2016 China PV Industry Market Review and Trends Outlook

I. Industry Review in 2015 (I) The scale of the industry has increased rapidly, and the profitability of enterprises has increased significantly.
In 2015, China's polysilicon production reached 165,000 tons, an increase of 25% year-on-year. The majority of 16 polysilicon enterprises were in full production, and the global production ratio increased from 45% in 2014 to 48.5%; wafer production capacity reached 48GW. The year-on-year growth rate was 26.3%, and the global production capacity increased from 76% in 2014 to 78%. The average capacity utilization rate of 37 wafers reached 94%; the output of battery chips reached 41GW, up 24.2% year-on-year, and the global production accounted for 2014. 65.6% of the year increased to 68.3%, the average capacity utilization rate of 50 companies reached 85%; component production reached over 43GW, up 20% year-on-year, and global production increased from 68.4% in 2014 to 71.7%. The capacity utilization rate is 86%. In 2015, China's new installed capacity was about 15GW, a year-on-year increase of more than 40%, and the cumulative installed capacity reached about 43GW, surpassing Germany to become the country with the largest installed capacity of PV in the world. In 2015, the profitability of China's PV companies improved significantly, and most companies turned losses into profits. The profitability of the photovoltaic manufacturing industry in 2015 has been significantly enhanced. The overall operating conditions of 33 regulated companies in 2015 showed an average profit margin of 4.7%, an increase of 30.6% over 2014. From the perspective of segmentation, the component link performance is significantly better than the silicon segment, and the average gross profit margin of the top 10 component companies is over 15%.
(2) The global layout of photovoltaic manufacturing is accelerating, and the pace of going out is gradually accelerating
Under the guidance of the “Belt and Road” strategy and the protection of international trade, the pace of “going out” of China's PV companies has been accelerating. China's PV companies have achieved global distribution through overseas construction and investment in photovoltaic power plants. Leading companies such as Artes and Poly GCL have achieved more than 700MW of PV projects in Canada, the United States and Japan. Some companies choose to set up factories in the terminal market to be close to the market. For example, China Telecom has built a new battery and component factory in Turkey. Jingao, Tianhe announced that it will build a battery and component factory in India. Some enterprises will build factories at a low cost to reduce production. Costs, such as Zhongli Tenghui and Yingli announced the establishment of a new component factory in Thailand, and Comtec will build a new silicon germanium and silicon wafer factory in Malaysia. In addition, some companies have signed a foundry agreement to circumvent the “double-reverse” tax rate and detour the global market. For example, Qihui Sunshine has established long-term OEM relationships in seven countries.
(3) The problem of discarding light and electricity is outstanding, and financing is difficult to constrain PV development
At present, there is a problem in the integration of renewable energy development planning and power grid construction planning. The structural constraints of regional power grids and the construction of outbound corridors are lagging behind. The power curtailment situation faced by concentrated power plants in photovoltaic power plants is becoming more and more severe, which makes the advantages of resource-rich regions difficult to achieve. At the same time, the requirements for the guaranteed purchase of the Renewable Energy Law have not been implemented, and the phenomenon that the renewable energy power generation system has been restricted is very serious, and there has been a wide-ranging and normal state of power cut and light. According to statistics, in 2015, the light-receiving rate in northwestern China reached 17.08%. Among them, the problem of light-abandonment in Gansu was outstanding. The cumulative amount of discarded light was 2.619 billion kWh, accounting for 56% of the total abandoned photoelectric output, and the light rejection rate reached 30.7%. Xinjiang has abandoned a total of 1.508 billion kWh of photovoltaics, accounting for about 32% of all discarded photovoltaics, and the light rejection rate reached 22.0%.
In addition to the abandonment of light and electricity, financing difficulties and financing also restrict the development of China's photovoltaic industry. China's PV companies are affected by industry consolidation and foreign trade disputes, and they have basically lost their ability to finance in overseas capital markets. The cost of domestic financing is relatively high. The financing cost of most PV companies is around 8%, and some even as high as 10%. The high cost of financing makes China's photovoltaic enterprises costly and greatly erodes corporate profits. At the same time, there is a huge gap in renewable energy subsidy funds, and subsidy arrears are more serious. The current renewable energy subsidy reporting procedure is too cumbersome, resulting in a long period of fund allocation, which makes the power generation enterprises have poor capital flow and increased financial costs. The industry chain has a triangular debt phenomenon among power generation enterprises, manufacturing enterprises and parts companies, which has seriously affected enterprises. Technological innovation, technological transformation, technology upgrading, normal operation and economic benefits.
