Industry Insight | The Photovoltaic Industry Will Continue to Thrive Globally

The global energy landscape is transforming from fossil fuels to a zero-carbon economy driven by new energy. In December 2015, 195 countries and the European Union signed the "Paris Agreement" to reach a consensus on zero-emission strategies. This move has prompted countries around the world to shift towards the development of renewable energy such as solar and wind power. The widespread use of renewable energy is a trend for long-term global development in the future.

Renewable energy generation generally refers to the process of generating electricity using sources including solar energy, wind energy, biomass energy, geothermal energy, ocean tidal energy, etc.

According to different power sources, China's electricity energy structure can be roughly divided into thermal power, hydropower, wind power, photovoltaic power generation, and nuclear power. Among them, thermal power accounts for the largest proportion, especially coal-fired power generation. The Chinese government emphasized at the Climate Ambition Summit in 2020 that by 2030, non-fossil energy will account for about 25% of primary energy consumption. Combined with previous important speeches on "carbon peak" by 2030 and "carbon neutrality" by 2060, it marks that China's non-fossil energy, especially renewable energy represented by photovoltaic and wind power, will become the backbone of future energy growth.

At the same time, China is one of the countries with the richest solar resources. More than two-thirds of the country's total area has an annual sunshine duration of more than 2,000 hours, providing a good foundation for solar photovoltaic power generation. Therefore, driven by supportive national policies and laid on the foundation of rich solar resources, China has gradually developed into one of the most important solar photovoltaic application markets globally.China's cumulative photovoltaic installed capacity accounts for the highest proportion in the global installed capacity and is the world's largest photovoltaic market; moreover, China's photovoltaic market contributes the largest incremental growth each year among all countries and is the main driving force for the development of the global photovoltaic market.

Photovoltaic is a new power generation system that uses the photovoltaic effect of semiconductor materials of solar cells to directly convert solar radiant energy into electrical energy. There are two modes: independent operation and grid-connected operation. Taking an installed capacity of 20 MW as the standard, photovoltaic power generation systems can be divided into two major categories: centralized and distributed. The centralized type is mainly large ground-based photovoltaic power generation systems; the distributed form is diverse, such as photovoltaic power generation on residential rooftops.

The upstream of the photovoltaic industry is the raw material supply market, the midstream is the photovoltaic module manufacturing market, and the downstream is the photovoltaic power station construction and operation market. The upstream market mainly includes the production of raw materials such as silicon rods and silicon wafers, the midstream market is oriented towards the manufacturing of photovoltaic modules such as battery wafers, and the downstream market includes the construction and operation of photovoltaic power stations.

The cumulative global photovoltaic installed capacity increased from 372.2 GW in 2017 to about 918.8 GW in 2021, with an annual compound growth rate of 25.3%.Among them, China has always been a leader in the global photovoltaic industry.In 2017, China's cumulative photovoltaic installed capacity was only 131.3 GW. However, with the increasing maturity of photovoltaic power generation technology and the further expansion of its application scope, China's cumulative photovoltaic installed capacity increased to 308.8 GW in 2021, with an annual compound growth rate of 23.8%.In the future, with continuously improving cost competitiveness and favorable policies, it is expected that from 2022 to 2026, the global cumulative photovoltaic installed capacity will increase from 1,132.3 GW to 2400.7 GW, with an annual compound growth rate of 20.7%; among them, China's cumulative photovoltaic installed capacity will increase from 372.5 GW to 721.5 GW, with an annual compound growth rate of 18.0%.

From 2017 to 2021, the global new photovoltaic installed capacity increased from 97.0 GW to 175.0 GW, with an annual compound growth rate of 15.9%. China's new photovoltaic installed capacity increased from 53.1 GW in 2017 to 54.9 GW in 2021, with an annual compound growth rate of 0.8%; due to China's accelerated subsidy refund policy for photovoltaic power generation, China's new photovoltaic installed capacity declined in 2019.In the future, China will maintain its leading position in the global photovoltaic industry; from 2022 to 2026, it is expected that the global new photovoltaic installed capacity and China's new photovoltaic installed capacity will increase from 213.5 GW and 63.7 GW in 2022 to 376.4 GW and 101.5 GW in 2026, with annual compound growth rates of 15.9% and 15.2% respectively.

