From the value chain of photovoltaic industry, we can analyze whether PV industry in China has investment value.

What are the links in the photovoltaic industry chain? It includes polycrystalline silicon material, silicon rod and silicon wafer, solar cells, solar module, and PV power station.

Silicon Material

For silicon material, its technology is very stable in recent ten years, but the maturity of new technology is low, so it is difficult to industrialize. The equipment for silicon material production has been made in China. For the use of the equipment, the loss is greater than that of continuous production, and the requirement of quantity guarantee is higher. Because of these reasons, the gross profit rate of silicon material enterprises has decreased from 31% in 2018 to 18%, and this year it has become 15%.

From the perspective of cost reduction, the largest share of the cost of silicon materials is electricity charges, which means that the construction of production capacity in low electricity price areas can reduce the cost, but the space for reduction is limited.

Silicon Wafer

In terms of technological change, we will try to promote large-scale technology in 2019. Its production equipment has also completed localization, and it is not necessary to continue production. Because of technological change, its gross profit rate has increased from 17% in 2018 to 31%.

For silicon wafer, it has two ways to reduce the cost, one is to reduce the cost itself, the other is to help lower the cost from downstream. There are two ways to reduce the cost, the continuous drawing method to improve the efficiency and the thinning thickness to increase the output. As for reducing the cost of downstream, we can dilute the cost of non-silicon by large-size silicon wafer. So, there is room for silicon chip to continue to reduce the cost, and new technology can further reduce the cost of kilowatt hour power.

Solar Cell

In the aspect of solar cell, there will be a technology change in 3-5 years. At present, the mainstream is single crystal high-efficiency PERC, while the new technology with potential advantages but not yet mainstream is TOPCON / HIT / IBC. In terms of production equipment, HIT / IBC has not yet completed the localization of equipment, that is, it still relies on overseas equipment for Chinese manufacturers. The equipment must be continuously produced. Its gross profit margin dropped slightly from 13% in 2018 to 12% in 2019.

To reduce the cost of solar cell, the key is to improve the efficiency. However, the main obstacle is the high cost of core equipment, so the fundamental way to reduce the cost is the localization of new technology and equipment.

Solar Module

The whole piece and half cut solar modules have been mature. The production equipment is relatively simple, and continuous production is not necessary. Its downstream is relatively scattered, and it attaches great importance to brand, and pays more attention to service and quality assurance. Gross profit margin fell slightly to 12% from 13% in 2018. And its collection of accounts for a long period, that is, more accounts receivable. The reason may be that it takes a long time to examine and approve the site selection of downstream power stations.

For solar modules, the cost of non-silicon is standard industrial products, and the price reduction space is limited. Therefore, we can only rely on upstream technology, half-cut, multi-cells, and other technologies to improve power and dilute the cost of non-silicon.

Conclusion

From the perspective of the whole industry, some investment institutions predict that this industry will be ten times bigger than ten years ago. At present, it has been five times bigger than ten years ago, and there is not much room left. If investing now, the return on investment will at most be one time. For the enterprises in the photovoltaic industry chain, the silicon related enterprises still have great investment value. Because the gross profit rate of silicon wafer is the highest at present, and there is more room to reduce the cost in the future, with lower cost and higher net profit rate.An enterprise with greater net profit in the future, of course, is likely to create greater value and have better investment value.

Ningbo Raytech New Energy Materials Co., Ltd. is specialized in “PV Modules Manufacturing and System Integration” and “Smart Panel Materials Manufacturing”. The company has independent product R&D teams, national key laboratory and 1.2GW full-automatic manufacturing line. Raytech’s production scale, product range and manufacturing standards are on a leading position in the industry. Raytech will continuously provide high transparency solar modules, double glass solar modules, and bifacial modules to support the local development of solar energy generation.