A sharp downturn: The "430" and "531" deadlines haven't passed, and several aspects of the photovoltaic industry are already...

In late April, the photovoltaic industry's "rush for 430" deadline is nearing its end, and "531" is also approaching, yet prices across the entire industry chain have quietly turned. From silicon materials, silicon wafers, and cells to modules, almost everything has dropped in price. This wave of rush installation driven by policy hasn't ended yet, but the market has already started to show signs of fatigue. Behind the price decline, it's not just the upstream industry chain that's having problems; the downstream is also showing signs of fatigue. This is a sharp downturn for the entire industry, from blind expansion to rapid cooling. Seeing the current situation, even I'm a little unclear, and I don't know how long this adjustment period will last. Friends in the industry, we really need to discuss this together in the comments section (If you find this helpful, please follow, like, and share it with friends who need it. Please point out any mistakes in the comments section).

I. The rush installation wave is nearing its end, and the four major segments are experiencing price drops across the board.

The "430" and "531" rush installation waves began in February this year, mainly driven by the National Energy Administration's "Management Measures for Distributed Photovoltaic Projects" and the (No. 136 document) new energy pricing reform policy. Driven by the "rush installation," module prices rose first, with spot prices even exceeding 0.9 yuan/W, but the price increase quickly spread from the downstream to the midstream cells and wafers, and even to the upstream silicon material segment.

However, this high temperature only lasted for two months. Since early April, prices across the photovoltaic industry chain have fallen. In the module segment, TOPCon module prices have fallen from a high of 0.77-0.8 yuan/W to 0.735 yuan/W; cell prices have generally fallen from 0.33 yuan/W to 0.29-0.3 yuan/W. Even the most resilient silicon materials have begun to soften, with the price of n-type polysilicon falling by nearly 1,000 yuan/ton month-on-month, and the destocking speed has slowed significantly.

The essence of the price drop is a reversal of the supply-demand relationship. Downstream demand stimulated by rush installation is rapidly weakening, while upstream inventories are increasing, especially in the cell and silicon material segments, which are nearing peak inventory levels.

II. Beyond price risks, non-technical costs are the straw that breaks the investor's back.

Recently, the sentiment of photovoltaic investors has also cooled with the sharp market fluctuations, but what really affects their confidence is far more than just "electricity prices." After electricity prices enter market trading, uncertainty increases, and some regions experience "peak shaving and valley filling," making project revenue calculations increasingly difficult. What is even more troubling for investors is the increasingly high non-technical costs.

Although the National Energy Administration and the National Development and Reform Commission have explicitly prohibited pre-production configuration, which local government would give up such a "sweet bun"? The ever-increasing land rent and investment in production are truly deterring major investors. In some areas, if a project does not have a local "production investment" background, it must first pay substantial "pre-payment" fees to obtain grid access and filing procedures. This directly prevents small enterprises from entering, leaving them to bear uncertain risks with large amounts of advance funding.

Secondly, there is a mismatch between financing and returns. Against the backdrop of declining return expectations, electricity price fluctuations, and high non-technical costs, many investors are becoming increasingly cautious about photovoltaic projects. Project financing is difficult, approvals are slow, and some capital is even choosing to wait and see, causing the project's progress to slow down.

III. Contractors are also "gambling with their lives": 430 costs surge by another 0.4 yuan/W

In addition to the wait-and-see attitude on the investment side, the contractors are also the most affected by the "430" rush installation. On the one hand, construction costs have risen sharply during the peak season. According to feedback from some EPCs, in the first half of April alone, unit costs increased by about 0.4 yuan/W due to increases in equipment, labor, transportation, and hoisting costs; on the other hand, many projects were bid at low prices at the beginning of the year to win market share, failing to foresee this round of price increases.

As a result, many EPC projects are in a state of "working at a loss," rushing to complete projects while losing money. The photovoltaic industry has always been known for its price wars, but this combination of "rush work + price increases + wait-and-see" has caused many companies' capital chains to collapse completely. In just a few weeks, many construction companies have exited the market, either due to capital shortages or difficulties in fulfilling contracts. Even worse, some older projects are facing termination risks because the procurement of raw materials is far higher than the budget, making it impossible to fulfill the delivery conditions stipulated in the original contract.

IV. Industry "reshuffling" accelerates, but high-quality capacity may also be mistakenly injured.

This crisis was not without warning. Over the past year and a half, the photovoltaic industry has been undergoing continuous "reshuffling": on the one hand, disorderly expansion has led to serious overcapacity; on the other hand, tighter financing, reduced orders, and difficulties in collecting payments have led to a cash flow crisis. According to statistics, as of the third quarter of 2023, the accounts payable and bills payable of only seven leading photovoltaic companies totaled 444.4 billion yuan.

While this round of price fluctuations has certainly driven the elimination of some backward production capacity, it has also placed a heavy burden on high-quality enterprises that are still operating healthily. If the "slow knife cutting the flesh" reshuffling process continues for too long, it is possible that many enterprises with technological and financial advantages will also be drained of their "last drop of blood."

V. Can self-discipline stabilize prices? Market recovery still takes time.

Faced with the triple predicament of plummeting prices, high inventories, and lack of confidence, the industry has quietly launched a new round of "self-discipline" actions. It is reported that in April, many leading companies participated in meetings to limit production and control prices, and in the future, they may ease market price fluctuations through setting shipment quotas, reducing production, and coordinating pricing. Module manufacturers are also negotiating "price adjustments" with downstream customers for June and July.

However, self-discipline can only alleviate short-term contradictions. The real determinant of industry trends is still the game between demand release and supply clearing. From the current situation, although concentrated power station projects and overseas orders in the second half of the year may alleviate some of the demand gap, structural problems such as cautious progress of new projects, financing bottlenecks, and high non-technical costs still exist.

A long sigh from Lao Wang:

"430" hasn't ended yet, but the photovoltaic industry has already taken a "sharp downturn." The rush installation wave has masked the industry's structural contradictions, and once the stimulus subsides, all the problems will erupt at once: exploding inventories, contractor losses, capital retreat, and industry chain fragmentation.

This is an industry that makes it impossible to breathe easily. Behind the apparent prosperity lies the uncertainty of prices, the difficulties faced by businesses, and the cold indifference of capital. Only by truly clearing excess capacity, reducing non-technical costs, and improving system efficiency can the photovoltaic industry usher in a long-awaited period of healthy development.