Author: Brother Mao This article is reproduced under the authorization of Brother Mao’s Vision (ID: maogeshijue) on the official account.
In the ancient Roman Empire, when the army triumphed and faced a wave of cheers, a servant was arranged as usual to remind the commander:
Your Excellency, all of this is just a fleeting moment
However, when Shi Zhengrong rang the bell on the New York Stock Exchange, no one reminded him of this sentence.
On December 15, 2005, the godfather of China’s photovoltaic industry led his Wuxi Suntech to become the first photovoltaic enterprise in China to be listed on the US motherboard.
The stock price skyrocketed at the beginning, reaching $90 at one point.
This shining achievement also made Shi Zhengrong reach the top of the China Rich List in 2006, becoming the new richest person in China.
However, what Shi Zhengrong did not expect was that just 7 years later, the photovoltaic empire he had created would suddenly collapse.
The stock price fell from $90 to $1, and Shi Zhengrong quickly returned to zero from $2.3 billion.
The collapse of Wuxi Shangde is a microcosm of the collapse trend of China’s photovoltaic industry in that era.
In the wave that swept across China, over 90% of photovoltaic companies died, and the rest were only struggling to survive.
Ten years have passed, are Chinese photovoltaic companies still alive?
When we turned our attention to China’s photovoltaic industry, we were surprised to find that compared to our last high-profile appearance, this time China’s photovoltaic industry has grown into a silent giant.
The production and production capacity of photovoltaic products in China has reached 95% of the world! Becoming a world-class leader!
So, how did China’s photovoltaic industry survive from that dead end and counterattack the world?
one
The Age of the Wild
On February 10, 1963, a pair of twins were born to a farmer surnamed Chen in Jiangsu. However, the poor farmer had no money to support two boys, so they had to give the younger brother of the twins to a family surnamed Shi in the same village and named him Shi Zhengrong.
From then on, the fate of this boy was completely changed.
Shi Zhengrong was smart when he was young. When he finished high school, he just caught up with the resumption of the college entrance examination. He was admitted to the Changchun Institute of Optics and Fine Mechanics (now Changchun University of Science and Technology) with excellent results, and then went to graduate school in the Chinese Academy of Sciences.
In 1988, Shi Zhengrong was sent to study at the University of New South Wales in Australia under the guidance of Professor Martin Green.
Who is Martin Green?
Father of solar energy! Nobel laureates!
Under the guidance of Martin Green, Shi Zhengrong began to come into contact with solar cells and successfully developed the technology of polycrystalline silicon thin film solar cells, earning a doctoral degree.
Shi Zhengrong (left) and Martin Green (right)
However, unlike his mentor who only focuses on solar energy research and development for space stations and spacecraft, Shi Zhengrong firmly believes that renewable solar energy has broad market prospects and that solar technology should be commercialized and commercialized.
Unfortunately, the mentor did not recognize this and said, “How can you compete with BP
There are two underlying implications: firstly, the high cost of solar power generation, and secondly, solar power generation will shake the cake of existing energy companies.
But Shi Zhengrong, a young man who grew up in New China, clearly did not believe in evil and chose to return to China to start a business.
Under the leadership of Li Yanren, who was then the director of the Wuxi Municipal Economic Commission, in 2001, Wuxi Little Swan Group (yes, the Little Swan that makes washing machines), Shanhe Pharmaceutical, and Wuxi High tech Venture Capital contributed to the establishment of Wuxi Shangde Solar Power Co., Ltd., with Shi Zhengrong serving as the general manager.
In terms of the opportunities of the times, this project still has great prospects.
At the end of the 20th century and the beginning of the 21st century, there were still over 70 million people without electricity in northwest China. Among them, the population without electricity in Tibet is as high as 78%.
Due to their wide distribution and distance from the power grid, it would take 20 years to solve the power supply problem by extending the power grid.
In order to solve this problem, China has started implementing the “Bright Project”, which establishes thousands of independent power generation systems in the western region through solar energy and other power generation methods, solving the power consumption problems of over 700 rural areas in the western region.
You see, Shi Zhengrong has technology, Wuxi has capital, and the western region has a market. How do you think this is a profitable business.
But when solar energy was produced, it was found that it could not be sold at all because the solar panels of that era were too expensive to have the value of large-scale use.
The Wuxi government had to provide another 50 million yuan loan to Shi Zhengrong in order to help Shangde overcome the difficulties.
In this way, Shangde endured until 2004 before truly ushering in a turning point.
In 2003, the German government was fooled by the Green Party, and revised the Renewable energy law to eliminate coal power, develop new energy, and vigorously subsidize the photovoltaic industry.
How about subsidies?
The electricity price in Germany is 0.1 euros per kilowatt hour, but if you are willing to install photovoltaic power generation at home, besides using it yourself, the price for selling excess electricity to the power company is 0.5 euros per kilowatt hour!
Subsequently, many countries such as Switzerland and Spain also introduced policies similar to the photovoltaic industry, which led to an explosive demand for photovoltaic products in Germany and even throughout Europe, creating a huge market.
As long as you stand on the wind, even a pig can fly.
Shangde became the earliest to fly due to its early layout and good technology.
