China’s solar exports in quarter ended March: A retrospective

China exported 50.9 GW of modules in the first three months of the year, up 37% YoY and 53% from a quarter earlier. Cell exports stood at 8.6 GW, up 66% YoY and 26% from a quarter earlier. 

Cell 

Turkey contributed to the largest share of China’s cell exports. The country imported 3.3 GW of cells in the first quarter, a sign of growing local module capacity. India and Southeast Asian countries are the second largest importers. Upon the end of fiscal year and looming deadline for postponed projects, India saw marked increase in demand for cells in the first quarter, accumulating 1.35 GW of cell imports. Its demand for modules also picked up after experiencing a slump caused by the introduction of BCD, having imported 1.6 GW of modules in the first quarter, a significant increase compared with the second half of 2022. 

Cell demand from Southeast Asia started increasing from the fourth quarter last year. Such demand growth is driven by rising utilization rates of module makers in the region, as India imported more modules from Southeast Asia and some foreign developers preferred modules made outside of China.


 

Module 

Europe contributed to most of the increases in module exports. The continent imported 29.5 GW of modules from China in the first quarter, up 56% from a quarter earlier and 77% YoY. Historically, the second and third quarters are Europe’s peak seasons. Last year, the second and third quarter respectively accounted for 29.6% and 29.3% of China’s module exports last year, while the first quarter only represented 19.3%. Examining data in 2020 and 2021, Europe’s imports in the first quarter respectively accounted for 20.7% and 16.7% of the annual total, indicating the first quarter is the low season.


 

This year, however, Europe’s demand for Chinese modules came in at 8.6 GW, 8.4 GW, and 12.5 GW in January, February, and March, respectively, amounting to 29.5 GW in total. That is an increase of 77% compared with the same period last year. 

Amid the phenome where Europe imported such high volume of modules in the traditional low season this year, the industry doubts whether Europe can sustain such growth in the following quarters. If Europe imports modules as the pattern of previous years, the total imports could reach as high as 150 GW this year, far higher than the forecast made by most industry professionals. This could also impact the annual forecast for the market size.  

In fact, it is not likely for Europe to witness the same scale of growth after the second quarter, given its module consumption falls behind imports. Moreover, as per InfoLink’s understanding, the significant export volume in early 2023 is partially due to module makers’ strategy to secure market when demand rises in peak season, meaning that those exports are not real orders but inventory. Whether such strategy will impact module demand in Europe remains to be seen. Inventory draw in the second and third quarter is more likely to remain as seen in the first quarter, but the growth will narrow. If the market continues such growth in the second and third quarter, global solar demand will be lifted significantly as Europe is the second largest solar market after China.

Brazil is another market to watch, for it also exported large volume of modules. The Netherlands aside, Brazil has been the largest importer of Chinese modules since 2022, having imported 18 GW of modules last year and reached 5.2 GW in the first quarter of this year. The Brazilian government enacted in January the Law 14.300, which charges grid fees on small-scale distributed PV projects. A large number of solar owners rushed to apply for grid-connection to keep their projects under old regulatory framework before the new regime takes effect. As a result, the Brazilian market boomed in 2022, importing 18 GW of modules from China, up 58% from a year earlier. 

The nation imported nearly 5.2 GW of Chinese modules within the first three months of the year, a level significantly higher than the previous quarter. But such imports was mainly ascribed to the Law 14.300 that requires solar projects submitted before 2023 to complete installation either within 120 days or a year, as well as the large amount of grid-connection applications earlier. Whether Brazil can sustain such high demand this year remains a question given its consumption capability and new policy framework. On the other hand, the market was mainly driven by distributed generation projects, but as module prices fell, its utility-scale projects could revive, pushing up module demand.

In addition to Europe and Brazil, the Middle East and Africa also experienced marked growth in the first quarter, evidence of accelerated deployment of solar. Estimate for this year’s solar market is adjusted due to increases in China’s module exports in the first quarter. Under a conservative scenario, InfoLink expects overseas inventory draw to weaken after robust imports in the first quarter, resulting in at least 24% of module demand growth this year. Demand will rise further if supply chain prices and freight rates continue to fall and countries around the globe introduce supportive policies. Under an optimistic scenario, overseas markets continue inventory draw as strong as in the first quarter, the solar market could see nearly 43% of growth.