China's PV market is not a big opportunity for private enterprises

Abstract The domestic market of China's PV industry seems to have signs of start-up. This is mainly reflected in the fact that the investment return rate of China's PV power plants has begun to accelerate, and the investment in PV power plants has become the hope of China's PV industry, which has suffered from the shrinking of overseas markets. After a 2011 over-expected industry boom...

China's PV industry domestic market seems to have signs of start-up, which is mainly reflected in the fact that the investment return rate of China's PV power plants has begun to accelerate, and the investment in PV power plants has become the hope of China's PV industry, which suffers from shrinking overseas markets.

After experiencing a worse-than-expected industry boom in 2011, the Chinese PV industry, the largest and largest company in the world, began to focus more on the local market. According to a survey by iSuppli, a world-renowned electronics manufacturing market research company, China's domestic market will rank fourth in the world (perhaps third) in 2012, while installed capacity growth will rank first in the world.

Photovoltaic industry giants and institutional analysts are optimistic that, thanks to the launch of China's domestic market, China's PV industry will pick up again in the second half of this year. However, most of the photovoltaic power plant resources are in the hands of large state-owned power generation groups, and private capital is difficult to enter. For private PV companies, the huge and start-up Chinese domestic market is likely to be beyond reach.

2011 PV cold wave

“In 2011, our year-end awards were not issued.” The relevant person in charge of the marketing department of a large-scale photovoltaic enterprise in Jiangsu, China, who did not want to disclose the name, told Netease Finance. It is also known that the domestic photovoltaic giant GCL-Poly has declined compared to previous years due to its performance last year, and even canceled the company's annual meeting.

The past year of 2011 is the year in which China's PV industry has been the coldest since 2005. Affected by the European debt crisis, the photovoltaic industry's financing channels have broken since the third quarter of last year, and demand from European countries such as Italy, Germany and Spain has shrunk severely.

At the end of the fourth quarter of last year, the German government considered further reductions in PV subsidies and set a ceiling of 1 GW for this year's PV installations. The European market, which has been growing rapidly for six years, is shrinking.

The United States, which was placed in the hope of replacing the European market, has filed a "double-reverse" case to respond to the hydrangea thrown by the Chinese photovoltaic industry. If the US "double opposition" is passed, Chinese PV companies will lose the fastest growing US market in the past two years. The United States has imposed a 100% anti-dumping punitive tariff, which is aggravating the domestic domestic PV industry, which has lost its high-speed growth in the European market.

Inspired by the last bus before the subsidy of the European market before October 2010, China's PV industry showed a high growth in 2010. In 2011, the capacity of the entire industry chain expanded further, resulting in more than double the overcapacity of some industrial chains. ,

After the peak is a deep valley. In the second quarter of 2011, the major countries in the European market, Germany, Italy, and the West, successively completed the reduction of subsidies for the photovoltaic industry. The European debt crisis broke out again in the second half of last year, causing the demand in the European market to plummet.

China's domestic production capacity has expanded rapidly and overseas demand has accelerated. The serious oversupply has caused the PV industry's entire industry chain products to fall sharply in the third quarter of last year. As of December 19 last year, the average price of polysilicon fell below 22 US dollars / kg (China's domestic polysilicon minimum production cost for Poly GCL, last year its polysilicon production cost is 22.5 US dollars / kg), the entire industry chain is facing losses.

The head of the marketing department of a large-scale photovoltaic enterprise in Zhejiang told Netease Finance that the annual winter season is the traditional off-season for PV power plants. Although the German and Chinese markets saw a situation of rushing at the end of last year, most of the shipments are still digesting the inventory accumulated in the previous period. Therefore, it is expected that the industry demand will not rebound sharply. In the first quarter of this year, the industry will still be in a downturn.

The attitude from the official is more pessimistic than the corporate people. Li Junfeng, deputy director of the Energy Research Institute of the National Development and Reform Commission, told Netease Finance: “The market is rumored to be cold, and this formulation is not accurate. The market is so in this situation, the majority of this industry. Enterprises have a responsibility, and the difficulties in the photovoltaic industry can not be solved in the short term."

According to a report released last December by iSuppli, a market research company focusing on global electronics manufacturing, the global installed capacity of photovoltaics will reach 23.8 GW in 2011, a year-on-year increase of 34%. The new PV installed capacity in Italy will reach 6.9GW, surpassing Germany's 5.9GW, becoming the world's largest solar PV market. The United States will rank third after Italy and Germany (with an installed capacity of 2.7 GW), followed by China, Japan and France with installed capacity of 1.7 GW, 1.3 GW and 963 MW respectively.

The report shows that the installed capacity of China's PV industry in 2011 reached 1.6 GW -1.7GW, an increase of 200%-220% over 2010, and for the first time broke through the "GW" (Jiva) (1000MW = 1GW) level, becoming Japan. After another country. More importantly, China's new installed capacity in 2012 is expected to reach 3GW~5GW, an increase of 100%~200%.

In other words, if China's PV installations can reach 4GW this year, it may surpass the US's top three new installed capacity in the global PV industry.

Domestic market will start

Hu Yishu, manager of Zhengtai Solar Technology Strategic Marketing Department, told Netease Finance that “the PV industry was really bad last year, but one thing is worthy of attention. The Chinese domestic market seems to be starting.” According to Li Junfeng’s point of view, China’s PV industry is self-defeating. The hope of "staying dead and then born" is pinned on the launch of China's domestic market.

