No Expansion, Or Elimination? 70 Billion "Light And Shade" Logic Of Photovoltaic Expansion

The solar energy Polytron Technologies Inc (A), which returned from the US privatization and landed on the A shares, soon enjoyed the convenience of financing in the domestic capital market.

In April 11th, Jo technology announced that it would raise more than 5 billion 200 million yuan for high efficiency batteries and component capacity expansion projects. This also means that under the support of capital, the expansion of domestic PV industry will be extremely intense.

? ? ? Twenty-first Century economic report reporter statistics found that since the beginning of this year, 601012.SH, 600438.SH, 002506.SZ, A and other 8 A share photovoltaic companies have announced a total capacity expansion plan of total investment amounting to $70 billion 838 million, which involves the production of PV rods, silicon wafers, batteries, components and other manufacturing sectors, and set off a new wave of expansion.

Although concerns about "overcapacity in the domestic photovoltaic industry" have never disappeared, the enthusiasm of PV companies for expanding production has never been reduced. Even in today's global spread of the new crown epidemic, leading enterprises are joining the "competition" without fear.

Some heads of enterprises in the twenty-first Century economic report reporters said that the company is based on technology iteration, reduce costs, expand market share and other considerations to expand production. But is that the real logic behind it?

Open face: scale effect and technology drive

More than 2/3 of the 5 billion 200 million capital increased by 5GW will be used for the annual production of high efficiency batteries and 10GW efficient components and supporting projects. These two projects are part of the company's annual 10GW high efficiency battery and 10GW efficient component and supporting project (hereinafter referred to as the Yiwu project) announced by the company in February this year. "The Yiwu project" According to the announcement at that time, Jing Yao technology intends to invest 10 billion 200 million yuan in the construction of the Yiwu project, and it will be implemented in two phases, with a total construction period of four years.

"The implementation of this project is conducive to increasing the capacity and market share of the company, further enhancing the scale effect, enhancing the competitiveness of enterprises, and contributing to the sustainable development of the future," Jing Wan technology said.

Strengthening the scale effect is an important reason for the domestic PV enterprises to explain the necessity of expanding production. Under the scale effect, the market share of PV companies is increased and the overall production cost has decreased.

Tongwei shares in February this year, throwing 20 billion yuan efficient battery expansion plan, said that "expand the scale of production capacity, improve market share" and "continue to reduce production costs" will be a significant impact on the company after the expansion of the project. When Xin Xin integrated the 18 billion yuan component expansion plan in March this year, it said that the project "will effectively support the landing of the company's photovoltaic main industry terminal strategy, and enhance the company's market share and industry status."

In fact, the effect of scale effect brought about by market share is obvious. According to Tongwei's expansion plan, the company is expected to form at least 30GW photovoltaic cell scale this year to further consolidate its leading position in the field of photovoltaic cells. Longji shares will increase its market share in the single crystal area by increasing the capacity of monocrystalline silicon rods and silicon wafers.

In addition, the new capacity projects built by expansion will mainly focus on the production line with improved automation level and optimized production process, and the production cost will be reduced. The overall production cost of the new and old production capacity will be further diluted to raise the profit level.

At the same time, the driving force of new technology iteration has also become another important reason for enterprises to introduce expansion.

Since this year, HJT (heterojunction) and large size silicon chips have become the two new technological routes of photovoltaic industry. Therefore, in this year's expansion plan, enterprises are not hiding the pursuit of new technology.

In the 20 billion yuan investment plan, Tongwei shares said it would choose the technology of high efficiency products such as large-size specifications, Perc+, Topcon and HJT in new projects, so as to promote the continuous decline of the non silicon cost of solar cells. In twenty-first Century, the economic news reporter found that in terms of HJT, Tongwei stock has three pilot lines with a scale of 400MW. In terms of product size, the new capacity of the project will adapt to the trend of large product size, and the specifications will be fully compatible with 210mm and below dimensions.

However, Liu Shuai, an analyst at UBS Securities utility and new energy and environmental protection industry, told reporters in twenty-first Century economic report that the scale effect caused by the expansion of photovoltaic industry is quite significant, and the so-called technological innovation is difficult to quickly reflect the new capacity.

Dark side: "gambling" and "fighting" for demand

Looking at the wave of expansion of domestic photovoltaic enterprises, it is easy to find that expansion has almost become a "gene" for the development of photovoltaic industry in China. When a single enterprise announces the expansion of new capacity, it will often form a full scale expansion of the whole industry, including active planning and passive follow suit.

A photovoltaic enterprise told the twenty-first Century economic news reporter, "every round of expansion will be a tragic reshuffle of the industry. Under the Matthew effect, some small and medium-sized enterprises without capital advantages have been trapped in the embarrassing situation of" waiting for death "without expanding their production and expanding the" finding death ".

In fact, under the circumstances of the global epidemic spreading this year, photovoltaic enterprises are facing greater uncertainty in demand. This makes the new round of capacity expansion become a "gambling" and "fighting" for the future needs of enterprises.

"Affected by the epidemic, many small and medium photovoltaic enterprises will postpone the original expansion plan." Liu Shuai told the twenty-first Century economic news reporter, but under the "counter trend", the leading enterprises are bold enough to throw out a big plan to expand production, which is aimed at normalizing the demand of the industry, and the new capacity can be released in time.

"Another important reason is the high cost of old capacity." Liu Shuai said that the old capacity is facing higher unit capital expenditure and depreciation, so the expansion of new capacity has become the preferred choice for leading enterprises.

In view of the industry's concern over the problem of excess capacity, Liu Shuai believes that based on the comprehensive judgement of leading enterprises on their own cost curves and demand curves, the current capacity plan should be able to be absorbed after the market demand normalizing after the outbreak, but some SMEs may face the risk of squeezing Market share.

However, the change of demand caused by the industry environment makes the capacity of the PV enterprises also face uncertainty.

In 2020, it was regarded as the last year of subsidies for the domestic photovoltaic industry. After the domestic photovoltaic policy was made clear earlier this year, the domestic market was postponed due to the causes of the epidemic. However, the PV industry has regarded the two quarter as the beginning of this year's market competition.

With the anticipation of the decline in demand caused by overseas epidemic, the situation of preempting the domestic market order by cutting prices has already appeared.

In April 8th, Longji shares updated the price of monocrystalline silicon wafers in its official website, and the products were cut across the board. Only two weeks later, the company lowered the price of silicon wafers again.

In this regard, CICC analysis, said Longji shares optimistic about the cost advantage of silicon in the price war, but the company may face the impact of oversea epidemics beyond the expected time, resulting in the risk of photovoltaic demand is expected to reduce.

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