outlook丨how can the new energy industry get out of a new round of "light cycle"
2024-08-31
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◇the new round of industrial cycles is different from the previous three due to changes in external policies. the main reason is the mismatch between supply and demand, which is manifested in three aspects: the "hand" of regulation has not kept up, the application and consumption have not kept up, and the overseas supporting facilities have not kept up.
◇as the new energy industry chain continues to improve and the "manufacturing end" becomes increasingly mature, the problem of insufficient consumption at the "application end" becomes more prominent. solving this contradiction requires systematic innovation in policy "supply".
text | reporter of outlook news weekly
liu jing ma shurui wu huijun
photovoltaic power generation project in xiaogang village, fengyang county, chuzhou city, anhui province (photo taken on august 22, 2024) photo by zhang duan/this magazine
from a country with "three heads abroad" of relying on imported raw materials, lacking core technology and equipment, and mainly selling products overseas, it has grown into a globally competitive advantageous industry. the new energy industry represented by photovoltaics and energy storage is one of the representatives of the leapfrog development of my country's emerging industries in recent years.
due to cyclical problems, the photovoltaic energy storage new energy industry is currently under downward pressure, with industry losses and capacity closures coexisting. wang bohua, honorary chairman of the china photovoltaic industry association, introduced that in the first half of this year, the output of polysilicon and silicon wafers increased by about 60% year-on-year, and prices fell by more than 40%; the output of batteries and components increased by about 60% year-on-year, and prices fell by more than 15%; the output value of photovoltaic manufacturing (excluding inverters) fell by 36.5% year-on-year.
what are the special features of this round of "light cycle"? how to promote the industry to get rid of the downward cycle? "outlook" news weekly reporters recently interviewed more than a dozen leading photovoltaic storage new energy enterprise leaders, industry experts, and competent departments. the interviewees unanimously agreed that the situation of "three heads outside" in my country's photovoltaic storage new energy industry raw materials, technology, and market has been reversed, and they are full of confidence in getting out of the "light cycle". to speed up the way out of the predicament, in addition to letting market regulation continue to play a role and clearing out the backward production capacity in iteration as soon as possible, it is also necessary to play a "combination punch", innovate policy "supply", vigorously expand the application and consumption of new energy, and accelerate the construction of a new energy system.
the industry has entered a critical and rising period
in the production workshop of anhui huasheng new energy technology co., ltd. located in xuancheng city, anhui province, agv carts are freely shuttling back and forth to transport auxiliary materials needed for the production of heterojunction photovoltaic cells. robotic arms are moving swiftly and orderly to grab materials and walk to the end of the production line that is hundreds of meters long. finished photovoltaic cells are coming off the line one after another here.
"china's photovoltaic industry has completely reversed the situation of raw materials, technology and market being 'outside the home' more than 20 years ago and has developed into an emerging industry with global competitive advantages," said xu xiaohua, chairman of anhui huasheng new energy technology co., ltd.
during the interview, our reporter learned that in anhui, jiangsu, zhejiang and other provinces with major photovoltaic and energy storage new energy industries, advanced photovoltaic and new energy storage industries are in a critical and rising period of transformation to high-quality development.
the scale of anhui's photovoltaic manufacturing industry has tripled in five years, with an average annual growth rate of more than 50%. by 2023, there will be 11 companies in the photovoltaic industry with revenue exceeding 10 billion yuan, and the industry scale will jump to third place in the country; jiangsu's photovoltaic industry has a complete industrial chain, forming multiple industrial clusters such as wuxi, changzhou, and suqian; zhejiang has cultivated more than 30 photovoltaic-related listed companies, with many advantages in capital, technology, talents, etc., driving the rapid growth of china's photovoltaic industry.
on august 15, zhao chenxin, member of the party leadership group and deputy director of the national development and reform commission, introduced at the press conference on important achievements of ecological civilization at the main event of the 2024 national ecological day that china has built the world's largest and most complete new energy industry chain. its photovoltaic module production has ranked first in the world for 16 consecutive years, providing 70% of photovoltaic modules for the world. among the top 10 power battery companies, 6 are chinese companies.
according to statistics from the china photovoltaic industry association, in the first half of this year, domestic silicon wafer exports were 23.5gw, a year-on-year increase of 20.7%; domestic battery cell exports were 28.98gw, a year-on-year increase of 38%; domestic module exports were 130.04gw, a year-on-year increase of 25.2%.
in addition to the eye-catching signs of scale and production capacity, the photovoltaic storage industry also has a new ecosystem driven by innovation and coordinated by multiple technological routes.
