Amid the pursuit of carbon neutral, the world’s major regions introduced policies that favor renewable energy, driving up renewable energy demand significantly. Solar installation has experienced exponential growth in recent years, beating forecast. Of all the elements, continued technology advancement underpins the solar development. PERC, emerged in 2015, and replaced Back Surface Field (BSF) to become mainstream in 2019, will remain its dominance in the two to three years to come. Yet, it’s inevitable that PERC cells are reaching its theoretically limit, a situation leading to the turning point in the technology.
Facilitated TOPCon technology development
Discussion on the next generation technology after PERC revolves around n-type TOPCon and HJT, as well as xBC. The three techniques can co-exist in the market, but how fast it can help improve cell efficiency and costs will determine their position and capacity expansion. Of which, TOPCon is more favorable by traditional cell and module manufacturers due to its compatibility with PERC lines. As of September, announced TOPCon capacity expansions have surpassed 350 GW, with more than 40 GW having been materialized. As Jinko, Tongwei, Trina, and JA Solar scaling up their TOPCon expansion, nameplate capacity is likely to exceed 70 GW by the end of the year.
Against the backdrop of significant growth in TOPCon capacity and production of leading manufacturers, InfoLink estimates that TOPCon shipment will stand at around 20 GW this year, an evident growth compared with 2 GW to 3 GW in the past. Its market share is likely to reach 7%. In 2023, shipment of which is expected to rise to 60 GW, with market share increasing to 20%. TOPCon is forecast to reach beyond 100 GW of shipment and hit 30% of market share in 2024.
POE encapsulant dovetails with TOPCon
Module assembly is one key processing step in the solar supply chain, and the rapidly growing industry spurs demand for encapsulant. EVA, with better optical performance, binding property, and lower costs, as well as good compatibility with p-type cells and modules, has dominated the market over the past decade. POE, with better moisture barrier as well as higher weather resistance and PID resistance, becomes a better option for n-type manufacturers as TOPCon emerges. This is because TOPCon cells, whose front silver contains aluminum, are more sensitive to water vapor, and thus requires stronger water barrier. EVA, on the other hand, may decompose and produce acid in hot and humid environment, thereby reacting with the glass and corrode the busbar, resulting in module performance degradation. Therefore, major n-type module manufacturers have either explored or adopted pure POE encapsulant or encapsulant that contains POE resin.
Resin resin supply and demand
As global solar installation rose to nearly 270 GW this year, module production is estimated to come in at 340 GW considering sea shipping and inventory factors. This translates to around 1,520,000 MT of resin demand. Of which, 1,270,000 MT comes from EVA resin and 250,000 MT from POE resin. Comparing with 1,330,000 MT of EVA and 310,000 MT of POE resin supply this year, supply is tight against demand.
Looking ahead, global neutral demand for modules is projected to hit 326 GW in 2023 and 380 GW in 2024, with total module production estimating to surpass 400 GW in 2023 and reach nearly 500 GW in 2024, if factoring inventory. Moreover, as TOPCon capacity continues to grow, demand for POE resin will also grow rapidly. Demand will differ depending on the encapsulation encapsulant used by TOPCon manufacturers, as shown by following scenarios:
Scenario 1: If TOPCon modules use EPE encapsulant for both sides on glass-glass or glass-backsheet module, such combination will have the lowest demand for POE resin. Under this scenario, demand for EVA and POE resin will respectively sit at 1,670,000 MT and 300,000 MT in 2023 and 1,780,000 MT and 360,000 MT in 2024. Given an estimated EVA resin supply of 1,690,000 MT in 2023, supply will run short in this case.
Scenario 2: If TOPCon glass-backsheet modules use pure POE encapsulant on the front and EVA encapsulant on the rear side, while 70% of glass-glass modules use pure POE encapsulant on both sides and 30% of glass-glass modules use EPE encapsulant on both sides, demand for EVA and POE resin will respectively come in at 1,530,000 MT and 390,000 MT in 2023 and 1,530,000 MT and 520,000 MT in 2024. Under this scenario, 2023 will see tight EVA resin supply, while 2024 will see tight POE resin supply.
Scenario 3: If TOPCon glass-backsheet modules use pure POE encapsulant on the front and EVA encapsulant on the rear side, while glass-glass modules use pure POE encapsulant, demand for EVA and POE resin will respectively come in at 1,480,000 MT and 420,000 MT in 2023 and 1,450,000 MT and 580,000 MT in 2024. Given the estimated POE resin supply in 2023 and 2024 is 475,000 MT and 590,000 MT, respectively, POE resin will be in tight supply in 2023 and become extremely tight in 2024.
Scenario 4: If TOPCon modules use pure POE encapsulant on both sides for glass-glass and glass-backsheet formats, demand for POE resin will be the highest. Under this scenario, demand for EVA and POE resin will respectively come in at 1,420,000 MT and 480,000 MT in 2023 and 1,350,000 MT and 660,000 MT in 2024. In this case, POE resin supply will run short in 2023 and 2024.
As per InfoLink’s investigation, scenario 2 and 3 are more similar to the actual situation, which estimates demand for EVA and POE resin respectively come in at 1,480,000-1,530,000 MT and 390,000-420,000 MT in 2023; 1,450,000-1,530,000 MT and 520,000-580,000 MT in 2024. Combing EVA and POE resin, supply of both will be tight in 2023. In 2024, supply of EVA resin will start to see surplus, while POE supply will become short.
POE proves itself to be a better product for n-type modules with its performance in water vapor barrier and PID resistance. Currently, POE resin is mainly supplied by Dow, LG, and Mitsui Chemicals. The growth of POE resin will rely on these manufacturers’ allocation of production lines to PV customers. Domestic POE production in China will not release until after 2024. If the penetration rate of n-type products improves or POE manufacturers overseas are unable to deliver POE resin to PV manufacturers, POE supply may fall short of demand, while module manufacturers will be forced to use encapsulant that is not consisted of purely POE.