Chinese Solar PV EPC Costs drop by 25% YoY; Rooftop Solar Almost as Cheap

Industry website BJX just released a very interesting statistical analysis of solar PV project tenders from the first half of 2024, including EPC costs, project volume, leading developers, and leading EPCs.

I have translated the content and recreated some of the charts (including reformatting charts for better visual impact).

Source: https://guangfu.bjx.com.cn/news/20240715/1388857-1.shtml

Project ownership:

Chinese renewable project owners have issued EPC tenders for 94.6GW of solar projects in the first half of 2024. Of these, 72GW have been awarded so far.

The most active entity issuing tenders is China National Nuclear Corporation (CNNC) with 11.28GW. Aside from CNNC, the other most-active companies have been CHN Power, Huadian, Huaneng, and Datang, all with at least 4GW of issued tenders.

All of the top 15 are SOEs, accounting for almost 50GW of the tenders, indicating moderate concentration, but with a very long tail.

This is a good opportunity to point out the variety of companies active at this level of solar construction, even if they are all SOEs.

You have both national-level SOEs (央企) like Huaneng and SPIC as well as provincial/local-level SOEs (国企) like Hengjian Holdings (Guangdong) and Yunnan Investment Group.

You have traditional power utilities (CHN Energy, Datang) nuclear power utilities (CNNC, CGN) and even EPC companies that have recently gotten very active in owning assets as well (CEEC, PowerChina).

You also have traditional coal miners looking to diversify their business (China Coal).

On a monthly basis, Jan-Feb started the year very strong for new solar tenders (not quite sure why...maybe working through project quota from the end of 2023?) and then settled into a more stable pace of 9-14 GW of new solar tenders per month. This usually picks up in 2H.

EPCs

On the EPC side, SOEs also dominate the tender wins (and not just any SOEs, but the central SOEs, like CEEC and PowerChina) although private companies also won a considerable volume of work.

Some major private EPCs include TBEA, Sungrow, GCL, CHINT, etc...

Utility-Scale EPC Costs

But first, a warning: successful EPC tender prices (EPC中标价) provide insight into trends, but don't reflect full project development costs, as they don't include land costs, cost of capital, etc. The main things included here are engineering, equipment, and labor.

Large EPCs have seen their average utility-scale solar tender prices decline by 24% YoY, from 4.49 CNY/W last year to 3.26CNY/W this year.

Safe to say engineering and labor probably aren't getting cheaper, so that's gotta be driven by declining equipment costs (especially batteries, which much be included together with new solar projects) plus some economies of scale and ever-aggressive pricing strategy from panel manufacturers.

The article notes the high mark of 4.7 CNY/W in 2024 was set by the 550 MW Nongken Wuyi Farm agrivoltaics station under construction in Zhanjiang, Guangdong, including 55MWh of battery storage. Lesser galangal (高良姜) and pineapple are to be planted beneath the solar panels.

Meanwhile, the low mark of 1.94 CNY/W was set by coal miner Mongolia Energy Corporation's 1.6 GW solar PV + environmental management project in Bayan Nur, Inner Mongolia. This project began construction last month.

Super Base EPC Pricing

Successful EPC pricing for Renewable "Super Base" projects was provided separately. As you'd expect, the larger scale of these projects allows the cost/Watt to be much lower than for "regular" utility-scale projects. The average EPC cost per/Watt for the 1.73 GW of "Super Base" tenders so far in 2024 has been just 1.9 CNY/W.

The image below shows a small section of the 1 GW solar Super Base now under construction in Guanling County, Anshun, Guizhou. The EPC cost/Watt for this section was 2.08 CNY.

Rooftop Solar EPC Pricing

Average distributed solar EPC costs have come down by 25% YoY, from 4.53 CNY/W to 3.39 CNY/W, mirroring the decline on the utility-scale side of things. Notably, Chinese distributed solar EPC costs in 2024 are just 4% higher than utility-scale EPC costs.

Whole-County Rooftop Solar EPC Pricing

Whole-country solar EPC costs are split from "regular" distributed solar, because the project structure is different. The larger scale helps them be slightly cheaper than regular rooftop solar (basically the same as utility-scale).

YoY change in whole-county rooftop EPC costs was only -11.5%, a lot less than the YoY cost decreases enjoyed by utility-scale and regular rooftop solar. Probably a combination of the these costs in 2023 already being very optimized and these projects not having batteries.

The first half of 2024 saw just 6.1 GW of whole-county solar EPC tenders issued, indicating the momentum for these projects has slowed a bit, probably because the leading provinces for these programs are already saturated. Top EPCs were CNNC, Huaneng, and CEEC.

Key Takeaways:

• 25% YoY decline in EP costs is stunning - driven mostly by cheaper lithium batteries this year, I'd think.
• Rooftop solar EPC costs only 4% lower than utility-scale very impressive, and virtually unthinkable anywhere else in the world...
• Super Bases are super cheap per watt!
• Whole-county solar programs definitely slowing - at least until another batch of target counties is announced?

That's all for this time. If you enjoyed this content, please give me a follow, and also check out The Lantau Group, a specialist consultancy focused on the Asia-Pacific energy sector. I'm based in The Lantau Group's Shanghai office, where I helps companies make crucial decisions about their energy strategy in China, including power tariff forecasts, budget forecasts, and sustainability planning for power customers, as well as transaction/commercial support for power infrastructure developers, lenders and investors.