In this regard, the domestic PV giant seems to be prepared for this. On December 12 last year, Fang Peng, CEO of JA Solar, the world's largest supplier of crystalline silicon solar cells, told Netease Finance that unlike most solar companies, the sales ratio of JA Solar's domestic and international solar products last year was close to 1:1. Sales accounted for approximately 47%-48%.

In the third quarter of last year, Jingao reported that its shipments (batteries and components) were 445MW in the third quarter of last year, up 11% from the previous quarter.

The world's sixth-ranked photovoltaic company, Artes Sunshine Power's president, Xiaoyu Xiao, told Netease Finance that it expects that Artes' shipments in the Chinese market in the fourth quarter of 2011 will set a new record in the company's history. "This year we will continue to exert strength in the Chinese market." Xiao Xiaoying is quite optimistic about China's PV market. "In 2010, China's PV installed capacity was only 500MW. Last year, it was estimated to be 2GW, which is four times a year. This growth rate is unique in the world. It is expected to continue to grow this year."

Hu Yushu also told NetEase Finance that Chint Solar is working hard to expand its domestic PV power plant business, but its scale is still small. “The company is involved in the installation of a photovoltaic power station in Qinghai, we are only responsible for providing 10MW installed capacity”; GCL-Poly’s handwriting is obviously larger. According to Netease Finance, GCL-Poly teamed up with China Guangdong Nuclear Power Group's China Guangdong Nuclear Power Development Co., Ltd. on November 17, last year to jointly develop a 1GW photovoltaic power plant project in Datong City, Shanxi Province.

Like JA Solar, GCL-Poly is very early in the field of power plant projects: Central PV, a subsidiary of GCL-Poly's parent company GCL, completed 53MW of installed capacity in 2010 and installed capacity of 500MW in 2011. The share is over 10%.

Jiangxi LDK, the world's largest silicon wafer producer, which was deeply affected by the sharp drop in polysilicon prices, also turned its attention to photovoltaic power plant projects.

According to Netease Finance, LDK is located in the Houtian Desert of Nanchang, Jiangxi, with a total installed capacity of 20 MW. The photovoltaic demonstration power station is the largest solar energy project in Jiangxi Province. Last year, LDK expects shipments of photovoltaic power plants in China to exceed 100MW.

Yang Minglun, vice president of investment and corporate development at JA Solar, also told Netease Finance that its domestic market products mainly supply large domestic PV power plants.

Private enterprises have little chance

The Chinese government is developing a huge plan for new installed capacity in the photovoltaic industry, which is obvious to attract companies to open up the domestic market. China's "Twelfth Five-Year Plan" photovoltaic target is set at 10GW, and the total installed capacity of photovoltaics in 2020 is as high as 50GW.

In August last year, the National Development and Reform Commission issued a domestic PV grid fixed electricity price policy, attracting a large number of enterprises to invest in the construction of domestic photovoltaic power plants, and even triggered the tide of the rushing of photovoltaic power plants in the west, becoming the brightest color of the photovoltaic industry last year. Ding Wenwu, Director of the Department of Electronic Information of the Ministry of Industry and Information Technology, said in November that the implementation rules for domestic PV on-grid tariffs will be introduced in the future to further attract enterprises to explore the domestic market.

Industry analysts believe that due to the collapse of downstream component prices and the introduction of PV subsidized electricity prices, the return on investment of photovoltaic power plants will continue to increase, and the operation of power plants will be the most beneficial sub-sector after the domestic market starts.

Xu Chao, a new energy equipment analyst at CITIC Jiantou, also believes that according to the current subsidy standard (the feed-in tariff subsidy standard is 1.15 yuan / kWh), the current western photovoltaic power plant project has a considerable return on investment, and the internal rate of return of individual projects exceeds 8%, even 10%. Since the domestic third quarter of last year, a large number of projects have been launched.

Looking at the year-on-year growth rate of new PV installed capacity, the domestic PV market is expected to start this year. Although the rapid start of the domestic market is still difficult to drive the recovery of domestic PV manufacturing industry, the positive effects on the downstream PV system and power station investment are still significant.

However, this kind of positive seems to have nothing to do with private PV companies that have been in the photovoltaic industry. The reason is very simple. Most of the photovoltaic power station resources are in the hands of large state-owned power generation groups, and private capital is difficult to enter. For private PV companies, the huge and start-up Chinese domestic market is likely to be beyond reach.

In August last year, Qinghai Province announced that all photovoltaic projects installed before September 30 last year could enjoy the feed-in tariff subsidy of 1.15 yuan/kWh to encourage enterprises to install photovoltaic power plants in Qinghai. In the case of private PV companies that are extremely cost-conscious and sensitive, such subsidies are not easy to make a profit.

Li Xianshou, CEO of Sunshine Sunshine, said at a seminar on photovoltaic industry in Zhejiang Province at that time that there were more than 20 companies involved in the bidding of 20MW photovoltaic power plant installation projects in Qinghai Province, but only the company that won the bid was only Zhengtai Solar. There are several private enterprises such as Qihui Sunshine and Wuxi Suntech. Other successful bidders are state-owned enterprises or central enterprises.

According to NetEase Finance, Zhengtai Solar also said to Netease Finance that the bidding for several PV power plant installation projects has not been successful. "The majority of the winning bids are central enterprises, and private enterprises must win the bid, unless there is no cost, there are several Do private enterprises have this defeating ability?"
At that meeting, Li Xianshou said that after measuring various conditions, it was found that the internal rate of return of Qinghai Project obtained by Qihui Sunshine was only 7.5%. "For private enterprises, this rate of return is quite low." Wang Sicheng, a researcher at the Energy Research Institute of the National Development and Reform Commission, believes that a more feasible rate of return should have an internal rate of return of at least 8%.

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