Photovoltaic power generation is one of the most important ways to use solar energy in today's world. Facing the serious fossil energy crisis and environmental crisis facing the world today, photovoltaic power generation has obvious advantages from the perspectives of resource sustainability and environmental friendliness. As an important representative of the global emerging industry, it has broad development prospects in the long run. Attracting a large number of corporate participation and investment.

The development of China's photovoltaic industry in the past decade

With the increasing global concern about energy and environmental crisis, the photovoltaic industry has experienced a rapid development stage in the past decade. At the same time, China's economy is also experiencing leapfrog development, and its economic aggregate ranks second in the world, second only to the United States. As a major manufacturing country and a major energy consumer in the world, China's photovoltaic industry has played a very important role in the rapid development of the world's photovoltaic industry, and has also experienced several staged ups and downs in industrial development.

On January 10, 2014, at the China Photovoltaic Industry Integration Symposium hosted by China Minsheng Bank, Mr. Wang Bohua, Secretary-General of China Photovoltaic Industry Alliance, summarized and reviewed several important stages of the development of the photovoltaic industry in the past ten years, as follows.

Rapid development period (2004-2008)

With the introduction of the EGG Act in Germany, European countries vigorously subsidize and support the photovoltaic power generation industry. Under this background, China's photovoltaic manufacturing industry uses foreign markets, technology, and capital to quickly form a scale. In 2007, China surpassed Japan to become the world's largest producer of photovoltaic power generation equipment. A group of photovoltaic manufacturing companies represented by Suntech Power and Jiangxi Saiwei have successively landed in the US capital market and won market pursuit. The price of polysilicon, the core raw material of photovoltaic power generation equipment, exceeded $400/kg.

First adjustment period (2008-2009)

The outbreak of the global financial crisis, the financing difficulties of photovoltaic power plants, and the sudden brakes of support policies in Europe, such as Spain, have led to a decline in demand. China's photovoltaic manufacturing industry has experienced a severe setback, and product prices have fallen rapidly. The price of polysilicon has fallen to about 40 US dollars/kg.

Explosive recovery period (2009~2010)

Under the background of the expected reduction of photovoltaic power generation subsidies and the financial crisis leading to the decline of photovoltaic product prices, the German and Italian markets broke out a wave of rush to install, and the market recovered rapidly. At the same time, China has issued a 4 trillion yuan rescue policy, and the photovoltaic industry has been positioned as a strategic emerging industry, which has given birth to a new round of investment boom in the photovoltaic industry. As a barometer of the photovoltaic industry, the price of polysilicon also quickly rebounded to the level of $90/kg.

Severe industrial adjustment period (2011~2013)

The explosive recovery in the previous stage led to the rapid growth of photovoltaic manufacturing capacity, but the slowdown in market growth brought about by the reduction of European subsidies led to a serious phased surplus in the photovoltaic manufacturing industry, a sharp decline in product prices and the rise of trade protectionism. China's photovoltaic manufacturing industry once again experienced setbacks, almost into the entire industry losses. The price of polysilicon fell to an all-time low of about $15/kg during this period.

Gradual recovery period of the industry (2013-present)

Japan has introduced an unprecedented subsidy policy for photovoltaic power generation, which has eased the contradiction between supply and demand in the market. At the same time, China-EU photovoltaic trade disputes were resolved through the commitment mechanism. China's photovoltaic industry support policies represented by the State Council's No. 24 document were intensively introduced, and supporting measures were quickly implemented. As a result, China set off a boom in photovoltaic installation, driving the price of photovoltaic products began to rise, and the price of polysilicon rose slightly to about $18/kg.

The core problem of photovoltaic industry-serious subsidy dependence

From the historical stage of the development of China's photovoltaic industry, it can be clearly found that the photovoltaic industry's dependence on subsidy policies, as well as the impact of subsidy policy changes on the industry cycle and ups and downs due to the dependence on subsidies.

With the rapid development of the photovoltaic industry and the improvement of technology in the past ten years, the efficiency of photovoltaic power generation has been continuously improved, and the price of modules has continued to fall. However, compared with other power generation methods, the cost of photovoltaic power generation is still high. Among them, the cost of thermal power generation is about 0.4 yuan/degree, the cost of hydropower generation is 0.2~0.3 yuan/degree, the cost of nuclear power generation is 0.3~0.4 yuan/degree, and the cost of wind power generation, one of the same important new energy sources, is 0.6 yuan/degree. However, the cost of photovoltaic power generation is still as high as 0.9~1.0 yuan/degree. Therefore, at least under the current technical level, photovoltaic power generation still relies heavily on government subsidies, and has not yet the ability to break away from subsidies and independently participate in the power market competition.

At the same time, the subsidy of "only follow the lead" and further lead to the imbalance between the upstream and downstream of the photovoltaic industry chain risk distribution. One end is the relatively low risk of photovoltaic power generation applications, and the other end is the relatively high risk of photovoltaic manufacturing.

As the strength of policy subsidies is easily affected by factors such as the macroeconomic cycle, economic weakness can easily lead to the tightening of subsidies. Europe is the most living example in front of us.

The weakening of subsidies will have an impact on investors of photovoltaic power stations, but at best, it will allow investors to reduce the scale of investment or not to invest. At most, it will disrupt the investment plan, not to mention too much loss. However, for photovoltaic power stations that have been put into operation and enjoy the subsidy policy, the so-called "old policy for the elderly, new policy for new people", the subsidy policy already enjoyed by the put into operation power stations generally promises a continuous period, the original level of earnings can still be maintained. Therefore, although the change of policy brings uncertainty to the development of photovoltaic industry, the impact on the application of photovoltaic power generation is relatively small.

However, for the upstream photovoltaic manufacturing industry, the change of subsidy policy has a great impact. The photovoltaic manufacturing industry, especially the most upstream polysilicon manufacturing industry, is a highly capital-intensive industry with a huge amount of investment. In the stage of increasing and continuing subsidies for photovoltaic power generation, due to active investment in power stations and strong demand for upstream components and raw materials, the photovoltaic manufacturing industry has a relatively stable and good income space, and the polysilicon industry has even experienced a profiteering stage. However, once subsidies are cut, power plant investment will slow down or require upstream products to reduce prices. In the upstream and downstream game, because the huge upstream production capacity is there, the game between manufacturers and power station investors is very high, and the risks are naturally transferred to the upstream manufacturing link. In this case, photovoltaic manufacturing enterprises are bound to adjust prices to accelerate sales, make up for the huge fixed costs, maintain book profits, to the capital market "delivery", at the same time, to maintain the operation of the capital chain. However, if subsidies are adjusted too much and weak demand causes product prices to fall to the point where even variable costs cannot be covered, manufacturers will incur cash losses. In order to prevent transitional blood loss, enterprises will have no choice but to stop production, or use shoddy and other improper means, but this is tantamount to drinking poison to quench thirst and cannot be sustained. At the same time, the decline in business performance and the tight capital chain will also lead to domino effects, such as high financing costs in the capital market, difficulties in refinancing, tightening of commercial credit of upstream raw material suppliers, and defensive credit contraction of financial institutions, which are undoubtedly worse for photovoltaic manufacturing enterprises. Negative energy savings to a certain extent, the enterprise will eventually go bankrupt. The example of the former pioneer and leader of China's photovoltaic industry "Suntech Power" is just around the corner.