Sudden decline in raw material prices dragged down photovoltaic companies

The slump in silicon prices has disrupted the original pace of Chinese PV companies. One month ago, Suntech announced the termination of the 10-year cooperation agreement with MEMC. For this reason, Suntech paid a compensation of US$212 million.

After Suntech announced the destruction of the contract, the gate seemed to be opened all of a sudden, and photovoltaic companies said in succession that they "do not rule out the possibility of breach of contract."

No one is willing to destroy the huge compensation payments, but the implementation of the contract may be delayed. The performance of the three large-scale PV companies that have reported quarterly reports has been at a loss.

After the domestic market has started, why is there a large area of ​​breach of contract?

Experts stated that individual companies’ breach of contract should be regarded as a corporate phenomenon. If the majority of companies in the industry are ruined, it reflects the market law. The price reduction in the photovoltaic market has become the trend of the industry. According to industry sources, after the door opens in the Chinese market, it is necessary to fundamentally solve the problem. It is imperative to establish its own standard certification system as soon as possible.

Business injury

After the termination of the contract, Suntech will no longer need to purchase approximately 4.6 GW of silicon wafers between 2011 and 2016. It is estimated that it will be able to save about 400 million U.S. dollars in costs for Suntech Power in the next five years.

Five years ago, Suntech and MEMC signed a 10-year supply agreement for silicon wafers from 2006 to 2016. Previously, when supply of silicon was tight, MEMC gave Suntech a price of US$40 per tablet equivalent to half the current market price. Today, the price is about $3 per piece.

In a supplementary document filed in the 2010 fiscal year report, Jinao stated that if the current price is significantly lower than the long-term contract price and/or it is not possible to obtain a satisfactory purchase price and quantity through renegotiation, the company may terminate the procurement contract. Of course, such Jinao will incur prepayment losses and compensation for breach of contract. If both parties to the agreement can not reach an agreement on compensation for breach of contract, it will inevitably lead to litigation.

“Jiao Solar is really in a dilemma. The next step is to watch the market.” A few days ago, JA Solar’s ​​related personnel told the “China Enterprise” reporter.

It is understood that many PV modules and battery manufacturers, such as Suzhou Artes and Changzhou Tianhe, are facing such a situation.

"Polysilicon prices reached the highest price of 400 to 500 US dollars per kilogram, but now, the price has dropped to 50 US dollars per kilogram to 60 US dollars." Deputy Chairman of the China Renewable Energy Society Meng Xianjun told the "China Enterprise" reporter, photovoltaic companies The long-term single-destroyed contract belongs to the corporate behavior and cannot simply rise to the industry behavior, but this reflects to some extent the arrival of the era of low-cost photovoltaics.

Meng Xianyi said that in the past few years, in order to ensure normal production, Suntech signed a long-term order contract with polysilicon manufacturers when the polysilicon price was relatively high. This was desirable at the time, and "occupied silicon as the king." However, in contrast to the past, the photovoltaic market has matured and matured, and the low price of raw materials in the past has now become a high price. "Since the huge investment in polysilicon, Suntech's profit last year was only about 20%, while Yingli is up to 30%. The latter is more flexible in the polysilicon pricing, will not be subject to raw material suppliers."

Jilong Industrial Group spokesman Duan Tonggang told the "China Enterprise News" reporter, now photovoltaic development also requires government subsidies and support, the current photovoltaic industry's market is still mainly in Europe, but European countries have reduced the subsidy of photovoltaic, a great influence Market performance. At the same time, due to the impact of the economic crisis, economic development in Europe has been constrained, and the economic downturn has caused a reduction in PV input. "With the maturity of PV industry technology, the improvement of the industry, and the popularity of photovoltaics, price reduction is a matter of time," Duan Tonggang said.