From 2002 to 2004, the output value of Suntech has been increasing at an average annual growth rate of 1000%, advancing rapidly like the speed of light.
Who could have imagined that a company founded in 2001 could go public in the United States in 2005 and become China’s richest person in one fell swoop?
That was really Shi Zhengrong’s golden age.
His huge promotional photo was erected at the entrance of Wuxi Expressway for everyone to learn, and the proud Shi Zhengrong left a famous quote:
From now on, I will never make a penny again, so I will spend money
As for people, they all believe in the myth of creating wealth. Countless people think that Shi Zhengrong can, but why can’t I?
Countless cities feel that Wuxi can, why can’t I?
So, like the nationwide real estate construction boom, photovoltaic construction has also begun in various regions, with a total of 18 provinces and over 100 cities establishing photovoltaic as a pillar industry.
Photovoltaic projects have started to be launched on a large scale, with those who used to buy cosmetics (Yingli Energy), those who worked in security (Jiangxi Saiwei), and even those who worked in pig farming all starting to make photovoltaic products, which can be regarded as a very typical “Chinese style” rush.
They may think that even a Little Swan who makes washing machines can use photovoltaic technology, so can I.
At its peak, over 200 photovoltaic companies emerged in Zhejiang province alone.
Many people wonder, is it so easy to build photovoltaics?
Don’t tell me, it’s really easy.
This starts with the photovoltaic industry chain. The photovoltaic industry chain is relatively complex and can be divided into four major links.
The first and most upstream link of the industrial chain is the manufacturing of solar crystalline silicon.
The main source is to refine the sand in nature (mainly quartz sand) to obtain high-purity silicon material through various physical and chemical means, and then convert the silicon material or pull rod into single crystal silicon rod, or cast ingot into polycrystalline silicon ingot.
Although quartz sand is very cheap, it is difficult to purify it to nine nines (second only to silicon ingots for chip making).
This process has a high technical threshold (especially for polycrystalline silicon) and a certain degree of monopoly, with the cost of silicon material accounting for the highest proportion of the total cost.
In 2010, the battery cost (including silicon) of a photovoltaic module accounted for 91% of the total cost.
The second step is silicon wafer production.
The main technical processes in this stage include ingot casting (or single crystal growth), square rolling, and chemical corrosion polishing.
There are also high technical requirements for cutting, not using an electric saw, but using very precise instruments to cut silicon ingots into thin sheets with a thickness of only 170-180 microns, which is a great test of technology.
The third step is to etch some electronic components, circuits, etc. onto the silicon wafer mentioned above, and add other physical and chemical processing processes to make a photovoltaic cell.
The fourth step is encapsulation.
Due to the weak power generated by a single battery, an appropriate amount of photovoltaic cells are connected in series or parallel to form a battery pack and packaged together.
The technological content of this area is relatively not that high, and it is more of a labor-intensive industry.
At that time, Chinese photovoltaic enterprises were uncertain about the first and second stages, and almost all of them focused on the fourth part of the photovoltaic industry chain mentioned above, which was simply an assembly plant.
First, we obtain the order, then import raw materials and accessories, assemble the finished product, and sell it to the customer, which means earning a hard money.
Essentially, there is no difference between the textile industry and the garment industry in the early stages of reform and opening up, as long as there are people involved.
At the most exaggerated moment, an ordinary migrant worker could assemble the world’s leading photovoltaic solar panels with an electric soldering iron after a week of training!
Magic or not?
With China’s unique human resources advantage, China’s photovoltaic industry has quickly occupied over 50% of the world’s market in just 5 years, replicating one “Shi Zhengrong style myth” after another!
Miao Liansheng, who came from selling cosmetics, became the richest person in Hebei with Yingli Energy, while Peng Xiaofeng, who started with security products, became the richest person in Jiangxi with Jiangxi Saiwei.
There are also 10 photovoltaic companies listed overseas, such as Trina Solar, Longji, and Jingke, creating one wealth myth after another and stimulating more people to join this track.
At this moment, no one realizes that a crisis is quietly approaching.
two
Defects and crises
The five years before 2010 were the golden years of China’s photovoltaic industry, but in reality, this golden light was only emitted by the gilded layer.
The reason is simple. There are three defects in Chinese photovoltaic technology: the three heads are external.
Simply put, it means that raw materials, technology, and markets are heavily dependent on foreign countries, with 90% of raw materials relying on imports, 90% of core technologies not in hand, and 90% of products exported to Europe and America.
First, let’s take a look at the raw materials.
The raw material is polycrystalline silicon, which is not complicated to put it bluntly, but production is not that easy.
Due to the backwardness of domestic polycrystalline silicon production, high energy consumption, and no advantage in price, in 2006, the national demand was 5000 tons, and the actual production was less than 300 tons, with the vast majority relying on imports.
But we have all heard one sentence:
Chinese people buy what is expensive and sell what is cheap.
The rapid development of China’s photovoltaic industry has clearly attracted the attention of international capital giants and become a target for hunting.
Due to the lack of advanced technology for polysilicon production in China, international capital has driven the prices of polysilicon raw materials to soar.
