The sorrow of raw materials prices of photovoltaic companies

Editor's note: No one is willing to ruin a huge amount of compensation, but continued performance may be dragged to death. The performance of the three large-scale PV companies that have already announced the quarterly report are at a loss. After the domestic market has already opened, why is there a large-scale breach of contract?

The price of silicon wafers plummeted and disrupted China The original pace of photovoltaic enterprises. A month ago, Wuxi Suntech announces termination with M EMC's 10-year cooperation agreement. To this end, Suntech paid $212 million in damages.

After Suntech announced the breach of the contract, the gate seemed to be opened at once, and some PV companies said that they "do not rule out the possibility of breach of contract."

No one is willing to sever a huge amount of compensation, but continued performance may be dragged to death. The performance of the three large-scale PV companies that have already announced the quarterly report are at a loss.

After the domestic market has already opened, why is there a large-scale breach of contract?

Experts said that the breakdown of contracts by individual companies should be regarded as an enterprise phenomenon. If most companies in the industry ruin the contract, it reflects the market law. The price reduction in the PV market has become an industry development trend. According to industry insiders, after the opening of the Chinese market, it is imperative to establish a standard certification system as soon as possible.

Corporate injury

After the termination of the contract, Suntech will no longer need to purchase approximately 4.6 GW of wafers between 2011 and 2016. It is expected to save approximately $400 million in costs for Suntech Power over the next five years.

Five years ago, Suntech signed a 10-year silicon supply agreement with MEMC, with a time limit from 2006 to 2016. Previously, when the supply of silicon was tight, MEMC gave Suntech a price of 40 US dollars per piece, which is equivalent to half of the current market price. Today, the price is around $3 per piece.

In a supplementary document to the 2010 annual report submitted by Jingao, the company may terminate the purchase contract if the current price is significantly lower than the long-term contract price and the satisfactory purchase price and quantity cannot be obtained through renegotiation. Of course, in this case, Jingao will incur losses in prepayments and damages. If the parties to the agreement cannot reach an agreement on the settlement of compensation, it will inevitably lead to litigation.

"Jingao Solar energy is really a dilemma. The next step is to watch the market. A few days ago, Jingao Solar told reporters.

It is understood that Suzhou Artes, Changzhou Tianhe, etc. Photovoltaic modules and battery manufacturers are facing such a situation.

" At the highest price of polysilicon, it reached $400-$500 per kilogram, but now the price has dropped to $50 to $60 per kilogram. Meng Xianyu, vice chairman of the China Renewable Energy Society, told reporters that the long-term destruction of photovoltaic companies is a corporate behavior and cannot simply rise to industry behavior, but this reflects to some extent the arrival of the low-cost photovoltaic era.

Meng Xianyu said that in the past few years, Suntech had ensured that production could proceed normally. When the price of polysilicon was relatively high, it signed a long-term contract with polysilicon manufacturers. This was desirable at the time, and “the silicon is the king”. But nowadays, in the face of the maturity and perfection of the photovoltaic market, the low prices of raw materials in the past have now become high prices. "Because of the huge investment in polysilicon, Suntech's profit last year was only about 20%, while Yingli reached 30%. The latter is more flexible in terms of polysilicon pricing and will not be subject to raw material suppliers."

Jing Tonggang, a spokesperson for Jinglong Industrial Group, told reporters that PV development still needs government subsidies and support. The current PV industry is still mainly in Europe, but European countries have reduced subsidies for PV, which has greatly affected market performance. At the same time, due to the impact of the economic crisis, European economic development has been constrained, and the economic downturn has led to a decline in PV investment. "With the maturity of the photovoltaic industry technology, the improvement of the industry and the popularity of photovoltaics, price cuts are a matter of time." Duan Tonggang said.

CIC Consultant Shen Hongwen, a researcher in the new energy industry, said in an interview that the current decline in polysilicon prices far exceeds that of PV companies. The original contract price is higher than the actual market price. From the current situation, polysilicon prices continue to decline. In this case, the PV company's continued execution of the contract means more losses, so PV companies, including Suntech, prefer to pay liquidated damages and are unwilling to continue to perform the contract. The national unified photovoltaic grid tariff has been introduced, although the price is not high, but it can already ensure the area of ​​the light-rich area Photovoltaic power plants are profitable. For PV companies, their profits come from further reducing the cost of photovoltaic power generation. Under the incentives of benchmarking electricity prices, the lower the cost of photovoltaic companies, the higher the profits.

Standard absent pain

In recent years, the bottleneck restricting the development of China's photovoltaic industry is mainly On-grid tariffs and PV on-grid tariffs are the golden key to opening up the domestic PV market. Although the on-grid price is low, its introduction marks the real start of China's photovoltaic market, which will benefit the development of the photovoltaic industry.

“The opening of the Chinese market is good news for domestic and foreign PV companies. However, compared with foreign certification and testing standards, China’s certification is equal to blank.” Jingao’s relevant person said.

"At present, in addition to the Golden Sun standard, there is no testing and certification system and standards for the photovoltaic industry." Meng Xianyu said, "After all, the Chinese market has just opened, and the solar power management system has yet to be gradually improved and improved."

"Compared with domestic product certification, the foreign certification system is very perfect." Zhu Cuihan, vice president of Zhejiang Renewable Energy Association, told reporters that Chinese products must pass product certification when entering the international market. The general certification time is Half a year to a year or so, it is expensive and requires certification every year. “The European and American certification standards are different.” That is to say, Chinese products entering the European and American markets require separate product certification.

It is understood that there are two main sets of standard systems for photovoltaic industry certification, one is UL and the other is IEC. The two are more concerned with fire safety than the other, while the other is more focused on the durability of the material.

In the United States, the requirements for product reliability are very high and the relevant laws are very strict. In Europe, although there is also a product liability law, there is a limit on the amount of product liability compensation required for a safety liability accident, which makes the focus between the IEC standard and the UL standard different. It is worth noting that UL provides the UL-EU logo in Europe in order to ensure market confidence and to inform investors and builders in the market, the reliability and quality assurance of the products they use.

Insiders of China Power Electric told reporters that because the construction of foreign power stations requires bank loans, when the bank makes an assessment, it will look at which company's products are used by the construction company. This will result in bank rankings, and the higher the bank rankings. Explain that the better the product, the faster the construction party's funds will be approved.

Shen Hongwen believes that as the domestic PV market cake grows bigger and bigger, foreign companies will enter more and more. Although there are certain advantages in the high-end market, foreign PV companies do not have much room for domestic use. Domestic requirements for certification testing may not be stricter abroad, and certification standards need to be further improved.

"The solar power management system is expected to be completed during the "Twelfth Five-Year Plan" period, but it is necessary to avoid the old road of wind power generation." Meng Xianyu said.

Yan Baofang, chairman of Jinglong Group, said in an interview that the state should formulate national unified standards for photovoltaic industry as soon as possible and standardize development. Enterprises that are unreasonable in layout will not be approved for project approval; restrictions on enterprises that are not qualified will be imposed; restrictions on unqualified products will be imposed on the factory; and access systems will be implemented for products of foreign enterprises. Promote the establishment of product certification and monitoring systems to achieve standardized and standardized production in the industry. At the same time, improve the quality standards of related products, strict product quality, strengthen industry supervision, purify the market, improve product quality, and maintain our reputation.

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