Policy and Industry Dynamics
Policy and industry dynamics
LONGi Corp., the global leading enterprise of mono-crystalline wafer and A-share listed PV company, announced on the evening of June 7, 2016 that it had signed the Letter of Interest respectively with Lijiang City, Baoshan City, and Chuxiong Prefecture of Yunnan Province, establishing a cooperation intention of 10 GW mono-crystalline ingots and wafers.
The annual mono-crystalline wafer production capacity of LONGi Corp. had been 5 GW by the end of 2015 and is predicted to reach 7.5 GW and even 12 GW respectively by the end of 2016 and 2017. The signing of the cooperation intention of 10 GW mono-crystalline ingots and wafers with relevant regions in Yunnan is one important step of the company to realize its strategic layout. According to information, Yunnan, driven by the investment projects of LONGi Corp., will become an important mono-crystalline product production base after Ningxia in China. Polycrystalline silicon giant OCI is also positively considering its layout in Yunnan. A mono-crystalline manufacturing industry chain is being formed, which will enlarge the need of Yunnan Province for power and promote the transformation of its hydroelectric resource advantage into industrial advantage and also the synergetic and healthy development of energy sources and industry.
Coincidentally, Zhonghuan Semiconductor Co., Ltd. (Zhonghuan), another important mono-crystalline wafer enterprise in the world, also released an announcement on June 6, disclosing that its subsidiary -- Inner Mongolia Zhonghuan Solar Material Co., Ltd. -- was planning a new project of 8 GW mono-crystalline silicon materials and wafers. The industry was surprised by the almost simultaneous large-scale expansions of mono-crystalline production capacity of LONGi Corp. and Zhonghuan, two important mono-crystalline product manufacturers. In fact, there are not only these two traditional mono-crystalline product enterprises that are carrying out mono-crystalline production capacity. It is reported that Golden Concord Holdings Limited (GCL), the largest polycrystalline silicon wafer enterprise around the globe, had invested and built 10 GW mono-crystalline silicon projects in Ningxia as early as in May last year, among which 1 GW had been successively put into production this year. Among the worldwide top three module enterprises, one is planning to invest a 2 GW mono-crystalline wafer project in Zhundong Wucaiwan of Xinjiang, and anther has ordered mono-crystalline cell equipment in a large scale. According to incomplete statistics, over 80% of the production capacity expanded since 2015 till now is related to mono-crystalline products (mono-crystalline wafer and cell). It is predicted by IHS that the annual installed capacity in the global PV market will be increased by 17%, up to 67 GW, in 2016. Calculated based on the 30% proportion of mono-crystalline products from a conservative point of view, the global mono-crystalline market will have an installed capacity of 20.1 GW.
"A single flower does not make a spring. Only when all flowers bloom has spring really come." Mainstream PV manufacturers expand the mono-crystalline production capacity one after another to meet the increasingly high demand for mono-crystalline products. The differences between mono-crystalline and polycrystalline products mainly lie in crystal growth and cell texturing links. Due to the relatively high threshold of mono-crystalline growth technology, in the domestic capacity expansion of PV manufacturing around 2010, many enterprises selected the field of polycrystalline ingot, which had a lower threshold, and "making money fast" had become a fashion during that period. Only few enterprises, including LONGi Corp., Zhonghuan, Comtec, and Solargiga Energy, focused on mono-crystalline production. That condition limited the production capacity and supply of mono-crystalline wafers and also restrained further increase of the demand for mono-crystalline products. On the other hand, the previous traditional mono-crystalline markets of Japan and Europe, i.e., regions of high installation cost, developed slowly because of limited supply of mono-crystalline wafers and too high price of mono-crystalline modules. Both LONGi Corp. and Zhonghuan, who had relied upon export before, strategically rethought the situation and had started their own layout in mono-crystalline cell and module fields since 2015, so as to deliver economical and efficient mono-crystalline products directly to the investors of end power stations, which was an effective path proved by practice.
Since the beginning of 2015, under the stimulus of power station investors' demand for highly efficient products, the share of mono-crystalline products in domestic market had increased by over 10% than that in the previous year, and mainstream PV manufacturers began to make planning for mono-crystalline production capacity to satisfy market demand. As reported by EnergyTrend, the domestic mono-crystalline market develops rapidly, so all large electric power groups and power station investors are quite interested in the cost performance of mono-crystalline products. Seen from the bids for PV power station projects in China, there were approximately 3 enterprises bidding for mono-crystalline projects in 2015, and that number had increased to 12 by Mar., 2016.
According to the analysis of market participants in the industry, since the difference in price per watt between mono-crystalline and polycrystalline modules has been reduced to RMB 0.05 -- 0.08 and the high conversion efficiency of mono-crystalline module brings about the surplus of installation cost, the actual investment in mono-crystalline system per watt has become less than that in a polycrystalline one. In the past more than a year, the roaring success of LERRI Solar, a wholly-owned subsidiary of LONGi Corp., had made the industry doubting whether its modules had sacrificed profit for the aggressive economic efficiency and high performance efficiency, but LONGi Corp. responded to that doubt with the leading profitability in 2015 and the first quarter of 2016. Based on the confidence in technological development and cost reduction of mono-crystalline products, LONGi Corp. publicly promised at its strategy conference during the period of SNEC: the price difference between mono-crystalline and mainstream polycrystalline wafers would not exceed RMB 0.6/piece at the most, and the price per watt of mono-crystalline wafer would be always RMB 0.01 less than that of the mainstream polycrystalline wafer. The promise of LONGi Corp. undoubtedly reassured its global cell clients -- the age of expensive mono-crystalline products had gone forever, and their advantage of sustainable cost performance deserved everyone's expectation.
LONGi Corp. and Zhonghuan both significantly improved their mono-crystalline growth technology in the past few years and, more remarkably, led the mono-crystalline wafer enterprises to popularize the diamond-wire wafer cutting technology; however, this technology still has technical difficulties in the link of polycrystalline silicon wafer cutting. The technological progress of mono-crystalline wafer is the prerequisite to cost reduction. The entry of more PV enterprises into mono-crystalline manufacturing will not only exacerbate the competition in the mono-crystalline wafer market but also accelerate the promotion and popularization of mono-crystalline technology. Scale effect will lead to the cost reduction in mono-crystalline supply chain. For instance, the cost of equipment, quartz crucible, argon, and graphite in the supply chain will be cut down. Hence, there is a higher potential for the reduction of mono-crystalline manufacturing cost.
In the 1990s, the domestic PV enterprises were mostly semiconductor companies and took mono-crystalline route uniformly, and mono-crystalline products prevailed over ten years; around 2010, cheap polycrystalline products had a short burst; since 2015, mainstream PV enterprises have quickened the pace in expanding the mono-crystalline production capacity in the wake of the demand growth for efficient mono-crystalline products in the global market, and such products, with economic efficiency, will win the favor of more PV power station investors.