news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

In 2024, the price war in the domestic photovoltaic industry intensified, and the war spread from the upstream silicon materials, components, and battery cells to the downstream power stations. The sharp drop in the price of lithium carbonate caused a chain reaction, driving the prices of downstream energy storage cells and systems to continue to fall.The price of some energy storage cells has even dropped to below 0.5 yuan/Wh (excluding tax).。

Starting this year, Chinese photovoltaic energy storage companies have turned to the Middle East, and their business has blossomed. Many companies have "hooked up" with wealthy people in the Middle East, especially energy storage. On July 16, many companies disclosed the results of their projects in the Middle East. JinkoSolar (SH688223, stock price 7.5 yuan, market value 75 billion yuan), TCL Zhonghuan (SZ002129, stock price 8.73 yuan, market value 35.3 billion yuan), and Envision Group announced that they had signed agreements with Saudi Arabia's sovereign fund PIF (Saudi Arabia Public Investment Fund) and other companies to invest in related projects in Saudi Arabia. Sungrow Power Supply (SZ300274, stock price 70.3 yuan, market value 145.7 billion yuan) successfully signed the world's largest energy storage project with Saudi Arabia's ALGIHAZ, with a capacity of up to 7.8GWh.

How promising is the solar energy storage market in the Middle East? Can mining the Middle East effectively alleviate the cost pressure caused by the price war in the domestic photovoltaic industry?

Lv Jinbiao, co-secretary general of the SEMI China Photovoltaic Standards Committee, told the Daily Economic News that China's advanced manufacturing industry has joined hands with Middle Eastern sovereign funds to reduce the political risks of going overseas to a large extent. In addition, by going through the Middle East, there is also an opportunity to make up for the absence of the US market. Chinese companies should still give full play to their professional advantages and cooperate for win-win results, rather than being so "competitive" as in China.

Chinese solar energy storage companies turn to the Middle East

Chinese photovoltaic giants have formed a group to explore the Middle East. Judging from the scale and amount of investment projects, this year's layout in the Middle East is the largest in history.

On July 16, several photovoltaic companies officially announced that they had reached cooperation with the Saudi Public Investment Fund (PIF). Among them, JinkoSolar will establish a joint venture in Saudi Arabia to build a 10GW high-efficiency battery and module project with a total investment of approximately US$985 million. The company said: "The project may become the largest overseas manufacturing base for China's photovoltaic battery and module industry, and it is also JinkoSolar's largest overseas investment project to date." It is understood thatBy 2023, JinkoSolar's market share in the Middle East will exceed 50%, including more than 70% in Saudi Arabia.。

TCL Zhonghuan will establish a joint venture in Saudi Arabia to build a 20GW photovoltaic crystal wafer factory with a total investment of approximately US$2.08 billion. After completion, it will become the first photovoltaic crystal wafer project in Saudi Arabia and the largest crystal wafer factory overseas.

Envision Technology Group will establish a wind power equipment joint venture in Saudi Arabia to carry out localized production of wind turbines and key components. "The joint venture will help Saudi Arabia's wind power value chain achieve the goal of 75% local production by 2030, and promote the clean energy transformation in the Middle East," the company said.

The leading inverter manufacturer Sungrow also announced on the same day that it had signed a contract with Saudi Arabia's ALGIHAZ for a 7.8GWh energy storage project, which will be delivered next year. It should be noted that in 2023, Sungrow's global energy storage system shipments will only be 10.5GWh. In terms of energy storage system shipments, Sungrow has been ranked first among Chinese companies for eight consecutive years.

In addition, in early July this year, Zhu Gongshan, chairman of GCL Group, met with the UAE Minister of Investment to discuss the establishment of an overseas FBR granular silicon industrial base in the UAE. In mid-June, Junda Shares (SZ002865, share price 36.64 yuan, market value 8.4 billion yuan) announced that it would invest US$700 million in Oman to build a 10GW high-efficiency photovoltaic cell project.

For a time, photovoltaic companies in the cold winter were hotly discussed in the market. Influenced by this good news, the A-share photovoltaic sector opened higher on July 17, with JinkoSolar rising 6% at one point, and TCL Zhonghuan and CHINT Solar (SH688408) rising more than 4% during the session.

The Middle East market has become a new highland for overseas expansion

The Middle East, which usually includes parts of West Asia and North Africa, is famous for its abundant oil. Geographically, the Middle East has vast deserts and plateaus, and most of the area has a tropical desert climate with sufficient sunshine throughout the year. Saudi Arabia is one of the largest economies in the Middle East and the world's largest oil exporter. In recent years, it has been seeking to optimize its energy structure.

The direct reason why Chinese photovoltaic companies are turning to the Middle East market may be related to Saudi Arabia's "Vision 2030". PIF is one of the most influential sovereign funds in the world. It has undertaken the mission of helping Saudi Arabia's renewable energy transformation and realizing Saudi Arabia's "Vision 2030" and is committed to developing renewable energy such as wind power, photovoltaics, hydrogen energy, and energy storage.

Saudi Arabia's "Vision 2030" proposes that by 2023, Saudi Arabia will achieve 58.7GW of renewable energy generation capacity, including 40GW of photovoltaic power generation. By 2030, 50% of energy efficiency consumption will come from renewable energy.

