China Photovoltaic Rolls Overseas: Go to the Middle East and Make tuhao Money!

When Europe and the United States are planning to launch another round of attacks on China's photovoltaic industry, another trillion-scale market has opened its warm arms to us.

On June 11, at the 10th Entrepreneurs Conference and the 8th Investment Seminar of the China-Arab Cooperation Forum, China and Arab countries signed 30 investment agreements worth 10 billion US dollars (about 71.6 billion RMB), covering renewable energy, agriculture, real estate, minerals, supply chain, tourism and health care.

In fact, in October 2021, before the 26th United Nations Climate Change Conference, which entered the implementation phase of the Paris Agreement, Crown Prince Salman made a commitment to achieve net zero emissions by 2060. As the world's largest oil exporter, the Middle East countries are now vigorously promoting the transformation of new energy. China's advanced photovoltaic technology and high-quality and low-cost photovoltaic products are exactly what they are eager to have.

For Chinese photovoltaic enterprises, opportunities and challenges coexist here, which is one of the most important battlefields for Chinese photovoltaic enterprises to go to sea. In this "place with gold and honey", Chinese photovoltaic enterprises are trying to grasp all possible opportunities in the crazy involution.

As the world's largest oil exporter, Saudi Arabia's development of new energy is a choice that has to be made to conform to the general trend of global energy transformation. Since

2017, Saudi Arabia has launched the National Renewable Energy Plan (NREP) as part of Vision 2030, aiming to achieve the installation of new energy power generation by 2030. The Saudi Ministry of Energy has entered the fourth round of bidding for new energy projects. On January 30

this year, Saudi state television quoted the Saudi energy minister as saying that the country planned to invest 1 trillion Saudi riyals (about 1.

Saudi Arabia is a country with extremely rich oil resources. Over the past few decades, relying on this natural resource, Saudi Arabia has been making money and getting rich. However, with the progress of new energy technology, the proportion of oil in the total global energy consumption has been declining for 13 consecutive years, and now it is only 31.

On the other hand, the international oil price has fallen sharply from 2014 to 2016, which has led to a serious economic crisis in this country where 75% of government revenue comes from oil. In 2017, its GDP growth rate was only 0. After more than 80 years of exploitation, Saudi Arabia's oil well exploitation has entered the middle and late stages, and its oil resources are facing exhaustion.

Under the triple pressures of falling oil prices, declining market share and resource depletion, this single economic structure, which relies heavily on oil, has become increasingly unsustainable. So, learning from the bitter experience, Saudi Arabia began its energy transformation. Similar

to Saudi Arabia, many oil-dependent countries in the Middle East are accelerating the transformation of new energy sources.

McKinsey Consulting has said that "given the changes in the global energy market and demographic structure, Middle East countries can no longer rely on oil revenue and public investment to promote economic growth for a long time".

At present, the United Arab Emirates, Oman, Jordan, Kuwait and other countries have also increased the proportion of renewable energy in their long-term planning and energy strategies. Among them, UAE plans to increase the proportion of renewable energy in the energy structure to 44% by 2050; Jordan plans to increase the proportion of renewable energy in power generation to 31% by 2030; Oman plans to increase the proportion of renewable energy consumption to 20% by 2030 and 35% -39% by 2040.

This wave of energy transformation has even spread from the Middle East to the oil countries in North Africa. Egypt plans to increase the proportion of clean energy generation in total electricity generation from 20% in 2022 to 40% in 2035; Morocco also plans to meet 50% of electricity demand by renewable energy by 2030 and 100% by 2050. The scale of

renewable energy planning is so large that photovoltaic is naturally the most important part of it.

The UAE has launched a number of

Under such a policy background, the photovoltaic market in the Middle East began to speed up.

According to the statistics of the Middle East Photovoltaic Industry Association (MESIA), the value of the photovoltaic market in the Middle East and North Africa is about 20 billion US dollars. In the next five years, another $5 billion worth of photovoltaic projects will be put into operation in the Middle East, and another $15 billion will be built.

The report shows that the low-carbon energy industry in the Middle East and North Africa region will be worth $257 billion by 2030. Among them, photovoltaic accounts for 50% of the project value, which means that the Middle East will be a nearly trillion-scale market.

According to Khaled Ahmed Sharbatly, chief investment officer and partner of Saudi photovoltaic developer Desert Technologies, photovoltaic power generation in the Middle East will reach 50 GWh by 2030. Saudi Arabia alone generates 20G Wh, Egypt and the UAE will generate 10G Wh, while Qatar, Kuwait and Oman together generate 10G Wh.

According to InfoLink data, in 2022, the Middle East imported 11. In the past, Pakistan and Israel were the main importers of components in the Middle East market, while in 2022, the United Arab Emirates and Saudi Arabia showed a substantial increase.

Among them, Saudi Arabia imported 1 from China in 2022, while the United Arab Emirates imported about 3 from China in 2022.

In the face of rare business opportunities, Chinese photovoltaic enterprises are no longer satisfied with the supply of goods, but are moving from domestic to foreign. Speed up the seizure of all possible opportunities in the Middle East market.

On May 24, TCL Zhonghuan announced that it intends to establish a joint venture with Vision Industries Company and build a photovoltaic crystal wafer factory project in Saudi Arabia.

