The "Energy-saving and Carbon Reduction Action Plan for 2024-2025" issued by the General Office of the State Council proposes that the energy efficiency of newly built polysilicon and lithium battery positive and negative electrode projects must reach the industry's advanced level.

On November 15, the Ministry of Industry and Information Technology issued the "Regulatory Conditions for the Photovoltaic Manufacturing Industry (2024 version)" showing that compared to the 2021 version, the admission standards for existing projects and newly constructed or expanded projects have been raised in terms of process technology and energy consumption.

In the past week, the photovoltaic sector has experienced accelerated supply-side reforms in energy consumption control, component prices, and future export price regulations. Specifically, the Ministry of Industry and Information Technology has released the latest norms for the photovoltaic industry, raising the energy consumption requirements for newly constructed silicon material capacity and clarifying that existing capacity will also be controlled through more policies.

In the new standard, the energy consumption of newly built silicon material production capacity has decreased from the previous 17 degrees per kilogram to 53 degrees per kilogram, with only the top 4 leading companies in the industry possibly meeting this standard.

In addition, clear standards for energy and water consumption in the battery segment have been set, encouraging the development of efficient and low-energy consumption technologies.

"Not only on the component side, but in the entire photovoltaic industry chain, companies with csi leading technology index are expected to be the first to cross the cycle and reap the technological dividends," said Qu Fang. For example, in the silicon material segment, under the background of cancellation of preferential electricity prices in various places, the economic benefits of granular silicon are significant and the cost advantages are obvious.

Benefiting from the ramp-up of production capacity and continuous optimization and improvement of production processes, the company's granular silicon production bases are continuously updating cost data. A relevant person in charge of gcl tech stated to the Securities Daily reporter that by the third quarter of 2024, the average cash cost of granular silicon has dropped to 33.18 yuan/kg, significantly leading the industry.

According to the Zhitong Financial APP, sinolink has released a research report stating that the photovoltaic main industry chain has been continuously losing money for over six months, with most segments entering a cash flow loss state. Under the joint effect of the association's initiative and corporate self-discipline, "production cuts and price support" may become the consensus action direction for leading enterprises in various segments of the industry chain. Considering the current significant slowdown in industry capital expenditure and the gradual elimination of backward capacity, the supply and demand relationship across various segments of the industry chain is continuously improving, and it is expected to accelerate during the "year-end" period from late 2024 to early 2025. The bottom of the profitability for all segments of photovoltaics is consolidating clearly, and a more general and significant profitability turning point for the main industry chain is expected to arrive as early as Q2 2025, with most symbols subsequently showing a "volatile upward" trend.

Leaders in the silicon material sector:

gcl tech (03800): In the third quarter, despite a decrease in production volume, cash costs (including R&D expenses) still fell by 2 yuan/kg to 33.18 yuan/kg. This is mainly due to the previous effects of technological upgrades. Institutions expect that the granular silicon process still has ongoing cost reduction potential in industrial silicon costs, energy consumption, and material aspects, with hopes of gradually controlling cash costs below 30 yuan/kg. Looking at previous directions in capacity restrictions and standard upgrades in other industries, low energy consumption, high quality, and new technologies are major trends and leading enterprises are expected to benefit fully.

xinte energy (01799): The first phase of the 0.2 million tons multi-crystalline silicon project in Junzhong, with a 0.1 million tons project, was completed and put into operation in August 2023, increasing multi-crystalline silicon capacity to 0.3 million tons/year. With the restoration of production at the 0.1 million tons multi-crystalline silicon project in inner mongolia, the company's silicon material cost per ton is expected to continue to decline. Looking ahead to 2024, the company expects an annual silicon material output of 0.28-0.3 million tons, with the proportion of N-type material output expected to continue to increase to over 80%.