In less than three years, the price of polycrystalline silicon raw materials has increased from $40 per kilogram to $500 per kilogram!
Don’t be too expensive, don’t bargain!
You don’t want it, other photovoltaic companies in China are still begging me for it!
As a result, the profits generated by labor-intensive industries in China’s photovoltaic industry were easily taken away by foreign suppliers thousands of miles away.
The gross profit margin of China’s photovoltaic industry has suddenly dropped from 40% in 2006 to 10%.
In order to kill competitors and worry about continued cost increases, domestic photovoltaic companies have started to compete for channels and supply.
Little did they know that they had caught a big thunder.
For example, Shi Zhengrong at the time judged that the growth of the photovoltaic industry would continue, and the price of polycrystalline silicon would only increase without decreasing. Therefore, it was necessary to lock in polycrystalline silicon production capacity in order to remain invincible in fierce competition.
So in 2006, Shi Zhengrong asked Nabil Gariba, CEO of MEMC, the leader of polysilicon manufacturing in the United States, to grind hard, and finally persuaded him to sign a 10-year long-term supply agreement with Wuxi Suntech at the price of 100 dollars/kg.
In 2007, Suntech signed a $678 million polysilicon supply contract with HoKu in the United States.
However, what Shi Zhengrong did not expect was that he would pay a huge price for his judgment.
The second is technology.
Under the stimulation of high polycrystalline silicon prices, is it not that no one has thought about whether to domesticate polycrystalline silicon and reduce dependence on foreign countries?
There’s nothing wrong with thinking this way. The direction is right, but the path is wrong.
Originally, we should have developed our own polycrystalline silicon technology and ultimately achieved industrial independence, but unexpectedly, photovoltaic private enterprises felt that instead of investing heavily in technology, it would be better to make the money in front of us first.
The vast majority of manufacturers are engaged in introducing Western production lines and manufacturing polycrystalline silicon to make quick money. Regardless of whether these production lines are outdated or about to be phased out, they can make money by bringing them to China.
So, China’s polycrystalline silicon projects began to bloom everywhere.
As of 2008, there were over a hundred domestic polycrystalline silicon enterprises, with a production capacity of only 60 tons in 2005, only 287 tons in 2006, and 1156 tons in 2007. However, in 2008, it soared to over 4000 tons!
However, due to the fact that technology is in the hands of Western countries, some production processes and methods with high energy consumption and pollution levels are being transferred.
As a result, China’s production of polycrystalline silicon does not have an advantage in terms of technology and cost, averaging around $70 per kilogram.
The cost for enterprises that have not achieved large-scale production and have not adopted closed-loop production is around $100.
The average cost per kilogram for large foreign factories is around $30.
For example, the former photovoltaic king of Hebei, Miao Liansheng, spent 12 billion yuan on the “69 Silicon Industry” project in 2008, claiming that the cost per kilogram can be reduced to $22.
But after production, the cost can reach as high as $60 to $70 per kilogram, and the equipment is constantly in good condition, with a maximum output of dozens of tons per quarter.
But this did not scare the already brainy bosses, who felt:
The price of polycrystalline silicon is so high now, even if I sell it for $200 to $400, I can still make a profit
In addition to the lack of upstream technology, equipment such as polysilicon pouring furnaces and wire cutting machines also rely on imports from Europe, America, Japan, and South Korea.
Taking the component end equipment string welding machine as an example, in that wild era, all the string welding machines purchased by China’s photovoltaic factories were from German TT, Somont, American Kumace, and others.
Foreign equipment manufacturers occupy the absolute market share of the domestic solar cell string welding equipment industry, resulting in the abnormal development of China’s photovoltaic industry, which is both strong and weak.
Do you want to introduce advanced technology?
Sorry, that’s a goose from Western countries that lays golden eggs. How could it be given to you?
The third is the market.
Although China’s photovoltaic products were equally popular, in fact, China’s photovoltaic installed capacity at that time only accounted for about 0.73% of the global market.
The output is about 80 times the installed capacity, and its profitability relies on the international market for over 90%.
For example, from 2004 to 2007, Spain’s solar photovoltaic installed capacity surged from 100 kilowatts to 10 megawatts, an increase of nearly 100 times in three years.
This has also driven the rapid development of the entire Chinese photovoltaic industry.
In 2001, China’s photovoltaic cell production was only 3 megawatts, but by 2007 it had reached 2600 megawatts, almost half of the global production that year, and even accounted for 70% of the market share in Europe.
However, this heavily reliant business model on the international market poses enormous risks.
Any ebb can expose the buttocks of Chinese photovoltaic companies.
No one has seen this, countless industry scholars and economists have warned of this risk, but bosses are immersed in making money and cannot extricate themselves. How can they listen?
Until that day arrives.
In 2008, the financial crisis broke out, followed by the outbreak of the European debt crisis, and the government ran out of surplus money, lowering photovoltaic subsidies one after another.
For example, in Germany, subsidies for rooftop photovoltaic systems and the removal of farmland farm facilities will be reduced by 13%, subsidies for conversion areas will be reduced by 8%, and subsidies for other areas will be reduced by 12%.
