|Date||April 13, 2022|
Upon invitation of the Japanese Chamber, PV analyst Amy Fang from InfoLink Consulting shared insights in trends, price movements, and production capacity of the PV supply chain this year via video conference with the China Silicon Industry, Tier-1 companies, and Japanese power station developers on April 8.
European demand spurs as warfare casts uncertainties
The black swan event underlines the imperative of energy transition in Europe. Responses from the bloc are immediate. According to analyst Fang, Europe saw module order volume markedly increase in the first quarter, boosting PV demand, and has wider price acceptance. This year, European demand is projected to grow steadily, potentially reaching 50 GW, with no evident high and low seasons.
Learn more: Solar outlook looks bright amid Russia-Ukraine war
Bullish demand in China, Japan awaits FIP to take hold
China has reached grid parity this year and will remain the major driving forces behind global PV market. Analyst Fang forecast that demand in China this year will grow to 75-80 GW, a 56% increase. Under the 14th Five-Year Plan, the country pledged to have renewables provide for 20% of electricity consumption by the end of 2025, 25% by 2030, and cumulate 1,200 GW of installed solar and wind capacity by 2030. Outlooks are bright in the long run.
In Japan, C&I and residential projects still dominate the Japanese market, with demand steadily increasing. Impacts of the FIP will be seen when it takes effect in 2022, in place of the FIT system. Considering rising renewable targets, this issue revises Japanese demand upwardly. Fang projects 6.5 GW of PV demand in Japan this year.
Anti-circumvention hits on U.S. cell and module supply
U.S. demand is subject very much to policies this year. The county aims to have PV energy provide 40% of electricity by 2035, and 45% by 2050. However, Xinjiang-related products were previously barred from the U.S. boarder, affecting utilization rates of Southeast Asia-based manufacturers. Add to that the U.S. Commerce initiated anti-circumvention investigation against Southeast Asia, with preliminary outcomes coming out by the end of August. As tariff rates vary a lot, the investigation hits hard on the supply of U.S.-exporting cells and modules. For now, small-scale manufacturers are still delivering some orders, but subsequent orders have been suspended. In the future, Southeast Asia-based manufacturers will transfer these orders to other regions, such as Europe and Canada. U.S. demand may dwindle until preliminary result of anti-circumvention unveils.
Polysilicon costs stay elevated in Q1, module profit sit at 3-5%
“Production costs is the biggest challenge this year. We see polysilicon production capacity coming online rather leisurely in the first quarter this year, whilst the tight balance-induced price hikes for polysilicon and wafers last year iterate,” said Fang.
With incumbent and upstart wafer makers ramping up expansions, wafer production capacity still grows faster than that of polysilicon, keeping polysilicon price elevated. Polysilicon production output will not see evident increase until the second half of the year, especially the fourth quarter. By then, prices may start to decline.
“Module prices are not expected to see significant decline, as subject to production costs. Add to that most orders are long-term orders; prices are not going to rise significantly. Given logistical uncertainty and competitions for market shares, the module sector can hardly see profit recover, coming in at around 3-8% this year, hardly covering management, sales, and R&D costs. Annual module prices will remain elevated and see gradual decline in the second half of the year,” according to Fang.
Learn more: Will polysilicon supply shortage ever stop this year
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Amy focuses on research and analysis of the solar cell and module segment of the supply chain. She supports the team in producing market trend analysis and works across price trend forecast and production capacity data services. Amy keeps on contributing to solar cell and module research efforts, analysis of utilization rates and market trends, as well as timely price forecast and market information.