How to break through the oversupply crisis in the solar PV industry? one word: Limit!
- Limit Electricity
Two years ago, Shandong province already experienced oversupply of solar power, especially during holidays, leading to China's first distribut.
Recently, the National Energy Administration released the Distributed Generation Development and Construction Management Measures (Draft for Public Comments), which mandates
Moreover, solar power utilization rates have become a key monthly statistic for the energy bureau. As of October, four provinces fell below 100% utilization, with Gansu’s rate as low as 87.6%.
How to handle the surplus in solar power generation? One word: limit! Limit installations, grid connections, and access.
- Limit Prices
Another major event in October for the PV industry was price limits!
Prices of silicon materials, wafers, cells, modules, and auxiliary materials dropped drastically as companies strived to maintain basic operation rates and market shares. However, such relentless price cuts resulted in widespread losses and bankruptcies across China's solar PV value chain in 2024.
Statistics show that the cost of polysilicon re-feeding materials ranges between RMB 42-45/kg, but market prices have dropped to RMB 35-38/kg. Many polysilicon companies have foregone the RMB 7/kg depreciation costs, focusing solely on survival. Both established and newly-invested enterprises are now prioritizing cash flow over investment recovery.
On October 18, the China Photovoltaic Industry Association (CPIA) announced that RMB 0.68/W is the minimum cost for high-quality PV modules under current conditions. Any bids below this threshold are deemed illegal. In November, CPIA revealed the comprehensive cost structure for mainstream products (N-type M10 and G12R modules), indicating that the all-inclusive, tax-paid cost for modules stands at RMB 0.690/W.
However, the reality is starkly different. During October’s holiday season, tender prices reached new lows: RMB 0.63/W for PERC modules and RMB 0.64/W for TOPCon modules. The industry is not just competing to survive but to see who can endure after severe self-inflicted financial harm.
By late October, five major module manufacturers convened to discuss price hikes. Interestingly, after winning a bid at RMB 0.68/W, one leading company requested the media not to publicize it. Since then, module bid prices have stabilized around RMB 0.70/W with minor fluctuations.
With prices plunging and the entire industry struggling with losses, what’s the solution? One word: limit! A self-discipline pact was formed, declaring bids below a certain price illegal. Reports suggest that CPIA may begin monthly guidance price announcements for modules starting next year.
- Limit Production
Excess supply of silicon materials, wafers, cells, modules, and auxiliary materials has plagued the Chinese PV industry in 2024. The immediate outcomes include insufficient operations, inventory pile-ups, layoffs, and factory closures.
By the end of 2023, Europe's PV module inventory reportedly reached 80 GW, while the region's new PV demand for 2024 was unlikely to exceed that amount. Similarly, rumors claim China's current inventory is enough to meet global demand through 2025.
In early 2024, Chinese PV companies hoped the phase-out of P-type silicon and PERC module capacities would improve supply dynamics in the latter half of the year. However, by year-end, old capacities remained while new ones continued to emerge.
During November’s PV exhibition in Chengdu, Trina Solar's president, Gao Jifan, remarked, "No winter lasts forever, and every spring will come." Yet, early December brought grim news: mass layoffs at a Suzhou module company led an employee to threaten suicide, while a Wuxi equipment manufacturer reportedly dismissed over 10,000 workers. Some companies may not survive this winter.
What’s the solution? Continue to limit!
Reports suggest over 20 wafer companies held an online meeting in early November to discuss coordinated production cuts to improve market conditions. They estimated 2025’s total wafer demand and proposed production reduction quotas for each company.
On December 5, CPIA organized a meeting attended by representatives from 33 PV companies accounting for 80-90% of China’s solar shipments. These companies signed a self-discipline agreement outlining output quotas for 2025, covering polysilicon, wafers, cells, and modules. Companies adhering to the quotas would join "white lists" for prioritized export and procurement opportunities.
With output quotas, production naturally falls in line, stabilizing the overall supply. Violating the agreement could result in exclusion from future bidding and export opportunities.
- Outlook After Limiting Production, Sales, and Prices
The self-discipline pact requires collective adherence to foster industry growth. While it may curb reckless expansion and price wars, it also temporarily restricts individual growth ambitions.
Industry insiders suggest that companies involved in distributed PV and ground-mounted projects may find advantages in this environment. Module manufacturers that invest in power plants could define these modules as "self-used," bypassing price and sales restrictions to some extent.
Regardless, oversupply in installations, production, and low-price competition defines 2024 for the PV industry. If the word limit can help the industry recover, then let this storm of limits blow even stronger!
Source：https://mp.weixin.qq.com/s/vyLJlrDBUSggS8Xgy-FXNw
