China, as the world's largest photovoltaic manufacturing country and consumer market, has achieved remarkable and far-reaching development over the past two decades. During this period, China's photovoltaic industry experienced ups and downs, driven by its integration into global supply chain and the backdrop of China-US competition. The series "China's Photovoltaic Go Global" focuses on the competitive advantages, strategic layout faced by Chinese photovovoltaic industry.
This article focuses on the development of China's photovoltaic industry in the 2.0 era (2011-2020). After an initial failed attempt to expand internationally, the industry regained its confidence and relied on the technological accumulation and operational experience from the 1.0 era (China's Photovoltaic Go Global Ⅰ: Barbaric Growth and Perilous Challenges) to overcome challenges. Key components and system research, development, and manufacturing, such as polycrystalline silicon and monocrystalline silicon, were successfully tackled, breaking the monopoly of key components by mainstream European and American photovoltaic manufacturers. This led to the establishment of a comprehensive photovoltaic industry chain and resolved the bottleneck issue in Europe and America.
The rise and fall of two companies, Longi(隆基） and SUNTECH（尚德）, epitomize the ups and downs of China's photovoltaic industry. Despite the bankruptcy of leading Chinese photovoltaic companies and the severe setbacks faced by the entire industry around 2011, the industry did not collapse. Even during the challenging global photovoltaic market and unfavorable international circumstances such as the European debt crisis and the "double reverse" measures from Europe and the United States in 2011 and 2012, China's photovoltaic industry maintained a nearly 50% global market share and achieved a 37% annual growth rate. In 2012, China's photovoltaic production reached 26 gigawatts, with a capacity of 35 gigawatts.
People began to contemplate how the Chinese photovoltaic industry could overcome obstacles in a passive industry landscape. In the past, the industry heavily relied on imported key technologies and materials in the 1.0 era. Core technologies such as the manufacturing of materials like polycrystalline silicon were controlled by Western countries, limiting the development space for Chinese photovoltaic enterprises. Consequently, more and more entrepreneurs and researchers realized that long-term dependence on Western technology would hinder genuine independent innovation and sustainable development of the Chinese photovoltaic industry.
Lying dormant in the western region, China's photovoltaic industry shifts market focus domestically with policy support
In 2010, the State Council of China issued a decision titled "Accelerating the Cultivation and Development of Strategic Emerging Industries," which included solar photovoltaics as one of the strategic emerging sectors. Compared to overseas markets, the Chinese photovoltaic market had been relatively small. However, this decision provided development opportunities and opened up market space for the Chinese photovoltaic industry, leading to a shift in focus towards the domestic market.
Around 2011, in response to anti-dumping investigations from Europe and the United States, the counterattack of China's photovoltaic industry officially began. The Chinese government initiated anti-dumping investigations on polycrystalline silicon products from the United States, South Korea, and Europe. Subsequently, China appealed to the World Trade Organization, accusing the European Union of discriminatory policies. This move partially provided a breathing space for the survival of the photovoltaic industry overseas.
In 2012, solar power generation was officially included in China's "Twelfth Five-Year Plan," signifying strong support for the sector at the national level. Shortly after, in 2013, the "Eight Policies for Photovoltaics" were introduced, which included a subsidy of 0.42 yuan per kilowatt-hour for distributed photovoltaic power generation projects. There were also plans to gradually adjust subsidy policies in the coming years to eliminate outdated production capacity.
In 2015, the National Energy Administration issued a document explicitly stating that the national scale of newly added photovoltaic power plant construction should reach 17.8 million kilowatts. This marked another development peak for Chinese photovoltaic enterprises in the domestic market. At the same time, domestic companies realized the weaknesses in the industry chain and understood that if they continued to engage solely in OEM (original equipment manufacturing), they would remain at the mercy of others. Only by mastering core technologies and materials could they control their own destiny. Guided by these policies, a few leading photovoltaic enterprises firmly returned to the western region and reexplored the market.
