Nov 20, 2020
Driving and restricting factors of China's photovoltaic inverter industry
1.1 The photovoltaic inverter industry chain is gradually improving
According to data from China Photovoltaic Industry Association, China's polysilicon production in 2018 was 254,000 tons, a year-on-year increase of 5.0%; silicon wafer production was 109.2GW, a year-on-year increase of 19.1%; crystalline silicon cell production was 87.2GW, a year-on-year increase of 21.1%; module output It was 85.7GW, a year-on-year increase of 14.3%. The production scale of all links in the industrial chain accounted for more than 50% of the world, and it continued to rank first in the world. In the past two years, Chinese departments at all levels have attached great importance to the photovoltaic industry and continuous technological innovation. China has established its mature and complete full photovoltaic industry chain, and the production capacity of each link in the industry chain has continued to expand, costs continue to fall, and efficiency continues to increase. This has promoted the explosive growth of China's photovoltaic installed capacity.
Driven by the background of the gradual improvement of the industrial chain, the production cost of photovoltaic cells in China has continued to decline. The diamond wire cutting technology has been fully popularized in the field of mono-polysilicon. The use of this technology improves the production and thinning efficiency of silicon wafers, and the thinning of silicon wafers is an important help for the reduction of battery costs, so the large-scale application of the technology can directly reduce The production cost of photovoltaic cells. Using diamond wire to cut monocrystalline silicon wafers, measured at a thickness of 190um, for every 10um drop in diamond wire diameter, the cost can be reduced by about 0.15 yuan/piece, the production capacity can be increased by 4%, and the cost can be reduced. On the other hand, due to the fact that grid parity has not yet been achieved, the prices of photovoltaic products have fallen further, prompting photovoltaic cell manufacturers to continue to reduce costs. Under the influence of market forces, upstream manufacturers in China's photovoltaic industry are reducing raw material production costs by expanding production scale, improving product conversion efficiency, and reducing consumables costs. As far as the development of the photovoltaic industry is concerned, the improvement of the industrial chain and the market force mechanism will further promote the development of the photovoltaic manufacturing industry.
1.2 The continuous growth of photovoltaic installed capacity provides more market space for photovoltaic inverters
Under the influence of policy guidance and market-driven factors, China's photovoltaic market has steadily expanded. According to Sullivan data, the photovoltaic industry is developing rapidly. The installed capacity of photovoltaic power generation in China increased from 28.0GW in 2014 to 174.4GW in 2018, with a compound annual growth rate of 58.0%, of which centralized power stations and distributed photovoltaic power stations were 123.8. GW and 50.6GW. The expansion of the installed photovoltaic power generation market has further accelerated the production of photovoltaic inverters and promoted the development of the photovoltaic inverter industry.
At the same time, the "Twelfth Five-Year Plan for Solar Energy" issued by the China Energy Administration in 2010 pointed out that the installed capacity of distributed photovoltaic power generation is not restricted by indicators in areas where solar abandonment is severe in the west, and the original 0.42 yuan/kWh Subsidies will not be reduced. The purpose of this policy adjustment is to vigorously promote distributed photovoltaic power generation. According to Sullivan’s data, the scale of the distributed photovoltaic power generation market has grown from 4.6GW in 2014 to 50.6GW in 2018, with a compound annual growth rate of 82.4%. A big thrust for the development of the inverter industry. Driven by the expansion of the number of installed photovoltaic power generation and photovoltaic policies, China's distributed photovoltaic inverters will continue to develop. It is expected to grow at a compound annual growth rate of 34.5% from 2019 to 2023, and will exceed 220GW in 2023. .
1.3 Favorable policies promote the development of the photovoltaic inverter industry
In recent years, the dividend policy has been an important thrust for the development of photovoltaic power generation and photovoltaic inverter industries. China has issued a series of policies to support the development of the photovoltaic industry. In 2013, the China Development and Reform Commission issued the "Notice on Utilizing Price Leverage to Promote the Healthy Development of the Photovoltaic Industry", stating that new ground-based power stations are divided into three types of electricity price subsidies based on the quality of light resources. In the same year, the State Council of China issued "Several Opinions on Promoting the Healthy Development of the Photovoltaic Industry", which pointed out the need to expand the domestic market, improve the technological level, and accelerate industrial transformation and upgrading. In 2014, the State Council of China issued the "Energy Development Strategic Action Plan (2014-2020)", which pointed out the need to adhere to the strategic policy of "saving, clean, and safe" and accelerate the construction of a clean, efficient, safe and sustainable modern energy system. In 2015, the China Energy Administration issued the "Opinions on Promoting the Application and Industrial Upgrading of Advanced Photovoltaic Technology Products", which mentioned that differentiated market access standards should be adopted according to photovoltaic technologies and products at different development stages to support advanced technology products to expand the market. Speed up the elimination of technologically backward products, accelerate the progress of photovoltaic power generation technology and industrial upgrading.
In 2016, the China Development and Reform Commission mentioned in the "Opinions on Implementing Photovoltaic Power Generation Poverty Alleviation Work" that photovoltaic poverty alleviation projects will be implemented in poverty-stricken areas across the country with photovoltaic construction conditions, and photovoltaic poverty alleviation construction models and construction sites will be selected according to local conditions.