"energy transformation fundamentally depends on technology upgrades to make photovoltaics the cheapest green energy," said xu xiaohua. under the guidance of the china photovoltaic industry association, the industry has established a collaborative innovation platform for heterojunction industries. huasheng has worked with more than 150 companies, universities and research institutes to provide advice for the industrialization of heterojunction stacked perovskites, promote industry progress, and especially improve the conversion efficiency of batteries. heterojunction batteries are a type of high-efficiency crystalline silicon solar cells. so far, the average efficiency of heterojunction batteries with double-sided microcrystalline passivation structures has been increased to about 26% in the industrialization of huasheng new energy.
according to industry calculations, if the photovoltaic power conversion efficiency increases by 1 percentage point, the cost per kilowatt-hour can be reduced by 5%. in order to seize technological opportunities, various regions have promoted mutual promotion and strengthening of industry and technology through institutional and mechanism innovation, and increased research and development intensity. in anhui, 25 provincial departments have established the provincial advanced photovoltaic and new energy storage industry cluster construction leading group as member units to promote the high-quality development of the province's photovoltaic and energy storage industries. in 2024, of the 170 million yuan of anhui photovoltaic storage special policy funds, 140 million yuan will be used to support corporate innovation and research and development, accounting for about 80% of the total policy funds.
"the cycle of the new energy industry is closely related to technological iteration. technological innovation can neither stop nor slow down. the more difficult the industry is, the more we need to focus on supporting r&d innovation to maintain technological leadership." said jiang chenjie, director of the electronic information department of the anhui provincial department of industry and information technology.
three "missed" "light cycle" strikes again
after three cyclical adjustments, namely the 2008 international financial crisis, the european and american "double anti-dumping" from 2011 to 2013, and the "531 new policy" in 2018, my country's photovoltaic energy storage industry ranks first in the world in terms of technology level, manufacturing technology, market size and industrial chain perfection. however, "cyclicality" still plagues the development of the industry. currently, the photovoltaic energy storage manufacturing industry is experiencing a new round of "photovoltaic cycle".
recently, reporters visited more than a dozen leading domestic photovoltaic and energy storage companies, including longi, risen energy, sungrow power supply, trina solar, and paineng, and found that many companies have reduced production and shut down production lines, especially old and backward production capacity, which has been shut down on a large scale. overall, the entire industry is under great pressure of losses. zhu gongshan, chairman of gcl group, said in an interview that the overall production capacity of the photovoltaic industry has expanded by about 3 times, but the profit margin has dropped by about 70%.
the expected losses for the first half of the year recently announced by leading photovoltaic companies such as longi green energy, tcl zhonghuan, and tongwei co., ltd. show that longi green energy expects a loss of 4.8 billion to 5.5 billion yuan, tongwei co., ltd. expects a loss of 3 billion to 3.3 billion yuan, and tcl zhonghuan expects a loss of 2 billion to 3.2 billion yuan.
disorderly competition has led to price "trampling", which has also affected overseas markets. according to data from the general administration of customs, in the first half of this year, the export volume of silicon wafers, batteries and components increased, but the export value was us$18.979 billion, a year-on-year decrease of 35%.
during the interview, many industry insiders believed that the first and second rounds of downturns in my country's photovoltaic industry were mainly affected by the international policy environment, and the third round of downturns was a market reaction to the adjustment of domestic industry policies. the new round of industrial cycles is different from the previous three, which were mainly caused by external policy changes. the main reason is the mismatch between supply and demand, which is manifested in three "failures".
——the "hand" of regulation has not kept up. "many overseas customers are puzzled. even if china sells at a higher price, they will still pay. why is the price still so low that it makes a loss?" said wang lina, general manager of the overseas sales center of daheng energy co., ltd.
fast capacity ramp-up and fast technology iteration are important features of the photovoltaic manufacturing industry. according to the interviewed companies, in 2023, n-type cells with higher photoelectric conversion efficiency and better technology have emerged, new projects have emerged, and capacity has expanded rapidly, but the previous generation of p-type "old capacity" has also expanded under the stimulation of some places, "dumping" has intensified, and the entire industry has been forced to lower prices.
the energy storage industry is highly related to the photovoltaic industry. "2023 is known as the first year of energy storage in the industry. tens of thousands of energy storage companies have emerged in china in one year. some companies' product quality and corporate qualifications are not reliable enough, and they only compete on low prices." yang yu, deputy general manager of anhui paineng energy technology co., ltd., said that in addition to insufficient prediction of the decline in overseas market demand and policy changes, companies generally face insufficient start-up and difficulty in profitability after explosive growth.
