In-depth: Photovoltaic Market Sees Unprecedented Imbalance Between Supply and Demand (AI Translation)

【周刊提前读】深度：光伏供需空前失衡 何处寻底？

Tongwei Co. Ltd. announced plans to acquire a 51% stake in Risen Energy Co., valued at up to 5 billion yuan. Risen Energy is among the top five global photovoltaic (PV) cell manufacturers [para. 1]. Runyang Co.'s ChiNext IPO in June 2023 was approved but subsequently lapsed due to cooling industry financing, affecting local government expectations [para. 2]. Yancheng's government facilitated Tongwei's potential acquisition of Runnong Shares, which faces high debt and plummeting valuation [para. 3]. Industry-wide, leading PV companies reported substantial financial losses in the first half of 2024 [para. 4]. These include Longi Green Energy, TCL Zhonghuan, and GCL Technology Holdings, which faced significant profit declines [para. 5]. This trend reveals an industry battle focused on maintaining cash flow, even at the expense of losses [para. 6][para. 7].

Photovoltaic module prices plummeted from 1.9 yuan/watt at the start of 2023 to 0.6-0.7 yuan/watt by mid-2024, affecting profitability [para. 8][para. 9]. Zhang Sen from the China Chamber of Commerce highlighted that international projects aren't profitable, and inefficiency in capacity elimination prolongs the industry's struggle [para. 9]. Financially, Longi Green Energy and Jinko Solar experienced significant net cash outflows in early 2024 [para. 11]. The overcapacity issue emerged within three years of China’s dual carbon goals announcement [para. 12]. Runyang Co.’s fluctuating valuation amid frantic investment cycles exemplifies this [para. 13].

Regulatory attempts to stabilize the photovoltaic market include improvements in tender evaluation methods to avoid excessively low pricing [para. 26][para. 30][para. 31]. Industry leaders like Longi have labored under the market's rapid decline and are calling for reforms [para. 32]. Capital initially boosted by subsidies is now retracting, with local governments struggling to meet their commitments, thereby worsening competition [para. 41][para. 42]. Local administrations previously offered attractive conditions to lure PV investments, exacerbating market transparency issues and leading to underbidding [para. 43]. The photovoltaic industry's overcapacity is partially rooted in the proliferation of entities driven by public subsidies [para. 68].

The industry’s current predicament sees local governments and companies engaging in measures to sustain operations. Qinghai province, for instance, recently settled delayed tax refunds and allocated new photovoltaic plant quotas to support struggling companies, yet these steps are insufficient to offset monthly losses [para. 44][para. 45]. Efficiency and technological advancements have reduced costs, which initially fueled capacity expansion but later revealed market saturation and oversupply issues [para. 71]. The future profitability of new technologies like N-type TOPCon cells remains uncertain due to rapid industrialization and intense price competition [para. 63][para. 64][para. 70].

Domestic photovoltaic installations witnessed growth but faced grid absorption issues and low utilization rates [para. 78][para. 79]. The sector's overdependence on conventional tenders has led to diminishing competitiveness despite reduced costs [para. 88]. International markets also show mixed results due to geopolitical and trade uncertainties [para. 90][para. 95]. U.S. markets continue to be more profitable, but Chinese manufacturers face challenges like tariff threats and compliance issues in Southeast Asia [para. 96][para. 97]. Repositioning to markets like the Middle East reflects attempts to navigate global trade barriers and local overcapacity [para. 100].

The industry's future hinges on technological innovation and enhanced management capabilities, as navigating these challenges will dictate the sector's recovery trajectory [para. 109].