According to Infolink Consulting, the demand for photovoltaic power in the Middle East will be about 20.5GW~23.6GW in 2023, with a significant increase in demand for photovoltaic power in markets led by Turkey, Saudi Arabia, and the United Arab Emirates. In addition, in order to increase the proportion of new energy structure and maintain the stability of the power grid, Saudi Arabia has formulated a 24GWh BESS (battery energy storage) project plan from 2024 to 2025 under the supervision of the Saudi Ministry of Energy.

In addition, the move to the Middle East is also related to the friendly local policies. A staff member of the Secretary's Office of TCL Zhonghuan told the reporter of the "Daily Economic News": "Saudi Arabia (project) is mainly aimed at overseas markets, mainly to avoid geopolitical issues." In May this year, the United States officially launched a new round of anti-dumping and countervailing investigations on photovoltaic products in four Southeast Asian countries. Relevant companies are facing overseas trade policy risks, which has affected their market layout in Southeast Asia.

When asked why JinkoSolar chose to invest in Saudi Arabia, Qian Jing, vice president of JinkoSolar, said: "First of all, Saudi Arabia is located in the heart of the Middle East and is also a hub connecting Europe and Africa. Establishing a base here has convenient transportation and wide coverage. Saudi Arabia is very friendly to new energy investment. In order to attract leading new energy companies like JinkoSolar to settle in, it has introduced a series of incentive measures. Saudi employees have advantages in terms of skills and work attitude in the Middle East. Saudi Arabia itself has huge potential in the new energy market, and the government is determined to transform its energy sector."

Lv Jinbiao told the reporter of Daily Economic News: "China's advanced manufacturing industry has joined hands with the Middle East sovereign funds to deeply participate in the new energy transformation of the Middle East.It has greatly reduced the political risks of going overseas.. In addition, there is also an opportunity to make up for the absence of the US market through the Middle East. Of course, the relocation of photovoltaic manufacturing should include the cooperation of the entire industrial chain. Equipment, spare parts and auxiliary materials can be supported by trade first, while the main industrial chain still needs to be implemented in groups. Chinese companies should still give full play to their professional advantages and cooperate for win-win results, instead of being so "competitive" at home. "

In fact, Chinese solar energy storage companies have noticed the huge potential of the Middle East market not only this year. JinkoSolar Chairman Li Xiande previously revealed that the company has entered the Middle East market since 2011 and has now covered most of the Middle East countries and has a 45% market share in the Middle East. Sungrow Power Supply entered the Middle East market in 2017. In its 2023 annual report, TCL Zhonghuan included the Middle East in the industrial layout area of ​​key countries or regions around the world and carried out project implementation research.

Can we break the domestic price war dilemma?

Can the rapid growth of demand in the Middle East market effectively alleviate the domestic price war dilemma?

At present, the photovoltaic main chain is facing oversupply, and the profitability of the manufacturing end is under pressure. Silicon material prices have bottomed out, silicon wafer overcapacity has become prominent, and N-type has accelerated its penetration, and the profit margin of the entire main industry chain has been squeezed to the extreme. On the one hand, companies are facing a cash flow crisis; on the other hand, shutting down production lines and reducing operating rates have become the mainstream, and the "survivors" of the photovoltaic industry are king.

A staff member from the Secretary's Office of TCL Zhonghuan Company told reporters: "(After the Saudi Arabia project is completed) Saudi Arabia, Europe and the United States are our target markets. The profit expectations are definitely higher than in China. However, we must also consider that the cost of building a factory overseas will also be higher than in China. It needs to be decided based on the price of silicon wafers at the time, order status, and supply chain situation. The procurement of silicon materials is still uncertain, but there is a high probability that overseas silicon materials will be used. Whether it will be local Saudi or European silicon materials is not yet certain." The reporter learned that about 98% of the world's monocrystalline silicon production capacity is in China, and TCL Zhonghuan's overall silicon wafer market share in 2023 will reach 23.4%.

Qian Jing revealed that JinkoSolar's product technology route and selection after production in Saudi Arabia will be the most advanced new generation TOPCon technology in the industry. The efficiency of the first batch of batteries to be produced will reach more than 27%, and the yield target is 99%. Regarding whether JinkoSolar will set up energy storage projects in the Middle East in the future, the reporter of "Daily Economic News" called JinkoSolar's secretary's office and learned that energy storage is a related business that the company is cultivating, and its overall revenue accounts for a small proportion.

What impact will photovoltaic companies competing in the Middle East have on the industry's competitive landscape?

Lv Jinbiao told reporters: "Domestic high-quality production capacity is homogenized, and the total production capacity of leading enterprises has exceeded global demand. In the current situation of continuous cash flow loss, only if leading enterprises take the lead in shutting down bases with relatively high production costs, reducing production load and reducing losses, can prices return to value. If cash flow continues to bleed, any beautiful overseas investment plan will be just talk."

Disclaimer: The content and data of this article are for reference only and do not constitute investment advice. Investors who act accordingly shall bear their own risks.

Reporter|Zhang Baolian

edit|Dong Xingsheng Sun Zhicheng Gai Yuanyuan

Proofreading|He Xiaotao

｜Original article from nbdnews, Daily Economic News｜

Reproduction, excerpting, copying and mirroring are prohibited without permission