Lookback of August 2022

Dear friends, the August is gone, leaving us waves of extreme heat rarely seen during the last decades. The abnormality of climate once again sent us alarms that we cannot stand aside any more hoping that the global warming would disappear overnight. What done by human must be rectified by human! As early as the beginning of 20th century, there was scientist stating that the CO2 from the burning of coal or its derivatives would cause the atmosphere to become warmer, and after 100 years, finally we are paying for this. To combat against the global warming is more than just propagandas or placards, there are plenty of small changes in our lives that could contribute a tiny bit of GHG reduction. Don't overlook these "Nonsense" behaviors, since many a little makes a mickle. If you think there is yet a lot more you can do, why not install a solar power system??

OK now let's have a look at what happened in the solar power industry in the last month.

First, let's take a look at the supply chain.

• The silicon raw material has its price raised for the 28th time in this year. The Mono-grade Polysilicon has hit 303,800 RMB/kg as the average price, ranging from 298,000 to 310,000 RMB/kg. The raise in price is understandable since Sichuan and Xinjiang, where the major production capacity is located, suffered from the energy cut and COVID-19 respectively and the planned capacity went down by 8%. For the rest of Q3 it is expected that the price would, if not go up again, maintain its current level, while in Q4 we see the possibility of a slight drop in price.

• As a result, all types of silicon wafer keep the high price in August. The P type M6 was quoted from 6.25 to 6.28 RMB/pc, M10 from 7.51 to 7.54 and G12 from 9.9 to 9.93 RMB/pc. Anyway, the limited supply of both the silicon raw material and the imported supplementary material （such as refined quartz sand）and the ongoing expansion of capacity of wafer would finally squeeze the margin of the wafer and rebalance the margin distribution along the whole PV industrial chain. We see a probable price drop of wafer in Q4 this year.

• The cell prices maintain the current level, M10 PERC cell quoted 1.25 to 1.3 RMB/Wp and G12 from 1.23 to 1.28. As the raw material could have a slight price drop in Q4, so would the cells. Since the N type cell is still a new comer in the market that the price mecanism is yet to be formed, the HJT M6 cell is quoted 1.36 to 1.45 RMB/Wp and Topcon (M10/G12) cell quoted 1.3 to 1.37 RMB/Wp.

• As the last segment of the supply chain, the solar module's price is the most concerned and discussed topic in the industry. In August, the price of M10 PERC module is 1.97 to 2.07 RMB/Wp and G12 PERC from 1.96 to 2.06, which are relatively steady. However the high price has affected the financial feasibility of PV projects. Lots of projects have suspended or postponed the construction meanwhile the domestic demand in DG market shrank a lot.

Next, we go through what happened in the domestic market in China

• From January to July, a total of 37.73GW new capacity was connected in China, resulting a 110% YoY growth.

• In a document published by the Guangdong Financial Advisory Authority, the local government is accelerating to launch the industrial silicon futures, among other futures exchange such as the polysilicon, lithium, rare earth, platinum and palladium, altogether forming up the "Green Development" products. As the market is established, the pricing rights would be taken over by Chinese market, so to construct a healthier market.
• The Green Power Transaction market has been very active with a total transaction of 295.653 billion kWh completed during January to July this year and the Carbon Emission Rights Transaction market is yet to be stimulated.

News from the overseas markets

• In July, the total exportation of solar modules from China was 15.512GW, resulting a slight MoM growth of 1.8% and a huge YoY growth of 94%. As per the customs, the average contract was the same as last month. As for the major destination countries, Netherlands once again took the first place with 4.481GW, Brazil next with 1.739GW and Spain as the third with 1.184GW.
• Until the end of August, the freights of all the shipping line keep going down. From Asia to East US, the freight went down to USD9,085 with a MoM drop of 9.2%; from Asia to West US dropped to USD5,419 with a MoM 22.1% off↘; from Asia to Europe the freight now is USD9,979 with a slight MoM drop of 2.3% and from Asia to Mediterranean the freight quoted is USD10,235, which is the only shipping line above 10 thousand dollars however the MoM 14.9% drop is still very huge.

• In Germany, the government approved a special climate and transformation fund of 177.5 billion euros over the next 4 years, to accelerate the transition to a greener economy and relieve the dependence to Russia for energy supplies.
• The Spanish government announced that the 4th round of Renewable Energy Auction would be held in 22 November. The auction is planned for 1.8GW of PV and 1.5GW of Wind.
• The mayor of Copenhagen of Denmark announced that the city gives up its target to realize carbon neutrality by 2025 due to a failure by a plant in fulfilling the criteria for the CO2 extraction technology.
• In 16 Aug, the Biden Administration approved the Inflation Reduction Act 2022 (IRA), which totaled a 369 billion USD, aiming at expanding the investment to the RE and related industries. As part of the IRA, the Investment Tax Credit (ITC), Production Tax Credit (PTC) and the Solar Energy Manufacturing of America (SEMA) are the most important good news for the solar industry and market in the US.
• As per published by EIA, the US solar market did not complete even half of the planned new capacity in the 2022H1 due to, among other reasons, the commercial conflicts, high cost of labor and transportation.
• According to ANEEL of Brazil, in July the country had a newly added RE capacity of 514.63MW, in which the solar took 330.51MW.
• Information from the Ministry of Commerce of India revealed that the imported solar modules in Q2 to the country totaled an amount of 597.48 million USD, resulting a YoY drop of 22% and a MoM drop of 51%. The major reason of the drop is attributed to the BCD enacted in April. The Ministry of New & Renewable Energy (MNRE) has revised an Approved List of Models and Manufactures (ALMM) that only the enrolled product models from specific manufacturers could be purchased. This has provoked a sudden raise in the prices by 40%. Right now there are 66 companies in the ALMM and none of them is non-Indian company. As a Non-tariff trade barrier, the BCD or ALMM won't help construct a healthier market but only bring more burdens to the final customers.
• The Ministry of Industry and Trade (MoIT) of Vietnam has proposed to the Prime Minister of concluding the problem of the pending electricity prices for the RE plant CODed after DEC31,2020. If the mechanism by MoIT could be accepted, the price, which is the most important factor for all RE plants, could finally be settled down and the entangled assets in the projects could be relieved before going to further investment.