Review of 2022 and Forecast of 2023

Dear readers, 2022 is gone, leaving behind a year with challenges and opportunities. It is worthy to do a review on the past year while to have some outlook and expectations about what's going to happen in the brand new 2023. Let's begin!

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1. In the first part, let's go through the domestic market in China.

1.1. 65.71GW new PV capacity added during January to November 2022, expected to hit 80-90GW for the whole year.

As revealed by NEA in mid-December 2022, 65.71GW was commissioned in China during January to November. This number represents an 89% YoY growth over last year. Even the data of December is not published, we could have an estimation since the last month of every is usually a peak month that most projects must have its commissioning before the end of year to ensure the tariff price and incentive. We are expecting that there may be 15 to 25GW new capacity to be commissioned in December, which makes up a 80 to 90GW for the whole year of 2022.

1.2. DG takes on the Peak Regulation responsibility

In late December, an official notice published by the Provincial NRDC of Hebei asked that all the distributed generation users must sign a Peak Regulation Agreement, to follow the coordination by the State Grid in case of need during the special period of Spring Festival. The participation in the peak regulation implies that the PV generation may be curtailed for some period of time. It is not clear if this policy may extend to a wider coverage or whether other provinces may follow. In case of affirmative, that may impact the general income of the PV system owner in the situation of no load or no BESS equipped.

1.3. A total of 339GW of PV capacity approved by local governments in 2022, to be implemented gradually in 2 years' time

As per information collected from public sources, until 29 December, there were a total of 339GW of all kinds of PV projects approved by local governments in China. This sum of projects would be implemented by the respective owners in no later than 2 years of time, which become the firmest backbone for the Chinese market in terms of PV market growth.

1.4. 115 to 125GW new PV capacity expected to go online in China in 2023

In a context of possible price war and stable demand from approved PV projects, we are confident about the market size in China in 2023. In the whole year, there may be 115 to 125GW new PV capacity to go online, in which the ground-mounted projects would take around 59 to 65GW while DG takes the rest.

2. In the second part, we go thru the international markets

2.1. Trade barriers and supportive measures for local manufacturing became the theme of 2022

Since China has such power in the solar product manufacturing along all the sectors, many countries are trying to set up thresholds against products from China, believing that their own companies may be protected from the disadvantages when competing with Chinese brands. EU is now on the way to approve CBAM, trying to impose barriers in the name of carbon reduction; US has long been setting up trade barriers such like Section 201 and Section 301 while the latest story they are composing is the UFLPA; India, is simply imposing new tariffs over imported PV products under its BCD Act. We are not sure if unilateral trade barriers would work to protect the local companies, what we saw is that the mentioned markets have suffer from high price and the planned schedule for renewable energy implementation is much delayed.

On the other hand, incentive measures are published to boost the deployment of local production facilities and capacities, such as the Inflation Reduction Act (IRA) of the US, the Milestone Proposal by the ESMC of EU and the PLI Scheme by the Indian Government. So far, we are not sure if all these measures could result in a positive ending, but we do hope the construction of local manufacturing capability won’t produce side-effects in our way to a greener world.

2.2. The avalanche of international freights

Unlike the beginning of 2022 when ports are jammed by containers and everybody is looking for available container, just after one year, the containers are still jammed in the ports but the only difference is that they are no longer wanted. The energy crisis, high energy prices and low demand from consumers have created an avalanche of the freight. From Asia to US East, the freight is quoted at 2,898 USD, with 83.4% off over the beginning of the year; Asia to US West at 1,382 USD with 90.6% off; Asia to EU at 2,741 USD with 81% off and Asia to Mediterranean is quoted at 3,887 USD with 71.4% discounted. That is crazy, indeed!

2.3. Amid challenges of supply chain and prices, exportation of solar panels from China kept going up, slightly but steadily.

According to Gessey, the solar module exportation from China has hit 149GW from January to November, with a YoY growth of 60%. The total value of exportation is almost 40 billion of USD with a YoY growth of 78%.

2.4. General Prediction for Overseas Markets

We expect that at least 210GW would be added in 2023 outside Chinese market, which is a rather conservative prediction. This sum takes 66% of the total new PV capacity expected for 2023. We did such a prediction based on: 1. The prices will slide so that the hesitating developers and pending projects will undoubtedly proceed; 2. There was 128GW of Public Utility Projects planned for 2022 but a big part of them were delayed so they are very likely to be carried out in 2023; 3. The energy crisis and measures to mitigate its influence would support the deployment of renewable energy in those countries.

2.5. Outlook for EU market

Info from SPE showed that all 27 countries in EU region have added as much as 41.4GW new PV in 2022, with a YoY growth of almost 50%! The list was led by Germany, with 7.9GW newly added, Spain and Poland took second and third with 7.5GW and 4.9GW respectively. We are very confident that 2023 would be another booming year for EU in terms of the new PV deployment since the energy crisis continues and the region is so eager to take back the autonomy in the energy field. We are also very glad to see that governments of European countries have come up with measures to promote the PV installation such as the VAT cut in Netherlands, the incentive of wider range in Poland and the simplified application procedure for new PV projects. We believe that in 2023 there would be 53 to 68GW new PV added.

2.6. Outlook for America market

In 2022, US has suffered from the tense supply chain due to the trade barriers and the expected PV installation was far behind schedule. We believe the situation would be much improved since the southeast countries’ exempt from the tariff is extended. We see around 34.3GW new PV in US next year. As for Brazil, we think it’s the second biggest market in American region. the Brazilian Parliament has approved the extension of DG incentive for another half year so we believe the new DG PV installation in the country would be far beyond expectation. The predicted new PV in Brazil would be around 13.9GW.

2.7. Outlook for India & MENA market

As per a report by JMK Research, there was 11.2GW newly added PV in India, in which the public utility took 9.3GW and the rooftop DG 1.3GW. We believe India will continue to be the supporting pillar in the region, since the country, with so large population, has been seeking for the energy transition. The expected new PV in 2023 would be 18-20GW. On the other hand, the “Made in India” is accelerating its pace. The Adani Group has announced its foray into the upstream of the PV supply chain with the new 30,000 tons polysilicon production capacity declared. The company is planning to have a 2GW capacity of ingot and wafer by the end of 2023, and 10GW vertically integrated solar module capacity by 2025 in India. Waaree has announced its plan to expand the production in India, from 9GW to 12GW by March 2023.

2.8. Outlook for APAC market

3 major markets in the APAC region are Australia, Japan and Korea and each of them is going to have around 5GW new PV in 2023. What’s worthy mention is Australia. The country has elevated its target of carbon reduction from 35% to 43% while the government is also promoting the development of local supply chain.

3. In the last part, it is the supply chain

3.1. Shackle unchained and bottleneck alleviated, supply and demand may swap the position in 2023

It is predicted that the total new PV added in 2023 would be 320 to 370GW, with a YoY growth of about 39%. Such sum requires about 891,000 to 962,000 tons of polysilicon raw material. What we could see from news is that by the end of 2022 the raw material supply is reaching 1,17 million of tons while in 2023 there would be an additional of 1,3 million of tons released. It is very possible that in 2023 the supply and demand will swap their position, from undersupply to oversupply. As a consequence, the price along the supply chain will drop tremendously.

Predictions by PV Infolink reveal that the production of wafer, solar cell and solar module would reach 545GW, 415GW and 423GW respectively.

3.2. A map of silicon raw material production distribution in 2023

We have made up a distribution map of polysilicon raw material production capacity in China.

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OK, so much for the contents. We would like to thank you for your following our posts, we do hop a more prospective year for you in 2023!