The originally set target for solar power generation by 2020 has been lowered by up to 90%
Subsequently, Spain imposed a subsidy ceiling of 500 megawatts (MW), leading to a significant contraction in the market.
The house leaks and it rains continuously at night.
Amidst the silence of the photovoltaic industry, in order to kill Chinese photovoltaic companies and survive, photovoltaic companies in the United States, the European Union, and South Korea have begun to sue China for dumping solar panels at prices below cost in the global market, violating international trade laws and restricting the export of Chinese photovoltaic products.
On December 2, 2011, the United States Department of Commerce launched an “anti-dumping and countervailing” investigation against Chinese photovoltaic products.
Subsequently, Europe also officially launched a countervailing investigation against China’s photovoltaic products.
This is the famous “double reflection” in the history of photovoltaics.
Under the dual anti tax situation, Chinese photovoltaic enterprises exporting goods will be subject to a high double anti tax of 23% -254%!
For Chinese photovoltaic companies that rely on overseas markets, the blow is almost fatal.
In 2013, the export value of Chinese photovoltaic products to the United States decreased by nearly 50%, and the export value to Europe decreased by 71%.
In addition, due to previous blind expansion, the photovoltaic industry has suffered almost all losses, falling into a vortex of “overcapacity”.
When there is overcapacity and the market shrinks, prices will naturally fall.
The price of polycrystalline silicon has plummeted from $500 per kilogram to $25!
What about China’s polycrystalline silicon enterprises with a production capacity of tens of thousands of tons?
We can only close the door and go bankrupt.
But don’t forget, Wuxi Suntech also has a long-term agreement with American polysilicon company MEMC!
One hundred dollars per kilogram!
In other words, the market value is $25, and Wuxi Suntech will import polysilicon from the United States at the price of $100 per kilogram according to the contract!
$75 per kilogram!
Even if Shang De had money, he couldn’t withstand such turmoil!
We had to find a way to breach the contract, and after two years of negotiations, we finally terminated the contract with MEMC, but paid a penalty of $212 million.
Taking into account the losses of previously imported high priced raw materials, semi-finished products, and finished products, after this battle, Shangde suffered a lot.
Two years later, the stock price of Suntech, which was once over $90, fell below $1 and was forced to go bankrupt for restructuring.
This is the tragedy of Suntech and a microcosm of contemporary Chinese photovoltaic companies.
More than 350 Chinese photovoltaic companies have closed down during the same period, and even the once top 10 Chinese photovoltaic companies cannot escape disaster.
In May 2013, Suihua Baoli Photovoltaics was seized by the court.
In October 2014, Jiangxi Saiwei filed for bankruptcy protection in the United States.
In October 2015, Yingli defaulted on its debt
three
Reorganizing Rivers and Mountains
If it were a free capital market, I am afraid that after this battle, China’s photovoltaic industry may no longer have the power to recover.
Fortunately, China has many advantages that countries do not have – national guidance and regulation.
In a market economy, it was normal for companies to live and die, but these photovoltaic companies in China are associated with millions of job opportunities, billions of dollars in capital, and the possibility of China seizing the commanding heights of future energy.
We cannot ignore it. We can eliminate outdated production capacity through market means, but we cannot kill it with one blow.
So the country has used four great tricks to help China’s photovoltaic industry come back to life.
The first move is to renew one’s life.
In order to solve the funding chain problem of photovoltaic enterprises, several major banks in China formed a consortium and provided a credit limit of $47 billion for photovoltaic enterprises.
Helping China’s photovoltaic industry overcome the darkest moments and preserving the spark of technology.
However, relying solely on money can only cure the symptoms, not the root cause.
The biggest problem with China’s photovoltaic industry is that the domestic market is too small to form a positive profit development cycle.
So we need to find ways to expand the domestic market, after all, the market with a population of 1.4 billion is not a joke.
In 2009, the Ministry of Finance, the Ministry of Science and Technology, and the National Energy Administration jointly issued a notice on the implementation of the Golden Sun Demonstration Project, with an expected investment of 10 billion yuan to help the photovoltaic industry connect to the grid through financial subsidies.
This work is not actually aimed at photovoltaic enterprises, but rather an independent photovoltaic project in remote areas without electricity.
It is mainly aimed at providing electricity to people in remote areas, greatly improving the living and production conditions of local people, and is part of China’s poverty alleviation plan.
However, in the past, photovoltaic prices were artificially high and cannot be used domestically. Now that photovoltaic prices have fallen, we have taken the opportunity to implement the plan, and by the way, we can save a group of photovoltaic enterprises.
This investment subsidy ratio is quite huge. For photovoltaic power generation projects, a subsidy of 50% of the total investment will be given, while for independent photovoltaic systems in remote areas, a subsidy of 70% will be given!
It is through these subsidies that Chinese photovoltaic companies have weathered the darkest moments.
But surviving is not enough, we still need to develop.
In July 2013, the State Council issued several opinions on promoting the healthy development of the photovoltaic industry.
Propose measures to promote the healthy development of the photovoltaic industry from multiple levels, including pricing, financial subsidies, taxation, project management, and grid connection management.
