In the first half of 2021, under the sharp fluctuation of the supply chain, the photovoltaic industry still continued the previous expansion trend, and the upstream material investment in the industrial chain exceeded 100 billion yuan.

In the first half of 2021, the investment at the capacity level of photovoltaic enterprises is close to 400 billion, and there are as many as 71 major investment projects with more than 100 million yuan, which is nearly double that of the same period last year.

China's photovoltaic is also officially entering a new "era of competition and cooperation", which may have a far-reaching impact on the future industrial structure.

Soochow Securities elaborated the current situation of the surge in demand in the photovoltaic industry from the perspectives of hot issues and domestic household use, and said that the world will fully enter the era of photovoltaic parity in 2021, which will promote the continuous increase of global demand.

The price of the industrial chain is rising, and the demand for photovoltaic is much higher than expected.

From the perspective of the main chain, the growth in demand has led to the gradual repair of the operating rate of battery modules and the continuous increase in production schedule. after a slight decline in the price of silicon wafers in July 2021, the price of silicon wafers returned to the upward trend in August 2021, with monthly increases of 2% and 5% respectively, approaching the highest value in June 2021.

In terms of auxiliary chain, the price of EVA particles shows an accelerated upward trend, with a weekly increase of 5%. The rising cost of plastic film is in short supply. The price increase of plastic film in September 2021 is strong. Glass orders have exceeded production capacity, and the price of small factories has increased by 4 yuan per square meter this week. Soochow Securities expects that large companies will generally follow the rise in September 2021.

Source: Solarzoom, Soochow Securities Research Institute

At the same time, the whole county is in full swing, and the large base power stations have been started one after another, and there is huge room for growth after parity. The whole county has continued to exceed analysts' expectations since the end of June 2021. It is expected that about 500 counties in 25 provinces have participated in the pilot project. Assuming that each county will exceed the 100GW of 200MW, the policy will help distributed enthusiasm to open up long-term growth space.

With the arrival of the era of photovoltaic parity, there will be more and more large-base projects, including desert power stations and western large-scale power stations. Zhongguang Nuclear Kubuqi 200MW Photovoltaic Sand Control Project will be launched on August 16, 2021, which can reduce 290700 tons of emissions per year, while effectively harnessing 7997 mu of desert, the large-base project will bring new increments of centralized power stations.

Domestic household demand continues to increase beyond expectations

Data from Soochow Securities show that the newly installed 7.65GW of household photovoltaic from January to July 2021 was + 157% compared with the same period last year, exceeding analysts' expectations.

According to the data of the National Energy Administration, the installed 7.65GW for household photovoltaic was increased from January to July 2021, which was + 157% compared with the same period last year, of which 1.76GW was installed in July 2021, with a month-on-month ratio of + 98% and 2%.

In 2021, the household subsidy is 3 cents / kwh, and the subsidy plate is 500 million yuan, all of which are directly connected to the grid. Assuming that the utilization hour is calculated according to 1000 hours, the scale will reach 16.7 GW +.

Soochow Securities expects that the new installed capacity for household use will reach 18GW in 2021, an increase of 78% + (10.12GW for household installation in 2020). After the subsidy retreat in 2022, the era of household parity will come, and the parity market space is expected to exceed 30GW.

Data source: China Light and Power Union, Soochow Securities Research Institute

Not only for household use, domestic photovoltaic installed 4.93GW was newly installed in July 2021, an increase of 67.69% over the same period last year, and the cumulative photovoltaic power generation capacity from January to July of 2021 was 37.1% higher than that of the same period last year.

Soochow Securities said that 2021 is the first year of domestic photovoltaic parity, but in view of the excessive price of silicon, the price game of the industrial chain, and the policy that the parity bidding project can be postponed to 2022, the installed capacity is expected to be 55GW in 2021, an increase of more than 15% over the same period last year.

Source: national Energy Administration, Soochow Securities Research Institute

High overseas demand, eye-catching new installation data in Europe and the United States

According to the data, the overseas photovoltaic bidding price in 2021 is generally 15-86% lower than the local commercial electricity price, and the lowest bidding price for the 600MW project in Saudi Arabia in April 2021 is only 0.0104 US dollars per kilowatt-hour, equivalent to less than 0.10 yuan per kilowatt-hour, which is only 15 percent of the local commercial electricity price, with strong cost competitiveness.

