On November 2, China’s National Energy Administration held a symposium to evaluate the results of the 13th Five-Year Plan for solar PV development at its halfway point, discussing the adjustment of PV and thermal generation targets in the plan. As a result of this, there is renewed positivity regarding China’s domestic solar demand in 2019-2020.
At the same time, the Chinese government also indicated that local governments should not be lagging behind on subsidy payments. Combined, these factors have erased some of the market pessimism post 31/5. PV InfoLink has increased its Chinese installation forecast to 42.5 GW, which boosts total demand to 110 GW in 2019.
If we divide Chinese demand into different project categories, the most robust is the Top Runner Program, for which there is a new annual target each year. The 5 GW General Top Runner Program is highly unlikely to be executed on time this year, owing to a lack of high-efficiency modules. Therefore, there will be 1.5 GW remaining to be completed in Q1 2019. Expected to receive a new incentive package are 1.5 GW of outstanding Top Runner projects. In addition, there are 1.5 GW from the Super Top Runner Program that required projects to connect to the grid before June 30. Combined, this represents 4.5 GW of solid, high-efficiency demand in H1 2019.
On the other hand, the Chinese government is expecting to release new Top Runner projects next year, with a conservative estimate of 8-10 GW.
In addition, the PV Poverty Alleviation program will continue with the actual demand from this program in 2019 likely to keep rising, reaching 5-7 GW.
As for demand for these two programs, it will be dependent on a new official PV target. But because there are many completed utility-scale PV projects that couldn’t connect to the grid due to the 31/5 Policy, utility-scale projects under the target will contribute little to actual module demand.
China’s residential installations have grown rapidly in early 2018. Over 1 GW of projects has been installed in H1 2018 alone. The number of retailers selling residential systems and the number of employees working in this field have soared.
However, the sudden 31/5 announcement froze the residential market segment. Many retailers closed shop as a result. Yet, based on the track record of residential market growth in mature PV markets, the segment in China is expected to reach 4 GW in 2019.
China’s C&I segment is facing the greatest uncertainty. The minimum target next year will reach this year’s 10 GW. With the significant growth of module power output this year, C&I projects will be more attractive next year, reaching 15 GW.
Grid parity projects are becoming an increasingly common theme in China. A clearer target is required and it is dependent on local governments to develop policy that will facilitate growth in this segment. We estimate a conservative target of 2.5 GW at this point, but the actual target may be even higher.
Despite the better than expected Chinese demand, the peak selling season extended this year from Q2 to Q3-Q4. As a result, the global market won’t witness industry downturn until before or after April 2019. In addition, each sector of the PV supply chain continued to release new capacities, leading to serious oversupply in Q1 2019. Overall supply chain prices will decline further. Taking into consideration the time at which manufacturers will start to conduct procurement is H2 2019, prices are expected to reach the lowest point of the year in April 2019.
The price change of polysilicon will continue to significantly affect the overall solar supply chain price during 2019. In H2 2018, several Chinese polysilicon manufacturers such as ReneSola, Yunxin, Hengxing, Dongming, Dongmeng, and GCL Poly have continued to curtail production – particularly at third-party owned sites. Meanwhile, capacity utilization has also declined slightly for South Korean manufacturers. In H1 2019, many top-tier manufacturers located in Western or Northwest China will rapidly release new capacities. It is projected that many more polysilicon makers will curtail or suspend production. As a result, polysilicon prices are not likely to decline much further in H1 2019.
For wafer, second/third-tier manufacturers of mono and multi wafers have gradually exited the market this year, resulting in higher industrial concentration. It is important to note that if Chinese demand rebounds to a level better than anticipated next year, the mono wafer market will witness tighter supply in Q3 2019 – although this is dependent on the expansion progress of Longi and Zhonghuan.
Mono PERC cells have become a mainstream product this year. The majority of production capacity expansions focus on mono PERC. This led to a higher than expected total PERC capacity, rising from 33.6 GW in the end of last year to
66.7 GW in late 2018. Total PERC expansion reached 33 GW this year. It is estimated that global PERC capacity will expand by over 26 GW by the end of next year, boosting global PERC capacity to more than 92 GW.
After implementing the selective emitter (SE) technology onto the p-type PERC production lines, no other technologies can be found to push up efficiencies further. As a result, efficiency may stagnate at 22%. It remains to be seen whether there will be any breakthrough for p-type TOPCon or not.
For n-type, before SNEC took place this May, many Chinese manufacturers announced expansion plans of heterojunction (HJT), including GS Solar, CIE Power, Hanergy, Tongwei, Akcome, and SunLink PV. But after China announced the 31/5 Policy, p-type product prices plummeted, widening the price gap between p and n-type modules. This made n-type product sales even more difficult, leading to postponement for many HJT expansion plans.
Overall, both demand and module wattage is set for growth. But we should be aware from the prosperous demand that the overall supply chain next year may be similar to the 2017 trend, which means prices will hit the bottom and begin to rebound before SNEC takes place. The polysilicon, wafer, and cell sectors could experience a rise in prices. If demand is more concentrated, module prices may also slightly increase in Q3 2019.
Source PV Magazine