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Yangtze Business Daily News● Yangtze Business Daily reporter Shen Yourong

Photovoltaic giant Longi Green Energy (601012.SH) unexpectedly expanded production against the trend in an attempt to break through.

On the evening of July 12, LONGi Green Energy issued an announcement that it plans to build the first phase of the LONGi Green Energy Photovoltaic (Xixian New District) 12.5GW high-efficiency BC battery project with a total investment of 3.206 billion yuan.

Longi Green Energy said that the company's BC-2 generation technology is already ready for large-scale mass production. The implementation of this project will accelerate the large-scale mass production of the company's BC-2 generation high-efficiency products, and break through the industry's homogeneous competition pattern with innovative high-barrier technology.

On July 9, Longi Green Energy released its performance forecast, predicting a loss of 4.8 billion to 5.5 billion yuan in the first half of this year. In 2023, the company's net profit attributable to shareholders of the parent company (hereinafter referred to as "net profit") will decline rapidly.

In the announcement, Longi Green Energy said that currently, the industry competition is fierce, and there is a mismatch between overall supply and demand in the photovoltaic industry. The company has set aside approximately 4.5 billion yuan to 4.8 billion yuan for inventory impairment.

Losses are almost a common phenomenon in the industry. In the first half of this year, companies including Aixu Technology and JA Solar Technology all suffered losses.

In the secondary market, since the beginning of the year, Longi Green Energy's stock price has been "falling continuously". Its current market value is about 107.5 billion yuan, which has shrunk by about 66 billion yuan this year.

Betting on the BC route to expand production against the trend

When the industry was suffering from a downturn, LONGi Green Energy chose to expand production against the trend.

According to the latest announcement, LONGi Green Energy plans to invest in the construction of the first phase of the LONGi Green Energy Photovoltaic (Xixian New District) 12.5GW high-efficiency BC battery project. The total investment is expected to be approximately RMB 3.206 billion (including working capital).

Longi Green Energy said that in the first half of this year, the company launched its self-developed high-efficiency HPBC2.0 battery technology (hereinafter referred to as "BC second-generation technology"). After sufficient research and development demonstration, ecological chain construction and market promotion, the company's BC second-generation technology has met the conditions for large-scale mass production. In order to accelerate the industrialization of BC second-generation technology, according to the capacity layout plan, the company plans to invest in the construction of the first phase of the Longi Green Energy Photovoltaic (Xixian New District) 12.5GW high-efficiency BC battery project in Jinghe New City, Xixian New District, Shaanxi Province. After the project is completed, it will form an annual production capacity of 12.5GW high-efficiency BC batteries.

It was disclosed that the company has completed the research and development, pilot production, process scheme design and equipment selection planning of BC second-generation technology. Once the project infrastructure is ready for production, the installation and commissioning of production equipment will be started as soon as possible. The project is expected to start production at the end of 2024 and be fully put into production in June 2025.

Longi Green Energy has high expectations for the investment and construction of the above projects. The company said that the products of this project are the company's independently developed BC second-generation high-efficiency batteries. Relying on the company's latest developed N-type Terai silicon wafers and advanced composite passivation technology, the battery efficiency can be as high as 26.6%, and the power of the component-end product is as high as 660W, which has achieved a significant improvement in conversion efficiency and performance compared with TOPCon products. The implementation of this project will accelerate the large-scale mass production of the company's BC second-generation high-efficiency products, break through the industry's homogeneous competition pattern with innovative high-barrier technologies, lead the industry's next-generation industrial technology iteration through forward-looking layout, and further build the company's long-term sustainable competitiveness and advantages.

In terms of certified conversion efficiency, the previous conversion efficiency of LONGi Green Energy's HPBC battery was as high as 27.09%. The current TOPCon battery on the market has a maximum efficiency of about 26.5%. The conversion rate of mainstream TOPCon modules is between 22% and 23%.

In the field of N-type batteries, there has always been a dispute over the route in the photovoltaic industry. LONGi Green Energy insists on the BC battery route, and Aixun shares also firmly follow this route. At a recent institutional exchange meeting, LONGi Green Energy announced that its BC battery mass production scale has reached 40GW, and it is expected to increase to 70GW by the end of 2025.

There are three technical routes for battery technologies, namely TOPCon, BC and HJT. The TOPCon technical route has developed most rapidly, and last year, many companies announced large-scale expansion of production. In the early days of the BC route, only Longi Green Energy and Aiko Solar were involved. Since the beginning of this year, giants such as GCL-Polymer and JA Solar have announced that they will focus on BC.

It’s been a difficult year

Whether Longi Green Energy can break through and turn things around by betting on the BC route remains to be further observed and verified.

On July 8, Longi Green Energy released the minutes of an investor exchange meeting. The company's chairman Zhong Baoshen said at the meeting that 2024 will be a very difficult year for the company and the industry. In 2025, the company will be the first to return to the growth track and will enter a recovery state before the photovoltaic industry.

Zhong Baoshen also said that by the end of 2025, the company's BC generation and BC generation combined production capacity will reach approximately 70GW. By the end of 2025, the company's BC component costs will reach or be lower than the TOPCon level.

Since the beginning of this year, many giants in the photovoltaic industry have fallen into a loss-making state. Not long ago, Aixu Technology announced that its net profit in the first half of this year would be a loss of 1.4 billion to 2 billion yuan, and its net profit after deducting non-recurring gains and losses (referred to as "net profit after deducting non-recurring gains and losses") would be a loss of 2.1 billion to 2.7 billion yuan; JA Solar Technology expects a net loss of 800 million to 1.2 billion yuan in the first half of the year; and TCL Zhonghuan also expects a net loss of 2.9 billion to 3.2 billion yuan in the first half of the year.

In the first half of this year, Longi Green Energy expects to lose 4.8 billion yuan to 5.5 billion yuan, compared with a net profit of 9.178 billion yuan in the same period last year; the non-net profit is expected to be a loss of 4.839 billion yuan to 5.539 billion yuan, compared with 9.060 billion yuan in the same period last year, both of which are a significant turnaround from profit to loss year-on-year.

In its performance forecast, Longi Green Energy explained that in the first half of this year, the company increased its investment in products and services in the photovoltaic terminal market, achieving year-on-year growth in module sales. However, due to the overall mismatch between supply and demand in the photovoltaic industry and the sharp decline in the market sales prices of major products in various links, compared with the same period last year, the company's incremental sales did not increase revenue, and its investment income in its equity-holding silicon material companies decreased. It is expected that the inventory impairment will be 4.5 billion yuan to 4.8 billion yuan, and short-term profits will be under pressure.

On July 9, the Ministry of Industry and Information Technology issued a document for soliciting opinions, proposing to guide photovoltaic companies to reduce projects that simply expand production capacity, strengthen technological innovation, improve product quality, and reduce production costs. The document proposes that the minimum capital ratio for new construction and expansion of polysilicon manufacturing projects be increased from 20% to 30%.

At present, the investment cost of a single GW of BC second-generation batteries is about 256 million yuan, which is still higher than TOPCon batteries. What are the chances of LONGi Green Energy betting on the BC battery route?

The company said that its initial cost will still be within 5% higher than TOPCon. The overall goal is that by the end of next year, the company's BC component costs will reach or be lower than TOPCon levels.

Industry insiders said that at present, the photovoltaic industry is highly competitive, and leading technology, relatively low costs, and excellent products are the key to competitiveness.

Can Longi Green Energy break out and turn things around by using the BC route?