According to Zhikong Finance APP, BOC International released a research report stating that on November 20, the Ministry of Industry and Information Technology released the revised "Standards for the Photovoltaic Manufacturing Industry (2024 Edition)", strengthening the requirements for energy consumption and water consumption indicators in various links of the industry chain, further raising the difficulty of new capacity for silicon materials, silicon wafers, and batteries, and continuously optimizing the photovoltaic supply side. Additionally, CPIA released a cost analysis of products in the main photovoltaic industry chain, indicating that the lowest price of components has increased compared to the previous period, which is expected to drive the recovery of industry profitability, establishing a gradual bottom for the industry.

The main points of BOC International are as follows:

The Ministry of Industry and Information Technology released the "Standards for the Photovoltaic Manufacturing Industry (2024 Edition)", tightening the indicators such as energy consumption and water consumption.

On November 20, the Ministry of Industry and Information Technology released the revised "Standards for the Photovoltaic Manufacturing Industry (2024 Edition)" and the "Management Measures for the Announcement of Standards for the Photovoltaic Manufacturing Industry (2024 Edition)", aiming to further strengthen the standardized management of the photovoltaic industry and promote the acceleration of industry transformation, upgrading, and jiegoutiaozheng.

Compared to the draft for comments disclosed in July of this year, the main changes are as follows: 1) The electricity consumption for new and expanded projects should be less than 40 kWh/kg (the previous draft was 44 kWh/kg), and the comprehensive electricity consumption should be less than 53 kWh/kg (the previous draft was 57 kWh/kg). 2) New requirements for silicon wafers: Companies are encouraged to use recycled water; the water consumption for new and expanded silicon wafer projects should be less than 540 tons/million wafers and the recycled water usage rate should be higher than 40%. 3) New requirements for batteries: Companies are encouraged to use recycled water; the water consumption for new and expanded projects should be less than 360 tons/MWp and the recycled water usage rate should be higher than 40%.

The threshold for industry expansion has been raised, which is expected to promote supply-side optimization.

According to the 2023-2024 photovoltaic development roadmap released by CPIA, in 2023, the water consumption for silicon wafers and n-type batteries is 870 tons/million pieces and 600 tons/MW, respectively, which is far higher than the new capacity requirements mentioned in the "Regulatory Conditions". BOC International believes that under the latest "Photovoltaic Manufacturing Industry Regulatory Conditions", the expansion difficulties for upstream high-energy-consuming polysilicon enterprises are increasing. Industry leaders, due to their low electricity consumption advantages, possess the capability to expand, and the supply-side reform continues to advance. In addition, the water consumption requirements for silicon wafers and battery segments are being raised, leading to higher thresholds for new capacity. It is determined that the increase in expansion thresholds will not affect projects that have already obtained energy evaluation and environmental evaluation indicators, and high-quality capacity at the silicon wafer and battery heads is expected to benefit.

CPIA released an analysis of the cost of photovoltaic main industry chain products, showing that component prices have risen month-on-month.

On November 20, the China Photovoltaic Industry Association released the component cost data for November, stating that the component cost remained flat compared to October, maintaining at 0.603 yuan/W. The minimum component quote increased to 0.69 yuan/W, up 0.01 yuan/W from October. The main reason for the difference is that this time considered the minimum necessary costs, and according to CPIA's survey, the current transportation cost for components is 0.015 yuan/W/thousand kilometers. BOC International believes that the increase in the minimum component price released by CPIA demonstrates a determination to promote anti-involution competition in the industry, which can lead to an increase in the terminal selling price of components and is also beneficial for the industry's profit recovery.

The bottom of the industry is gradually establishing.

BOC International believes that against the backdrop of the industry promoting anti-involution competition, restrictions on production scheduling expectations at various links are expected to improve, and production restrictions in segments such as silicon wafers are gradually being implemented, with expectations for reduced silicon material production continuously strengthening; the price increases for photovoltaic batteries and components have already taken effect. Under the influence of policies and the market, the photovoltaic industry chain may see phase-based price rises, with the industry's fundamentals gradually confirming the bottom.

Recommendations for investment symbols

JA Solar Technology (002459.SZ), Jinkosolar (688223.SH), Longi Green Energy Technology (601012.SH), Trina Solar Co., Ltd. (688599.SH), Hainan Drinda New Energy Technology (002865.SZ), it is recommended to pay attention to Shuangliang Eco-Energy Systems (600481.SH), Tongwei Co., Ltd. (600438.SH), GCL Tech (03800), and Daqo Energy (688303.SH).

Risk factors

Unfavorable fluctuations in raw material prices; risks of international trade friction; new technology developments not meeting expectations; risks related to new energy policies; consumption risks.