Understanding an Entire Industry Chain in a Day: The Photovoltaic Industry

01

Industry Chain Overview

 

 

The photovoltaic industry, as a product of the deep integration of semiconductor technology and the demand for new energy, presents an interlocking industrial chain. Its upstream focuses on the precise collection of crystalline silicon raw materials and the fine processing of silicon rods, ingots, and wafers; the midstream revolves around the meticulous manufacturing of photovoltaic cells, photovoltaic modules, and their supporting equipment, forging a series of core components; the downstream focuses on the efficient integration and stable operation of photovoltaic power station systems, realizing the conversion and application of light energy into electrical energy.
 

 

02

Upstream Industry Chain

 

 

2.1 Silicon Material

Solar-grade polysilicon, with its grayish-black metallic luster solid appearance, is a typical representative of photovoltaic silicon materials, and is the undisputed core material of silicon wafers and the entire photovoltaic system, known as "black gold" in the industry chain.

From the perspective of production capacity data, in 2022, 14 polysilicon production enterprises were active in China, jointly building an effective production capacity of 1.166 million tons/year, a year-on-year increase of 87.2% compared to the previous year.

A deep exploration of the driving force behind the increase in production capacity mainly stems from the active investment in new production lines by industry pioneers such as Tongwei, Polysilicon, Xinte Energy, Qinghai Lihao, and Asia Silicon Industry. At the same time, the resumption of production by companies such as Yichang Nanbo and GCL-Poly also injected additional momentum into capacity improvement.

Under the dual stimulus of strong market demand and sustained high product prices, many companies have been committed to improving capacity utilization rates, and some companies have even exceeded their nominal capacity limits, achieving an over-release of production.

 

2.2 Silicon Wafers

Silicon wafers, as an intermediate product of solar cells, are produced through the precise pulling and fine cutting of high-purity polysilicon. This seemingly simple conversion process actually involves extremely high technical precision requirements, because the quality of the silicon wafer is directly related to the subsequent photoelectric conversion efficiency.

In 2022, the national silicon wafer production was approximately 357GW, a significant year-on-year increase of 57.5% compared to the previous year. Focusing further on the industry structure, the top five companies, with their advanced technology and scale advantages, jointly accounted for 66% of the total domestic silicon wafer production, demonstrating a strong industry concentration trend.

Data Source: China Photovoltaic Industry Association, National Ministry of Industry and Information Security Center, Ping An Securities Research Institute

 

2.3 Photovoltaic Silver Paste

Photovoltaic silver paste, using silver powder as its main component, is scientifically formulated and finely prepared by combining it with glass oxides, organic resins, and organic solvents. In the operating system of solar cells, photovoltaic silver paste plays a crucial role, and its product performance and preparation process directly affect the photoelectric conversion efficiency of solar cells. From the perspective of cost structure, due to the high silver powder content and the high price of silver powder itself, the cost of photovoltaic silver paste is second only to silicon wafers, becoming one of the key factors affecting battery costs.

According to the difference in application location, photovoltaic silver paste can be divided into front silver paste and back silver paste. Front silver paste is deployed on the front electrode, responsible for collecting current and efficiently exporting photogenerated carriers, mainly used in the light-receiving surface of P-type cells and both sides of N-type cells; in contrast, back silver paste focuses on the negative electrode of P-type cells, playing a welding and bonding role. Due to its different functional emphasis, the requirement for conductivity is slightly lower than that of front silver paste. From the perspective of technology routes, P-type cells and N-type TOPCon cells currently mostly use high-temperature silver paste, while HJT cells, due to the temperature characteristics of the production process, mainly use low-temperature conductive silver paste. It is particularly noteworthy that for HJT cells, the optimization and cost control of photovoltaic silver paste is of vital strategic significance for improving the economic efficiency of this battery.

According to authoritative statistics from the China Photovoltaic Industry Association, the market share of domestic front silver paste has shown a rapid upward trend, rising strongly from about 61% in 2021 to over 85% in 2022. With the acquisition and integration of paste businesses by international giants such as DuPont and Samsung by domestic companies, the market structure has been further reshaped. It is expected that by 2023, the market share of domestic front silver paste will continue to advance, exceeding 95%. At the same time, the localization process of N-type cell positive silver has also achieved remarkable results. In 2022, the domestic production rate of TOPCon cell front silver paste has reached about 85%. In the domestic market, Juhe, Dik, Jingyin, Tiansheng, and Suote are the main suppliers, while foreign markets still have companies such as Heraeus and LG participating in the competition.

 

 

 

03

Midstream Industry Chain

The midstream is the manufacturing of photovoltaic cells and photovoltaic modules and supporting equipment, with core components such as cells, modules, photovoltaic glass, and inverters.

 

3.1 Cells

Photovoltaic cells are semiconductor thin films that are produced from silicon wafers through a series of fine processing steps, including circuit etching, and can efficiently convert sunlight into electricity. In the overall architecture of the photovoltaic system, the photoelectric conversion efficiency of the cells directly determines the power generation efficiency of the entire system, and the sophistication of its production process is directly related to the service life of the photovoltaic system. From the perspective of cost proportion, cells are undoubtedly the core component of the cost structure of photovoltaic modules.

According to the essential differences in semiconductor materials, solar cells can be clearly divided into two categories: crystalline silicon solar cells and thin-film solar cells. In practical applications, because monocrystalline silicon wafers have a highly ordered crystal structure, this structural characteristic creates ideal conditions for the preparation of high-quality PN junctions, which can achieve higher photoelectric conversion efficiency. Therefore, monocrystalline silicon wafers have become the mainstream material of choice in the current development of the photovoltaic industry.