Soochow Securities said that the overall parity is approaching, the proportion of large-size improvement & the improvement of battery conversion efficiency & the improvement of MBB& power station voltage system and other technologies will continue to promote photovoltaic cost reduction in the future. The world will fully enter the era of photovoltaic parity in 2021, and the growth center of photovoltaic in the medium term is expected to exceed 20%.

Data sources: Zhihui Photovoltaic, Globalpetrolprice, Soochow Securities Research Institute

Data show that the United States added new 2.7GW in June 2021, an increase of 33% year-on-year and 18% month-on-month. Official new installations in 2021Q1 reached an all-time high of 5.3GW, the largest year-on-year increase on record in the first quarter.

With the support of Biden's new energy and carbon reduction policies, photovoltaic power generation accounts for 58 per cent of all new power capacity in the US, while renewable energy accounts for nearly 100 per cent of all new power capacity in 2021Q1.

As of 2021Q1, the total number of utility-scale contract pipelines has increased to nearly 77GW, an increase of 36.42% year-on-year and 11.59% month-on-month.

Source: us Energy Information Administration, Global Energy Network, Soochow Securities Research Institute

In other countries, Germany is far ahead in installed capacity in the European Union. Germany has installed 4.88GW in 2020, an increase of 24% over the same period last year. 2021Q1 is not weak in the off-season, and the total installed 2.89GW from January to June in 2021 is + 22.51% over the same period last year.Among them, Germany installed new 429MW in June 2021.

France added new installed 821MW in 2021Q2, an increase of 359% year-on-year and 50% month-on-month. From January to June 2021, it added new installed 1367MW, an increase of 285.07% over the same period last year.

The EU carbon reduction target was set to be raised to 55%, and the installed capacity of big countries such as Germany and France increased significantly in the first half of 2021 compared with the previous month.

Soochow Securities expects Europe to add 27GW and 35GW in 2021 and 2022 respectively, up 38 per cent and 30 per cent year-on-year, respectively.

The relevant data of Turkey, Poland, India, Japan and other countries are also very eye-catching.

As for domestic demand, Soochow Securities estimates that in 2021, photovoltaic power stations will be installed at 35 80GW, plus 15-80GW for household use, and the domestic installed capacity for the whole year will be 50 GW, an increase of more than 8% over the same period last year. In 2022, if the electricity price policy is higher than expected and parity projects are deferred, domestic demand is expected to be 70-GW, an increase of more than 36% over the same period last year.

As for global demand, Soochow Securities believes that overseas parity has arrived, and the high price of components does not reduce the enthusiasm for overseas installation. It is estimated that overseas installation demand is 110-120GW in 2021, global demand is 160-170GW, and global installation demand in 2022 is 210-230GW, an increase of more than 35%. At the same time, the unit profit of the industrial chain will improve year-on-year, with both volume and profit rising.

A number of companies' profits exceeded expectations, and prosperity rose quarter by quarter.

Longji shares achieved revenue of 35.098 billion yuan in 2021H1, an increase of 74.26%, and a net profit of 4.993 billion yuan, an increase of 21.30% over the same period last year.

The company shipped 38.36GW (about 6.14 billion wafers) in 2021H, of which 18.76GW was exported, up 36.48% from the same period last year.

In the context of rapidly rising silicon prices, Longji supply chain + non-silicon cost advantage is significant, its gross profit margin is expected to exceed 33%, the leading position of components is also gradually strengthened.

Soochow Securities expects 2021Q3's profitability to improve significantly as component prices improve month-on-month. In 2020, the company ranked first in photovoltaic modules in the world, with a global market share of 19%, increasing 11pct compared with the same period last year.

Source: company announcement, Soochow Securities Research Institute

The profits of Jingao Technology, Trina Solar Energy, Sunshine Power and other company components have also improved significantly, exceeding market expectations.

The author: Soochow Securities Zeng Duohong and Chen Yao, the original title: "Photovoltaic prices rose in September, strong demand exceeded expectations."