In the fourth quarter, the photovoltaic industry entered a period of explosive demand. Unlike the demand scenario, downstream investors and component manufacturers are increasingly anxious. The sound of rushing goods, price increases, and production suspension are endless, all of which are attributed to the recent supply shortage and price increase of photovoltaic auxiliary materials, among which the shortage of photovoltaic glass is relatively large.
According to data disclosed by PVinfolink on October 29, the price of 3.2mm coated glass on the spot market has reached RMB 41-48 per square meter, and the price of 2.0mm glass has also risen to around RMB 35 per square meter, compared to September The price of 30 yuan / 24 yuan per square meter, the price increase in just two months is amazing. According to statistics, in recent months, glass prices have increased by more than 60-70%. And due to the large shortage, it is expected that the price increase of glass will not stop in the short term.
According to industry internal news, glass manufacturers are about to raise the price of glass again, which is expected to rise by 30%, which translates to 8-9 cents per watt. With the high price of glass, the cost of photovoltaic downstream enterprises has become unbearable. Even so, photovoltaic glass is still priceless. Under the current circumstances, small second- and third-tier component manufacturers are unable to purchase enough glass, and large-scale shutdowns have occurred, and first-tier component manufacturers have also begun to reduce production and lower their operating rates. If prices increase again, the entire industry will be shut down.
The shortage of glass supply is prominent, and the gross profit margin of glass companies is high
Some organizations pointed out that during the 14th Five-Year Plan period, China’s new renewable energy installed capacity is expected to reach 110-120GW each year, with a cumulative total of 500-600GW. The development prospects are promising. According to the research report of Guosheng Securities, as photovoltaic power generation enters the era of parity, under the dual stimulation of economic and social benefits, photovoltaic installed capacity will grow rapidly. According to data from the European Photovoltaic Association, it is expected to increase from 117GW in 2019 to 255GW in 2024 in the next five years, a compound annual growth rate of 17%.
Photovoltaic parity has brought strong expectations for downstream installations, and the module link is accompanied by rapid expansion. By next year, the module link capacity will reach 300GW. The pace of glass production capacity is relatively slow, and photovoltaic glass may remain in short supply for some time in the future, which will continue to support glass prices and capacity utilization. At the same time, since the beginning of this year, the application proportion of double-sided double-glass modules has increased to nearly 40%, and the rapid application of double-sided modules has also brought more demand for glass.
Under the background of rapid industry demand growth and increased double-sided penetration rate, it is expected that the photovoltaic industry’s demand for effective production capacity of kilns will increase from 21,100 tons/day to 42,700 tons/day in 2020-2024. The data shows that the global demand for photovoltaic glass will be about 658, 870, and 10.16 million tons in 2020-2022, with an annual increase of nearly 2 million tons, while the actual annual growth of photovoltaic glass production capacity in 2020 is only about 730,000 tons. The production capacity of ultra-white glass used in photovoltaic modules is far from being able to meet demand, and has become an important factor restricting the output of photovoltaic modules.
Flatter, a leading photovoltaic glass company, recently stated in an external roadshow, “It is expected that there will be a gap of about 15% in photovoltaic glass in 2021. Although Flatter has expanded its production capacity by 5,600 tons and Xinyi by 4,000 tons, these production lines are Construction and production are distributed in different quarters. The photovoltaic glass furnace itself has a ramp-up period. It will take about 3 months to reach the expected production capacity after the completion of the construction. Therefore, the actual supply market is not so much, and the photovoltaic glass market demand is still Increase, so the demand still exceeds the installed capacity. It is predicted that under the condition that the policy is completely liberalized, photovoltaic glass will not be able to ease and reach the balance of supply and demand at least in 2022.”
In this context, with strong demand, shortage of supply, and soaring prices, photovoltaic glass is still hard to find. The gross profit level of glass companies has also reached a record high. According to the latest financial report, leading glass companies, such as Flat, have a gross profit margin of over 50% in the third quarter of 2020. Correspondingly, the share prices of leading glass companies have doubled in one month. According to the recent trend of a 30% increase in glass prices, the gross profit of glass will increase by 10%. At the same time, in the face of rising glass and other auxiliary materials across the board, photovoltaic module manufacturers are all struggling on the profit and loss line, and they are also facing the situation of unable to purchase glass at any time and stop production and supply.