(4) The technical level and product performance are continuously improved, and the production cost continues to decline.
In 2015, under the joint promotion of internal and external environment, China's PV companies increased their research and development of process technology, and their technical level and product performance continued to improve. The energy consumption of polysilicon production in backbone enterprises continues to decline. The average integrated power consumption of the industry has dropped to 100KWh/kg, and some enterprises have even fallen below 70 kWh/kg. The industrialization process such as the silane method fluidized bed method is accelerated; single crystal and polycrystalline batteries The technology continues to improve. The silicon consumption per watt of crystalline silicon cells is reduced from about 7g in 2010 to the current 5g. The efficiency of industrially produced ordinary structural cells is 19.5% and 18.3%, respectively, which is at the global leading level. The average conversion efficiency of N-type batteries produced by the company reached 22.9%. Passive emitter back contact (PERC), heterojunction (HIT), back electrode, high-concentration light, and other technical routes have accelerated, and some technologies have begun mass production; photovoltaic module packaging and anti-photo-attenuation technologies have been continuously improved. Driven by the production process level, the production cost of the product is continuously reduced, the total cost of polysilicon is reduced to 15 US dollars / kg, the production cost of leading enterprise components is reduced to 2.9 yuan / watt, and the investment cost of photovoltaic power generation system is reduced to 8-9 yuan / watt. Some distributed installations even fell to 6 yuan / W, the cost of electricity to 0.6 to 0.9 yuan / kWh.
(5) The photovoltaic market is booming and the market application is diversified
In 2015, China's PV market continued to grow. The newly installed capacity is expected to exceed 15GW, up **% year-on-year. It continues to rank first in the world, with a cumulative installed capacity of over 43GW, surpassing Germany to become the country with the largest installed capacity of PV in the world. At present, although the large-scale ground power station still accounts for more than 80% of China's total PV installed capacity, in 2015, China's photovoltaic power station development has diversified development integrating with agriculture, aquaculture, mining and ecological management. trend. Driven by policies, the scale of distributed photovoltaic power generation has also expanded, mainly in the central and eastern regions where power load is relatively concentrated. The types of photovoltaic applications such as photovoltaic pumps, photovoltaic street lamps, photovoltaic trees and photovoltaic consumer products are gradually diversified.

Second, the development trend in 2016 (1) The scale of the industry will continue to expand, and the willingness to expand the industry is strong.
In terms of polysilicon, with the global production of new polysilicon production capacity and the optimization of original production capacity, it is estimated that global polysilicon production will reach 360,000 tons, China's polysilicon production will reach 180,000 tons, and product prices are expected to remain at around 110,000 yuan / ton. . In terms of battery components, with the overall improvement of the photovoltaic industry and the rising cost of photovoltaic power generation due to the decline in component prices, it is expected that China's component production will continue to grow, with overseas plants expected to reach 50GW, and industrial concentration will be further improved. . At the same time, considering that the US will expire at the end of 2016 due to the ITC (tax reduction) policy, it will continue to set off a rush. Emerging markets such as India and Africa are vigorously promoting the development of photovoltaics. With the improvement of supporting policies and financing means, it will become the next growth point. One Belt and One Road "Regional PV market demand is gradually released. China's PV installed capacity will reach more than 20GW in the year due to the "leaders" plan and the rush of equipment prices. The overseas PV market will also boost in 2016. The development of China's photovoltaic industry. "Another round of photovoltaic thermal shocks, it is expected that the industry will increase production will be more intense.
(II) Industrial investment continued to strengthen, and the pace of mergers and acquisitions of enterprises accelerated
Under the environment of government support and technological progress, China's photovoltaic industry continues to pick up, and the investment in the photovoltaic industry has soared. Many traditional industries are trying to rapidly enter the photovoltaic industry through mergers and acquisitions. At the same time, China's PV companies will continue to accelerate the expansion of emerging markets, actively implement the global layout plan of the industry, promote the international photovoltaic trading pattern to accelerate the evolution through overseas investment and set-up factories, and overseas companies' mergers and acquisitions, and the PV industry investment continues to strengthen. With the sound development of the photovoltaic market, the development of the photovoltaic industry has gradually presented the “Matthew effect” of “the big ones are big and the weak ones are weaker”. Those photovoltaic enterprises that are not competitive and have poor operating conditions will gradually withdraw from photovoltaics through restructuring. The market, while leading companies will expand their production capacity by acquiring other companies to seize market share, or obtain advanced production technology. The Ministry of Industry and Information Technology issued the "Opinions on Further Optimizing the Market Environment for the Merger and Reorganization of Photovoltaic Enterprises" to some extent to eliminate policy barriers in the process of mergers and acquisitions. Financial institutions are also supporting enterprises to strengthen mergers and acquisitions through relevant policy funds. It has created a good policy environment for mergers and acquisitions of enterprises; the improvement of the corresponding indicators of the "Regulations on the Standardization of Photovoltaic Manufacturing Industry" has further raised the technical threshold of photovoltaic enterprises. The superposition of the above policies will also accelerate the elimination of backward production capacity. In 2016, it will become the photovoltaic industry. The year of integration and mergers and acquisitions.
