Top 6 largest manufacturers target more than 170 GW of module shipments in 2021
December 30, 2020 PV Men
2020 saw growing dominance of Tier-1 PV manufacturers. Amid the ongoing trend to expand capacity and increase market presence, the top 6 module manufacturers aim to double their shipments in 2021, and together they will hit more than 170 GW of shipments, according to PV Men.
A third-party consultancy estimates that the global installed PV capacity will come to 150 to 160 GW next year. Calculating with the PV/ inverter ratio of 1 to 1.2, the estimated demand will be 180–192 GW, meaning that the top-6 will take up over 90% of the market share. Based on the current capacity expansion plans, module capacity housed by these producers will exceed 200 GW at the end of 2021.
Increasing market concentration
The market concentration is growing in the supply chain that conducts much business with the module segment. In the markets of polysilicon, wafers, and module bill of materials, more than 70% of capacity lies in four to five Tier-1 producers. The module market is one of the least consolidated in the supply chain. Unlike the cell segment where capacity distribution is more diversified due to vertically integrated producers’ engagement in cell business, the diversification in the module sector is ascribed to dispersion of brands and distribution channels.
Over the past one year, Tier-1 producers have made considerable effort in capacity expansion, brand marketing, and distribution channels. Therefore, they see growing dominance in China and abroad this year. “The number of bids for the utility-scale auction has declined from around 30 last year to 20 this year, which indicates a growing tendency to select top-ranked developers,” a representative of a module producer told PV Men.
Moreover, thanks to a series of installation rushes over the past several years, older production lines have been able to come back to life. Yet, since the Chinese PV market will enter a grid parity era, it will become increasingly competitive, with big players expected to edge out smaller ones.
“In fact, customers increasingly recognize brand premiums this year, so investors can accept if Tier-1 producers offer price quotes higher by 2 to 3 cents per wattage than Tier-2 and 3 producers,” the representative added. “After some years on, customers have come to realize that Tier-1 producers do a better job with products, delivery, and after sales services."
According to PV Men’s statistics of module shipments by top 10 largest module suppliers for the first half of this year, the top-6 all achieved a 20% growth despite the COVID-19 pandemic. This means top-tier makers are nudging out their Tier-2 and 3 rivals amid slack demand.
Major challenges ahead
With an anticipation that the 14th Five-Year Plan will be well developed, Tier-2 producers are catching up with Tier-1 manufacturers in production capacity and technological capability. However, more of the challenges that module manufacturers are going to deal with in the upcoming year lie in how to manage the supply chain and keep brand marketing and distribution channels running.
Since the second half of this year, module producers have stumbled on supply-chain management a couple of times. The contributing factors include a persistent shortage of glass, films and even cells among leading manufacturers. In fact, the supply of high power output modules depend heavily on how much cell production lines can be ramped up and upgraded. This is the case when PERC cells find widespread use thanks to the launch of Top-Runner Program projects and 166mm-modules are running short in supply.
A Tier-1 cell maker that has been running at full capacity since May still falls short of delivering all the orders it has received, PV Men observes. This is regardless of the fact that the producer had shifted to larger formats ahead of others. In early December, the top managers of a Tier-1 module maker led a team to ask to speed up cell delivery—which points to widespread acceptance of high power output cells and modules.
While products of different size variants including M6, M10, and G12 products will prevail next year, end customers will continue to focus on reducing BOS costs. Modules based on M10 and G12 wafers primarily range from 535 to 540 W, as can be observed in a 1.3 GW procurement exercise launched by the China National Nuclear Corporation that calls for a delivery of modules in the third quarter of 2021. High power output modules are much in demand, but there remains a shortage of compatible glass and cells. Therefore, how well the supply chain can be managed will determine next year’s real module shipments.
Other than production capacity and technological capability, module producers need to improve upon what enables them to survive: branding, distribution channels, and sales expertise. This is particularly the case for Tier-2 and 3 producers. In an interview with PV Men, the representative of a Tier-3 Chinese module maker conceded that “we received a lot less orders in the first half of this year than years earlier; Tier-1 makers secured most of the orders from customers at home, and they offered low prices and grabbed some of our long-term customers.
When the market is down, Tier-1 makers—which boast cost advantages—wage a price war to undercut smaller rivals. When the market is up, they respond in a more timely manner by improving technologically and upgrading their production lines and are the first in line to earn orders for high-wattage modules. As technology and size have been evolving fast over the past two years, Tier-2 and 3 producers find themselves struggling hard to catch up.
Tier-2 and 3 producers, particularly those with a capacity of more than 5 GW, will fight a life-and-death battle next year. In the module sector—where technical barriers to entry are characteristically low—product supply, technical expertise, cost, branding, and distribution channels are all requisites. Tier-1 producers are also going to fight an intense battle while they are expected to ship over 170 GW next year. Meanwhile, if the Chinese PV sector, having achieved grid parity, enters into an electricity market under the 14th Five-Year Plan, module producers will surely be the first to see the impact of the market’s competition.
Source: PV Men
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