The photo voltaic PV business is forecast to supply 310GW of modules in 2022, representing an unimaginable 45% year-on-year enhance in comparison with 2021, based on the most recent analysis undertaken by the PV Tech market analysis crew and outlined within the new PV Manufacturing & Technology Quarterly report.
The market in 2022 was production-led and finally sized by the quantity of polysilicon produced throughout the yr. Demand at instances doubtless ran 50-100% greater than what may very well be produced.
There might be sufficient polysilicon produced in 2022 to assist the manufacturing of about 320GW of c-Si modules. Wafer and c-Si cell manufacturing ranges are prone to find yourself round 315GW. Module manufacturing (c-Si and thin-film) ought to be near 310GW, with remaining market shipments at 297GW. I’m placing a ±2% error-bound on these values proper now, with six weeks of manufacturing left for the yr.
Of the 297GW of modules shipped in 2022, a major quantity of this is not going to end in new PV set up capability. This is because of a number of elements; some commonplace, some new. Most pronounced have been the ‘stockpiling’ of modules at US customs and interconnection delays. However there may be now actually an considerable quantity going into module replacements and even plant repowering. Ultimate new PV capability added in 2022 might find yourself nearer to 260GW as soon as all of that is identified totally.
From a producing standpoint, there have been no main surprises. China produced 90% of polysilicon, 99% of wafers, 91% of c-Si cells and 85% of c-Si modules. And naturally, everybody desires home manufacturing, particularly India, the US and Europe. Wanting is one factor; having is one other.
About half of the polysilicon made in China throughout 2022 for the PV business is produced in Xinjiang. This ratio will fall yearly going ahead now, with no new capability anticipated to return on-line on this area.
By way of know-how, n-type made important inroads, with TOPCon now the popular structure for the market leaders, though some pretty outstanding names are hoping to drive by way of each heterojunction and back-contact to the multi-GW scale in 2023. Virtually 20GW of n-type cells are forecast to be produced in 2022, of which 83% might be TOPCon. Chinese language producers are driving the TOPCon transition; about 97% of TOPCon cells made in 2022 are in China. Subsequent yr will doubtless see this transformation, as TOPCon begins to seek out its approach into the US utility section, one thing that can demand TOPCon cells to be made outdoors China, possibly in Southeast Asia, nevertheless it does rely on what occurs with ongoing investigations regarding anti-circumvention within the US.
By way of module shipments throughout 2022, Europe turned out to be the massive winner, though a staggering 100GW-plus of modules had been made in China and stored in China. Excluding the US, all different main end-markets noticed sturdy double-digit progress, in line with the manic yearning for photo voltaic that has gripped the world just lately.
Europe was topic to a few points in 2022 that prompted the staggering progress seen. The area turned the go-to cargo location for volumes that weren’t out there to the US market and was additionally most instantly impacted by the implications of the battle in Ukraine. Virtually 67GW of modules had been shipped for the European market in 2022 – volumes nobody was anticipating a yr in the past.
All year long, the PV business was most visibly impacted by the brand new buzzword on everybody’s lips: traceability. Shopping for photo voltaic PV modules has by no means been so difficult.
Put apart the truth that pricing remains to be 20-30% greater than a few years in the past, that contracts signed six months in the past may not be well worth the paper they’re written on, or certainly the thorny subjects of subject reliability and honouring guarantee claims.
Outranking all of those immediately is the traceability conundrum. Who makes what and the place immediately, and extra to the purpose, the place will they make it in coming years.
The company world is grappling with this problem now and what it means when shopping for a PV module. I’ve written extensively on PV Tech over the previous decade on why you will need to perceive that almost all corporations promoting modules do nothing aside from ‘package deal’ product made by different corporations. Earlier than, I assumed it mattered principally when it comes to having confidence in high quality; now that is being outranked by traceability and the necessity to audit provide chains.
Module consumers are having to take a crash course in manufacturing provide chain dynamics now, peeling off the layers of a module all the best way again to the uncooked supplies going into the polysilicon vegetation globally. Painful as it could appear, the ultimate advantages might be important, finally outranking that of traceability auditing.
Proper now, when it comes to element manufacturing (polysilicon, wafer, cell and module) it’s helpful to section the world into six elements: Xinjiang, the remainder of China, Southeast Asia, India, the US, and the remainder of the world. Perhaps subsequent yr, Europe comes into play right here, however for 2022 it’s untimely to tug out Europe (aside from the truth that Wacker makes polysilicon in Germany).
