Reporter Wang Yajie
In late August, photovoltaic module manufacturers collectively raised their quotations. A month later, the momentum of this round of price increases has become weaker and weaker.
On August 25, a leading photovoltaic module manufacturer raised the price of mainstream N-type (the current mainstream high-efficiency technology route) modules by 0.01 yuan to 0.04 yuan per watt.
On the same day, according to Digital New Energy DataBM research, JinkoSolar Co., Ltd. (688223.SH, hereinafter referred to as “JinkoSolar”), Canadian Solar Group Co., Ltd. (688472.SH, hereinafter referred to as “Canadian Solar”), GCL Integrated Four component companies, Shenzhen Skyworth Photovoltaic Technology Co., Ltd. (002506.SZ, hereinafter referred to as “GCL Integrated”) and Shenzhen Skyworth Photovoltaic Technology Co., Ltd. (hereinafter referred to as “Skyworth Photovoltaic”), have raised their quotations for mainstream N-type modules, also rising from 0.01 yuan per watt to 0.04 yuan per watt.
This is a new round of price increases after the implementation of the anti-involution initiative (a self-regulatory agreement that commits the selling price to not be lower than full cost) signed by eight polysilicon companies in the upstream photovoltaic industry.
However, the order window that can accept this round of price increases is closing. Several large power generation groups are the largest buyers of the above-mentioned components. They conduct centralized bidding for annual consumption and purchase several gigawatts (GW, 1 GW equals 1 million kilowatts) at a time.
Tenders for this type of annual large orders are usually set at the beginning of the year or in the first half of the year, and the price and scale are locked in one go. By the time this round of price increases took effect in August, the orders in their hands had already fallen at the old price. In other words, the big buyers who account for most of the demand have left the market early, leaving less and less room to cash in on this round of price increases.
In mid-September, although the public quotations of leading manufacturers have not relaxed, the transaction volume has quietly moved downwards. Second- and third-tier companies have taken the lead in cutting prices, and some special-price components have returned to around 0.65 yuan per watt.
漲價
The business leader of a leading photovoltaic module manufacturer told the Economic Observer reporter that this pricing refers to the reference cost given by the “General Principles of Cost Accounting Model for the Photovoltaic Industry” (a group standard compiled by the China Photovoltaic Industry Association, which provides a unified caliber for industry cost accounting). It is also based on its own complete cost (a cost line covering all expenditures such as depreciation, labor, finance, etc.). This price increase is also to repair losses.
After the price adjustment letter was issued, his company followed the industry in raising prices. A few days later, the numbers on the quotation changed, but the price benchmark in the customer’s bidding system remained where it was. The person in charge said that many customers are now negotiating with price increase notices, hoping that the previous price benchmark will still be used in bidding and bidding, and some are still lowering prices.
Manager Li, the head of an energy storage system integrator in East China, also has such a contract in hand: For the low-price independent energy storage (energy storage power station constructed and operated separately) project that the company had previously accepted, he did not dare to continue shipping according to the original contract, because the contract price has been locked, but the cost of the upstream cells (battery units of the energy storage system) has rebounded. For every 1MWh (megawatt hour, energy storage capacity unit) delivered strictly if the contract is fulfilled, he will lose money.
Manager Li repeatedly talked with the owner. The other party had sufficient alternative suppliers and was unwilling to accept the price increase. The final negotiation was to extend the payment cycle and add free operation and maintenance services. Manager Li’s company sacrificed its own profits to maintain the project. Manager Li said that the photovoltaic upstream is clamoring for price increases, but the terminals are not accepting the offer, which is very similar to the situation in the energy storage industry. The core logic of the two is similar – the manufacturing side has been losing money for a long time and wants to repair the price, but the end investors have a rigid red line of income and will not pay simply because the manufacturer sends a price increase letter.
For several contracts that Manager Li has handled recently, the final quotations were all signed based on the latest price increase letters from the manufacturers. But at the same time, he offered profits to the buyer by increasing the supply volume, extending the warranty period, and providing free on-site technical support. He also split a contract into two parts: an equipment contract and a technical service contract. The equipment contract was executed at a high price, and part of the price was returned in the form of technical service fees. The payment for goods will be settled by bill, and the capital cost will be borne by the supplier.
He said: “The common result of these measures is that the contract price has increased, but the actual comprehensive cost paid by the buyer has not increased simultaneously.”
A person from a polysilicon company analyzed that after eight polysilicon companies signed the anti-involution initiative, orders significantly lower than cost prices have indeed decreased. However, public quotations have maintained the bottom line of costs, and competition has not disappeared. Instead, it has shifted from a pure price battle to a competition on business terms and service levels such as billing periods and settlement methods. Companies strive for orders by extending the payment period, accepting acceptance bills, and providing complimentary services. This shows that although the initiative can control public quotations, it is difficult to limit adjustments at the commercial terms level. This change in itself is not a bad thing. It promotes industry competition from “price in exchange for volume” to “service in exchange for orders”, which is more beneficial to the long-term operation of enterprises and the healthy development of the industrial chain.
The big order window is closing
When the price increase letter was issued, the prices for this year’s heaviest batch of module orders had already been locked in based on the old benchmark.