After the first generation of photovoltaic companies failed in overseas markets, state-owned enterprises such as China Power Investment（中电投） and Hualu Engineering(华陆公司) did not give up. After a decade of technological accumulation during the 1.0 era, these companies established photovoltaic industry bases in the western region and continued to develop the industry in places like Tibet and Xinjiang. This not only addressed the power shortage issue in the western region but also contributed to the continuous reduction of photovoltaic generation costs. It also facilitated the implementation of the "West-to-East" power transmission model, supporting the development of eastern cities and industrial economic zones with renewable energy from the western region and bringing returns to the western region through the new energy industry.
Simultaneously, the promotion of industrial technology iteration and upgrading in eastern coastal cities solved the dual challenges of market and technology faced by the Chinese photovoltaic industry. It opened up domestic market demand and achieved a development model based on internal circulation, reducing excessive reliance on overseas markets. In this process, the "Golden Sun" project supported by the Ministry of Finance provided funding and market support for the domestic development of the Chinese photovoltaic industry. CPI played a significant role in promoting the development of the photovoltaic and wind power industries.
After shifting focus to the eastern coastal region, China Power Investment collaborated with GCL Technology Holdings（保利协鑫） to open up a second front for the Chinese photovoltaic industry. This led to the upgrading of market presence and industrial technology, effectively resolving the issue of dual dependence on market and technology.
Localization of Silicon Materials: The First Step of China's Photovoltaic Companies' Technological Counterattack
In the field of polysilicon materials, SUNTECH, the first-generation photovoltaic company, once became the world's largest polysilicon manufacturer. However, due to excessive reliance on polysilicon raw materials and technology from Europe and the United States, the pricing power of polysilicon materials was effectively controlled by European and American companies, with China's photovoltaic industry relying on them for over 90% of its photovoltaic raw materials.
To break China's dependence on European and American materials and technology in the photovoltaic industry, a team led by engineer Chen Weiping from China's Hualu Engineering achieved a breakthrough in the cold hydrogenation core technology of polysilicon in less than a year. They achieved multiple world-first breakthroughs, breaking the monopoly of European and American companies in polysilicon technology. This technology has been widely applied in private photovoltaic companies and markets, further reducing the cost of the photovoltaic industry and addressing the external dependence on polysilicon materials. In 2007, the first cold hydrogenation process in China was completed, officially ending the history of China's inability to mass-produce polysilicon in the kiloton range. With decades of technological accumulation and breakthroughs, the quality of China's polysilicon products had reached a world-leading level by around 2012.
At that time, the current star photovoltaic company, Longi, was just a newly established small enterprise. Its founder, Li Zhenguo, decided to take a different path: to base their business on the then non-mainstream monocrystalline silicon technology route. Through their research, they discovered that with technological progress, monocrystalline silicon would eventually have a cost advantage in terms of electricity generation. Meanwhile, all other companies in the market were expanding their polysilicon production on a large scale.
What are the differences between monocrystalline and polysilicon? If cost is not considered, monocrystalline silicon significantly outperforms polysilicon in terms of performance, with an approximately 5% higher photoelectric conversion efficiency. However, due to its high price, it has only been applied in select high-end product areas. In contrast, polysilicon, although slightly inferior in performance, is more affordable. However, Longi made new breakthroughs in monocrystalline silicon raw materials and technology, further reducing the cost of photovoltaic power generation in China.
In 2013, GCL Technology Holdings completed another technological breakthrough in the production process of polysilicon, developing the production technology of silane fluidized bed method. Since then, Chinese companies have mastered both major production technologies of polysilicon.
In 2015, Longi began to adopt diamond wire cutting technology on a large scale, greatly reducing the production cost of monocrystalline silicon wafers and truly gaining the ability to compete with polysilicon. In the following years, the silicon material market underwent tremendous changes. China's market share of monocrystalline silicon increased from less than 5% in 2014 to 15% in 2015, and by 2020, it reached 90%, making China the world's largest producer of monocrystalline silicon and marking the end of the era where silicon wafers were controlled by others.
From 2009 to 2019, the technological advancements in the photovoltaic industry resulted in an 81% reduction in global photovoltaic generation costs. With its technological and supply chain advantages, China's photovoltaic industry gradually became the most competitive photovoltaic producer in the world. China's photovoltaic industry also completed an overtaking maneuver against Europe and the United States in this process.
