Photovoltaic Business Self-help: Dangerous Industrial Chain Terminal Road

“The more we go downstream, the more hidden barriers are, the easier it is to form our own core competitiveness.” On December 1st, Wang Xinghua, chairman of Zhongsheng Optoelectronics Group, was located in the company's factory area in Jiangsu Taizhou New Energy Industrial Park. On the other hand, “The sales will exceed 1 GW this year, and the sales will exceed 10 billion yuan. It will become a few members of the 'GW Club' in the world.”

However, let Wang Xinghua feel more comforting that, in the context of the general industry-wide loss, Zhongsheng Optoelectronics has not suffered a loss and has gone rather steadily. In his opinion, the reason why today's situation is not only benefited from strict cost control and flexible sales strategies, but more importantly, it has chosen a strategic route that focuses on the downstream market and focuses on the terminal market. For "one-stop solar power solutions provider."

Almost when Wang Xinghua stepped into the photovoltaic industry, a young man named Su Weili in Hebei established a photovoltaic company focused on the terminal market, Tianhua Sunshine. "The result of my thinking was that the future profit margins should be in the downstream market, and they can use the network of manufacturing companies to obtain low-cost and stable sources of supply," said Su Weili.

After Wang Xinghua and Su Weili, some large-scale photovoltaic manufacturing companies have also turned their sights to the downstream and invested heavily in photovoltaic power plant projects. Whether in Qinghai, Ningxia in the northwestern China, or Germany or Italy in Europe, Suntech and other PV manufacturing companies can always be seen.

However, in the case of the first group of crab-eaters like Su Weili, there are many dangers and variables in the extension of manufacturing companies to the end market, and after the ambitious vision, there may be a tragic story.

The antenna extends to the "terminal"

Like other companies, Wang Xinghua was mainly engaged in the manufacturing of wafers, batteries, and modules at the beginning of the photovoltaic industry in 2005. After nearly a year of exploration, he realized that there was no way to popularize equipment and expand reproduction. Continuing, it gradually turned its sights to the higher end market.

According to the statistics, in addition to the traditional manufacturing business, Zhongsheng Optoelectronics now accounts for two-thirds of the downstream power plant service sector, covering project development, EPC and power plant investment services. "We have estimated that making a 3 megawatt power station is equivalent to selling 15 megawatts of components, and the profit margin is obviously higher than simply selling components." Wang Xinghua said.

According to Su Weili, Zhongsheng Optoelectronics is still a manufacturing company, but it is based on the EPC business to drive the sales of components: "You go to see his financial statements and you know, the main business income still comes from the manufacture and sale of photovoltaic modules. "Tianhua Sunshine, which was once created by it, did not set foot in the manufacturing business but only focused on the terminal area.

Su Weili said that the so-called terminal contains three levels of content. The first level refers to components made from silicon. The second level refers to doing EPC (ie, "design, procurement, construction", approximate project general contracting), mainly some of the central enterprises, including power design institutes and professional engineering companies engaged in the business; the current TBEA also gradually The business focus shifts to trends in this area. The third level refers to investing in power plants as owners. This includes the two modes of IPP (ie, independent power plant operators) and BOT (ie, "construction-operation-transfer", commonly known as selling power stations).

Unlike Zhongsheng Optoelectronics, which focuses on EPC business, with the overcapacity in the photovoltaic industry, the prices of battery modules continue to drop, and the overall cost of photovoltaic power plant construction also gradually declines. Many manufacturing companies directly from the manufacturing sector to the third level, especially the BOT Mode leap forward.

Examples are numerous. As an industry leader in the past, Suntech began to make significant progress in the early stage of 2009. It has invested in photovoltaic power stations in Daqing, Qinghai, Ningxia, Shaanxi and Sichuan provinces. Among them, the 10MW project of the first phase of Shangde Ningxia Shizuishan has become China's first large-scale ground power station project connected to the grid. Immediately thereafter, companies such as Savi, Artes and others also joined the ranks of power station development.

In 2012, with the intensification of trade disputes and the contradiction between supply and demand as well as the introduction of a series of favorable domestic policies, the trend of this kind of near-end market is even more pronounced. Many companies have even ventured out of the ocean to go to the Nuggets. In October, the National Development and Reform Commission concentratively approved 15 overseas investment projects, including the investment of 122 million watts of photovoltaic power station projects in Romania by Hareon Solar and the construction of photovoltaic power plant projects in Italy and Greece.

Facing the high enthusiasm of photovoltaic manufacturers for the end market. Suvili seemed disapproving: "The fact that manufacturing companies do power stations will make their days colder."