In particular, it is proposed to shift the development focus of the photovoltaic industry to expanding the domestic market and improving technological level, and increase the target for photovoltaic installation by 66% in the next two years. At the same time, it is encouraged that photovoltaic enterprises gather in resource advantageous areas in the central and western regions.
In August of the same year, the National Development and Reform Commission issued a notice on leveraging prices to promote the healthy development of the photovoltaic industry in accordance with the requirements of the State Council documents.
Further improving the pricing policy for photovoltaic power generation projects, three types of resource zone benchmark grid electricity prices (0.9 yuan/kWh, 0.98 yuan/kWh, and 1 yuan/kWh) and distributed photovoltaic electricity subsidy standards (0.42 yuan/kWh) have been established, and subsidy funds have been allocated to power grid enterprises on a quarterly basis, and subsidy distribution mechanisms have been established for power grid enterprises on a monthly basis.
The introduction of “electricity price subsidies” means that China’s photovoltaic industry has entered an era of domestic market based electricity subsidy, triggering a wave of investment in domestic photovoltaic power generation.
In the following two years, a large number of photovoltaic enterprises that suffered setbacks in the overseas market flooded into the western region, and various photovoltaic power stations emerged. The industry chain that suffered severe losses from both sides was also repaired to some extent.
From then on, China’s photovoltaic installation scale began to enter the fast lane of doubling.
In 2013, the newly added installed capacity exceeded 10 million kilowatts for the first time, surpassing the total of new installed capacity in the previous five years.
As of the end of 2015, China’s cumulative installed capacity of photovoltaics was 43.18 million kilowatts, surpassing Germany and ranking first in the world. Since then, it has stood out and continued to lead the world.
Of course, there must be some fraudulent subsidies involved, that’s okay. At first, some people also cheated on new energy vehicles, but later, through policy adjustments, low-quality enterprises were gradually eliminated, leaving behind already strong ones.
The second move is to counterattack the market and force technological upgrades.
Subsidies alone are obviously not enough, otherwise in a situation where high-quality polycrystalline silicon relies on imports, investing too much money will result in Western countries reaping most of the profits.
It should be noted that although China’s polysilicon production capacity skyrocketed during the period of blind expansion, due to many companies blindly starting production, the quality of their products may not necessarily meet industry standards, and they still need to import a large amount of high-quality foreign polysilicon.
So this still cannot break the cycle of low-end photovoltaic assembly in China, and it must be changed.
The opportunity has come in 2014.
The United States has made a ruling on China’s double anti-dumping investigation, stating that China has engaged in significant dumping and subsidy practices, and has begun a second double anti-dumping investigation.
China has also responded promptly to this: prohibiting the import of polycrystalline silicon through processing trade!
So what should domestic photovoltaic companies do if they cut off their raw materials?
Then you can find a way to upgrade your technology!
Don’t always think about expanding production capacity to earn more money, do you also need to find ways to upgrade your technology?
Under this forced strategy, Chinese photovoltaic companies are forced to invest in research and development, highlighting two technology trees.
The first is granular silicon.
In the production of polycrystalline silicon, there have always been two technical routes, rod-shaped silicon and granular silicon.
The rod-shaped silicon is produced using the current mainstream production process improved Siemens method, while the granular silicon is produced using the silane fluidized bed process.
In 2006, REC Silicon and MEMC Electronic Materials had already applied fluidized bed reactor (FBR) technology and produced granular polycrystalline silicon in Lake Morey, Washington, USA and Pasadena, Texas.
It quickly attracted worldwide attention due to its low cost, low energy consumption, and low pollution.
At that time, Chinese photovoltaic company Poly GCL also noticed this technology.
But when Zhu Gongshan, the boss of GCL, took the opportunity to buy silicon materials and wanted to visit the production workshop, he was rejected.
After being shut down, Zhu Gongshan became even more determined in his heart:
We not only need to produce China’s own granular polycrystalline silicon, but also need to achieve a production capacity of 10000 tons!
In China, Zhu Gongshan heard that the technical engineering team of Hualu Engineering Technology Co., Ltd. had broken through the cold hydrogenation process, so he invested HKD 26.35 billion to acquire all equity and began large-scale production.
So in 2013, when other photovoltaic companies were struggling under the dual strike, only Poly GCL, relying on its advantages in granular silicon, defeated the then world giant German company Wacker.
With a global market share of 1/4, GCL has become one of the top three polysilicon suppliers globally, ranking first in the world with an annual production capacity of 70000 tons. The second and third places are Germany’s Walker’s 60000 tons and Korea’s OCI’s 50000 tons, respectively.
Recently, GCL has focused more on granular silicon and proposed to completely stop producing rod-shaped silicon by the end of 2023, transferring limited production capacity to high gross profit granular silicon.
The second is monocrystalline silicon.
The difference between monocrystalline silicon and polycrystalline silicon is significant.
Silicon material can be melted into ingots or sliced into polycrystalline silicon wafers or monocrystalline silicon wafers, respectively.
In comparison, monocrystalline silicon solar cells have higher conversion efficiency, but the manufacturing process is complex and the cost is higher. Polycrystalline silicon chips have lower manufacturing costs and relatively low photoelectric conversion efficiency.