The graphic beneath is taken from a webinar I delivered final week. It reveals 2022 manufacturing throughout the varied areas highlighted above.
Going into 2023, there are numerous uncertainties at this level, and I’ll attempt to cowl these over the subsequent couple of months at our occasions and in PV Tech options and webinars
Whereas traceability and ESG will stay excessive on the agenda for many (each shopping for and promoting modules), the problem of module worth (ASP) may very well be the one to trace most intently (once more!).
Module ASP has remained excessive for a few years solely due to this manic yearning for photo voltaic that the online zero syndrome has imposed on governments, utilities and international corporates (photo voltaic stays probably the most enticing renewable vitality attributable to pace of deployment and on-site/possession flexibility). Even when one speculates that demand (undefinable when solely a fraction of buyers get product) for photo voltaic doubles within the subsequent couple of years, in some unspecified time in the future China capability extra will enter the world.
Merely put, if you need double one thing subsequent yr and the availability chain invests to make thrice the volumes of final yr, this turns into a purchaser’s market and the worth of the commodity comes down. Globally immediately, the bottleneck is polysilicon. In 2023, some markets might produce other bottlenecks if there are import situations imposed on different elements of the worth chain (cells or modules, for instance). However the focus is broadly on polysilicon and the way a lot new capability will come on-line in China and what it will produce; capability and manufacturing are two very various things, particularly when new gamers enter the house.
Forecasting polysilicon manufacturing in 2023 may be very exhausting immediately. Not a lot when it comes to understanding what stage of latest capability might be ‘constructed’; extra so when it comes to what it will produce and if the Chinese language polysilicon ‘cartel’ will act to manage provide with a view to preserve it tight. It is sensible for the Chinese language polysilicon producers to behave as a membership, or cartel, and decelerate expansions if wanted, or do prolonged upkeep mid-year to get by way of stock.
Historical past tells us the other although. Chinese language corporations are likely to go overboard when there’s a market want, and regardless of the nation being ideally positioned to move down mandates on sector capability ranges, it does find yourself a free-for-all with infinite cash on the desk for any new entrant with an business aspiration.
It is very important notice that polysilicon pricing can come down, however module pricing enhance. This is likely to be troublesome to absorb because it goes towards regular logic throughout the PV business. However it’s one thing which will transpire in 2023. I’ll attempt to clarify this now.
In a market with module oversupply (because the PV business operated principally till 2020), there tends to be downward module ASP trending and a squeeze upstream on prices. By default, polysilicon pricing (assuming oversupply there too) is low. Think about the sub US$10/kg again within the day.
Through the previous couple of years, module pricing didn’t go up just because polysilicon provide was tight and the pricing elevated (to above US$30/kg principally), however as a result of it was a module vendor’s market. If polysilicon pricing in 2022 had decreased to US$10/kg, module suppliers might nonetheless have been in a position to promote product within the vary 30-40c/W. There would simply have been extra margin for wafer, cell and module producers. You don’t deliver a worth down when you don’t must.
For the previous 18 months, it has been stunning to me that Beijing didn’t (utterly behind the scenes) ‘order’ the polysilicon cartel in China to deliver pricing down. To not assist the remainder of the world when shopping for modules, however to permit a fairer share of the income throughout the remainder of the manufacturing worth chain in China. I can solely assume it didn’t occur as a result of everybody in China was in a position to prosper and preserve 10-15% gross margins – even with polysilicon promoting at US$40/kg. The one cause then for a Beijing edict could be to point out the surface world that its polysilicon suppliers (bear in mind half of China’s polysilicon in 2022 was made in Xinjiang) weren’t reporting 70-80% margins whereas underneath the highlight arising from the entire Xinjiang query.
Subsequently, it isn’t loopy that in 2023, there might be instances that polysilicon pricing comes down however module pricing is unaffected and probably even will increase.
It’s not all dangerous information for module consumers in 2023. There are indicators that cyclical oversupply will happen, particularly within the first half of 2023 and possibly being seen first for European module consumers. A lot of that is coming from the truth that the Chinese language sector is delivery large volumes to Europe and nearly actually approach above what the European builders/EPCs can probably make occur at brief discover.
Most of those subjects might be centre stage on the forthcoming PV ModuleTech convention in Malaga, Spain on 29-30 November 2022. There are nonetheless locations out there to attend the occasion; extra info on the hyperlink here and the best way to register to attend. There has by no means been a greater time for us to carry our first European PV ModuleTech convention!