(3) The difficulty of financing and the difficulty of joining the network remains to be solved, and the non-technical factors eclipse the profit of the power station
The financing cost of China's PV companies is much higher than the average level in the US and Europe. The heavy financial burden and the cash flow that can't make ends meet make many PV companies miserable. In particular, the main body of distributed photovoltaic power generation is mainly small and medium-sized enterprises, and there are fewer financing tools. The high financing cost inhibits the willingness of small and medium-sized enterprises to develop distributed photovoltaics. At present, financial leasing, yieldco, asset securitization, and crowdfunding have different degrees of restrictions. To solve the problem of photovoltaic financing, it is fundamentally necessary to rely on banks with heavy holdings. In 2016, the difficulty of financing the photovoltaic industry is still difficult to solve. From the point of view of installed capacity in 2015, Xinjiang (including the Corps), Gansu and Inner Mongolia have already exceeded the national quota. As UHV facilities that carry electricity from these areas to demanding urban centers are still under construction, these provinces will still face severe power cuts. We expect other areas, such as Zhejiang and Fujian, to encounter similar problems. In the current situation that the load and resource mismatch phenomenon cannot be solved in a short period of time, although the electric power reform will effectively alleviate the serious phenomenon of current blackout and power cut from the system and practical operation level, the pressure limit, subsidies and land use pressure are still there. Non-technical factors will still eat away from the power station's profits.
(4) The development of new technologies and new products is active, and the level of intelligence is expected to increase.
In 2016, technological progress will remain the theme of industrial development. The photovoltaic front runners plan will continue to further stimulate the demand for high-efficiency single crystal market. The mainstream efficiency of monocrystalline silicon cell industrialization is expected to reach 20%, the power of mainstream component products will reach 265-270W, and the large-scale production of PERC batteries and N-type batteries will be further expanded. Considering that the problem of power cuts in the west is more prominent, this year's photovoltaic power plants will be tilted to the central and eastern regions. New models such as agricultural light and fishing light will promote the demand for new products such as double glass components, tracking systems and MPPT inverters. Silane fluidized bed process polysilicon production process is expected to achieve large-scale production, single crystal continuous feeding production process and G7, G8 large capacity ingot casting technology continue to improve, diamond wire cutting technology will be further applied. Changes in market supply and demand will force companies to gain progress through technological advancement and product differentiation. At the same time, the automation, intelligence, flexibility of photovoltaic manufacturing and the future global virtual factory have become the main trend of PV industry upgrade. Most PV companies have gradually realized the transformation from “manufacturing” to “intelligence”, and the intelligent level of photovoltaic manufacturing. It is expected to gradually improve. In the coming period, the demand for photovoltaics at home and abroad is strong, and efficiency and reliability are no longer the only indicators for measuring photovoltaic products. The requirements of intelligent, lightweight and combined with buildings will make the products more diversified and suitable for a variety of applications and Installation conditions to achieve energy internet.
(5) The market application continues to be strong, and the installed capacity is tight before the situation
Although China's PV market faces problems such as power cuts in some areas, land arrears, subsidy arrears, and tariff cuts on the Internet, the government is cracking the bottleneck by upgrading renewable energy and optimizing the scale of power station indicators, and the continuous decline in product prices will also offset. The impact of tariff cuts and power cuts. Driven by policies, the scale of distributed photovoltaic power generation has been expanding, and the application fields are more extensive. The main distribution areas are turning to the central and eastern regions where power load is concentrated. At the same time, China's preliminary planning for the "13th Five-Year" photovoltaic installation scale target will reach 150GW, the installation scale has increased significantly, once again indicating the country's determination to support the development of photovoltaic. With the gradual implementation of the national PV policy, investor confidence has increased, and the domestic PV market application continues to be strong. It is expected that the domestic PV installed capacity will exceed 19GW in 2016, and will once again become the world's largest solar PV market, with a cumulative installed capacity of 65GW. However, in June 2016, the benchmark price of the Internet will be lowered. As a result, the market is likely to have a tight and loose trend.

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