Further subdivision, monocrystalline cells can be accurately divided into P-type cells and N-type cells according to the difference in silicon wafer doping elements. Traditional P-type cells use a process route in which the silicon wafer substrate is doped with boron elements. This process is relatively simple and easy to mass produce, but its photoelectric conversion efficiency limit is relatively low; in sharp contrast, the new N-type cells choose to dope the silicon wafer substrate with phosphorus elements and form a P+/N structure through subsequent diffusion of boron elements. This innovative process architecture enables N-type cells to have greater potential for improvement in photoelectric conversion efficiency.

Citing detailed data from the China Photovoltaic Industry Association, the national battery production in 2022 was approximately 318GW, representing a robust year-on-year increase of 60.7% compared to the previous year. Focusing on leading industry players, the combined output of the top five companies accounted for 56.3%, demonstrating a high degree of industry concentration.

 

3.2 Backsheet Film

Photovoltaic backsheet film plays a crucial role in the photovoltaic component system, similar to a "protective umbrella." It possesses excellent resistance to heat and humidity, light exposure, and moisture barrier properties. Tightly wrapped around the solar cells, it acts like a faithful guardian between the photovoltaic glass and the backsheet, creating a stable operating microenvironment for the cells.

From the perspective of market competition, the global photovoltaic backsheet film market currently exhibits a certain degree of concentration. Foster, as an industry leader, has long held about half of the global market share, firmly occupying the top spot. Swick and Haoyou New Materials, as leading companies in the second tier of the industry, each hold 10-20% of the global market share. In summary, the combined market share of these three companies exceeds 70% of global market demand, giving them significant dominance over market trends.

Looking back at 2022, transparent EVA film experienced a decline in market share, dropping to 41.9%. In contrast, POE and EPE films, leveraging their technological advantages and improved adaptability, saw their market share rise to 34.9%. Looking ahead, as the market share of TOPCon and double-glass components gradually expands, it is expected that by 2030, the market share of POE and EPE films will further expand due to material compatibility and superior performance, potentially exceeding 50% and becoming the market mainstream.

 

3.3 Photovoltaic Glass

Photovoltaic glass, a special type of glass custom-designed for photovoltaic components, has the dual critical function of providing robust physical protection for the internal structure of the components and ensuring high light transmittance to facilitate light energy absorption by the cells. It is an indispensable auxiliary material in the component encapsulation process. Based on different design concepts of the glass encapsulation structure, photovoltaic components can be divided into two main types: single-glass components and double-glass components.

In terms of cost composition, photovoltaic glass accounts for approximately 7% of the total cost of photovoltaic components. Although the proportion seems low, its critical function has a significant impact on the overall performance and cost control of the components.

 

3.4 Components

Photovoltaic components, as integrated devices, cleverly utilize series and parallel circuit connections to organically integrate multiple individual cells. They are precisely encapsulated using key materials such as backsheet film and tempered glass, and equipped with an aluminum alloy frame to enhance overall structural stability. These meticulously crafted photovoltaic components possess strong solar energy absorption and conversion capabilities, efficiently converting absorbed solar energy into electricity and providing stable current output. They are the undisputed core component of solar power generation systems.

According to authoritative data from the China Photovoltaic Industry Association, the national component output in 2022 reached 288.7GW, a significant year-on-year increase of 58.8% compared to the previous year. Focusing on leading industry players, the combined output of the top five companies accounted for 61.4%, again highlighting the industry's leading cluster effect. Based on current industry development trends and market demand forecasts, domestic component production is expected to exceed 433GW in 2023.

 

3.5 Inverters

Photovoltaic inverters, meticulously constructed power adjustment devices made of semiconductor components, play a crucial role in the power conversion process of photovoltaic systems. Their core function is to accurately and efficiently convert the direct current generated by photovoltaic components into alternating current that can be smoothly integrated into the grid or directly used by loads, meeting power needs in various scenarios.

In terms of inverter types, there are several types, including centralized inverters, string inverters, distributed inverters, and micro-inverters. In 2022, the photovoltaic inverter market was still dominated by string inverters and centralized inverters, which together accounted for the vast majority of the market share. Distributed inverters have a smaller market share and are still in the development stage.

 

04

Downstream Industry Chain

In 2023, China's photovoltaic power generation industry has shown strong growth in terms of newly installed capacity. In the first quarter alone, new photovoltaic power generation installations reached 33.66GW, a remarkable year-on-year increase of 154.81% compared to the same period last year.

Further data breakdown shows that new installations of centralized photovoltaic power generation reached 15.53GW, a year-on-year increase of 257.8% compared to the same period last year; distributed photovoltaic power generation installations reached 18.13GW, a year-on-year increase of 104.4%. As of March 2023, China's cumulative installed capacity of photovoltaic power generation has climbed to 425.89GW. This milestone figure marks the official surpassing of hydropower by photovoltaic power generation, becoming the second largest power source in the country.

Continuously tracking industry dynamics, as of May 2023, China's cumulative new photovoltaic installations in the first five months have reached 61.21GW, exceeding the cumulative new installations in the first ten months of last year, fully demonstrating the rapid development of the industry. Based on the current development pace and market trend predictions, it is expected that the total new photovoltaic installations in China in 2023 will reach 150GW, a potential year-on-year increase of 70% or more, indicating that the photovoltaic industry is striding towards a new peak of development.