Looking forward to 2018, due to the strictness of the indicator management policy, projects that have been built but cannot obtain indicators may no longer appear. Therefore, we believe that the demand-side general indicator projects (general centralized, centralized poverty alleviation, ground distribution) will decrease. 18GW; the scale of the front runner base will be further expanded, it is expected to be around 6-8GW; the distributed power station will continue to have high growth, and it is expected to have 23-25GW; the photovoltaic poverty alleviation will be further enhanced, it is expected to have 4GW, the demonstration power station and other projects are expected to be 4- 5GW, so the domestic installed capacity in 2018 is about 55-60GW, and demand is still strong. The comparison of new PV installation structures in China in 2017 and 2018 is shown in the following table (unit: GW).
The five potential factors have contributed to the continued development of the photovoltaic industry:
1. Potential factor 1: The market is booming in the off-season, and demand is improving.
The first quarter is the traditional off-season of the photovoltaic industry. In December 2017, the National Development and Reform Commission released the price policy for photovoltaic power generation projects in 2018. In 2018, the benchmark electricity price will be lowered from 0.65, 0.75, 0.85 yuan/kWh to 0.55, 0.65, 0.75 yuan/kWh (including tax). “Spontaneous use, the balance of the Internet†distributed photovoltaic is the project subsidy from 0.42 yuan / The kilowatt hour is lowered to 0.37 yuan / kWh. Affected by the benchmark price cut policy, there will be two rushing nodes in China's PV market in 2018. As of March 5, 8 PV front-runner bases and 38 projects have been completed, and each base project has a capacity of 500MW, a total of 4GW. The front runners plan to propose new requirements: the application of the leading base should complete the competition optimization before March 31, 2018, all construction starts before June 30, and all capacity will be built into the grid before December 31. It can be seen that in the second quarter, a new round of rushing of photovoltaics is about to begin, and after the “6.30â€, due to the adjustment of distributed electricity prices, the market will continue to grab until “12.30â€.
Compared with the monthly installed capacity in 2017, we can see that the first quarter is the low season of photovoltaic tradition. As the installed capacity of 6.30 will be significantly improved, distributed photovoltaics will continue to lead the market to maintain a high degree of prosperity in the second half of the year. We believe that from the perspective of the installed structure, there will be no major changes in 2018. Therefore, the second quarter will begin to enter the peak season of procurement, and the prosperity of various industries in PV will be greatly improved.
2. Potential factor 2: The industry chain price has completed a relatively complete down cycle
It can be seen that from the end of 2017, the component link begins to cut prices first. At this time, the prices of other links in the industry are still relatively stable, and even the polysilicon material link is still rising. After entering 2018, the price of components still slowly declined, and the upstream wafers fell off the cliff. After that, the battery segment began to drop sharply. After entering February 2018, the leading enterprises represented by Longji shares once again actively cut prices, while the silicon material ends. Start to cut prices sharply. The industrial chain price has completed a relatively complete down cycle, and we expect prices to start to stabilize in various industries as demand starts to improve in the second quarter.
In 2018, the monocrystalline silicon wafer leading Longji shares were adjusted three times. At present, the domestic price of monocrystalline silicon wafers is 4.55 yuan/piece, and the foreign price is 0.63 US dollars. The total price reduction is 0.85 yuan/piece. At the same time, the price of polysilicon in January and February of 2018 showed a clear trend of “falling cliffsâ€. At the beginning of February, the price of polysilicon fell instantly and fell. At the end of February, the price was 126,600 yuan/ton, a drop of 18.6%. The average price in February was 129,600 yuan/ton, down 15.3% from the previous month. The connection between the battery and the components is relatively stable. We believe that after the first quarter of the off-season, after the price has been greatly adjusted, the second quarter will soon be rushing to the market, and the price of each link will stabilize.
3. Potential factor 3: India's anti-dumping policy may be withdrawn
According to Indian media reports, India’s anti-dumping laws on imports of solar panels and components for China, Taiwan and Malaysia have been withdrawn. There is also a high probability that the lawsuit on the domestic solar industry protection law in India will be lost. The hearing on the Indian solar industry protection law was postponed until March 9 at the Madras Supreme Court. As a representative of the emerging markets of photovoltaics, India is rapidly emerging. In 2017, India's new solar installed capacity will reach 9.6GW. In March 2018, India has begun to openly bid for 3GW of PV projects, and 8GW projects will be completed by the end of March. It can be seen that the Indian market is already a "new battlefield" for global photovoltaics. Therefore, some experts also said that 70% of import tariffs will greatly increase the cost of local photovoltaic electricity, which is undoubtedly a major blow to the industry's progress. However, low-priced imported products have a big impact on local manufacturing. Therefore, India needs to balance between “cheap electricity†and “local manufacturingâ€.
India's solar industry is growing at an exponential rate, with a growth rate of 900% over the past three years. Due to the current specific tax rate and uncertainty of the collection time, the solar market developers in the Indian market have been in a difficult position: not sure whether to continue bidding, or what will happen during the project production phase. All stakeholders are waiting for the final conclusion of the government.
