Cost upside down, losing money with every sale! Will component prices continue to fall after the rush to install?

After the rush to install, prices in the photovoltaic industry chain are experiencing a rapid "cooling"!

 

According to the latest market prices, the recent silicon material spot market remains sluggish, The lowest has reached 31,300 yuan/ton The average transaction price of components for distributed photovoltaic projects has shown a downward trend, Market prices have fallen back to 0.6x yuan/W After a strong rebound, it quickly fell back, Compared to the previous high, it has fallen by about 16% 。

 

Image source: WeChat Moments

 

Therefore, the encouraging trend of component prices returning to the 0.8 yuan/W era did not last long, and the photovoltaic industry remains in a "cold winter". Behind this "avalanche" is the demand vacuum after the rush to install before the "430 policy node" and the panic selling caused by the "531 market-oriented grid connection" policy.

 

The "golden track" has transformed into a "capital graveyard." What are the chances of component prices rising again in the future?

 

Two major difficulties behind the sharp drop in component prices

 

This round of component price declines began in early April. According to relevant statistics, price declines in the entire photovoltaic industry chain began with components and gradually spread upstream to various links. The main reasons are: The main reasons for the sharp drop in component prices are the weak demand due to the approaching policy node and the cost inversion caused by the overall decline in supply chain prices. 。

 

From a policy perspective, since "531", distributed projects must be compulsorily equipped with storage and participate in market transactions. Currently, the return on investment for industrial and commercial projects in Shandong and Hebei has plummeted from 8% to 4%, and the installed capacity has decreased by nearly 60% month-on-month. Jiangsu and Guangdong have also recently issued new policies on time-of-use electricity prices, which have also dealt a "heavy blow" to the industry.

 

Taking Jiangsu as an example, Jiangsu currently uses a "four-stage electricity price + deep valley period" policy, designating 10:00-14:00 in spring and autumn as the valley period electricity price, and adjusting the deep valley period during major summer and winter holidays to 10:00-14:00, directly offsetting the peak output of photovoltaic power generation. Since the midday power generation of distributed photovoltaics in Jiangsu accounts for more than 60%, the current price reduction in this period is as high as 90% compared to the flat period, resulting in a reduction of about 25%-30% in the self-generation and self-use income of the project, and the electricity price of the remaining grid-connected electricity may even fall below 0.1 yuan/kWh.

 

At the same time, since projects put into production after "531" must compulsorily participate in market transactions, coupled with the mismatch between the peak electricity price period (14:00-22:00) in southern Jiangsu and the low valley of photovoltaic output, it will further cause the situation where midday power generation cannot be sold at a good price and there is no electricity to sell during the high-price evening period. According to a certain calculation model, The return on investment for industrial and commercial photovoltaic projects without energy storage will plummet from 8.5% to 5.2%, approaching the industry's financing cost red line of 6%. 。

 

In the time-of-use electricity price system introduced in Guangdong, Midday (10:00-15:00) is the lowest deep valley period for electricity prices, and electricity prices may fall by 70%-90% This means that the off-mechanism electricity of photovoltaic projects will face extremely low market prices, further suppressing the demand for high-priced components.

 

From the supply chain perspective, prices in various links of the photovoltaic industry have shown a continuous downward trend. In terms of silicon materials, according to the quotation of the Silicon Industry Branch on May 14, except for the price of N-type granular silicon remaining unchanged, all other specifications have fallen, The decline is between 0.84% and 3.1% Battery slices also maintain a downward price trend, and the average transaction price of TOPCon 182 battery slices has even dropped to 0.26 yuan/W According to market monitoring, the prices of various links have now approached or even fallen below the cost line, Further cost transmission in various links has "created space" for component price reductions, and the entire industry is caught in a vicious cycle of "the more you sell, the more you lose". 。

 

 

 

It is understood that the integrated component production cost of some industry leading companies is 0.729 yuan/W, but the market transaction price is only 0.65 yuan/W, which is equivalent to a loss of 0.08 yuan per watt. An executive of a leading company complained that although the production line runs 24 hours a day, the workers' wages cannot be paid.

 

Statistics show that among 138 listed photovoltaic companies, 55 have negative net profits in 2024, with a loss rate of 40%, and 73% of companies have seen a year-on-year decline in gross profit margin. The average gross profit margin of the industry has plummeted from 18% in 2023 to 8% in 2024, and the gross profit margin of the component segment is only 5.2%, the lowest in ten years.

 

However, although the rush to install has subsided, and the prices of components of various technical routes have been adjusted to varying degrees, there is a situation where high-power components are out of stock and low-power components are being sold at a loss. According to incomplete statistics from Digital New Energy DataBM.com, As of May 16, about 6 leading component manufacturers have experienced out-of-stock phenomena. Currently, the market supply of 700W+ products is extremely limited, with daily new spot supply less than 1-2MW, and the shortage has spread to the 630W power segment. 。

 

 

From a macro perspective, under the current price and technological involution, the polarization of the component market is becoming increasingly severe. With the narrowing of the technological window period, lagging production capacity will be accelerated elimination. Only by accelerating technological iteration can enterprises have the possibility of regaining profitability after this sharp drop.

 

 

Post-531 era, where will component prices go?

 

The dust of history falling on an individual may be a mountain. "531" is accelerating the reshuffling of the photovoltaic industry, and photovoltaics are also in the process of switching from "technology-driven" to "cash flow survival".

 

1

Low component prices are a certainty in the short term, and a rebound is hopeless.