Monocrystalline silicon is technically superior to polycrystalline silicon, but “expensive” has become the biggest stumbling block on the development path of monocrystalline silicon.
So for a long time, the vast majority of Chinese photovoltaic companies have chosen the polycrystalline silicon route with lower technological barriers and lower costs.
In 2014, even the technical director of Poly GCL admitted that “monocrystalline silicon does indeed have a better future in terms of efficiency”, but the future is “the future” after all.
The implication is that the practical application of monocrystalline silicon will take a long time.
However, in 2015, the National Energy Administration, the Ministry of Industry and Information Technology, and the National Certification and Accreditation Supervision Commission jointly issued an opinion on promoting the application and industrial upgrading of advanced photovoltaic technology products:
Announce the implementation of the ‘Leader’ program.
The most crucial aspect of the “Leader” plan is to clarify the photoelectric conversion efficiency as the admission standard.
If the coefficient of multiplying component efficiency by 1.1 is the corresponding relationship between battery cell efficiency, the “Leader” plan suggests that the efficiency of polycrystalline battery cells should be around 18.15%.
At that time, the efficiency of mainstream polycrystalline battery cells was 17.8%, which means that China’s mainstream polycrystalline silicon products could not meet the threshold of the “leader” plan.
At this point, monocrystalline silicon with higher conversion efficiency faces development opportunities.
At this point, a Chinese photovoltaic enterprise has already made an advance layout.
As early as 2006, Chinese photovoltaic company Longji, after researching all photovoltaic technology methods, determined that the pushy polycrystalline silicon would inevitably fail and decided to set its development direction as a monocrystalline silicon route with higher conversion efficiency and greater room for cost reduction.
Therefore, from its listing in 2012 to 2021, Longji has invested a total of 12.358 billion yuan in research and development, achieving a series of technological breakthroughs.
In 2014, Longji took the lead in overcoming the industrialization problem of RCZ single crystal growth technology, increasing the output of silicon rods from the original 60 kilograms per crucible to over 1500 kilograms per crucible.
This has quickly narrowed the huge cost gap between single crystals and polycrystals, saving approximately 13.6 billion yuan in costs for China’s photovoltaic industry in 2020 alone.
A decade ago, the price of a single crystal silicon chip was about 100 yuan per chip, but now it’s only over 3 pieces.
You can flip through Taobao and find that an A4 sized solar panel costs only a dozen yuan.
Then Longji began to commercialize the application of high-efficiency PERC battery technology on a large scale, achieving an astonishing 24.06% conversion efficiency for PERC batteries!
Breaking through the industry’s previously believed efficiency bottleneck of 24% for PERC batteries.
After 16 years of technology and production capacity layout, Longji Green Energy’s market share of single crystal silicon wafers and components has steadily ranked first in the world.
GCL and Longji are just a microcosm of China’s photovoltaic companies climbing the technological peak.
Nowadays, Chinese photovoltaic companies have broken through the diamond wire cutting technology that has been monopolized by Japanese manufacturers for many years.
For every 10um decrease in diamond wire diameter, the cost of single chip silicon decreases by about 0.15 yuan, the production capacity increases by about 4%, and the cutting speed of silicon wafers increases by 300%, saving the industry over 30 billion yuan in costs annually.
There are also 210 large silicon wafers launched by China, which have led the trend of large-sized and thinned industries and once again reshaped the industry landscape.
As the efficiency of P-type batteries approaches its limit, Chinese photovoltaic companies are actively deploying N-type batteries such as TOPCon and HJT with greater efficiency potential.
China has also broken the monopoly of foreign enterprises in production equipment, as well as raw materials.
From the production of silicon materials, processing of silicon wafers, production of battery cells and components, to testing equipment and simulators related to the photovoltaic industry chain, China has a complete supply capacity.
Currently, 95% of the string welding machines in the new production lines in the Chinese market have become domestically produced equipment.
Former industry leaders such as Komax from the United States, NPC from Japan, and Toyama have withdrawn from the string welding machine market due to high product prices.
The third is to use end push.
The production side has solved the problem, but the user side still faces many problems.
Photovoltaic power generation is not a mineral like coal and oil, but a low-density energy source that requires sufficient installation space.
So the question arises, if we vigorously develop solar energy, where should we find suitable installation space?
Why is the photovoltaic market large in Europe and America?
Because their houses are mainly single family, residents use the roof or idle gardens to install photovoltaic modules, generate electricity and use them locally, and the remaining space is connected to the internet nearby for neighbors to use.
This greatly reduces the pressure on the power grid and the problem of losses in power transmission.
But what about China?
There are residential buildings like pigeon cages in the city, where is there a place to install photovoltaic panels?
There are places in rural areas, but how can farmers afford to install them?
So China is facing an awkward situation where urban people have no place and rural people have no money, so it is not possible to develop distributed power stations, only centralized power stations.
The large-scale photovoltaic power stations in Qinghai, Ningxia, and Xinjiang, which cover hundreds of acres of land, belong to the 2B mode and mainly sell power generation to the power grid.
However, this approach limits the installation of photovoltaic systems in sparsely populated areas in the northwest, while the 10 billion square meters of roofs and vertical surfaces that can receive sufficient sunlight in rural areas in the east can only be abandoned.