Vision Industries is a new energy enterprise in Saudi Arabia. Its main business is the investment and development of the whole new energy industry chain, including solar photovoltaic, wind energy, hydrogen energy, etc. It has rich localization experience and related resources in wind power, photovoltaic, energy storage and other fields. Before

that, Jingke Technology, Longji Green Energy and other enterprises have a deep layout in the Saudi photovoltaic market. In December

2022, Jinko signed a memorandum of understanding with another local heavyweight company, Saudi International Power and Water Company (ACWA Power), to provide 4GW N-type Tiger Neo components for project development and construction.

ACWA Power is an operator in the fields of power and renewable energy, seawater desalination and green hydrogen energy, which is controlled by the Saudi Public Investment Fund (PIF), and is an important force in promoting energy transformation in Saudi Arabia. ACWA Power is the developer of the Red Sea New Town Project, a key project bearing Saudi Arabia's 2030 vision.

In addition to Jinko, Longji and Sunshine Power (SZ: 300274) have also established cooperative relations with ACWA Power. In 2022, Longji completed the delivery of 406 MW photovoltaic modules to the Red Sea New Town Project in Saudi Arabia. Sunshine Power will provide 536 MW/600 MWh energy storage system for this project this year.

In Saudi Arabia, Jinko is also unwilling to sell only components. In January this year, Jingke Technologies announced that it had won a contract to develop 300 MW Sade photovoltaic solar independent power generation project under the third round of Saudi Arabia's National Renewable Energy Program (NREP). The total investment of the project is about 2.

Not only private photovoltaic giants, but also state-owned enterprises such as China Southern Power Grid, State Power Investment Corporation, China Energy Construction Corporation and China Guangdong Nuclear Power Corporation have signed relevant new energy cooperation agreements with Saudi Arabia.

Last November, China Nengjian announced the launch of 2.Located in the Al shuaibah area of Jeddah, Makkah Province, Saudi Arabia, the project is the largest single photovoltaic power plant project currently under construction in the Middle East.

On December 7, witnessed by Saudi Minister of Investment Khalid Falih, China General Nuclear Energy International Holding Co., Ltd. signed a framework cooperation agreement with AlJomaih Group, a well-known Saudi enterprise. The two sides will jointly develop a number of solar, wind, gas and thermal power generation projects in the Arabian Persian Gulf region, Bangladesh, Azerbaijan and other regions in Asia, with a cumulative installed capacity of more than 10 million kilowatts. Mohammed Abunayan, chairman of

Saudi International Power and Water Company, said: "We benefit from China's strong capabilities and technology, which are reflected in the construction and supply of equipment and equipment."

With more and more Chinese enterprises pouring into Saudi Arabia, the competition in this trillion-scale market is becoming more and more fierce, and the degree of involution is no less than that at home. The

Middle East tuhao is not

profitable for Chinese photovoltaic enterprises in the Middle East, and the market prospects here are promising. However, it is not easy to grab the cake from the Middle East market.

First of all, environmental factors determine that the quality requirements of photovoltaic projects in this market are very high. Photovoltaic power plants in the

Middle East are often built in remote deserts, and the accumulation of wind and sand in the desert environment will seriously affect the power generation efficiency of photovoltaic modules. According to Dr. Ben Figgis, research project manager of the Qatar Environment and Energy Research Institute (QEERI), in Qatar, the daily power generation will drop by about 50% due to the presence of dirt, which raises the technical requirements for the operation and maintenance of photovoltaic projects.

From the climate point of view, the Middle East is not all arid deserts, there are also humid deserts on the coastline, in this environment, high temperature, high humidity, high saline-alkali, harsh conditions. To build a power station here, photovoltaic modules should not only resist wind and sand, high temperature, but also have strong saline-alkali and corrosion resistance.

Despite the high standard of technical requirements, the bidding price here has repeatedly hit a new low in the industry.

This is related to the bidding mechanism in the Middle East. In order to promote the development of solar power market, the United Arab Emirates and Saudi Arabia launched energy market reforms in 2015, one of which is the introduction of bidding mechanism for photovoltaic power generation. This makes the bidding price of photovoltaic power generation projects in the Middle East a global price depression since 2017.

Taking the recently announced bid price for the sixth phase of Dubai's 1.8G W Maktoum solar project as an example, Masdar of the United Arab Emirates reported 1. This means that the price war in the Middle East market is even more brutal.

It should be noted that at present, few Chinese-funded contractors directly become investors, and most of them participate in project development in EPC mode. Because the EPC contract usually stipulates that the contract price will not be adjusted due to the rising price of equipment and raw materials, the EPC contractor is often the most risky link in the low-price competition.

In 2021, Shanghai Electric (SH: 601727) announced that it had suffered a loss of more than 1 billion yuan in the Dubai solar thermal power plant project in which it participated as an EPC contractor due to the impact of the global epidemic on the supply chain. The loss of income caused by such risk fluctuations deserves the vigilance of Chinese enterprises.

In addition, ethnic issues and geopolitical risks in the Middle East also require Chinese enterprises to take precautions. The Middle East is known as the "powder keg" of the world, where conflicts and wars have continued for thousands of years. At the first sign of trouble, the Middle East powder keg creaks, and if there is a war, the losses of enterprises are incalculable.

Following the trend of world energy transformation, the new energy market in the Middle East is taking off, but the risk is always the other side of the opportunity. How to grab the market while ensuring full revenue is what many Chinese photovoltaic enterprises in the Middle East need to consider.