Review on April 2023
Hi, there, in May we are going to have the 2023 SNEC Expo which we believe is the biggest in China and even the biggest show in the world related to the PV industry. Let’s see what happened in the industry before this pageant.
1. The Ministry of Natural Resources of China has recently published the Formal Management Rules regarding the use of land and forestry, which include the requirements for PV projects in terms of the land and forestry occupation. In the context of the 3rd National Land Resources Survey, some of the feasible land before is no longer possible to construct new PV projects. The conclusion of relevant regulations may impact the new projects in China and push the developers to find other opportunities in offshore and intertidal zone scenarios.
2. 33.66GW of new PV projects were commissioned in China during 2023Q1 which represents a YoY 155% growth, and the related investment went up to 52.2 billion of RMB, with a 178% of YoY growth. When it comes to the numbers, the new capacity in the first quarter is equivalent the quantity during the first half of 2022. We could see a very strong will from the market thanks to the reopening from epidemic and the reduced costs of major components.
3. 6.1 billion kWh of Green Power transaction realized in 2023Q1 and the average price of Green Power Certificate is 45.5 RMB/pc (each piece of Green Power Certificate equals to 1MWh of electricity). Besides, the Management Rules for Carbon Quota has also come conclusion and the average carbon price in market is 53-56 RMB/ton.
4. As we know, several economies have released incentive policies to draw back the production capacity of PV products or even set up trading barriers to obstruct the importation from China. We are in no position to comment on these policies but we have collected information from PV-tech and prepared a chart indicating major brands who have decided to expand the production lines in outside China.
5. According to Gessey, 47.881GW of solar modules are exported from China, with a YoY growth of 15.9%.
6. After years’ opinion collection and public audit, the EU has formally implemented the Carbon Border Adjustment Mechanism (CBAM) in Europe. In near future, industries like the steel, cement, aluminum, chemical fertilizer, power, hydrogen and the indirect emission in certain situation are under the scheme of CBAM. Related products are required to make up the gap between the carbon price of the country of origin and the carbon price in the EU Carbon Transaction System. The CBAM is going to gradually implement from 2026 to 2034, accompanied by the rescission of free quota allocation under the current carbon transaction scheme.
7. Several European countries has enacted VAT adjustment policies to promote the residential PV. From 1st Apr 2022, the British government has reduced the VAT from 5% to 0% over the thermal pump and solar panels used in residence. From December 2022, the German parliament approved a duty cut proposal, which removes the VAT over residential PV system under 30kW. From 2023, the Dutch government removes the VAT over residential PV while the corresponding users could benefit from the “Net Metering” policy. From April 2023, the Irish government removes the VAT over residential PV. Taking a 3kW PV system as example, the Irish people could save as much as 1000 euros every year.
8. Federal government of California has approved the NEM3.0 Bill. In detail, the previous NEM2.0 (Net Energy Metering) is now the NEM3.0 (Net Billing Tariff). Residential PV owner could accumulate credit by injecting excessive energy generated by PV into the grid and the credit could be discounted totally over the energy taken from the grid. Such way can be understood that the prices of sold energy and purchased energy are the same. But now, there would be a 25% cut over the energy sold which leads to a prolonged return of investment (from 5-6 years to 9-10 years). The new Bill is very likely to impact the resident PV markets in the US since California took 2GW share in the 5.9GW total residential PV capacity in the country.
9. The Indian government is planning to release 50GW renewable energy auction during the fiscal year of 2024 to 2028 to complete the target of 500GW renewable energy until 2030. Due to the lack of funding, technology, production capacity and other issues, the total installed capacity of RE in India until the end of 2022 is 170GW. There is a huge gap of 330GW yet to be filled within 8 years. Many local developers have been lobbying the government about abolishing the AMLL which aims to impose certain domestic products, we believe that the Chinese manufacturers may benefit from this.
10. A budget of 244.7 billion Won is approved by the Korean government for the use as incentive in rooftop PV system and other small scale RE systems. In the sum, 48.9 billion would be used for rooftop PV system on standalone buildings and multi-block buildings, 61.1 billion for commercial rooftop PV and 140 billion for any 2-technologies combined RE systems. The application for incentive commenced since April 2023. The Korean government plans to realize 30.8GW of PV installation in which 20.9GW was done until the end of 2022.
11. We prepared a chart indicating the supply chain trending and prediction. The polysilicon raw material continues to drop and decrease is much bigger than other sectors. The mono wafer is stable in short term because of the shortage of high-purity quartz sand. The mono solar cell keeps the same pace as wafer. The mono PERC solar module is decreasing tenderly since the demand is going up while the production has managed to catch it up. However, the N-type mono solar module is quite stable since the upstream supply is tight.
12. 2023 is the key moment of technology transition, the N type solar cell is gradually replacing the P type and the TOPCon is preferred by the market because of its lower cost and easy-to-upgrade from the existing P type lines, related equipment, solar module manufacturers are making tremendous investment into this track. As per disclosure, the total production capacity, including capacity in production and capacity in plan, is over 600GW. The market has made its decision. According to calculation, the return of investment of TOPCon is around 100 million RMB/GW while the HJT is 56 million/GW, the former technology is obviously more economically feasible than the ladder. In 2022, thanks to the equipment localization, the average investment of TONCon is 189.4 thousand/GW which is slightly higher than P Type. On the other hand, HJT is still facing high cost and lots of companies are still working on the development. Anyway, we do believe that HJT will take the market share as soon as the cost is more acceptable.
So much for the information share this time, thank you for your time and see you next month!