If these areas are all developed and utilized, it is expected to generate 2 trillion kilowatt hours of electricity annually, approximately 28% of the current total annual electricity generation.
In response, local governments have issued relevant policies to support the construction of photovoltaic power stations, bringing spring to distributed photovoltaics.
For example, in the “Several Measures for Vigorously Promoting Distributed Photovoltaic Power Generation in Shenzhen” issued by the Shenzhen Development and Reform Commission, it is explicitly stated that:
Fully utilize the roofs, facades, or other suitable sites of industrial parks, enterprise factories, logistics and warehousing bases, public buildings, transportation facilities, and residential buildings, and actively carry out the construction of photovoltaic projects in accordance with the principle of “building as much as possible”.
In this way, not only can the problem of photovoltaic layout space be solved, but also the problem of electricity consumption for farmers’ production and daily life can be solved.
The inexhaustible electricity can still be transmitted to the power grid, and the money sold can also solve the problem of increasing farmers’ income, making it one of the key channels for poverty alleviation in China.
Since 2015, the cumulative installed capacity of distributed photovoltaic power generation has been increasing year by year.
In 2019, among the newly added 30.1GW of photovoltaic installed capacity, centralized 17.9GW and distributed 12.2GW were added.
Distributed photovoltaic accounts for 40% of the newly added installed capacity, which is gradually increasing.
The fourth is to cut off, supplement, and force.
Chinese companies always have a problem, crying and crying when they can’t survive, but once they survive, they start to fall into a comfortable zone and are unwilling to make progress, and some companies even deceive and compensate directly.
For example, during the Golden Sun Project, the initial installation subsidy was implemented, rather than the current subsidy for electricity generation.
Some companies even print blue A4 paper in order to deceive and compensate, then seal it with glass, disguise it as a component, and take the money after installation.
This kind of gameplay is just like creating “fake cars” to deceive new energy vehicle subsidies at the beginning.
The country is well aware that from the photovoltaic crisis in 2010 to 2018, Chinese photovoltaic enterprises have breathed a sigh of relief and have also grown and grown.
But this growth still belongs to the state feeding enterprises. If national policies are cancelled and subsidies decline, can these enterprises survive?
So on May 31, 2018, the National Development and Reform Commission, the Ministry of Finance, and the National Energy Administration jointly issued a notice on matters related to photovoltaic power generation in 2018.
The new policy has released an important change:
The photovoltaic grid electricity price will be further reduced, and the subsidy for electricity consumption will be further tightened.
Ultimately, zero subsidies will be achieved after 2021, allowing photovoltaic power to compete freely with other forms of power generation such as thermal power and wind power.
This is both a shocking “531 New Deal” in the industry.
It’s like a child finally growing up, not always being protected by their parents, but learning to face the ups and downs of life independently, so that they can truly grow.
The implementation of a new policy has led to a new round of reshuffle among Chinese photovoltaic enterprises in their decision-making process.
Faced with the New Deal, some are happy while others are worried. Those companies that lack core technology, have high costs, only want to make quick money, and even rely on government subsidies to survive can only leave.
This indirectly allows giants with core technology and cost advantages to gain more market share.
The effectiveness of the 531 New Deal goes without saying, let’s take a look at the achievements of China’s photovoltaic industry today, and it can explain everything.
As of the end of 2022, China’s installed capacity of photovoltaic wind power has exceeded 700 million kilowatts, ranking first in the world for 10 consecutive years.
As of the end of 2022, the grid connected installed capacity of photovoltaic power generation has reached 390 million kilowatts, ranking first in the world for 8 consecutive years.
Distributed photovoltaics have reached 107.5 million kilowatts, exceeding 100 million kilowatts, accounting for about a quarter of the total grid connected installed capacity of photovoltaic power generation.
Among the newly added distributed PV, household PV has reached about 20 million kilowatts, which has become an important force for China to achieve the goal of carbon peaking and carbon neutrality as scheduled and implement the rural revitalization strategy.
The huge domestic installed capacity has brought not only the market but also unparalleled competitive advantages to Chinese photovoltaic enterprises.
In economics, there is a term called economies of scale, also known as “scale profit”, which refers to the fact that within a certain range of output, the average cost continuously decreases as the output increases.
For example:
A chef stirs a small fry for 10 yuan, and the average cost at this time is 10 yuan.
But if the chef stirs a large pot of rice and sells 10 servings, the average cost at this time is only 1 yuan.
So, the advantage of economies of scale is that as production capacity increases, the long-term average cost will be reduced.
Photovoltaics is a great example of economies of scale.
China has a large enough market, and in the massive production of photovoltaic products, costs continue to decrease with production volume;
In addition, China’s low labor costs and a sufficiently sized industrial system can leverage its scale advantage to minimize costs.
No matter how hard foreign enterprises try, they cannot compete.
This is the underlying logic behind why China can win in the photovoltaic and new energy strategic industries;
It is also a manifestation of China’s institutional advantages and an important logic of dual circulation in the next 15 years.
So after China’s photovoltaic industry once again shifted its focus from the domestic market to overseas, it was surprising to find that no enterprise could compete with China’s photovoltaic industry in terms of cost!
