In June, domestic PV installation reached a record high of 17GW, showing a remarkable 140% year-on-year increase and 33% month-on-month growth. The rapid decline in prices is expected to suppress short-term demand, but it also validates the notion that price cuts stimulate potential demand. The decrease in PV exports in June, coinciding with Europe’s summer vacation period and the domestic installation rush, aligns with our analysis of the European module inventory issue.
This week, the National Energy Administration reported that new domestic PV installed capacity from January to June reached 78.4GW, marking a substantial 154% year-on-year increase, with June accounting for 17.2GW, a growth of 140% compared to the previous year and 33% compared to the previous month. From May to June, industrial chain prices began to fall rapidly and gradually bottomed out, and end customers are more willing to observe the market situation. While the market had lower expectations for June’s installation data, the final figures surpassed predictions with triple-digit year-on-year and significant month-on-month growth. In June, the installation capacity is high, along with projects facing the 630 grid-connected deadline, but the module prices witnessed sharp and rapid decline. This situation has led to fluctuations in demand, but the factors driving potential demand are more effective in the market. Despite the previous data on wind and solar consumption released by the National Energy Administration, the current domestic installed capacity does not seem to be affected by the pressure of wind and solar consumption.
Recently, there has been a bottoming out of upstream prices in the industrial chain, leading to a gradual clarity in the lowest prices of corresponding modules. The domestic centralized power plants are easy to be affected by the rapid fluctuations on prices, and their demand will probably increase faster in the second half of the year. Additionally, the economics of household, industrial, and commercial distributed projects have significantly improved due to the reduction in module prices. The first half of this year has witnessed a high proportion of distributed installed capacity, indicating a substantial potential demand for distribution installations. Our annual strategic forecast from last year, projecting a domestic annual new installed capacity of 150GWac with a year-on-year growth rate surpassing 70%, has been overfulfilled.
In parallel, the customs authority announced that domestic PV module exports reached 16.6GW in June, showing a 9% year-on-year increase but an 8% month-on-month decrease. Cell exports amounted to 2.6GW, declining by 51% month-on-month but increasing by 48% year-on-year. The cumulative exports of modules from January to June reached 99GW, reflecting an 18% year-on-year increase, while cell exports totaled 20.3GW, surging by 79% year-on-year. The cumulative exports of cell modules reached 119GW, up 25% year-on-year. In June, national inverter exports amounted to 6.7 billion yuan, marking a 41% year-on-year increase but a 10% month-on-month decrease. Cumulative inverter exports from January to June reached 42.4 billion yuan, representing a substantial 109% year-on-year growth. Furthermore, the month-on-month change in the export volume of inverters in June mirrored that of modules.
This week, industry media reported that European module inventory is expected to exceed 40GW, causing market concern. However, we believe that this data might not be derived from comprehensive research involving dealers and enterprise warehouse installation capacity. More likely, it is based on module import and export data from Chinese and European Customs, along with installed capacity data calculated and published by SPE with correction algorithms. We want to emphasize the potential reasons for the significant difference between installed capacity data and module export volumes in Europe. Firstly, the installed capacity published by SPE only accounts for AC caliber installations. As Europe experiences low sunshine hours in many regions, the average capacity ratio of projects tends to be higher compared to the domestic market and other regions, estimated at around 1.25 to1.3 on average, and even reaching 1.4 to 1.5 for some projects. This leads to a 25-30% difference in GW.
Secondly, many national statistical agencies typically focus on counting installed capacity for grid-connected projects above a certain capacity threshold (e.g., MW level). Consequently, the official statistics might not include a large number of small-scale distributed and off-grid installation capacities, which have significantly increased due to the European energy crisis in the past year.
Thirdly, during the rapid expansion of customer demand and industry scale, the inventory of the normal distribution channels might be inflated to some extent. Moreover, there is a noticeable imbalance in the distribution of domestic demand between the first and second halves of the year. Some module enterprises adopt a business strategy to handle overseas orders, actively increasing inventory in the first half of the year and reducing it in the second half.
Recently, the prices of polysilicon and cells in the industry chain have started to stabilize and even rebound, leading to a relatively high level of profitability for cells. This indicates a gradual release of customer demand and a clear trend of increasing operation rates month-on-month within the industry chain. We anticipate that overall production scheduling and shipments in the industry will continue to increase month-on-month during the second half of the year. By the end of Q3 and the beginning of Q4, module production scheduling is expected to surpass 50GW (equivalent to 600GW annually). Furthermore, the installed capacity of domestic energy storage is projected to reach 40GWh this year, with large-size storage companies entering a period of performance growth.