For Chinese companies, anti-dumping is not new. Some companies have already set up factories in India through investment or joint ventures to face increased tariffs. Referring to the US "201" bill, a 30% tariff on imported solar products will not significantly improve the market competitiveness of the local industry. Instead, it will kill the growth of the photovoltaic industry and reduce the number of local employment. Therefore, we believe that the final result of this Indian anti-dumping program will be better than market expectations.
4. Potential factor 4: The bidder's bid price is 0.39 yuan/kWh, which drives the parity online expectation.
On March 5th, the bidding deadline for the leader of Jilin Baicheng project, the bidding company has reported the bidding price of 0.39 yuan/kWh in multiple bidding sections, and refreshed the bidding price of China's PV project bidding. The on-grid price of the desulfurized coal-fired benchmark in the project site is 0.3731 yuan / kWh. If the quotation of 0.39 yuan is won, it is only 4.5% higher than the local coal-fired on-grid price. Basically, the industry has achieved the "power generation side parity online" industry.
In 2016, in the bidding of the Wuhai base in Inner Mongolia, there has been a quotation of 0.45 yuan / kWh. In the past two years, the cost of component parts has dropped rapidly, which greatly reduced the initial investment cost. At the same time, compared with the second batch of projects, the Energy Bureau is in the first In the three batches of front-runner base projects, strict control over various non-technical costs and external costs that may occur, such as land rent limits and joint construction of external routes, has greatly improved the investment environment of the third batch of projects. It also reduces the cost during operation. Therefore, we also have reason to believe that the quotation of 0.39 yuan is not the intentional vicious competition of enterprises, but the confidence to achieve profit through technological innovation and cost control. At the same time, from the perspective of the price reduction of various links in the industry chain in 2018, silicon wafers and silicon materials are the first to reduce prices, and the trend will be further transmitted to the falling cells and components. Therefore, the technical cost of the project undertaker will be greatly reduced.
The initial investment cost of photovoltaic power plants accounts for 43% of the total investment. The decline in component prices will greatly increase the initial capital investment. At the same time, it can be seen that in addition to the depreciation expenses during the operation period, the largest proportion is the land rent and land tax. The Project Energy Bureau has focused on the control of non-technical costs. Therefore, the expenses incurred during the operation period of the project undertaker will also be improved. Therefore, we believe that there will be more bids in the future that tend to be "flat". Helping the parity road of the photovoltaic industry.
5. Potential factor five: the industry threshold is further improved
The Ministry of Industry and Information Technology recently disclosed that in order to promote the sustainable and healthy development of China's photovoltaic industry, the "Regulations on Photovoltaic Manufacturing Industry (2018)" was officially released. The "Conditions" put forward comprehensive requirements for photovoltaic manufacturing enterprises in terms of production scale, process technology, comprehensive utilization of resources, energy consumption, environmental protection, and quality management.
The "Conditions" clarify that the new photovoltaic manufacturing projects that simply expand production capacity are strictly controlled, and the photovoltaic enterprises are guided to strengthen technological innovation, improve product quality, and reduce production costs. Newly built and expanded polysilicon manufacturing projects, the minimum capital ratio is 30%, and other new and renovated photovoltaic manufacturing projects, the minimum capital ratio is 20%.
Existing photovoltaic manufacturing enterprises and project products should meet a series of technical indicators, in which the minimum photoelectric conversion efficiency of polycrystalline silicon cells and monocrystalline silicon cells is not less than 18% and 19.5%, respectively; silicon-based, copper-indium gallium selenide (CIGS) The minimum photoelectric conversion efficiency of cadmium telluride (CdTe) and other thin film battery modules is not less than 8%, 13%, 12%, and 10%, respectively. The technical requirements for new and rebuilt enterprises and project products are even higher: the minimum photoelectric conversion efficiency of polycrystalline silicon cells and monocrystalline silicon cells is not less than 19% and 21% respectively; silicon based, CIGS, CdTe and other thin film battery components The minimum photoelectric conversion efficiency is not less than 12%, 14%, 14%, and 12%, respectively.
The "Conditions" also clarify that if existing PV manufacturing enterprises and projects fail to meet the requirements of the regulatory requirements, according to the requirements of industrial transformation and upgrading, under the guidance of the national industrial policy, through mergers and acquisitions, technological transformation, etc., as soon as possible to meet the requirements of this standard Claim.
This "Condition" puts forward higher requirements for the industry, which is a big change from the previously implemented "Regulations on Photovoltaic Manufacturing Industry (2015)." Mainly manifested in: (1) the regional conditions for individual construction of photovoltaic manufacturing projects should not be relaxed; (2) the minimum capital requirement for polysilicon manufacturing projects should be increased; (3) the actual production requirements for the previous year should be increased when the declaration conforms to the list of specifications; ) The photoelectric conversion rate of batteries and components, the Chinese weighting efficiency requirements of inverters are improved; (5) the component attenuation rate requirements are increased; (6) the current polysilicon project power consumption, battery project power consumption and water consumption requirements are improved; (7) the environment Protection requirements have increased.
It can be seen that this "condition" raises the threshold of the industry, puts forward higher requirements for existing enterprises, further accelerates the survival of the fittest, and the industry concentration will be further improved. The overall market competition pattern will improve, and the leading bargaining power will be further enhanced.
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