Combined with the current situation of overcapacity and declining demand in the photovoltaic industry in 2023, the following three major development paths will be formed in 2024, affecting the long-term development of the photovoltaic industry:

1) Technology leads the way and goes through cycles. The bottom of previous cycles has been accompanied by major changes in technology, and technological progress can ultimately realize the first principle of reducing costs and increasing efficiency in the photovoltaic industry;

2) It’s time to expand overseas. Against the background of slowing domestic demand, companies will definitely seek various market channels to eliminate excess production capacity. If there are opportunities for mergers, acquisitions and restructuring, they can also accelerate the realization of globalization;

3) Great development of new energy supporting systems and equipment. The lag in the construction of the power system has seriously affected the growth rate of distributed installed capacity, leading to downward demand. Improvement is expected to accelerate in 24 years. At the same time, energy storage, as an important supporting facility, is also expected to benefit from this.

1. Photovoltaic industry chain supply and demand analysis

1.1 The policy side actively guides the high-quality development of the photovoltaic industry

The policy side actively responds to the cyclical decline caused by the rapid expansion of photovoltaic production capacity. On the one hand, the pace of IPOs and refinancing will be tightened in stages to control the rapid expansion of the photovoltaic industry. Some new players and companies with insufficient cash will be directly restricted. The company’s own hematopoietic ability is more important. Industry concentration is expected to increase and the competitive landscape will be further optimized. On the other hand, the manufacturing enterprise symposium focused on the high-quality development of the photovoltaic industry, guiding and supporting enterprise technological innovation and the rational layout of photovoltaic industry production capacity.

In addition, my country’s photovoltaic industry is highly dependent on the global market. In recent years, the scale of exports has been larger than the scale of domestic installed components. However, the U.S. tariff policy on imported photovoltaic products has changed frequently, such as anti-circumvention investigations and the implementation of UFLPA. The establishment of a consensus on development cooperation has sent a positive signal to my country’s photovoltaic product exports.

1.2 Supply: The company has lowered its production expansion speed and has sufficient monetary funds.

The company limits its expansion speed and gradually optimizes its supply-side structure. According to data from Oriental Fortune, in the first and second quarters of 2023, 60 companies in the photovoltaic industry initiated refinancing with a quarterly average of over 100 billion yuan. Among them, 45 listed companies raised 115.8 billion yuan through additional issuances, and 11 companies issued convertible bonds to raise 53.1 billion yuan. Yuan, 3 new stocks listed and raised 4.659 billion yuan; according to data from Polaris Solar Photovoltaic Network, in the first half of 2023, the expansion of silicon material production scale will reach 760,000 tons, the scale of silicon wafers will reach 442GW, and the scale of cells and components will reach 1,100GW. In the first half of the year, financing and production expansion of photovoltaic companies were in full swing.

However, as factors such as the gradual oversupply of silicon materials, the rapid compression of excess profits of TOPCon cells, the downward shift of the profit center of the industrial chain, the decline in demand growth, and the phased tightening of IPO and refinancing, the capital market began to cool down, and the photovoltaic industry has since The third quarter showed an increasingly obvious trend of improvement on the supply side. For example, in the third quarter, the financing of the photovoltaic industry was less than 50 billion yuan; as of Q3, judging from the actual progress of the industry’s announced expansion projects, all links in the photovoltaic industry chain have been declining since 2023. The progress of some projects reaching production is significantly slower than expected. It is expected that the industry’s overall willingness to expand production will decline significantly in the first half of 2024.

1.3 Demand: Q4 Domestic installed capacity increased sharply, while export value and scale both declined.

In the first three quarters of 2023, the scale of domestic component bidding increased significantly year-on-year. According to Gaisi Consulting data, the domestic module bidding scale in the first three quarters of 2023 was 295.85GW, a year-on-year increase of 90%; the module winning bid scale was 463.50GW, a year-on-year increase of 219.3%, of which the domestic module bidding scale in September was 56.2GW, a month-on-month increase 50.7%, and the module winning scale was 39.1GW, a month-on-month decrease of 35.8%.

Component demand is expected to decline in the fourth quarter, with N component procurement accounting for more than half. According to SMM data, N-type module calibration showed explosive growth from September to October 2023, with the calibration scale exceeding 20GW. Among them, the module procurement quota in October was 22.91GW, and the N-type module procurement proportion was 53%. Due to the first-mover advantage of TOPCon technology, it has accounted for more than 70% of the absolute share in the bidding and centralized procurement of some central and state-owned enterprises, indicating that the trend of N-type batteries replacing P-type batteries is gradually taking shape. As prices in the industry chain continue to decline, module demand is expected to be lower than expected in the fourth quarter, with inventory digestion being the first priority, but N-type modules will still account for a high proportion.

New centralized installed capacity is expected to maintain growth in the fourth quarter. From January to October 2023, my country’s newly installed photovoltaic capacity was 142.6GW, a year-on-year increase of 145%. Among them, the newly installed capacity in October was 13.6GW, a year-on-year increase of 142%, and a month-on-month decrease of 14%. The reason for the decrease may be the impact of the holidays. From the perspective of installed capacity structure, distributed installed capacity exceeded 50% in 2023, and centralized installed capacity increased rapidly year-on-year. Among them, Q3 distributed installed capacity was 26.2GW, accounting for 51.8%, and centralized installed capacity was 24.3GW, accounting for 48.2%. As prices in various links in the industrial chain continue to decline recently, centralized installed capacity is expected to maintain growth from November to December.

Photovoltaic product exports both declined in value and scale in October. From January to October 2023, my country’s cumulative export value of photovoltaic products (silicon rods, silicon wafers, cells, modules) was US$43.766 billion, a year-on-year decrease of 2.6%. Among them, the export value in October totaled US$3.094 billion, a year-on-year decrease of 24.7%. The month-on-month decrease was 19.2%, the lowest in a single month in the past two years. The main reason was that the high base last year led to greater destocking pressure in some regions.

According to InfoLink data, my country’s cumulative module export scale from January to October 2023 was 174.1 GW, a year-on-year increase of 30.6%. Among them, the module export scale in October was 16.5 GW, a year-on-year increase of 39.8%, and a month-on-month decrease of 16.7%. In the last two months of this year, due to foreign holidays and inventory pressure, it is expected that both export volume and scale will decline.

The large amount of goods being pulled in the first half of the year may lead to a decline in demand in the European market in the fourth quarter. From January to October 2023, the top five countries in my country’s component export volume are the Netherlands, Brazil, Spain, India, and Saudi Arabia. Among them, the export volume of countries such as Saudi Arabia and Belgium has increased significantly year-on-year. The European market is currently one of the most important countries for my country’s photovoltaic product exports. From January to October, Europe imported a total of 91.6GW of photovoltaic modules, a year-on-year increase of 22.6%. Among them, China exported 6.2GW of European photovoltaic modules in October, a year-on-year decrease of 10%. The 18% decrease is mainly due to the accumulation of inventories caused by large quantities of goods in the first half of this year. It is expected that the overall demand in Europe will fall significantly in the fourth quarter of the traditional off-season.

In 2023, the growth rate of new installed capacity in the world and China is expected to hit a new high, and the growth rate is expected to fall sharply in 24-25 years. From January to October this year, my country’s newly installed photovoltaic capacity reached 142.56GW, a year-on-year increase of 144.78%. Among them, the newly installed photovoltaic capacity in October was 13.62GW, a year-on-year increase of 141.49%.