Nowadays, with the expiration and cancellation of the EU’s “double anti” and minimum price limit (MIP) measures against Chinese photovoltaics, Chinese photovoltaics are beginning to take a big hit in the European market.
At this time, China’s photovoltaic industry is no longer the three headed processing plant that can only earn some hard money, but covers the industrial giants in the upstream, middle, and downstream of photovoltaic.
By 2020, the global production of polycrystalline silicon by Chinese photovoltaic companies had reached 78%, and 7 of the top 10 polycrystalline silicon manufacturers in the world were from China.
The global production of silicon wafers accounts for 97%, the global production of battery cells accounts for 85%, the global production of components accounts for 71%, and the global production of adhesive films accounts for 85%.
Photovoltaic inverters also account for 70% of the market share.
For the US market, Chinese photovoltaic companies also have solutions.
By establishing factories in Southeast Asian countries, the ban was successfully avoided.
Today, 80% of the photovoltaic modules imported from the United States come from Chinese companies’ factories in Southeast Asia.
Do you now know why the United States banned Xinjiang goods on the grounds of so-called “forced labor” in Xinjiang?
Do you think it’s just for cotton?
The real goal is to crack down on Xinjiang’s photovoltaic products, which account for one-third of China’s production capacity.
This is the story of China’s photovoltaic rebirth.
Like many industries, starting from the low end, there have been cases of crowdsourcing and speculative subsidies, but in the end, China’s photovoltaic industry broke through.
He played a bad hand as Rocket, and now he has become the world leader.
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In 1979, US President Carter held a “rooftop press conference” at the White House.
The display is also very simple, in fact, it is a hot water system composed of 32 solar panels, which can burn hot water for the White House restaurants and laundry.
If this thing is placed in China, I’m afraid a farmer’s rooftop solar panel is larger than that of the White House.
But in that era, Carter raised its significance to the level of “creation”, called it “the greatest and most exciting part of the adventure in the history of the United States”, and emphasized that this is the foundation for the United States to deal with the global energy crisis.
It is interesting that the confidence of the United States was once taken down by subsequent presidents, while photovoltaic technology has now become China’s confidence.
China is poor in oil and gas, and has a high dependence on overseas energy, which has become an important factor affecting national security.
The dilemma of Malacca is even more like a sword of Damocles hanging over the heads of Chinese people, which will be chopped down at an unknown time.
For this reason, China has paid a huge price by developing the China Pakistan Economic Corridor, Gwadar Port, China Kyrgyzstan Ukraine Railway, China Russia Pipeline, and so on, in order to achieve energy security.
However, these still depend on people.
The only thing that is not constrained by the outside world is China’s photovoltaic industry.
At present, China has started planning to build 450 million kilowatt large-scale wind and photovoltaic bases in desert, Gobi, and desert areas, which is equivalent to the power generation of the three Three Gorges.
It is expected that by 2050, photovoltaic will replace coal-fired power and become the second largest clean energy source in China.
With this confidence, China can respond to the Western carbon reduction conspiracy.
Once upon a time, Western countries wanted to use carbon emissions as a weapon to lock in China’s development.
But to my surprise, isn’t it just playing with green energy?
China is not only willing to accompany, but can rely on its strong manufacturing industry to bring the banner of Western countries over for its own use.
Looking at the new energy vehicles and photovoltaics in China now, I wonder if Western countries want to lift the table?
With photovoltaic technology, China can become a pioneer in global climate cooperation between China and the United States, cracking down on American scoundrels and even pushing Chinese standards to the world.
This is the foundation for participating in global climate governance.
More importantly, photovoltaic, as a future energy source, will also become a pioneer for China to expand its overseas interests.
Saudi Arabia, Iran, North Africa, and the desert plateau areas of South America will all be ideal battlefields for China’s photovoltaic power plants.
China’s unique ultra-high voltage transmission will become one of the cornerstones of the strategy of exporting electricity to the sea.
Now, Chinese photovoltaics light up China. So in the future, China’s photovoltaic industry will surely light up the entire community with a shared future for mankind.
Looking back at China’s photovoltaic industry, perhaps we should truly thank the pair of invisible hands that caught us when we fell into the abyss.
Big hands not only save lives, but also guide the industry towards success like a god.
Similar success not only exists in photovoltaics, but also in new energy vehicles, solid-state drives, home appliances, display screens, shield tunneling machines, and so on.
With the tenacity of ‘success does not necessarily depend on me’, after more than ten or twenty years, we have completed an industrial counterattack.
China has a population market of 1.4 billion, a wise and strong central government, intelligent, capable, and hardworking people. As long as we follow the correct path, there are no industries that cannot be countered.
Photovoltaics are like this, cars are like this, and the future chip industry is also like this.
When China truly reaches the peak of high-end manufacturing, when all industries can earn high profits, and the great rejuvenation of the Chinese nation is no longer a slogan, but a necessity.
The waves wash away the heroes, and whether it is success or failure turns to emptiness.
The green mountains are still there, and the sunset is red several times.
This article is reproduced with the authorization of official account Maoge’s Vision (ID: maogeshijue).