Jiangsu PV Industry Faces New Dilemma

Photovoltaic price subsidies in Germany will drop significantly; the photovoltaic power generation market will shrink significantly, and the installed capacity will drop from 9 GW last year to below 5 GW this year. At the 2011 International Solar Energy and Photovoltaics Shanghai 2011 (short for 2011SNEC), which ended on February 24th, Mr Martin, the expert from the Ministry of Economics and Technology of the German Federal Government, made such a prediction. Germany is the largest photovoltaic power generation market in the world. It accounted for more than half of the total installed capacity in Europe last year and is also the largest purchaser of photovoltaic modules in China.

Not just Germany. It is understood that Italy will begin to lower its PV tariff subsidies in May, and its demand for PV equipment is bound to drop significantly. For the photovoltaic photovoltaic module industry, the main body of the photovoltaic power group in our province, the market is facing a severe new situation.

Overseas Markets: Accelerated Price Reduction

Martin told us that the German photovoltaic power price subsidy is higher. Before July 1, last year, the on-grid electricity price of the ground power station surpassed 26 euro cents per kilowatt-hour, which is roughly equivalent to 2.6 yuan. High electricity prices brought high profits and attracted a large amount of capital inflows. As a result, the German PV market was extremely popular in 2010, and the total installed capacity almost doubled from 2009.

However, this "hot" is at the price of this year's market tightening. According to Martin, the ground-based photovoltaic power station with the largest installed capacity in Germany has been used as an example. At the end of last year, the on-grid electricity price has dropped by 16%. This year it is expected to be lowered to 22.09 euro cents, and it will drop by more than 13% again! Driven by Germany, the major PV markets in Europe and the world will fall in volume and price in 2011. “Made in China” currently accounts for more than one-third of the German PV module market, and the Jiangsu PV Corps is almost half of “Made in China”. This huge fluctuation in overseas markets this year will first impact on Jiangsu PV companies.

Ye Zhengxian, general manager of Motech (Suzhou) New Energy Co., Ltd. predicts that the global PV module production capacity will reach 28-30 GW this year, but the market demand is only 14-20 GW, and the pattern of oversupply will be significant.

Raw material prices: sharp rise

Compared with photovoltaic cell module companies, the silicon material manufacturers can be described as excellent. Last year, the European photovoltaic market pushed up the price of upstream raw materials, especially the price of polysilicon and its expectations. One of Asia's largest polysilicon companies, deputy general manager of GCL-Poly Energy Holdings Co., Ltd., told reporters that in June last year, the domestic polysilicon material price was only 50 US dollars per kilogram, which began to rise in the third quarter and rose to more than US$110 after the Spring Festival. Half-year increase of more than 100%. The New Deal of "Polysilicon Industry Access Requirements" issued in January this year requires that the annual production capacity of investment production lines not be less than 3,000 tons, which will increase the industry's entry threshold, and that the growth of polysilicon production capacity will slow in the future, which will objectively increase the price of boosting supplies.

The cost of silicon material accounts for more than 70% of the cost of photovoltaic cell modules. The apparent increase in its price will undoubtedly greatly increase the cost pressure for the manufacturers of cell modules.

Battery pack maker: profit "diving"

On the one hand, the prices of photovoltaic cell modules at home and abroad continue to decline; on the other hand, the cost of raw materials continues to rise; the photovoltaic cell module manufacturers in our province suffer from two squeezes, and profits have dropped significantly. It is reported that China's largest photovoltaic battery company - Wuxi Suntech's polysilicon battery gross margin has been "diving" to between 15% -20%, and some traditional industries are already almost the same. Changzhou Tianhe, Suzhou Artes and other major manufacturers are similar.

Observers in the industry believe that in this new dilemma, the pressure on small and medium-sized PV module enterprises in our province is particularly great. “Although the global PV market this year exceeds supply, the well-known large-scale manufacturers will still receive more orders based on their brand, management, and technology advantages, continue to expand production capacity, and squeeze the market space of small and medium-sized enterprises.” Ye Zhengxian said. In fact, the profitability of some small PV module manufacturers is less than 5%! Ye Zhengxian pointed out that one of the direct consequences of this dilemma is that in the next two to three years, the Jiangsu PV industry will usher in a “big reshuffle”.

How to break through the difficulties?

How do PV companies break out of market difficulties? "Either technological innovation or industrial restructuring." Martin admitted frankly. Some large enterprises are extending upstream and downstream of the industrial chain. For example, Suntech and Tianhe are trying to build a “vertical industrial chain” model and enter new areas such as silicon slicing and power station development to reduce costs and gain more profit. At present, amorphous silicon thin-film battery companies are enjoying a good opportunity for development. One important factor is that their technical threshold is high and there are few competitive enterprises.

Ye Zhengxian pointed out that improving the management level, reducing costs, improving corporate culture, and developing brands are also the way to solve the future of PV companies in Jiangsu.