Shen Hongwen, researcher of China Investment Advisor New Energy Industry Research Group, said in an interview with a reporter from China Enterprise News that at present, the price drop of polysilicon has far exceeded the expectations of photovoltaic companies. The original contract price is higher than the actual market price. From the current situation, Polysilicon prices have room for further decline. In this case, PV companies continue to implement the contract means that they face more losses. Therefore, PV companies including Suntech prefer to pay liquidated damages and are not willing to continue to perform contracts. The unified national PV benchmark price has already been introduced. Although the price is not high, it is already possible to ensure the profitability of photovoltaic power plants in areas with abundant sunshine. For photovoltaic companies, their profits come from further reducing the cost of photovoltaic power generation. Under the incentives of benchmarking electricity prices, the lower the cost of photovoltaic companies, the higher profits they will receive.

“From the perspective of the entire industry, this is the progress of the photovoltaic industry. The price reduction is the inevitable trend of the development of the photovoltaic industry and is the result of the market's laws.” Meng Xianzhe said that the purpose of the state's subsidy of solar energy is also to achieve normal electricity price standards for solar power generation and achieve universality. . The sharp drop in the price of silicon indicates that the time when raw materials are completely dependent on imports is gradually ending. In the past, with China's photovoltaic industry at the two ends, raw materials were almost entirely dependent on imports. The large demand in the Chinese market has virtually pushed the price of polysilicon to high levels. At present, domestic polysilicon has been put into operation one after another, and the price will be slowly pulled down to make prices rational.

Standard absence pain

In recent years, the bottleneck restricting the development of China's photovoltaic industry is mainly the on-grid price, and the on-grid tariff of photovoltaic electricity is the golden key to open the domestic photovoltaic market. Although the on-grid tariff is low, its introduction indicates that the photovoltaic market in China is actually starting up, and it will be conducive to the development of the photovoltaic industry.

"The opening of the Chinese market is good news for domestic and foreign photovoltaic companies. However, compared with foreign certification and testing standards, China is equal to a blank in terms of certification."

"At present, apart from the Golden Sun standard, there is no photovoltaic industry inspection and certification system and standard." Meng Xianyi said, "After all, the Chinese market has just opened, and the solar power management system needs to be gradually improved and improved."

"In stark contrast to domestic product certification, the foreign certification system is perfect." Zhu Cuihan, vice president of the Zhejiang Renewable Energy Association, told the "China Enterprise News" reporter that Chinese products must enter the international market and must undergo product certification. The general certification time is about six months to one year, which is expensive and requires certification every year. "Europe and the United States have different standards for certification." In other words, Chinese products enter the European and American markets and require separate product certifications.

It is understood that there are two sets of standard systems for photovoltaic industry certification, one is UL and the other is IEC standard. One is more concerned with fire safety than the other, and the other is more about the durability of the material.

In the United States, the requirements for product reliability are very high and the relevant laws are very strict. In Europe, despite the product liability law, there is an upper limit on the amount of product liability claims for safety-responsibility accidents, which makes the focus between IEC standards and UL standards different. It is worth noting that UL is providing UL-EU logos in Europe to ensure market confidence and to inform investors and builders in the market about the reliability and quality assurance of the products they use.

The insiders of China Electric Power told the "China Enterprise News" reporter that because the construction of foreign power stations requires the banks' banks, the banks will look at which company's products are used by the construction company. This results in a bank ranking. The higher the bank's ranking, the better the product, and the quicker the construction party's funds will be approved.

Shen Hongwen believes that as the domestic photovoltaic market cake becomes bigger and bigger, the entry of foreign companies will also be more and more, although in addition to having a certain advantage in the high-end market, foreign photovoltaic companies in the domestic exhibition space is not large, but Domestic requirements for certification testing may not be stringent abroad, and certification standards need to be further improved.

"Solar power generation management system is expected to be completed during the "Twelfth Five-Year Plan" period, but it is necessary to avoid taking the old road of wind power generation. "Meng Xiankai said.

In an interview with a reporter from China Enterprise News, the chairman of the Jinglong Group said that the country should formulate national unified standards for the photovoltaic industry as soon as possible and regulate development. Enterprises that have an unreasonable layout will not be allowed to approve projects; restrictions on unqualified companies will be restricted; unqualified products will be restricted from being listed on the market; and foreign companies’ products will be subject to an access system. Promote the establishment of product certification and monitoring systems to achieve industry standardization and standardized production. At the same time, improve the quality standards of related products, strict product quality, strengthen industry supervision, purification of the market, improve product quality, and maintain our reputation.