On April 6th, the centralized procurement bid for CNPC's 8GW photovoltaic modules was opened. A total of 47 companies have been attracted to register, but in the face of these large orders of over 12 billion yuan, the average price quoted by participating companies is 1.68 yuan. On April 10th, the candidate for winning the bid for Huaneng Guizhou photovoltaic modules was announced, and the first place, Changzhou Huayao Optoelectronics, had a calculated bidding unit price of only 1.533 yuan/W. On April 13th, the bidding for the centralized procurement of wind pulse energy components was announced, and Tongwei won the bid at a unit price of 1.596 yuan/W. The prelude to mid low quotation marks the beginning of a comprehensive photovoltaic price war. 2023 may become a watershed for photovoltaic enterprises, and the industry is highly likely to undergo a reshuffle. 

PART01 | The decline in silicon material prices, but integration actually leaves room for component price reduction? Since the beginning of this year, combined with the Silicon Industry Branch of the China Nonferrous Metals Industry Association (hereinafter referred to as the Silicon Industry Branch) and InfoLink

According to statistics from Consulting and Shanghai Nonferrous Metals Network (SMM), the average transaction prices for the latest phase of polycrystalline silicon dense materials by each company were 206700 yuan/ton (March 29 price), 202000 yuan/ton (April 7 price), and 202500 yuan/ton (April 10 price), respectively, continuing a slow downward trend overall. The latest price of polycrystalline silicon material has approached 200000 yuan/ton. However, the loosening of the silicon material supply chain has not driven the entire industry chain price down. At the same time, component pricing has also shown differentiation in recent times. Against the backdrop of demand support and fluctuations in raw materials, the prices of components for large-scale ground projects continue to decline, while prices for distributed projects have increased. It can be confirmed that regardless of how the prices of the industrial chain change, "integration" seems to have become a consensus among leading enterprises to resist risks. In the past year, the components have been under pressure from upstream cost pressures, while the components have been under pressure from lower prices in centralized procurement bidding. Choosing integration and ensuring supply chain security is one thing for photovoltaic enterprises, and there is a more important reason: integrated component enterprises actually earn money from the silicon and battery cell links, but only reflect profits on the components. Recently, both CNC and TCL Central have announced a new phase of increased production expansion - the former officially announced component projects, clearly creating an "integrated" layout throughout the entire industry chain; Although the latter has not been clearly defined as' integrated ', it has recently announced a 10 billion dollar fundraising to improve the battery sector. Everyone is doing integration, but in fact, they have returned to the same starting line. So, even if the prices of silicon materials, silicon wafers, and batteries do not return to their previous historical lows, there may still be considerable room for component prices to decline.

 PART.02 | The downstream price game of the industrial chain is fierce. In the industry's view, the driving force for the rise of silicon wafers is not sustainable. InfoLink

Consulting analysis suggests that the monthly production of single crystal silicon wafers will see a significant increase in April, expected to reach 46GW to 47GW, with a month on month increase of approximately 11% to 13%. And it is expected that there is still room for growth in May, but it is currently difficult to observe large-scale inventory accumulation in the silicon wafer segment in April. However, the upward momentum for the 182mm specification silicon wafer price is also lacking. This year, the bottleneck of the photovoltaic industry chain material has shifted to the auxiliary material segment, including high-purity quartz, POE film, IGBT and other materials. However, the tight supply of these materials has led to a more independent price trend in major links such as silicon wafers and components. Especially on the component side, according to InfoLink

According to the price data from Consulting on April 7th, the average transaction prices for single crystal PERC 182mm and 210mm sizes in China were 1.735 yuan/W and 1.745 yuan/W, respectively, with a month on month increase of 0.30%. The possibility of component prices rising is unlikely. With the improvement of the supply and demand structure in the future, the overall price trend of components is expected to decline month by month, but it is not ruled out that there will be periodic price fluctuations. In the industry's view, as upstream silicon material prices enter a downward channel, industry chain profits are expected to shift downstream in 2023. From the perspective of profit proportion, the profit proportion of the component sector has decreased year by year from 26.67% in 2019 to 12.87% in 2022, mainly due to the significant price increase in the silicon material sector after 2020. Considering that the downward trend of silicon material prices in the future is relatively certain, there may be significant improvements in the profits of the component sector in the future. 

PART.03 | The existing photovoltaic manufacturing capacity in China is somewhat surplus by the end of 2022, with a battery capacity of approximately 490GW and a module capacity of approximately 650GW. That is to say, even if there is no need to build any new production capacity, corresponding to the most optimistic demand for 400 GW of photovoltaic installation in 2023, without considering the production capacity of overseas batteries and components, there is already a serious surplus! Since the beginning of this year, the expansion of industry production can be described as crazy. InfoLink predicts that by the end of 2023, the total production capacity of each link in the photovoltaic industry chain will exceed 800GW. In the past, it was not difficult to calculate the production capacity and output of the industry. Just grasp the expansion plans and production status of several leading enterprises, and simply add them up. Now it's a bit chaotic, there are too many old and new players, and it's not enough to see a project without 10GW when it comes to expanding production. 

Taking TOPCon as an example, in the first half of this year, Black Horse Junda's TOPCon battery production capacity will leap to 31GW, second only to Jingke's 35GW, ranking second in the industry. Also, small players like Runyang, who never make components, suddenly emerge and steal food from top component companies without talking about martial arts. According to IRENA's most optimistic prediction, the global photovoltaic installation in 2026 will only be 458.8GW. Let's calculate it as 500GW, and with a capacity ratio of 1.15, the demand is only 575GW. At that time, our existing production capacity will still be abundant. That is to say, the manufacturing end has already overdrawn global demand for three to four years in advance. What is the result of excess? The quantity will not change, but the price will change. On the one hand, it is the limitless "scenery" that is widely expected, and on the other hand, it is the cross-border and expansion of production under the hidden concerns of overcapacity. The photovoltaic price war has already begun. This is a selection match and also a knockout match.