Solar photovoltaic industry trapped in the industry chain (1)

As a clean energy source for sustainable use, solar energy has great potential for development and application. Through the promotion of solar photovoltaic technology, we can gradually improve China's energy consumption structure and ensure energy security to some extent. However, as the world's largest producer of solar cells and modules, China's photovoltaic industry is facing the plight of the “two out of the world, subject to people” industry chain. In the face of the pressing situation of foreign-funded enterprises, how Chinese companies, who are entrants to the market, seek development in an inherently unfavorable situation is an important issue that affects the optimization of China's photovoltaic industry structure.

Industrial chain dilemma: dim under the bright

Since 2007, China’s solar cell production has leapt to the top in the world. In 2009, it accounted for 40% of global solar cell output. However, manufacturing a large country is not the same as an industrial power. Just as steel production ranks first in the world, it cannot hide the complete failure of Chinese companies in pricing iron ore; the world’s first car production has not produced Chinese Volkswagen and Chrysler. China's photovoltaic industry under the surface of the bright, hiding the industry chain is difficult and the company's helplessness.

The solar photovoltaic industry chain can be broadly divided into five links. From top to bottom, they are: solar grade silicon materials, silicon ingot silicon, batteries, components, and system integration. They ultimately act on the market side to realize photovoltaic power generation. In the entire industry chain, upstream crystal silicon preparation and slicing technologies have the highest technical threshold and profit return, while downstream battery and component manufacturing links have lower technical thresholds and lower profit returns. Especially in the component part, the cost competition is the fiercest, and the company's ability to resist risks is also the lowest.

However, our country's enterprises are precisely concentrated in the production chain of batteries and components in the middle and lower reaches of the industrial chain. The upstream crystalline silicon material is mainly monopolized by the traditional seven major manufacturers in Europe, America and Japan. In 2008, it accounted for more than 70% of the global supply of polysilicon materials. The downstream photovoltaic power generation market is mainly concentrated in Europe. Its photovoltaic system installed capacity accounts for nearly 80% of the world's total. It can be seen that for our country, the so-called "photovoltaic powerhouse" is merely a "manufacturing powerhouse" and, to be more precise, it is only a "battery and module manufacturing country." In such a new industry, China still has not been able to shake off the role of the "world factory." Strategic highs such as capital, technology, and markets have remained overseas, and low value-added downstream product manufacturing has been introduced into China.

"Two heads out": Hard times

The dilemma of upstream crystalline silicon material and the downstream power generation market with “two outside” makes China's photovoltaic industry form a “double-low” situation of “low bargaining power” and “low resistance to risks”.

Looking upstream, crystalline silicon material suppliers headed by seven traditional foreign companies face more battery and component manufacturers and have more bargaining capital. Although the "silver-owned people are king" situation has collapsed with the outbreak of the financial crisis, it has not been able to fundamentally change the crystalline silicon production link and its dominant position in the photovoltaic industry chain. The ability to obtain stable silicon supply channels has become a core issue for many battery and component manufacturers.

Looking downstream, in recent years, although China's photovoltaic power generation market has accelerated the pace of development, the major global markets are still distributed in Europe, the United States, and Japan. The sharp contraction of the Spanish market and the cooling of German policies this year have directly contributed to the slowdown in the growth of the global photovoltaic power generation market. This is the first component that affects the most intense competition in the industry chain and has the lowest technical threshold and battery manufacturing links. In the financial crisis a year ago, a large number of PV module manufacturers in China closed down.