According to statistics from Digital New Energy DataBM, 7 major power generation groups have released group-level 2026 component frame procurement (framework procurement, suppliers and unit prices are determined first, and then orders are placed in batches) projects, totaling approximately 45.6GW, and only 4 have not yet announced. The largest deals this year have been signed based on previous price benchmarks.
The person in charge of an overseas clean energy base project affiliated to a central power generation enterprise recently returned a project income calculation form to the finance department. He told a reporter from the Economic Observer that based on his calculations for overseas projects with high financing costs, modules will increase by 0.03 yuan per watt, and the IRR (internal rate of return, a core indicator for measuring project investment returns) of ground power stations will be reduced by 0.4 to 0.6 percentage points. Nowadays, the financing cost of overseas new energy projects is rising. The red line of yield for many projects is stuck at around 6%. Once it falls below this line, the project will lose its investment value and can only be postponed.
When the news of a collective price increase by domestic component manufacturers reached him on August 25, the low-price inventory he had on hand, combined with the long-term inventory, could probably cover the project construction needs in the next three to four months. During this period, he did not want to rush to replenish the spot stock at a high price.
The person in charge of the above-mentioned overseas clean energy base project said that if all purchases are made according to the latest spot quotation, the investment income calculation of the entire project will not be established. This increase cannot be digested directly internally. It must negotiate back and forth with suppliers and will not passively accept price increase notices from manufacturers.
The person in charge of a leading A-share photovoltaic power plant operation company faces a similar situation. The person in charge said: “The impact of rising module prices is concentrated on the newly installed capacity sector. Modules account for about 40% to 50% of the total investment in ground power stations. As module prices rise, the initial investment of projects of the same scale will directly increase. Our team will re-calculate project income, and some new projects with low yields will be suspended and the start of construction will be delayed.”
The upstream and downstream bargaining power is being reversed. The person in charge of the above-mentioned leading A-share photovoltaic power station operating company further stated that in the past, when module supply was in short supply, module manufacturers were the stronger party, and power station owners could only passively accept quotations. Nowadays, the industrial chain has overcapacity, manufacturing companies are experiencing large losses, and orders have become a scarce resource. As a power station operator, my negotiating position has been significantly improved. However, this does not mean that I can lower prices without restrictions, and I do not want the industry to continue vicious low-price competition. If manufacturing companies close down on a large scale, there will be problems with subsequent equipment warranty and spare parts supply, and the risk will eventually be transmitted back to the power station.
The person in charge of the above-mentioned overseas clean energy base project is responding. For example, the payment period for some orders has been lengthened from the original mainstream 3 to 6 months to 9 to 12 months. At the same time, suppliers are required to increase spare parts and extend the warranty period. The person said, “For us investors, the total investment cost is the core assessment indicator, and the paper quotation is only one dimension.”
Overseas markets do not accept all orders. Jiang Cong, the person in charge of overseas projects of a leading optical storage company, told reporters that the company’s overseas project procurement is divided into two models. One part is long-term orders with locked prices 6 to 12 months in advance, and the other part is small-volume spot purchases. This round of domestic upstream price increases will not affect long-term orders that have been signed, but for newly launched spot inquiries, the external quotations given by manufacturers have indeed increased.
Jiang Cong said: “In some emerging markets in the Middle East and Southeast Asia, the local photovoltaic supply chain is weak, the project delivery cycle is tight, and there are few supply options, so the tolerance for price increases will be higher. However, large power groups in European and Latin American markets have very tight red lines for project investment income and will not easily accept sudden increases in equipment quotations.”
預判
Upstream actions occur earlier than on the component side.
Whether the price increase can be implemented ultimately depends on whether the product is worth the price. The price person in charge of the above-mentioned head component manufacturer said: “The policy initiative provides a cost bottom line, but there is a misalignment between the actual demand of the end market, the project revenue model, and the cost line.”
The person in charge of the above-mentioned leading A-share photovoltaic power plant operation company judged that short-term quotations can be supported by industry initiatives and policy expectations, but whether they can stand firm in the medium and long term depends on two things: first, whether high inventory can be effectively eliminated, and second, whether backward production capacity can be substantially cleared. If the prices of silicon materials and modules can be stabilized and maintained above the reasonable cost line, the investment payback period of ground photovoltaic power stations will be extended by 0.3 to 0.5 years, which is good for power station operators, but the premise is that the price increase can be implemented and cannot be just a paper quotation.
On August 26, the quotation price of midstream cells (the core component of the module) fell back to 0.32 yuan to 0.35 yuan per watt. The quotation of 0.38 yuan in the previous week was no longer visible; the order signing and delivery period for the 620 watt to 630 watt power segment (referring to the power generation power of a single module) was shortened from one month to one week.
Component factories are also making corresponding preparations. The price manager of the above-mentioned head component manufacturer is already preparing for orders in September: “If there are not enough orders to be placed at the new price in the future, it cannot be ruled out that some products will be adjusted back to the actual transaction price through commercial terms and account period adjustments. The company does not want to return to the old way of grabbing orders at a loss, but it must first ensure the survival of cash flow.”
Since August 25, the public quotations of mainstream N-type modules have increased by a few cents. The production schedule (production plan) for September will be finalized soon. The numbers on the quotation have changed, but for component companies, whether this round of price increases can actually be reflected in their accounts depends on the remaining few months.
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