In 2018, the Ministry of Industry and Information Technology of China issued the "Smart Photovoltaic Industry Development Action Plan (2018-2020)", which mentioned that it will plan to promote the intelligent upgrade of photovoltaic basic material production, support the mechanization and automation of polysilicon production, transportation and packaging, and improve photovoltaic products Full-cycle information management level, encourage enterprises to adopt information management systems such as enterprise resource planning ERP, production process execution system MES, etc., to achieve full information management of production processes such as product design, research and development, supply, and inventory management.
The introduction of the policy will be conducive to opening up the domestic photovoltaic inverter application market in China, establishing a photovoltaic product production, sales and service system adapted to the Chinese market, forming a market environment conducive to the sustainable and healthy development of the industry, and promoting the downstream demand of the photovoltaic inverter industry Expansion, driving the development of the photovoltaic inverter industry.
2.1 Subsidies have gradually declined and the profitability of the photovoltaic industry has slowed. As the current cost of photovoltaic power is still high, the development of the photovoltaic industry still relies on government subsidies. After the country and local governments have strongly supported the subsidy policy for photovoltaic power generation in recent years, China has entered In the era of national photovoltaics, photovoltaic power generation has entered a stage of explosion, and the installed capacity of photovoltaic power generation across the country has continued to increase significantly every year. According to the development plan formulated by the state, the subsidy policy for photovoltaic power generation will be withdrawn in 2020, and the photovoltaic industry will enter the market-oriented operation stage to achieve parity on the Internet. In addition to the national photovoltaic subsidy policy declining year by year, the photovoltaic power generation subsidy policies issued by various local governments have also been cancelled or will soon expire. In addition to the gradual cancellation of the original subsidies, the originally promised subsidies may not be fulfilled or paid overdue. The year-on-year reduction of benchmark electricity prices and the gradual withdrawal of subsidies will force companies to achieve independent profitability as soon as possible, and the goal of reducing production costs is imminent. For the photovoltaic inverter industry, the slowdown of government subsidies for the photovoltaic industry will further affect the production and manufacturing of midstream photovoltaic inverters, and the overall industry profitability will slow down.
2.2 Low-cost control restricts the technological development of the photovoltaic inverter industry
As one of the core equipment of the photovoltaic power generation system, the R&D and manufacturing process of photovoltaic inverters involve a wide range of technologies, covering a variety of technologies such as power electronics technology and power conversion technology. The key performance of photovoltaic inverters, such as conversion efficiency, will directly affect the power generation revenue of photovoltaic power generation systems. Therefore, the development of photovoltaic inverter technology is of great significance to the development of the industry. The development of photovoltaic inverter technology directly depends on the development and demand of the photovoltaic application market. From the perspective of the development of the photovoltaic power generation market at this stage, China’s photovoltaic inverters will develop in the megawatt-level direction in the next three to five years, while gradually increasing the For the power and conversion efficiency of the converter itself, IC is used to replace separate electronic components.
At present, with the introduction of policies to reduce the photovoltaic inverter market, the vicious price competition in China's photovoltaic inverter market is becoming increasingly serious. In order to achieve profit in the fierce market competition, companies usually use the replacement of electronic components, the replacement of raw materials, or the specification of integrated circuits to control costs to achieve established market profits. This vicious competition trend will directly affect the performance of photovoltaic inverter products, restrict the production technology of photovoltaic inverters to a certain extent, and hinder the development of the industry.
2.3 The New Deal restrictions on photovoltaics exceed market expectations, and the midstream of the industry is under greater pressure
On June 1, 2018, the National Development and Reform Commission, the Ministry of Finance, and the Energy Administration of China jointly issued the "Notice on Matters Related to Photovoltaic Power Generation in 2018", the key contents of which include: ①No provision for 2018 ordinary photovoltaic power plant indicators, benchmark electricity prices Respectively reduce by 0.05 yuan/kWh, and the photovoltaic benchmark on-grid electricity prices in category I, II, and III areas are reduced to 0.5, 0.6, and 0.7 yuan/kWh respectively;
②Distributed photovoltaic power generation: Only those connected to the grid before May 31 can be included in the central financial subsidy; from June 1st, the subsidy of electricity per kilowatt-hour will be reduced by 0.05 yuan/kWh to 0.32 yuan/kWh;
③Photovoltaic poverty alleviation project: The benchmark electricity price policy remains unchanged, that is, the categories I, II, and III are 0.65, 0.75, and 0.85 yuan/kWh respectively;
④ "Lead Runner" project: This year, we will conduct further research based on the scale control of photovoltaic power generation.
The issuance of the notice aims to solve the problems of overcapacity in the photovoltaic industry, photovoltaic consumption, and solar abandonment. However, the introduction of this new photovoltaic policy has exceeded market expectations, and to a certain extent directly restricted the production and operation of the photovoltaic inverter industry in the middle reaches of the industrial chain. The outbreak of downstream demand in the industry has led to continuous growth in the demand for silicon materials at the uppermost end of the industry. The supply and demand of silicon materials have gradually appeared gaps, and the prices of silicon materials have risen steadily. However, the prices of downstream photovoltaic products have dropped repeatedly. Because of the impact of the New Deal, domestic demand has decreased, which has put inventory pressure on companies, and companies have to sell products at low prices in order to obtain cash flow. The increase in the price of upstream silicon materials and the decrease in the price of downstream products will continue to compress the profitability of the photovoltaic inverter industry in the midstream, and photovoltaic inverter manufacturers will face tremendous pressure to survive.