New challenges in photovoltaic investment: electricity generation or electricity price?

After Document No. 136 promoted new energy into the electricity market, the industry found that the original investment logic has become invalid.

 

“Electricity price has become the biggest uncertainty in current new energy investment. Firstly, the on-grid electricity price has changed from a fixed coal-fired benchmark price to a fluctuating market price, completely subverting the original investment model; secondly, for photovoltaic power stations, as long as the sun rises, photovoltaic power stations in sunny areas across the country are generating electricity, whether it is Xinjiang or Beijing, and supply and demand determine that the electricity price at this time must be the lowest, but this time period also coincides with the highest electricity generation period of photovoltaic components”, communication between photovoltaic companies and power design institutes found that the previous independent calculation of new energy power station development now increasingly needs to be bound to production and marketing to evaluate investment value.

 

For the industry, should we prioritize electricity generation or electricity price? Can both be achieved? This is the biggest impact of the electricity market on new energy investment. The change in investment logic will also completely change the existing photovoltaic power station selection ideas and subvert the current direction of innovation.

 

Contradiction: High conversion efficiency may not equal high project returns

 

In fact, under the rules of the electricity market, photovoltaic power stations must achieve a balance between electricity generation and electricity price in order to obtain higher comprehensive returns.

 

Photovoltaic companies learned that the recent spot market settlement price of photovoltaic power stations in Shandong is only 5.7 cents/kWh, less than 0.1 yuan/kWh, and this is basically the inevitable trend of large photovoltaic installation provinces.

 

From the perspective of power supply and demand, photovoltaic power stations must work on how to adjust the power generation curve in order to obtain higher electricity prices, that is, less generation (or no increase) at noon and more generation in the morning and evening.

 

In addition to relying on additional means of energy transfer such as energy storage, photovoltaic components themselves also need to consider how to break through this constraint. In contradiction to this, the technological innovation focus of the photovoltaic industry has always been on how to improve component efficiency. Now it seems that the higher the efficiency, the more electricity generated at noon, and the cheaper the electricity price.

 

This means that it is becoming increasingly difficult for investment enterprises to calculate project investment. They need to consider LCOE from the perspective of investment costs and the time-based characteristics of electricity prices, and try to generate more electricity during periods of high electricity prices. Obviously, this cannot be achieved simply by pursuing high conversion efficiency of components, but requires a comprehensive multi-dimensional approach to take responsibility for investment.

 

Power plant investment needs to comprehensively consider cost-effectiveness

 

Analyzing step by step, if we consider reducing the cost of electricity, photovoltaic investment needs to be analyzed from two dimensions: initial investment cost and electricity generation throughout the life cycle. From the perspective of current mainstream product types, in high-reflectivity application scenarios represented by large-scale bases in deserts and Gobi areas, TOPCon components are obviously the most cost-effective choice.

 

On the one hand, from the results of several recently bidded component centralized procurement sections, it can be seen that the quotations of TOPCon sections are basically 0.05-0.1 yuan/watt lower than other technical routes. On the other hand, from the power generation data, although TOPCon is not the technology with the highest front-side power generation efficiency, considering the bilateral rate in most application scenarios, the power generation data of TOPCon is relatively stable and excellent.

 

Data from the State Power Investment Corporation Daqing Photovoltaic Storage Base shows that in the annual data comparison, the average power generation per watt of N-type TOPCon components is the highest, 1.16% and 2.87% higher than IBC and PERC components respectively. This data is based on the optimal balance of TOPCon components, moderate temperature coefficient and more than 80% bilateral rate. In case of snow, the proportion of back-side irradiation can be as high as 60%, and the contribution of back-side power generation will be higher. Coupled with high system adaptability, the voltage increase at low temperatures is controllable, which can reduce the risk of string overvoltage. Therefore, under the annual verification, the average power generation per watt of N-type TOPCon components is the highest.

 

 

In addition to snowy areas, from the above figure, it can be seen that the proportion of back-side irradiation in grassland and other scenarios is at least more than 10%. With the advancement of China's Three North Desert, Gobi and wasteland photovoltaic desertification control plan (2024-2030), the theoretical installed capacity can reach 10 billion kilowatts, which means that large-scale bases in deserts and Gobi areas will be the focus of the future incremental market for centralized photovoltaic power stations. When selecting equipment, the bilateral rate of photovoltaic components will still be a key factor.

 

In fact, according to the latest data from authoritative third-party InfoLink, the global proportion of bilateral scenarios in 2025-2028 will reach 86-88%, close to 90%. Therefore, at present, measuring the power generation performance of photovoltaic components needs to consider the comprehensive impact of temperature, bilateral rate, etc.

 

Tracking high electricity price periods

 

In addition to comprehensively evaluating the cost-effectiveness of equipment price and power generation performance, photovoltaic power station selection should also focus on the power generation capacity during high electricity price periods. Only by increasing the power generation during high electricity price periods can the overall return of the project be effectively improved. To address this issue, optimization can be carried out from two aspects: component power generation performance and structural innovation.

 

On the one hand, from the perspective of component power generation performance, TOPCon components have better power generation capacity under low irradiation, so they are more suitable for the current demand for tracking high electricity prices (morning and evening periods). It is introduced that the irradiation time of less than 800W/m² in the Daqing verification base accounts for more than 80%, accounting for nearly 60% of the total annual irradiation. ² The global market head of Trina Solar, Dr. Zhang Yingbin, introduced that "low irradiation performance is very important. The time when the irradiation level of 1000W/m² can be reached in various countries and regions around the world is less than 10%, and most areas have low irradiation."

 

High electricity prices generally coincide with low irradiation periods, which also helps to address the problem of falling photovoltaic power station prices due to excessive midday power generation simultaneity in the spot market.

 

In addition to the components themselves, another way to track high electricity price periods is through tracking brackets. In 2024, Trina Tracking released a set of verified data on tracking brackets certified by UL, showing that under typical cloudy and sunny conditions, the power generation gain of using intelligent AI algorithm compared with the astronomical algorithm tracking system is up to 9.15% and 2.87% respectively, and the power generation gain in the morning and evening periods is higher than the average level throughout the day. According to the characteristics of domestic electricity market transactions, it can further increase the revenue from power generation in the morning and evening periods.

 

 

Overall, the full entry of new energy power stations into the electricity market will inevitably bring a subversive impact on the existing return calculation model, further affecting the rules and methodology of power station equipment selection, and the direction of industry innovation should start from the comprehensive return of electricity generation * electricity price. Simply emphasizing the advanced nature of a single indicator often cannot achieve twice the result with half the effort.