In the short term, as the "531" policy node approaches, the grid connection demand for distributed photovoltaic projects will further decrease. According to statistics, Shandong's newly installed distributed photovoltaic capacity in March was 5.2GW, accounting for nearly 30% of the national total. However, with the fading of policy benefits, the installed capacity in June is expected to decrease by 40% month-on-month. The pressure for capacity clear-out is further intensifying. Currently, some leading enterprises have initiated “off-season promotion” measures, offering special packages for distributed modules at 0.72 yuan/W to stimulate installations for small and medium-sized projects. However, the overall overcapacity issue in the industry is severe and difficult to resolve in the short term. Module prices might drop to 0.6 yuan/W, while high-efficiency modules (such as N-type) have a certain resistance to price declines. At the same time, prices across various segments of the industrial chain will continue to fluctuate close to cost, with no immediate hope for a rebound. 。

 

2

Along with capacity clear-out and technological iteration

Module prices are expected to stabilize and rebound

In the medium term, as capacity clear-out accelerates and technological iteration is completed, high-efficiency technology may become the key to module prices rebounding. This year's Shandong exhibition presented a “two extremes” phenomenon: on one hand, the number of exhibiting companies sharply decreased by 20%, and the waiting period for many second-tier brand modules reached 45 days. On the other hand, inquiries for distributed PV surged 3 times, with agents generally reporting “money but no goods.” Coupled with local leading enterprises maintaining high prices through a “BC production line full operation + provincial capacity allocation” strategy, it further proves that companies with technological advantages will continue to enjoy profit margins.

 

The future increase in module prices will mainly be influenced by the mandatory energy storage cost after “531” and the impact of international tariffs on the domestic market from two aspects.

 

From the perspective of mandatory energy storage costs Currently, major distributed power provinces like Shandong and Hebei require new PV projects to mandatorily configure energy storage. Taking a 20MW industrial and commercial project in Shandong as an example, configuring 15% energy storage will increase the system cost by approximately 0.3 yuan/W (including energy storage equipment, land, and O&M), leading to a decrease in the project's internal rate of return from 8% to 4%. This cost pressure will force investors to prioritize low-priced modules, limiting the independent price increase potential of modules.

 

From the international market perspective The international trade environment is complex with continuous trade barriers. The United States has conducted multiple “double anti-dumping and countervailing duties” investigations on Chinese PV products, with the actual comprehensive tariff rate exceeding 100% in 2024. Although US-China tariffs are currently suspended, the future international trade environment remains uncertain. If a portion of exports are hindered, it could lead to approximately 15-20GW of capacity shifting to domestic consumption, further intensifying price competition. At the same time, N-type modules converted from export to domestic sales may lose some of their technological premium, potentially selling for 0.1-0.15 yuan/W lower than in overseas markets.

 

3

Future module prices may form a “two-tier” structure

In the long term, the PV market over the next year will primarily be driven by the major trend of capacity clear-out and technology-driven prices. Looking solely at the polysilicon market, often called the “mother of cycles” in the PV industry, breaking the internal competition of polysilicon prices and accelerating polysilicon clear-out is imminent. Currently, leading polysilicon companies will spearhead the establishment of a 700 billion yuan fund to acquire and integrate other polysilicon capacities, promoting industry clear-out and a rational price return. Many industry insiders state that although this plan is in its “very early” stages with many details yet to be finalized, the industry generally has good expectations. For most companies, rather than succumbing to price wars, it is better to exit the market gracefully through this method.

 

Assuming global installed capacity in the next two years will be 600GW and 800GW respectively, with an annual elimination of 30% excess capacity, by the end of 2026 capacity utilization may increase to 65%, approaching the reasonable manufacturing level of 70% ±5%.

 

Only when polysilicon, cell sheets, and other components achieve capacity clear-out and price stabilization in the future, and the market returns to supply-demand balance, will corporate gross profit margins likely return to around 15%, and module prices may stabilize above 0.75 yuan/W, while ultra-efficient modules like BC and HJT, leveraging their "technological premium," may maintain prices at 0.8-0.9 yuan/W. At the same time, regions such as Jiangsu, Zhejiang, and Guangdong will occupy leading positions in the distributed PV market due to their high absorption capacity. Central provinces like Henan and Anhui, relying on rural revitalization policies, may see annual growth in the household market exceeding 30%.

 

On the technological front, as inefficient capacity is gradually phased out, TOPCon technology may continue to dominate the centralized power station market in 2025 due to its process compatibility advantages. However, with the increasing asset bubble of TOPCon, the industry may form a situation where TOPCon and BC dual technologies mutually dominate and integrate. The penetration rate of BC modules is expected to reach 7% in 2025 and is projected to rise to 20% by 2027, while also forming a differentiated market in high electricity price regions like Zhejiang and Guangdong. In contrast, ordinary modules, constrained by global overcapacity, may long-term anchor at 0.65-0.7 yuan/W after supply and demand reach equilibrium. 。

 

 

“A thousand ships pass by the sunken one.” The PV industry is undergoing a “change unseen in a decade.” A rebound in module prices after “531” might still be distant. However, as provincial supporting policies are implemented and technological innovation accelerates, the industry is shifting from “racing against time and competing on scale” to “competing on technology and emphasizing efficiency.” Under the multiple challenges of electricity price marketization, normalized energy storage configuration, and globalized competition, those companies that survive cash flow crises and bet on the right technological routes will ultimately reap dividends in the next cycle. As Li Zhenguo, founder of LONGi, said: “Only by surviving can one change the world.”