After the Energy Bureau's "11.2" meeting, the prosperity of the photovoltaic industry has significantly rebounded. Adjusting policies will provide impetus for the sustained and stable development of the photovoltaic industry. In 2019, we conservatively estimate that the newly added 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. India, the United States, and Europe have seen significant market growth, with foreign market demand expected to be around 80GW in 2019.
1、 2019 domestic market will return to normal
2018 is destined to be an extraordinary year for the photovoltaic industry. From the "5.31" New Deal to the "11.02" Energy Bureau Conference, the photovoltaic industry experienced significant fluctuations, with industry chain prices generally falling by about 30%. The new policy of photovoltaic "531" has brought the prices of the industrial chain to a low level in a short period of time, alleviating the pressure of subsidies, and unintentionally accelerating the arrival of the era of affordable internet access.
In 2018, a total of 44.26GW of new installed capacity was added, a year-on-year decrease of 19.7%, including centralized 23.3GW and distributed 20.96GW. It can be seen that after "5.31", the domestic installation 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 Administration recently issued the "Clean Energy Consumption Action Plan (2018-2020)", requiring significant results in clean energy consumption in 2018 and a basic solution to the problem of clean energy consumption by 2020. According to the action plan, in the next three years, it is necessary to ensure that the national average utilization rate of photovoltaic power generation is above 95%, and the waste light rate is below 5%. The photovoltaic rejection rate has significantly decreased in the past three years, entering 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 "5.31" correction has been unanimously recognized by the entire market. Currently, the electricity price adjustment policy and construction scale plan have given the market clear expectations, and these adjustment policies will provide impetus for the sustained and stable development of the photovoltaic industry.
2、 Bright export data and vast overseas market space
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%. Component exports reached 41GW, a year-on-year increase of 30%. Silicon wafers and battery cells are affected by price fluctuations, resulting in a decrease in export prices and an increase in both component exports and export volumes, with the proportion also increasing 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 was 25% from July 30, 2018 to July 29, 2019, 20% from July 30, 2019 to January 29, 2020, and 15% from January 30, 2020 to July 29, 2020. The implementation period of this policy is only 2 years, so the motivation for Chinese manufacturers to build factories in India is not strong. At the same time, this policy only targets China and Malaysia, and currently some manufacturers have expansion plans in Indonesia and Vietnam, and related products will not be subject to tariff restrictions.
India is a populous country with abundant lighting resources, but lacks electricity. India is vigorously developing solar energy and other clean energy at a rapid pace. The Institute of Energy Economics and Financial Analysis previously predicted that an additional 11GW of installed capacity is expected to be added in 2019, which is expected to become the world's second largest market. Meanwhile, India is expected to accumulate 100GW of installed capacity by 2020. But India's domestic production capacity is limited and heavily relies on Chinese imports. According to CPIA data, more than 90% of India's new installed capacity in 2017 relied on imports for components, and over 80% imported from China.
The US market: The trade protection measures of the "201" Act are specifically divided into two parts: photovoltaic cells and modules. For photovoltaic cells, the United States is exempt from tariffs on imported batteries within 2.5 gigawatts per year. If the total import volume exceeds 2.5 gigawatts, special tariffs will be imposed. The tax rate will decrease year by year from 30% in the previous year, 5% per year, and 15% per 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 photovoltaic capacity in the United States will be around 12GW in 2019. In the next five years, the photovoltaic installation in the United States will double. By 2023, the annual installed capacity of the United States will reach 14GW.
European market: On September 3, 2018, the European Union ended its five-year double anti trade policy against China and lifted the MIP (Restriction clause) against China. In 2017, Europe installed 8GW of components, with most of them coming from Southeast Asia and Taiwan. China's exports only accounted for about 25%. In 2018, Europe had an overall installed capacity of 11GW, with significant demand growth. The IEA predicts that the new installed capacity of new energy in Europe is expected to double, and a decrease in component prices is expected to stimulate an annual average of 3-5 GW of new installed capacity.
3、 Parity approaching, batteries remain the core of cost reduction
After the 2018 photovoltaic new policy, there has been a significant decline in domestic component prices and BOS costs. Currently, components 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 established installed capacity, the use of high-power components can reduce the number of components used, and correspondingly reduce the construction and installation costs of 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 Chinese residents, large industries, and businesses are 0.52 yuan/KWh, 0.61 yuan/KWh, and 0.83 yuan/KWh, respectively. Photovoltaics have achieved parity on the user side. In terms of power generation, domestic target projects have played a positive role in promoting electricity prices, which are a relatively high weight indicator in project bidding (accounting for 35%). Overall, the average online electricity price of the third batch of guiding targets is 0.427 yuan/KWh, with an average subsidy of 0.081 yuan/KWh, an average subsidy reduction of 0.365 yuan/KWh, and an average subsidy reduction of over 80%. Golmud and Delingha respectively reported lower electricity prices of 0.31 yuan/KWh and 0.32 yuan/KWh, both lower than the local desulfurization coal price of 0.3247 yuan/KWh, indicating the dawn of parity on the power generation side.
Recently, among the top batch of affordable online projects in China, photovoltaic power generation projects account for approximately 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 cost reduction path will still revolve around batteries. The structure of PERC technology is simple, and the production line is easy to transform. It only needs to add two steps of coating and laser marking on the basis of the existing process. The technical difficulty is relatively small, and the equipment investment cost is low. It is the preferred path for batteries in the industry. At present, P-type batteries are dominant in PERC batteries, but P-type components exhibit light decay. The N-type component has no light attenuation and obvious advantages in efficiency and stability. The requirements for component efficiency and stability in the future market will continue to increase, and the N-type is more suitable for making 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 batteries will increase from 3.5% in 2016 to 30% in 2025. In recent years, a number of crystalline silicon battery technologies have emerged, including wet process black silicon (MCCE), back passivation (PERC), heterojunction battery (HIT), full back electrode contact crystalline silicon photovoltaic cell (IBC), and N-type double-sided, opening up channels for future cost reduction.