On the one hand, if an investment power station relies on selling electricity to obtain revenue, it generally takes 8 to 12 years to recover its cost. Even if it digests its own production capacity, it is simply transferring its storage location from the warehouse to the power station. Sales performance cannot be confirmed. There is no profit in the short-term, but additional investment is required. This obviously worsens the manufacturing companies that have already had tighter financial conditions.

On the other hand, even if you use the BOT model to profit from selling power stations, you will encounter similar problems. A power plant project will undergo complex legal procedures from the start of site selection to construction and operation. It will take at least two years before it can be transferred out. This means that the company has no sales revenue for two years, and the project still has Take up cash flow.

In this regard, a senior executive of photovoltaic manufacturing giants in the country also agreed: “The power station is really not very good.” From this executive’s point of view, there is hardly any company in the country that has the capability to operate the power station. The factors that are difficult to predict are very numerous. If no one buys a power station, the return of funds is a problem.

Dangerous overseas Nuggets Road is affected by the debt crisis, Europe and the United States and other countries have reduced photovoltaic subsidies, but because of the continuous decline in the price of photovoltaic modules, the cost of power plant construction has also dropped significantly, benefiting from this, European developed countries have entered the era of affordable Internet access . According to Peng Shou, Chairman of China National Building Materials International Engineering Group Co., Ltd., overseas power plant construction market is still expanding at a rate of 10% per year.

While the traditional photovoltaic market in Europe and the United States has grown, demand from emerging markets such as India and Brazil has begun to erupt. It is particularly worth mentioning that Japan began to implement the fixed price purchase system for renewable energy on July 1 this year, vigorously develop solar energy, and the construction of photovoltaic power plants ushered in a wave of climax.

Perhaps stimulated by the aforementioned favorable factors, many domestic PV manufacturing companies are gearing up to go far to the oceans and go to overseas Nuggets PV power plants.

However, Suvili seems to have remained extremely cautious about this.

When Suvili first arrived in Spain to do a power plant in 2008, the power station was about to be connected to the grid. However, the river management department of the local government informed the Internet that the wires would cross a river. This is not allowed. He personally inspected the "river" - a small, overgrown ditch that he could use to lift his legs. For 20 years, there was no water. As a result, Su Weili spent all his contacts and eventually obtained the special amnesty of the government.

In Germany, power station investors only need to sign a power agreement with the power company. Unlike this monorail system, Italy adopts a dual-subsidy system. When some domestic companies went to Italy to buy licenses, they only obtained local DIA licenses. According to this, they could obtain project online access rights and receive 9 cents of electricity from the power company. However, extra subsidies exceeding 9 cents must be paid to the central government. The department applies, which means that at the same time you must get an AU license.

“There is only a DIA license and no AU license, which means that the central government does not have a corresponding budget, and companies naturally receive no subsidies. The loss of power station operations is almost an inevitable result. In these cases, local lawyers will not tell the company. So they appeared in Italy. There have been many cases of investment mistakes,” said Su Weili.

Photovoltaic companies' self-help: Dangerous and dangerous industrial chain terminal road In addition to Europe, the recent hot market in Japan is not an easy bone. Su Weili said that Japan attaches great importance to the division of labor and generally does not allow manufacturing companies to enter the downstream power station business. “In order to circumvent this problem, Artes currently claims that it is a Canadian company listed in the United States in Japan.” Su Weili said: “And Tianhua Sunshine chose to cooperate with local companies and launched a bid for a large-scale ground power station project in Japan in September. Among them, Tianhua Sunny won 22 bids and ranked in the top three."

The domestic market is still unclear. In order to rescue the market, a series of favorable policies and measures have been launched from the national ministries to the grid companies. Recently, the list of the second batch of Golden Sun demonstration projects was announced in 2012. The total installed PV project installed capacity was 2.83 GW. Together with the first batch of Golden Sun demonstration projects that were announced in May this year at 1.71 GW, the total annual project scale reached 4.54 GW, slightly higher than previously expected. According to statistics, in 2012, the central government allocated a total of 13 billion yuan in funds, and the total scale of domestic applications for supporting photovoltaic power generation reached 5.2 GW.

However, there is a huge gap in subsidy funds, and long-term defaults have also caused some manufacturers of investment power stations to agonize.

However, the determination of the decision makers cannot be a key factor in deterring food abuse. There are no lack of optimists in this regard. China Industrial Solar Technology Holdings Co., Ltd. Han Junli said that the industry expects that the issue of subsidy funds will be clarified after the “**” in April of next year.