The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that domestic PV consumption bottlenecks may be opened, which will bring more room for new domestic PV installations. At the same time, bottoming out of component prices compounded IRR improvements, boosting the desire to install downstream equipment. The bank expects domestic PV installed demand to exceed expectations in 2024, increase the annual growth rate to 20%-30%, and expect an additional 260-280 GW of PV installed capacity for the whole year (previously estimated 230 GW installed in 2024). Furthermore, if domestic demand can maintain a high growth rate in 2025, the supply and demand pattern in some areas may reverse ahead of schedule, and I am optimistic about TopCon batteries and photovoltaic glass.

CITIC Construction Investment's views are as follows:

Consumption bottlenecks may be opened, and domestic PV demand is highly elastic

Judging from international experience, as new energy sources gradually participate in the electricity market, economic power abandonment due to market factors will increase. The “Notice on Accelerating the Construction of the Electricity Spot Market” makes it clear that electricity that has not won the bid due to quotation will not be taken into account in the amount of electricity discarded by new energy sources. The average domestic PV consumption rate in 2023 is 98%, and the current policy uses 95% as the red line for consumption. The bank estimates that if the domestic PV consumption rate falls to 97%, 95%, 92%, 90%, and 85%, respectively, the corresponding incremental PV installation space is 22.78, 58.59, 111.63, 143.42, and 247.95 GW, respectively. The specific elasticity of demand depends on the increase in the above space over several years.

Component prices are bottoming out and IRR improvements are compounded to increase the desire to install downstream equipment

Since January of this year, component prices have basically stabilized, and with the strong recovery of downstream demand, the N-type pre-bid price has also risen slightly. Demand for PV terminals has a certain “buy up, don't buy down” mentality. As the bottom of module prices solidifies, all wait-and-see feelings of terminal customers will dissipate. Furthermore, module prices in 2024 have dropped significantly compared to 2023, and the margin of financing interest has declined further. The IRR of some distributed projects in some domestic regions with low utilization hours has also been raised. The bank judges that demand in regions with relatively weak lighting resources will also be clearly released this year.

Domestic installation expectations for 2024 were raised, and some aspects of the supply and demand pattern may be reversed ahead of schedule

The bank raised its forecast for new domestic PV installations in 2024 to 260-280GW, a year-on-year increase of 20%-30% (previously estimated 230 GW). If consumption bottlenecks are opened so that domestic demand continues to grow at a high rate in 2025, global component demand may break through 800 GW, and under an optimistic scenario, it may reach more than 850 GW, and some aspects of the supply and demand pattern are expected to reverse ahead of schedule.

TopCon battery supply is tight, and glass supply and demand have improved markedly

Judging from the supply situation in the main photovoltaic sector, it is expected that the supply of TopCon batteries will be tight in 2024-2025, and the supply-demand ratio for photovoltaic glass will also drop significantly and return to a state of balance between supply and demand. Under the optimistic assumption of demand, photovoltaic glass is likely to be in short supply.