L R AS Published on Sunday 1 October 2023 - n° 459 - Categories:European countries, China

Comparing exports to Europe and installations at the end of 2022, China was oversupplied

The price of panels has fallen by almost 30% since January. Bids for large-scale plants have fallen back to €0.11/watt.

The debate among industry players is raging, especially on social networks. Germany's energy ministers have spoken of unfair competition, and have blamed the "glut of panels" on a "lack of competition".

to a US import ban following allegations of forced labour in Xinjiang, China.

Analysts refuse to explain the fall in prices by Chinese dumping. Some assess panel supply by comparing export data from the main Chinese ports with European installation volumes, despite the absence of official data on Chinese exports. However, on a European scale, this difference only represents a few gigawatts. As a reminder, the German Federal Ministry of Economics forecasts a photovoltaic market in the European Union of between 70 GW and 100 GW by 2023.

In June, Rystad noted an accumulation of panels in the port of Rotterdam and forecast a stock of 100 GW by the end of 2023. Since then, Rystad has corrected its forecast, observing a stagnation of stocks at around 40 GW, which suggests that manufacturers are responding to demand signals from wholesalers and project developers.

These stocks are the result of recent events: the war in Ukraine and the energy crisis have prompted new owners to invest in photovoltaics. This was combined with the continuing disruption to Chinese production capacity caused by the pandemic. Wholesalers were finding it difficult to supply their customers. Installers were forced to select their customers. As a result, the market slowed.

Wholesalers realised that demand was high and that they were short of goods, so they placed massive orders. The wholesalers' sales representatives fought over every container from China. Manufacturers repeatedly increased their demand forecasts. As a result, the market went from a shortage to an overflow where price is everything. Over the summer, analysts at Rystad, BNEF and S&P Global systematically observed a gap between panel imports and installations, ranging from 40 GW to 60 GW.

At the same time, energy prices in Europe were gradually returning to normal levels. This reduced demand for rooftop installations. For example, on1 January, the average cost of a kilowatt-hour for new customers in Germany was around €0.44. Since then, prices have fallen steadily, with new customers now paying an average of €0.29/kWh. As prices fall, the incentive to invest diminishes.

Rising interest rates have made financing considerably more expensive and have combined with the Building Energy Act to discourage potential solar installations.

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Although demand for rooftop installations remained relatively strong, it failed to meet the expectations of manufacturers and many wholesalers during the first quarter, resulting in demand well below expectations. Wholesalers are suffering from the fall in prices: those who bought a 500 W panel at €0.25/W are now struggling to resell them at just €0.15/W, resulting in significant losses on stocks. This situation has led to financial difficulties for some retailers, increasing the risk of insolvency. To cope with the oversupply, Chinese panel manufacturers and European wholesalers are trying to sell off their stocks, even if it means selling at a price below their value, prioritising cash flow over profits.

Dumping is characterised by a lower price on the export market than on the domestic market. Investigations in China have revealed bids for new P-type panels ranging from €0.156/W to €0.164/W, with slightly higher average prices for new N-type panels, ranging from €0.166/W to €0.176/W. The minimum value of 0.11 €/W probably represents a reduced price for older PERC panels.

Wholesalers free up stocks by slashing prices

The widespread transition to TOPCon technology is contributing to the fall in PERC panel prices. PERC manufacturers are obliged to switch rapidly to TOPCon technology. This is what both wholesalers and analysts suspect, albeit cautiously. Although the process seems plausible, it is difficult to prove definitively.

The rapid adoption of TOPCon and heterojunction technologies is naturally driving down the price of PERC panels.

Chinese manufacturers are also facing a difficult situation, suffering losses as a result of the ongoing price war. BNEF foresees the possibility of bankruptcies among Chinese manufacturers, a recurring phenomenon in the cyclical solar industry. The decisive factor here will be Chinese domestic demand for panels in 2024 and 2025.

Does Wright's Law apply?

Most consumer panels are sold for between €0.14/W and €0.16/W in projects above 10 MW. Wright's cost learning curve is based on the development of the industry: it traditionally leads to a 20% reduction in costs with a doubling of production capacity.

In 2020, global installed capacity reached 774 GW, with consumer panel prices at €0.21/W according to the pvXchange index. With cumulative installed capacity in 2023 of 1,500 GW, post-learning curve costs could be around €0.168/W. Although prices may vary according to supply and demand, this suggests that the fall in prices does not seem fundamentally implausible and requires direct explanations of subsidies or dumping.

Analysts and wholesalers predict that it will be the first quarter of next year before stock levels normalise.

The current debate on measures to restrict imports of Chinese panels mirrors the situation during the 2013-2018 "tariff period". Market players are expressing doubts that tariffs would effectively stimulate European production. Higher costs for photovoltaic products could lead to lower demand, which could require additional public funding.


PV Magazine 29 September 2023

Editor's note The volume of panels imported into Europe is available on a month-by-month basis (we report on this when it appears in international publications). We have annual statistics from SolarPower Europe, which indicated an installation of 26 GW in 2021, then 40.2 GW in 2022, a figure that was known on 5 January 2023 and indicated an increase of 55% at around the same date as the volume of Chinese panel imports in 2022, i.e. 86.6 GW. This should have alerted Chinese manufacturers to a distortion between excessive imports and demand.

As a result, Chinese deliveries to Europe should have come to a halt. In fact, they continued to grow by 35% over the first seven months of the year, to 69.5 GW. To claim that the Chinese were unaware of the situation in Europe and to blame European distributors, who have always ordered more, is contradicted by the facts.

China wanted to invade the European market, knowing full well that the technological changes under way would reduce the value of the panels it supplied. There was a desire to destroy the few European manufacturers. This is also how they operate in South-East Asian countries when they attack an economic sector.

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