• Market Competition Further Intensifies

In the future, competition in the photovoltaic industry will become increasingly fierce. For example, many photovoltaic module manufacturers in the upstream industry have begun to expand into the downstream photovoltaic power station business, which has intensified market competition. Firstly, the establishment of photovoltaic power stations is an effective channel to digest their own module products to ensure good return on investment. Secondly, due to Western countries' anti-dumping and anti-subsidy measures against Chinese photovoltaic module manufacturers, some photovoltaic module manufacturers have begun to invest in the downstream photovoltaic power station market.

• Distributed Photovoltaic Power Stations Become a New Growth Point

In recent years, distributed photovoltaic power stations have shown a good development momentum. By the end of 2021, China's cumulative grid-connected capacity of distributed photovoltaics exceeded 100 million kilowatts, accounting for about one-third of all photovoltaic power generation grid-connected capacity; among China's new photovoltaic power generation grid-connected capacity in 2021, distributed photovoltaics accounted for about 55% of all new photovoltaic power generation installations. In the future, with government support, distributed photovoltaic power stations will further grow.

In June 2022, nine departments including the National Development and Reform Commission and the National Energy Administration jointly issued the "14th Five-Year Plan" for renewable energy development, proposing "to adhere to both centralized and distributed development, promote the construction of a number of major renewable energy bases, and strongly support the development of distributed new energy," elevating the development status and importance of distributed photovoltaics to parallel that of centralized photovoltaics. By utilizing their different characteristics and application scenarios, solar resources can be better utilized. With the continuous expansion of the distributed photovoltaic market and policy support, distributed photovoltaic power stations will become an important growth point in the photovoltaic industry.

• Continuous Technological Breakthroughs

In recent years, from silicon materials, batteries, modules to system optimization and innovation, the technical level and process level of each link in China's photovoltaic industrial chain have been greatly improved. In addition, Chinese photovoltaic enterprises have successively made breakthroughs in high-efficiency crystalline silicon battery production technologies such as PERC, TOPCon, HJT, and IBC. Related technologies such as half-cell, double-sided, stacking, multi-main grid, and large-size have also matured and been gradually applied, continuously improving and innovating.

• Favorable Policies

In recent years, multiple favorable policies have been introduced at home and abroad, which has promoted the healthy and rapid development of the photovoltaic industry. To address global climate change, 157 countries around the world adopted the "Paris Agreement" in 2015, proposing that all parties should strengthen their response to global climate change. In addition, in December 2020, national leaders further stated at the Climate Ambition Summit: "By 2030, China's carbon dioxide emissions per unit of GDP will be reduced by more than 65% compared to 2005, non-fossil energy will account for about 25% of primary energy consumption, forest stock will increase by 6 billion cubic meters compared to 2005, and the total installed capacity of wind and solar power generation will reach more than 1.2 billion kilowatts."

• Elimination of Backward Capacity

Under the background of carbon neutrality, the global energy landscape is being reshaped. Many countries are actively developing renewable energy, especially photovoltaic energy, and strive to replace fossil energy. Under full competition among all links, backward capacity is continuously eliminated, resources are concentrated towards leading enterprises, and leading enterprises further strengthen R&D investment, forming a virtuous cycle and promoting the development of the photovoltaic industry.

• Cost Reduction

In recent years, the cost of key components of photovoltaic power generation has been continuously decreasing. Due to technological progress and oversupply, the prices of photovoltaic modules, inverters, and systems, which account for the main cost of photovoltaic power generation development, have been continuously decreasing. Therefore, under stable supply conditions, the cost of other components remains unchanged, and the total cost of developing photovoltaic power generation projects is constantly decreasing, which promotes the development of the photovoltaic industry.