that my country's photovoltaic production capacity corresponds to the global market. Judging from the annual installed capacity in the global market and China's production capacity, the problem of photovoltaic overcapacity is not obvious.

On the other hand, fierce competition is conducive to forging better companies. Under free market competition, overcapacity is difficult to avoid. In order to continue to outperform the photovoltaic market, companies must expand new production capacity, develop lower-cost products, and rapidly advance, lock in technology, improve talent reserves and technical levels, and occupy a place in the fierce market competition.

Original title: Are hidden worries about photovoltaic production expansion emerging?