At present, the price of the industrial chain continues to decline, and the profit margin of many manufacturers has been compressed. Some enterprises have postponed or even cancelled the project plan, and more expansion plans are expected to be cancelled next year, while photovoltaic enterprises with backward cost control ability and insufficient sales channels may also be forced to withdraw from the market. The problem of grid-connected absorption of
photovoltaic demand is gradually emerging
, and the significant decline in component prices has significantly led to the growth of demand in 2023. When component prices are still at a high level in 2022, many projects are forced to delay or cancel. The rapid decline in component prices this year has led to the start of deferred projects in the early stage. New projects are also growing rapidly due to increased returns, and global module demand is expected to reach about 412-455 GW in 2023, a growth of about 53% compared with last year.
Despite the rapid increase in component shipments, there has been a serious problem of inventory accumulation in some overseas markets such as Europe and Brazil this year, which shows that although the price decline is beneficial to the investment rate of photovoltaic projects , due to the shortage of installation manpower, policy changes, project planning needs time and other factors. The growth rate of actual demand for installed capacity is not as fast as the growth rate of output. In the case of serious inventory stagnation, many manufacturers are forced to sell at a lower price or re-export to other countries, causing huge losses to enterprises. The actual installed capacity demand in 2024 is expected to further increase, but the corresponding capacity increase is still insufficient, and the continuous oversupply will limit the volume of new capacity. After the experience of inventory accumulation in 2023, manufacturers need to be more cautious in production scheduling, shipment planning and sales strategy next year.
In addition, the limitation of demand growth comes from the carrying capacity of the power grid. With the rapid growth of installed capacity, the access capacity of power grids around the world has begun to be tested. In Brazil and some European countries, the saturation of power grid capacity has forced distributed projects to be delayed or even cancelled, while China, where household installed capacity is growing rapidly, is more noteworthy. With the emergence of grid access problems, various provinces in China have successively introduced relevant policies and started to assess the carrying capacity of the grid. However, the short-term measures are still limited to the suspension of the access of distributed generation projects, mandatory storage and other schemes.
Although the growth rate will slow down compared with this year due to the higher base period, grid capacity, localization wave and other constraints, driven by the significant decline in module prices, we are still optimistic about the growth of the photovoltaic market next year, and it is expected that the demand for modules will continue to grow by about 15-20% in 2024.
With a large number of expansion plans in the photovoltaic supply chain coming to the ground this year, the bottleneck of upstream silicon supply since 2022 has been solved, and the rapid growth of production capacity has led to a serious surplus, which has led to a significant decline in the overall supply chain price since 2023. The price of upstream silicon materials has dropped from more than 300 yuan per kilogram at the end of last year to about 69 yuan per kilogram at present, and the price of components that have a direct impact on terminal demand has also dropped rapidly from $0.245 per watt at the beginning of the year to about $0.135 per watt at present; Although prices may still fluctuate in the short term due to changes in supply and demand in the upstream and downstream sectors in the future, the demand for installed capacity relative to the terminal is still excessive, so it is expected that the supply chain price will not rebound significantly again, and the voice of the industry will further move closer to the demand side and become a buyer's market. Although the increase of the 
overall industry capacity is conducive to the development of the industry, it also makes the competition among enterprises increasingly fierce. Many enterprises, whether existing or new players, see the rapid growth of the market and the announcement of large-scale expansion plans for better profits when the overall supply chain price is still at a high level in 2022, which intensifies competition and leads to a rapid decline in prices. Therefore, in addition to accelerating the elimination of some old production capacity, some new production capacity plans have been cancelled under the condition that new production capacity is almost unprofitable. It is expected that more expansion plans will be cancelled next year, and photovoltaic enterprises with backward cost control ability and insufficient sales channels may also be forced to withdraw from the market. In order to protect their autonomy in energy,
some countries began to restrict the origin of photovoltaic products in recent years, and tried to establish local production capacity. Specific policies such as the Inflation Reduction Act (IRA) in the United States and anti-circumvention investigations in Southeast Asia. As well as India's BCD tariff, ALMM list and production subsidy plan (Production Linked Incentive Scheme, PLI), Europe has also begun to re-examine the need for import restrictions due to the impact of Chinese component prices; But at present, the production capacity of photovoltaic links is still highly concentrated in China, the concentration of silicon materials, silicon wafers and batteries is as high as 93%, 97% and 90% respectively, and the components are still 82%. It will make the potential demand difficult to meet, leading to a decline in installed capacity. For example, after UFLPA banned the import of modules made of silicon materials from Xinjiang in 2022, the installed capacity of the United States declined by 16% in that year, seriously affecting the photovoltaic development process. However, driven by various subsidy policies, there will be a large number of overseas expansion plans in 2023, especially in the United States and India, and many new production capacity will land in 2024. According to InfoLink incomplete statistics, by the end of 2024, overseas component production capacity will grow by at least 78% to 270 GW compared with the beginning of 2023. Some manufacturers are still evaluating the possibility of expanding factories in Europe, the Middle East and other regions, which will change the competition pattern that Chinese components almost monopolize the market in the past.
It is worth noting that, considering the amount of capital investment, technical difficulties and other barriers to industrial entry, the current overseas expansion plan is highly concentrated in the component sector, and there are a small number of battery expansion plans, but compared with the components, there are still deficiencies, while the upstream silicon materials and wafers are very few at present, for these new batteries and components. In the short term of two to three years, it is still difficult to completely get rid of the dependence on China's supply chain.
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