After confronted by the sudden shock of China’s 531 Policy in 2018, spot prices of all sectors of the supply chain dropped 30%. This also calmed the originally overheated PV industry down. After module demand drops to 88GW in 2018, the Chinese government revised upward the installation target for the “13th Five-Year Plan”. The overall market takes it as a positive sign. Not just China, but also India and the US are expecting to witness higher demand. Furthermore, with the help of the emerging markets, the global module demand is likely to reach more than 112GW in 2019.
Although the 531 Policy has slowed down the expansions for the overall supply chain, the PV industry is still gradually getting rid of companies without competitiveness.
For the polysilicon sector, the westward of Chinese polysilicon capacity is the quickest road to cost reduction. According to PV InfoLink’s statistics, polysilicon capacity will increase 60% in Xinjiang, Inner Mongolia, and Sichuan in 2019. This will constrict the market share of Chinese second/third-tier small-scale makers, old-brand second-tier manufacturers, and top-tier overseas polysilicon makers.
Many small-scale wafer makers have been eliminated in 2018. The mono wafer market has gone through a new round of industrial concentration. Aside from top-tier and vertically-integrated manufacturers’ own capacity, barely any small-scale manufacturers could survive. Due to the lower cost gap between multi wafer companies, the elimination of multi is slower than mono wafer companies. However, these small-scale multi wafer makers may return to the market once peak season arrives again next year.
In the aspect of cell sector, not just top-tier cell makers with over 5GW of capacity like Tongwei and Aiko Solar have completed upgrade their production lines to PERC + SE, other manufacturers also have 1-2GW of new capacity trying to catch up with the upgrade. In addition, due to the impact is getting smaller from the trade wars, it will cause manufacturers which with slower cost reduction to be completely marginalized.
With the “Top Runner Program” pushing up the production ratio of mono products in China and a surge in mono PERC cell efficiency, 2018 is a year for mono products to finally take over control. The market share of mono products has increased from 28% in 2017 to 46% in 2018.
Looking ahead for 2019, mainstream wattage of mono PERC modules is likely to reach 310W in Q2, creating a 35W gap from the 275W for multi modules. Because of this, more manufacturers in China and the overseas will prefer to use mono modules.
In addition, thinner wafers can help reduce costs and cell efficiency can be boosted further. A new round of the “Top Runner Program” may allow module wattage to surge again. All of these will help strengthen the competitiveness of P-type mono products further next year.
Since it’s more difficult to raise cell efficiency, manufacturers have begun to try various sizes to mono and multi wafers in 2018. In order to pursue higher module wattage, it’s more likely that manufacturers will increase the area of wafers and modules. Demand of wafers with a size of over 157mm is expecting to take up 20% of the total demand in 2019.
For mono products, N-type and Taiwanese module manufacturers that focus on the niche or high-efficiency markets will have to pull up module wattage and cost–performance ratio further, therefore, almost all of them have adjusted wafer size to M4. Jinko Solar is the first Chinese manufacturer to introduce 158.75mm wafer. If other top-tier vertically-integrated manufacturers choose to follow suit, the market may witness two kinds of size: 158.75mm for vertically-integrated manufacturers and M2 for non-vertically-integrated manufacturers. For multi wafer, area of multi wafer also not unified yet, mostly promoted by vertically-integrated manufacturers themselves.
In terms of thickness, more and more production lines have been adjusted to match 160µm mono wafers in order to reduce costs. Meanwhile, multi wafer is still in an inferior position in terms of the thinning process.
Just like conventional mono replaced by PERC in 2018, SE will become standard equipment for production lines. Later, it will depend on whether there’s a breakthrough for TOPCon in P-type mono cell. But no matter what, efficiency increase is limited for P-type mono cells and the increase of module efficiency will be achieved through module technologies.
Judging from this year, the half-cut is a relatively mature technology in terms of equipment, yield rate, and actual production among all module technologies. The market has higher acceptance on the half-cut in 2H18. More manufacturers are expecting to upgrade their production lines to half-cut next year.
Multi busbar and shingled will certainly become mainstream technologies in the future as well. But because it takes time for the technologies and equipment to mature, PV InfoLink projected that these two technologies won’t be implemented in a large scale until after 2020.
Although there’s barely any additional cost to turn PERC cell into bi-facial module, the expansion of bi-facial module has grown relatively slow. Most of the bi-facial modules shipments are expecting to fulfill the China domestic market next year. Bi-facial demand will slowly rise in the overseas when end-users gradually realize the benefit of bi-facial modules.
Looking ahead for next year, the market will witness the weakest demand in 1Q19 owing to the following reasons – 1) The Lunar New Year is in Q1 2) there’s only a small amount of demand from the “General Top Runner Program” that didn’t finish on time 3) Countries that usually see higher demand in Q1 like India, Japan, and Australia will just experience average demand in 1Q19. The overall supply chain prices will be lowered further and the industry downturn this time will last till mid-2019. Considering manufacturers will start to conduct procurement in 2H19, the market will witness the lowest price of the year in April 2019.
As the market will witness weak demand in 1H19 but strong demand in 2H19, we need to pay special attention to whether there’s supply shortage caused by the over-concentrated demand in 2H19. It appears that the minimum demand will reach 32GW in 3Q and 4Q19, respectively. Calculated from an approximate mono proportion of 60% in 2H19, there will be 19.2GW of mono demand per quarter. With 85,000 tons of polysilicon capacity for mono wafer use in Q3, If most manufacturers choose to conduct the equipment maintenance in Q3 and lower capacity utilization rate to below 70%, polysilicon for mono wafer use will experience slightly tight supply.
On the other hand, because the industrial concentration is very high for mono wafers, if the expansion progress of top two wafer makers Longi and Zhonghuan fail to expectations, the mono wafer market will witness slight tight in supply in Q3. Yet, the actual situation will depend on the expansion plans of Longi and Zhonghuan.
Overall, after going through the low season after the Lunar New Year next year, the PV industry will be prosperous again. The overall supply chain prices may rebound in 2H19. However, in 1H19, manufacturers will have to consolidate deployment in the overseas markets and keep up with the market product trend. When the peak season comes again, there will be more fruitful harvest.
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