| Date | July 19, 2023 |
|---|
Upon the invitation of the China Photovoltaic Industry Association (CPIA), Dora Zhao, senior analyst from InfoLink Consulting, spoke at the "PV Industry 1H23 Retrospect and 2H23 Prospect Conference" on July 19, discussing supply-demand dynamics and price trends in the PV industry for 2023 with a focus on the supply and demand of n-type products.
In 2023, the PV industry chain still experiences notable transformations in production capacity, output, and product types from mono-Si p-type products to the more efficient mono-Si n-type products. Meantime, demand exhibits rapid growth, particularly in module demand. Prices across the supply chain fluctuate more significantly than expected, challenging the profitability of all manufacturers.
Annual global module demand will increase by 38% to 390 GW, according to a conservative projection of InfoLink based on the current market landscape. In an optimistic scenario where issues about inventory in non-China markets and land approval and grid congestion in China continue to improve, the annual global module demand may reach 455 GW, a remarkable year-on-year growth of up to 61%.
At the CPIA conference, Zhao highlighted the growing momentum in global module demand during the first half of 2023. The stellar performance of major markets, such as China, Europe, and Brazil, the gradual recovery of the Indian and US markets, and the rise of emerging markets open the door to another stronger-than-expected growth in annual demand.
The addition of installed capacity in the first half of May was outstanding, said Zhao. As of May, China had cumulated 61.21 GW of installed capacity, a whopping 158% year-on-year increase from 23.71 GW last year. However, recent challenges surrounding grid congestion and land approval inspections affect the progress of ground-mounted projects. Furthermore, the ongoing decline in module prices makes end users even more in a wait-and-see mode. As a result, the demand in China will be a crucial variable in the second half of the year.
Customs data compiled by InfoLink show China exporting 88 GW of modules during January and May, a 39% year-on-year increase. Yet, the month-on-month growth rate has decelerated compared to the first quarter. After substantial shipments in the first quarter, inventory piled up, affecting the growth in demand of non-China markets. Challenges in inventory control and finding sales channels intensified market competition. In the latter half of 2023, even with price declines across the supply chain boosting demand, whether the markets can sustain a growth rate as fast as in the first half hinges on effective inventory depletion, explained Zhao.
In terms of production capacity, the four major sectors all post strong growth momentum. The annual cell production capacity exceeded 1,000 GW. In the second quarter of this year, module capacity experienced a 20% year-on-year increase, driven by the rapid expansion of n-type product capacity. Zhao expects the figure to reach 25-30% in 2024 while leaving open the possibility of impacts from severe price wars and capacity retirement.
Regarding n-type cells, Zhao pointed out the narrowed price gap between TOPCon and p-type cells from 0.13 yuan per watt to 0.07-0.08 yuan per watt early this year. Given equipment installation and debugging progress in the second half of this year, the market will see heightened competition in the first half of 2024. By mid-2024, the profit of M10 PERC cells will be 10% lower than the current level.
In the module sector, Tier-1 module makers maintained an overall utilization rate of 70-80% in the first half of 2023, while the utilization rate for other manufacturers averaged around 50%-60%. According to Zhao, the shipment volume of the top 10 module makers equals approximately 70% of global production. In the second half of the year, the top 10 will continue vying for shipment rankings. Tier-1 module makers will leverage their advantages in brand recognition, distribution channels, and production costs to bolster their leading position. Meanwhile, their Tier-2 peers may face increased competitive pressure, even leading to market exits.
In 2023, the PV industry chain still experiences notable transformations in production capacity, output, and product types from mono-Si p-type products to the more efficient mono-Si n-type products. Meantime, demand exhibits rapid growth, particularly in module demand. Prices across the supply chain fluctuate more significantly than expected, challenging the profitability of all manufacturers.
Annual global module demand will increase by 38% to 390 GW, according to a conservative projection of InfoLink based on the current market landscape. In an optimistic scenario where issues about inventory in non-China markets and land approval and grid congestion in China continue to improve, the annual global module demand may reach 455 GW, a remarkable year-on-year growth of up to 61%.
At the CPIA conference, Zhao highlighted the growing momentum in global module demand during the first half of 2023. The stellar performance of major markets, such as China, Europe, and Brazil, the gradual recovery of the Indian and US markets, and the rise of emerging markets open the door to another stronger-than-expected growth in annual demand.
The addition of installed capacity in the first half of May was outstanding, said Zhao. As of May, China had cumulated 61.21 GW of installed capacity, a whopping 158% year-on-year increase from 23.71 GW last year. However, recent challenges surrounding grid congestion and land approval inspections affect the progress of ground-mounted projects. Furthermore, the ongoing decline in module prices makes end users even more in a wait-and-see mode. As a result, the demand in China will be a crucial variable in the second half of the year.
Customs data compiled by InfoLink show China exporting 88 GW of modules during January and May, a 39% year-on-year increase. Yet, the month-on-month growth rate has decelerated compared to the first quarter. After substantial shipments in the first quarter, inventory piled up, affecting the growth in demand of non-China markets. Challenges in inventory control and finding sales channels intensified market competition. In the latter half of 2023, even with price declines across the supply chain boosting demand, whether the markets can sustain a growth rate as fast as in the first half hinges on effective inventory depletion, explained Zhao.
In terms of production capacity, the four major sectors all post strong growth momentum. The annual cell production capacity exceeded 1,000 GW. In the second quarter of this year, module capacity experienced a 20% year-on-year increase, driven by the rapid expansion of n-type product capacity. Zhao expects the figure to reach 25-30% in 2024 while leaving open the possibility of impacts from severe price wars and capacity retirement.
Regarding n-type cells, Zhao pointed out the narrowed price gap between TOPCon and p-type cells from 0.13 yuan per watt to 0.07-0.08 yuan per watt early this year. Given equipment installation and debugging progress in the second half of this year, the market will see heightened competition in the first half of 2024. By mid-2024, the profit of M10 PERC cells will be 10% lower than the current level.
In the module sector, Tier-1 module makers maintained an overall utilization rate of 70-80% in the first half of 2023, while the utilization rate for other manufacturers averaged around 50%-60%. According to Zhao, the shipment volume of the top 10 module makers equals approximately 70% of global production. In the second half of the year, the top 10 will continue vying for shipment rankings. Tier-1 module makers will leverage their advantages in brand recognition, distribution channels, and production costs to bolster their leading position. Meanwhile, their Tier-2 peers may face increased competitive pressure, even leading to market exits.
Speaker
Dora Zhao
Senior Solar Analyst
Senior Solar Analyst
Dora has over 15 years of experience in the solar industry. Prior to this role, Dora applied her expertise in market analysis and sales to a leading solar company, developing distinctive views of and firm networks within the solar industry.
At InfoLink, Dora focuses on the upstream and midstream of the supply chain. She closely monitors and analyzes demand, supply, price trends, and competition in the polysilicon and wafer sectors.