——application and consumption have not kept up. the interviewed companies generally pointed out that in the previous three cycles, my country mainly used methods such as subsidizing photovoltaic power generation, stimulating installed capacity demand, and expanding the scale of the industry to achieve a "blowout" in the manufacturing end of new energy. however, it has been difficult for the power grid to consume the electricity generated by new energy in a short period of time, and photovoltaic power stations need to be equipped with energy storage.
the head of a company in chuzhou, anhui province, which mainly engages in energy storage and system solutions, told reporters that the fundamental logic of energy storage power stations' profitability is "peak-valley arbitrage." according to calculations, the initial investment of a photovoltaic power station equipped with a 20% installed capacity and a 2-hour energy storage project will increase by 8% to 10%, but the operating profit model is unclear, causing the industry to fall into a vicious circle where the more photovoltaic new energy power generation, the more energy storage power stations are needed, and the more energy storage power stations, the less money can be made.
——the overseas supporting facilities have not kept up. faced with the complex and ever-changing global market situation, enterprises are still "going their own way" when going overseas, and even undercut each other on price. this "scattered" model is no longer suitable for the current global new energy competition situation, and is not in line with my country's new energy industry status.
zhao jun, assistant to the chairman and director of the board office of guoxuan high-tech, said that many companies going overseas do not know much about international laws, regulations and policies, are not sensitive to foreign-related incidents, and do not predict the risks that may be brought about by changes in overseas situations. "the trend of globalization is unstoppable, and chinese companies still need more compliance management to enable them to go overseas."
promote iteration, adjust the model, and let go of the market
"every four or five years, the 'photoperiod' comes." during the interview, companies generally felt deeply about the "cycle curse" of the photovoltaic industry. the reporter found that in the previous three cycles, subsidies for photovoltaic grid-connected power generation, stimulating installation demand, strengthening technology research and development, and reducing costs and increasing efficiency helped the industry successfully resolve the crisis. during the survey, photovoltaic storage companies and competent departments believed that the entire industry is currently facing considerable difficulties, but it will eventually get out of the predicament with time. to reduce this time as much as possible, we must first let the market mechanism play a role.
the rapid technological iteration has led to rapid expansion of production capacity, and the expansion of new production capacity has forced the elimination of some backward production capacity. this is the characteristic of the evolution of my country's photovoltaic manufacturing industry in the past 20 years. some companies have reported that in 2023, n-type cells with higher photoelectric conversion efficiency will become the dominant technology route for photovoltaics, and new production capacity will continue to enter the market, but the previous mainstream route p-type cell production capacity has not been withdrawn in large quantities. in some places, due to the stimulation of investment promotion, the production capacity of p-type cells has even been expanded. these old production capacities are eager to clear out and lower prices, squeezing the price system and profit space of the entire photovoltaic industry, and the new and old production capacities have not achieved a reasonable and orderly survival of the fittest.
learning from the lessons of the "failure" of the market regulation mechanism, enterprises and competent departments generally believe that it is necessary to control the market frenzy and "involutionary" vicious competition as soon as possible to cool down the market. the interviewees highly agree with the policies of building a unified national market, such as standardizing local investment promotion laws and regulations, strictly prohibiting illegal and irregular policy preferential behaviors, and increasing the proportion of self-owned capital investment in photovoltaic manufacturing projects. they hope to refine the reform measures and establish a tracking, supervision and inspection mechanism to ensure that the macro-control measures are implemented in the new energy industry and play a practical role.
zhang zhiyu, general manager of fengyang zhuri energy technology co., ltd., pointed out that many companies have currently stopped production, but there is still a lot of photovoltaic production capacity that is ready to start at any time. as long as the price is slightly right, they may make a comeback. we must prevent some places from irrational "protection" and "rescue" of these companies.
xu xiaohua said that industry associations can explore ways to constrain corporate self-discipline, implement capacity control, and promote relatively consistent overseas operations by formulating technical standards and launching advanced manufacturing solutions for the industry. industry associations can be used to mobilize industry self-discipline and avoid "involutionary" vicious competition.
expand application, expand consumption, and innovate policy supply
the "china new energy power generation analysis report 2024" shows that in 2023, my country's new energy power generation will be about 1.47 billion kwh, a year-on-year increase of 23%, accounting for 15.6% of total power generation, an increase of about 2 percentage points year-on-year. the interviewed companies and experts pointed out that with the continuous improvement of the new energy industry chain and the increasing maturity of the manufacturing end, the problem of insufficient consumption on the application end has become more prominent, requiring systematic innovation on the policy supply side.
some companies admit that although the manufacturing and construction ends of new energy have experienced explosive growth, it is difficult to match and upgrade the construction of ultra-high voltage and other power transmission systems, the grid's bearing capacity and dispatching operation, and the application and absorption systems. the existing domestic power system cannot bear the large-scale absorption demand of new energy production capacity. this not only involves complex technical transformation, but also involves institutional reform in the power sector. it requires top-level design, macro-planning and a certain construction cycle. the new energy distribution network needs to further improve power supply reliability, transaction flexibility and diversity of power supply forms.
