China’s Solar Winners From 2022

As the largest solar energy producer in the world, China offers conducive conditions for the solar market. Last year, as installations surged worldwide, including almost 90 GW in China itself, Chinese suppliers of raw materials for solar panels emerged as the winners in the photovoltaic energy boom amidst rising prices.

Reports say that some 31 PV firms out of the 56 mainland-listed ones, that have already released their annual earnings reports, predict net profit growth for 2022. Eight of them expect to turn profitable after slipping into losses earlier. Only five predicted that net profits fell and nine were making a loss, four of which did so for the first time.

The robust performance was driven by large-scale installation demand and the trend is expected to continue. This year, China’s new PV installation capacity will top 110 gigawatts if the National Energy Administration’s plan are not changed.

Among big players, Chengdu-based Tongwei and Shihezi-HQ- Daqo New Energy, are reported to be ranked best in profitability last year. Silicon material giant Tongwei expects its net profit to have jumped by more than three times to a point between CNY25.2 billion and CNY27.2 billion (USD3.7 billion and USD4 billion) as product prices soared. Interestingly, Tongwei, which had hitherto stayed away from the module market, has finally taken the plunge into Modules too, turning into the one of the few if not the only manufacturer worldwide with a  complete solar supply chain from polysilicon to modules.

Solar glass maker Daqo also anticipates a more than threefold profit boost year-over-year to CNY19 billion or even as high as CNY19.2 billion.

However, the trend of rising raw material prices showed signs of easing in the fourth quarter, taming firms’ performance. Tongwei  reported that in the last quarter of 2022, its net profit fell as much as 64 percent from the third quarter. Silicon wafer giant Longi Green Energy Technology  revealed that its profit decline may have been as high as 22 percent over the same time period.

But the whole year seemed good for the midstream companies. Longi expects its net profit to go up between 60 and 71 percent to a sum between CNY14.5 billion and CNY15.5 billion. TCL Zhonghuan Renewable Energy Technology predicts a number as high as CNY7.1 billion (USD1.1 billion), a gain of 64 to 76 percent YoY.

But, despite rising commodity prices large mid and downstream players still recorded impressive profits due to rising downstream demand .

Three leading wafer and module suppliers, Jinko Solar, JA Solar Technology, and Trina Solar, each expect their net profits to have more than doubled from 2021. JInko of course also saw its principal subsidiary complete an IPO listing during the year.

Beijing-based JA Solar is the biggest gainer among solar panel manufacturers with a net profit boost of up to 175 percent to as high as CNY5.6 billion.

Though the prices are volatile, firms across the industry chain are expanding production. Longi  is expected to  invest CNY45.2 billion (USD6.7 billion) to add 100 GW of annual capacity of silicon wafers and 50 GW of monocrystalline cells.

At a time when for the first time in a decade, governments and firms outside China seem to be making a concerted bid to establish their own solar manufacturing base, the funds flush Chinese majors have all announced or are in the process of executing significant capacity additions, pointing to a very complicated global market in the coming years. That has meant the risk of China trying to limit export of solar manufacturing technology, to the rise of tariffs, and finally, the threat of all out trade wars by 2025, when many of these plans outside China will also play out. Are we heading for a worldwide production glut? Time will tell, but one thing is for sure. Chinese manufacturers will continue to have a serious edge thanks to their strong innovation base today, massive scale, and access to local supply chains