Li has been working in the energy sector for more than 40 years and is one of the participants in the process of formulating and implementing renewable energy legislation in China. In the past 20 years, Li has given very pragmatic and relevant suggestions and solutions to the key nodes of several cycles of the photovoltaic industry in the past.
In the second half of 2023, panic selling was observed in the photovoltaic industry with the release of a large amount of production capacity, while the industry demand is strong, the price dropped from CNY 2 yuan/W to CNY 0.8 yuan/W, losses occurred in all links, or approaching the cost limit, and the panic caused by the price dive behind the industry is more worthy of vigilance.
In view of this, Solarbe Global specially invited Mr. Li Junfeng, executive director of the China Energy Research Society, to analyze the causes of the predicament of the photovoltaic industry and point out the way forward.
Li: The outbreak of the crisis is different from the past. The past several industry shock factors are from the outside, but this time, the industry did not think about the new direction of development after the photovoltaic parity, did not turn the development of the photovoltaic industry from blindly reducing the cost and price of power generation to high-quality development.
“The crisis is not of any external causes, the global market demand situation is very good. The growth rate of photovoltaic installed capacity exceeded 20% for three consecutive years, and there was a growth rate of more than 30% in 2023, under such conditions, such a shock is not normal. First of all, photovoltaic demand continues to grow, as far as China is concerned, new photovoltaic installed capacity of 87GW in 2022, close to 200GW in 2023, the global total growth of more than 40%, exports have also increased significantly. But under such conditions, there has been panic selling in China’s photovoltaic industry. In May 2023, enterprises warned that overcapacity, and then began panic selling, at the beginning of 2023, each watt of photovoltaic is still CNY 2 yuan, but it began to drop in June, to September it fell to about CNY 1 yuan, now even less than 1. This is the first time, in such a good external environment, in the rapid growth of the market, the price has plummeted, and the photovoltaic industry has been in disarray.”
Q: Do you think this situation in the photovoltaic industry is a stampede effect?
Li: The current industry has been reducing the price without logic. In all industries, such as real estate and automobiles, no one cuts prices when demand is high, because no one benefits in the process. Even the buyer was unhappy because his assets were losing its value. There is no price reduction in high-quality development, only photovoltaic began this panic price reduction. China’s photovoltaic industry should straighten out the relationship between capacity and output. Output is output, capacity is capacity, capacity is not equal to output. Production should be determined according to the objective demand of the market, capacity is to ensure production, to achieve the objective existence of market supply and demand balance, we must have a certain flexibility and toughness of production capacity, the formation of production to adapt to the changing market demand.”
“The industry chain should be flexible and resilient. It means that when the market demand is low, the industry can reduce production, adapt to market demand, instead of deal with it with panic selling, and when the market is strong, it can increase production appropriately, not simply send prices skyrocketing.”