adapting to the needs of the new energy system and accelerating the planning and construction of the new energy system have become the unanimous consensus of the competent departments, industry associations and corporate entities. a series of policies to improve the consumption and regulation of new energy have become clearer.
the "decision of the cpc central committee on further comprehensively deepening reform and promoting china's modernization" adopted at the third plenary session of the 20th cpc central committee proposed to "accelerate the planning and construction of a new energy system and improve the policies and measures for the consumption and regulation of new energy."
on july 24, at the press conference of the "national electricity supply and demand situation analysis and forecast report in the first half of 2024" held by the china electricity council, zhang lin, director of the planning and development department of the china electricity council, stated that in the next step of reforms, the ways and paths for new energy to participate in the market will be clarified, and the adaptability of the power market to a high proportion of new energy will be improved. it will explore the implementation of the responsibility weight of renewable energy consumption to end users, improve the green electricity and green certificate trading mechanism, and guide all parties to reasonably assume the responsibility and cost of new energy consumption.
the interviewed companies also proposed that adapting to the application and consumption of new energy requires "walking on two legs". on the one hand, through technological innovation, promote the reform of the new power system; on the other hand, tap into more new business forms and new scenarios, explore profit models, and expand distributed consumption scenarios such as industry, commerce, and household use. ouyang jianbo, deputy general manager of chuzhou jietai new energy technology co., ltd., said that the application and consumption of new energy often has to develop from centralized to distributed. at present, the country is still dominated by centralized, and the technology and model matching distributed consumption are not mature enough. in the future, there is still a lot of room for opening up the application and consumption of new energy from distributed.
improve services, break through "blocking points", and provide good "escort" for going overseas
the photovoltaic and energy storage new energy industry is a representative of my country's new quality productivity and an important component of the global new energy market. at present, the globalization trend of the photovoltaic and energy storage new energy industry is still unstoppable, and chinese companies have also formed a good situation of going overseas in groups. in the face of the complex and changing global market situation, photovoltaic and energy storage companies call for better supporting services to "escort" their overseas expansion.
——integrate the forces of various departments and associations to improve the supporting services for enterprises to go overseas. guoxuan high-tech is one of the top three companies in the global new energy battery industry. in 2023, its energy storage business and overseas business will nearly double year-on-year. zhao jun said that guoxuan high-tech started its globalization journey early and quickly, but it needs legal services to deal with foreign-related emergencies and changes in overseas situations.
enterprises have called for industry associations to better play their functional roles, as they are an important support for the market regulation mechanism. they should focus on helping enterprises obtain policy support in foreign trade export areas such as law, finance, logistics, and insurance, guide enterprises in industrial planning, layout, cooperation negotiations and other work, and provide timely risk prevention and early warning reminders to help enterprises avoid risks and pitfalls.
——remove the logistics "stuck points" encountered in the export of new energy products. with higher energy density, the capacity of energy storage system products is getting larger and larger, and the product weights are mostly 36 tons, 38 tons, 43 tons, and 45 tons, with the heaviest exceeding 58 tons. there is an urgent need to update logistics standards and policies.
the reporter learned that, at present, in terms of domestic logistics, energy storage products are classified as nine types of dangerous goods including batteries, and it is strictly prohibited to transport overweight or oversized products. the existing logistics standards and policies stipulate that the maximum weight of loaded cargo is 30 tons. enterprises can only apply for an "oversized transport vehicle pass" in accordance with non-dangerous goods, and there are disputes over law enforcement. in terms of seagoing logistics, container shipping companies will provide a small amount of space for products between 30 tons and 36 tons according to the route conditions, which is still insufficient compared with corporate needs.
in this regard, li ka, manager of the logistics and customs department of sungrow's solar energy storage sales and operation center, and others suggested that when lithium battery energy storage products are transported by road, if the battery state of charge (soc) is lower than 30%, they are not considered dangerous goods and can be transported by ordinary vehicles; if the energy storage products are overweight or over-limit, an application for a large-scale transportation permit should be applied for in accordance with relevant road transportation laws and regulations.
——expand the "circle of friends" and create a more resilient global industrial chain. li zhen, chairman of guoxuan high-tech, pointed out that the globalization trend of the new energy industry is irreversible, but enterprises also need to improve their "internal strength", increase r&d investment, and enhance technological innovation capabilities. in particular, upstream and downstream enterprises should cooperate more, follow the global development strategy of "be local, for local", do a good job in localized production and supporting layout, abide by laws and regulations and local cultural customs, operate legally and in compliance with regulations, and become local "corporate citizens".
(outlook, 2024, no. 36)
