2019 Photovoltaic Change: The Challenge of Overseas Competition

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  2019光伏变局:海外争夺战成关键

Although the subsidy policy has not yet landed, the overall trend in the domestic market has long since become clear. The first thing to be clear is that in 2019, PV projects can be divided into two categories, one is unsubsidized projects, and the other is subsidized projects. How will the PV market develop in 2019, depending on how much market demand these two types of projects can bring.


From a business perspective, in addition to market demand, the project's rate of return is also a key factor in determining future development. What is the yield of PV projects in 2019?


The rate of return is king


For the project's rate of return, we still need to analyze the unsubsidized and subsidized projects. First of all, from the perspective of subsidized projects, the policy of limiting the subsidy of 3 billion yuan is likely to be implemented. As a result, regardless of the installed capacity of subsidized projects, the revenue generated is almost limited.


According to the new policy, in addition to poverty alleviation projects, household projects and a small number of demonstration projects, all other subsidized projects need to obtain scale indicators through bidding. The model of bidding for scale indicators has been used by the leader plan project, which means that ordinary projects in 2019 have become 'leaders.'


Drawing on the bids of the top two low-cost starters in the past two years, this year's subsidized project bidding will certainly be very lively. It is precisely because of the existence of the bidding that the photovoltaic power generation cost of the front runner project is approaching or even lower than the parity Internet standard, but at the same time, the yield of these projects has correspondingly dropped significantly.


From the experience of the front runner project, we can foresee that the grid-connected photovoltaic power generation price with subsidized projects will be lower and lower under the driving of the bidding model, and the photovoltaic power generation cost will gradually approach the parity online under the price limit. standard. Therefore, unlike the previous fixed subsidies, the subsidy rate of subsidized projects in 2019 will drop sharply.


Therefore, under the control of the subsidy of 3 billion yuan and the control of the bidding model, the yield of subsidized projects will drop sharply until it approaches the cost line. As a result, the size of its installed capacity has not made much sense.


From the perspective of unsubsidized projects, since such projects are not eligible for state subsidies, their yields are basically difficult to compare with subsidized projects. However, from the 'Notice on actively promoting the work related to wind power and photovoltaic power generation without subsidy parity online' issued in the previous period, the yield of unsubsidized projects depends to a large extent on the implementation of the policy.


Only when the above policies can be implemented to the maximum extent, the “non-technical costs” of unsubsidized projects can be effectively reduced, and the project yield can be guaranteed. Ultimately, the unsubsidized projects can be successfully promoted in large scale in 2019.


Even in areas with superior resource conditions, the yield of unsubsidized projects may be equal to some subsidized projects. In general, the yield of unsubsidized projects has large variables, which are greatly affected by the “non-technical cost” factor. Under ideal conditions, the yield of unsubsidized projects may be at the same level as subsidized projects.


In summary, the yield of subsidized projects in 2019 may continue to decline, and the yield of unsubsidized projects is also difficult to perform well. Under such circumstances, the new installed capacity of PV projects in 2019 cannot represent the development of the industry as it has in previous years. Because at the same scale, the revenue generated by the new project scale in 2019 is much different from the previous year.


Therefore, for the photovoltaic market in 2019, the rate of return is the king, and only those companies with strong cost control capabilities can have a place.


Overseas competition is the key


From the above analysis, we may find that there may still be a good new installed capacity in China in 2019, but the revenue generated by these scales will fall sharply. The market size does not seem to change, but the cake is invisibly smaller. In this way, the domestic market in 2019 is still unable to recover to the vitality of 2017.


Unlike the domestic market, overseas markets have blossomed around in 2019. In recent years, the wave of clean energy has been set up in the world, and the photovoltaic markets in Europe, America, and Japan have matured and developed. The Latin American and African markets are in the ascendant, and in many areas with good resource conditions, the cost of photovoltaic power generation has been lower than the local thermal power price. In contrast, the potential and opportunities of overseas markets have emerged. This is why the competition in overseas markets has become the key to the development of current PV companies.


Unconsciously, the battle for overseas markets has already erupted. From the financial company's financial report, it can be found that companies that have achieved good performance after the '531' last year have one thing in common, that is, overseas business prosperity. Representative companies include Jinko Energy, GCL Integration, and Longji. The importance of overseas markets has gained greater attention from companies in 2019. Since the New Year, many companies have been actively exploring overseas markets.


According to reports, in the first half of the year, orders for domestic first-line PV module companies including Jingke, Jingao, Trina Solar, Longji Leye and Dongfang Risheng were almost full, and most of these first-tier companies are supplying foreign orders. In addition, the news that domestic companies have won overseas orders is not uncommon.


The 'patent infringement' incident that has received industry-wide attention in recent days also indicates that the competition in overseas markets has entered a stage of intense heating.


All the clues indicate that although the domestic market is still in the wait-and-see period before the official release of the policy, the battle for overseas markets has already begun. In the case of continued weakness in the domestic market, the performance of overseas markets will become the main profit point of major PV companies.


Summary


The market is ever-changing, and the change has already begun. The current PV market has become more and more global, and the days of restlessness in the domestic market are gone forever; the current PV market is becoming more mature and stable, and only companies with excellent cost control capabilities can A share of the future market.