Photovoltaic Industry Faces Price Pressures but Sees Strong Long-Term Prospects
Photovoltaic Companies Struggle with Overcapacity and Price Drops
At the recently held 2024 Photovoltaic Market Development Forum, China photovoltaic (PV) component company highlighted the industry’s current challenges.
“A PV module workshop with an annual capacity of 1 GW, employing 230 workers continuously for a month, would incur a loss of 5 million yuan due to significant price drops in modules.
If the workshop halts production and gives the employees paid leave, it could save on utility and equipment depreciation costs.”
Challenges in the Current Market
The PV industry is a strategic emerging industry in China with a complete industrial chain, active technological research, and continuous scale expansion.
The total industry output value has exceeded 1.7 trillion yuan. However, since 2023, the PV industry has entered a “clearance sale” mode, with prices of polysilicon and modules falling by more than 50%, below production costs, causing significant profitability pressure on companies.
Despite the global increase in PV installations, why are prices falling? What will the future of the PV market look like? And what key issues need urgent attention?
Rational View on Temporary Fluctuations
In 2023, significant expansion in polysilicon, silicon wafer, cell, and module production has led to market oversupply. “Prices have dropped too much.
TOPCon and heterojunction (HJT) cells are being sold at a loss, which is not a reasonable pricing system,” noted Tian Jiehua, Senior Director of Product Development Management at Anhui Huasheng New Energy. The market has a self-regulating function, and when some companies can’t cover their losses, they will naturally be eliminated, and PV product prices will return to reasonable levels.
“Chasing low prices is detrimental to the long-term development of the PV module industry,” said Yin Haibin, Domestic Technology Head of the PV Business Department at Tongwei Co., Ltd. Rapid technological updates in PV modules, such as TOPCon, HJT, and perovskite/hybrid BC technologies, mean that large-scale production adjustments are challenging in the short term.
“The PV industry chain’s prices are relatively transparent, and each segment must retain a reasonable profit margin.”
Balancing Manufacturing and Development
“This is a painful period for manufacturing companies but a joyful one for development companies. However, it will eventually adjust to a relatively balanced state,” said Tang Zhengkai, Strategic Product and Market Director for China at Trina Solar.
While continued cost reductions will increase investment profit margins for PV power plants, most of these profits are currently captured by the development sector, which is inherently unbalanced.
“PV power is not yet a stable energy source, and profit margins should be invested in making PV power more stable and friendly.”
Positive Long-Term Outlook
Despite fierce market competition, industry insiders believe the PV industry will continue to grow rapidly.
Tao Ye, Deputy Director of the Renewable Energy Center at the China National Development and Reform Commission’s Energy Research Institute, noted that with the further transmission of renewable energy consumption responsibilities to key energy-using enterprises and end-users, the whole society’s green consumption awareness will increase, leading to rapid growth in green power consumption in outward-facing industries, high-tech equipment manufacturing, and modern services. The scale of green power trading is expected to multiply.
Tao expects that by 2024, non-fossil energy generation capacity in China will reach 55%, with wind and solar power accounting for over 17% of total power generation. Non-fossil energy consumption will increase to about 18.9%, with a continued rise in terminal electricity consumption.
International Green Transition Consensus
Yin Haibin highlighted international commitments, such as those from COP28 and the China-U.S. Joint Statement on Addressing Climate Crisis, aiming to triple global renewable energy capacity by 2030. “Global renewable energy capacity will reach around 11,000 GW.
For the PV industry, global installed PV capacity will increase from 1,054 GW in 2022 to 5,457 GW by 2030, with an annual increase of about 550 GW. We remain optimistic about the PV industry’s growth in the coming years.”
Han Bo Yu, Global Solar Solutions Director at JinkoSolar, predicted that the global mainstream PV market will grow by over 24% in 2024. “Last year, the top four companies accounted for 57% of total shipments, and the top seven for 73%. This year, competition will intensify, further amplifying the advantages of leading companies. The top four companies are expected to exceed 60% market share.”
This overview of the photovoltaic industry highlights the current challenges and the optimistic long-term outlook, reflecting the ongoing efforts to balance manufacturing and development while maintaining a strategic focus on technological innovation and global market expansion.