l'Actualité du Solaire

Since December 2019, 28 solar companies in China have announced or launched capacity expansion plans totalling at least RMB 120 billion of investment and 240 GW of cumulative capacity (2020 demand is around 100 GW). These increases concern

47,000 tonnes of silicon, 26.6 GW of wafers, 84 GW of cells and 104 GW of panels. Behind these large-scale expansion plans lies the manufacturers' ambition to stay ahead of the technological curve and secure a share of the growing global solar market. This investment will inevitably lead to excess capacity and, with it, fierce competition which will lead to the elimination of old production lines.

This growth is partly due to the adoption of new technologies (heterojunction, TOPCon, heterojunction back contact-HBC, perovskite, the adoption of larger wafer sizes (210 mm), but also to the volume effect as seen with the new silicon production capacity which has allowed a drop in prices in 2019.

The renewal of technologies requires significant investment expenditure. A new law presented on 14 February by the China Securities Regulatory Commission allows the industry to start production with a low profit. The gradual increase in production and the reduction of costs will increase profits. The gradual reduction of costs and prices will stimulate demand.

These increases in capacity lead to increased competition between first and second ^tier manufacturers. As long as capacity is increased, there is a chance of survival. If you stop, you lose your place in the competition. It must be stressed that it can be extremely difficult to switch from one technology to another.

Some companies will manage to seize this expansion phase to dominate the market. Among the most promising: LONGi, JA Solar, Risen, Zhonghuan Solar and Tongwei, all of which have increased their profits in 2019.

These changes in technology are making the fortunes of equipment manufacturers who recorded an 80% increase in profits last year.

With the arrival of grid parity, the internal rate of return is increasingly becoming the preferred criterion. There should therefore be a strong increase in demand from the end market. It is therefore urgent to increase production capacity.

Since new production lines are technologically more advanced and entail lower costs, old production lines that operate with low efficiency and entail higher costs are the first to be phased out of the market. In view of this trend, only by gaining new capacity to improve its market share can a photovoltaic company stay ahead of the others.

Tongwei wants to become the world's number one in silicon and cells and create a gap with the number two. Aiko Solar wants to reach 22 GW of cell capacity by the end of the year. It must exceed the 20 GW threshold in order to remain competitive.

The competition between the players forces them to eliminate the least efficient production lines. The progressive elimination of public subsidies will force producers to better select their technology, reduce their costs and better define their strategy.

PV InfoLink of 26 March