Limited release of glass production capacity, photovoltaic industry faces challenges
Downstream demand is strong, and glass faucets are also the first to lead the industry in expanding production. Qualified leading companies in the industry such as Xinyi Solar, Flat, Almaden, Rainbow New Energy, and CSG A have successively announced expansion plans. However, the investment and construction period of photovoltaic rolled glass production capacity is long (land purchase, energy assessment, environmental assessment, civil engineering, production line construction, capacity ramping), and it takes about two and a half years from project establishment to full production. The progress of each company’s expansion is not 1. Looking at the current situation, the actual production capacity is far from supporting the development of the photovoltaic industry.
At the same time, in January this year, the Ministry of Industry and Information Technology issued the “Operational Answers to the Implementation Measures for Capacity Replacement in the Cement Glass Industry”, proposing that it is strictly forbidden to record and build new expanded flat glass (including photovoltaic glass, automotive glass and other industrial glass original sheets) projects. It is necessary to implement reduction or equivalent replacement, and formulate a capacity replacement plan. Recently, the Ministry of Industry and Information Technology once again clarified the principle of promoting the replacement of photovoltaic glass capacity in an orderly manner, and continued to include photovoltaic glass in the scope of capacity replacement.
Due to the one-size-fits-all policy, the shortage of photovoltaic glass and the structural surplus of flat glass are grouped together, and the old production capacity must be replaced with new production capacity, which brings greater difficulty to the increase and release of photovoltaic glass production capacity.
In fact, the entire industry has not approved a new photovoltaic glass production line so far this year. Under this circumstance, the exchange of the glass production capacity replacement index that has spawned is also difficult. The old kiln that was originally worth tens of millions has been transformed, and the target of several hundred million has been sold out, completely out of the market order. This is also a heavy burden for glass companies and photovoltaic companies that are eager to reduce costs.
On the other hand, large-size modules and bifacial modules have recently become the development trend of the photovoltaic industry. It is estimated that the production capacity of large-size modules will account for more than 50% in 2022. Affected by the increase in the penetration rate of double glass and the trend of large-scale components, some old furnaces will gradually withdraw from the market because they cannot adapt to the production of ultra-thin, large-size glass. However, some small production lines that cannot be adapted need to be technically modified. However, it will be difficult to obtain economic benefits due to problems such as long shutdown and resumption cycles, difficulty in improving production economy, and intensified market competition. Part of the production capacity will also gradually withdraw from the market, and the actual effective production capacity of photovoltaic glass will be lower than the preset production capacity.
According to estimates, by 2021, my country’s photovoltaic glass production capacity is expected to meet the demand for photovoltaic modules of more than 50GW; by 2022, it will meet the demand for photovoltaic modules of 60GW. This is far from the future installations predicted by all parties. From this, the shortage of glass will exist in the photovoltaic industry for a long time in the future, which will seriously affect the development process of the photovoltaic industry.
Give full play to the market mechanism and coordinate the development of the industrial chain
It is undeniable that for some industries with structural surplus, policy control can help realize supply-side reform and optimization and enhance industrial competitiveness. Photovoltaic glass is clearly far from surplus.
There is overcapacity of ordinary glass in my country, but there is no overcapacity of photovoltaic glass. On the contrary, due to the rapid development of the photovoltaic industry, there is a capacity gap. Due to policy control, it is more difficult for photovoltaic glass to increase production capacity. How to fill the growing gap is a difficult problem for policy makers and related companies.
It may be the fastest and most efficient solution to give full play to the market mechanism, to allocate resources through market competition, to introduce more resources for full competition, to survive the fittest, to quickly improve the quality of photovoltaic glass products and reduce costs.
Lu Fang, Secretary-General of the Photovoltaic Special Committee of China Green Supply Chain Alliance, said: “We must look at the problem of photovoltaic production capacity structure from a development perspective. The new installed capacity in the whole year of 2025 may exceed 300GW, and the global module production capacity may exceed 400GW by the end of 2025. Chain safety is particularly important. The supply chain of raw and auxiliary materials and equipment must be coordinated, and there must be no shortcomings. Ultra-white glass used for photovoltaics should be distinguished from ordinary building materials glass and used as an auxiliary material for the photovoltaic industry to encourage development.”
At present, my country has officially announced that it will increase its national independent contribution, adopt more powerful policies and measures, strive to reach the peak of carbon dioxide emissions by 2030, and strive to achieve carbon neutrality by 2060. High expectations are placed on the development of renewable energy, and the photovoltaic industry is of vital importance in the future green development system. At this time, the coordinated development of the industrial chain is a prerequisite, and at least one link cannot be “stuck”!