After three years of efforts, China has completed the domestic substitution in the photovoltaic industry, gaining dominance in the market, technology, and raw materials. In 2011, it became a turning point for the development of the photovoltaic industry between China and the United States, with China's photovoltaic industry starting to dominate the global market based on technological advantages. According to the latest statistics, in 2021, China's silicon wafer production capacity accounted for 97% of global capacity, and the proportions of silicon materials, cells, and modules exceeded 75%, surpassing the combined total of other countries. Moreover, in the field of photovoltaic panels, China has gradually taken a dominant position, with Huawei's photovoltaic inverters holding a 23% market share globally, consistently ranking first for multiple years.
Today, the photovoltaic industry has become an important component of China's export trade, bringing in billions of dollars in foreign exchange annually. In 2018, China's photovoltaic exports surpassed the European and American markets, expanding to more than 200 countries including South Korea, India, Japan, Australia, and Mexico. The Chinese photovoltaic industry has encountered unprecedented broad development prospects.
The victory or defeat in the photovoltaic game between Europe, America, and China has been decided.
After the 2008 financial crisis and the European debt crisis, the economies of Europe and America experienced a recession, which dealt a heavy blow to the photovoltaic market. European and American photovoltaic giants lost government subsidies and industry support, leading to financial difficulties and even bankruptcies. They have been unable to fully recover. European and American companies missed out on the second wave of global photovoltaic industry expansion and began heavily relying on Chinese photovoltaic companies for technology and products. More than half of Europe's photovoltaic products and components need to be imported from China.
When China's second-generation photovoltaic companies entered the European and American markets again, industrial capital in Europe and America was unwilling to lose the dominant position and profits in the photovoltaic market, and they launched another round of hunting. However, European and American photovoltaic companies faced high costs and slow technological iteration. Relying solely on trade remedies, such as anti-dumping measures, couldn't change the situation where Chinese photovoltaic companies were technologically and capacitive leaders. Instead, they had to import components from China. Unable to directly purchase photovoltaic raw materials and components from Chinese companies, they had to import photovoltaic products produced and assembled by Chinese enterprises through intermediate countries in Southeast Asia. Thus, Chinese companies achieved indirect product input.
In 2018, China successfully connected the first large-scale grid parity photovoltaic project in Golmud, Qinghai. The average electricity price of the project was 0.316 yuan/kWh, which was 0.01 yuan/kWh lower than the local coal-fired electricity price, setting a precedent for grid parity in photovoltaics. This milestone marked significant progress in China's photovoltaic industry.
According to the latest report from the Solar Energy Industries Association in the United States, solar energy (with photovoltaics accounting for 96%) has contributed more to the increase in electricity generation over the past decade than coal, wind, and natural gas. By 2025, the global photovoltaic penetration rate will reach 8%, and by 2030, it will reach 19.32%. According to the special report on the global photovoltaic supply chain released by the International Energy Agency (IEA) in July 2022, by 2025, critical components for global photovoltaic module production will be almost entirely reliant on China, highlighting China's significant contribution to the global photovoltaic penetration rate.
Meanwhile, Europe has also realized that anti-dumping policies cannot effectively sanction China and have instead caused losses to their own industry. In 2018, as the gap between the European and American photovoltaic industry and China continued to widen, the European Union decided to revoke anti-dumping duties imposed on China's photovoltaic industry, restore free trade with Chinese photovoltaics, and end the largest anti-dumping investigation in history that lasted for five years. In the year when the anti-dumping duties were revoked, Europe's installed capacity of photovoltaics increased by 21.5% compared to the previous year, and the growth rate has been rapid ever since.
In contrast, the United States took the opposite approach. In 2017, former President Trump initiated a Section 201 investigation against China's photovoltaic industry, resulting in a sharp drop in China's module exports to the United States to 825 MW, a 71.2% year-on-year decrease. In the first quarter of 2019, China's photovoltaic module exports to the United States were only 10 MW, and the door to the US market was almost completely closed. After President Biden took office in 2021, the United States conducted another investigation and crackdown on China's photovoltaic industry, restricting the entry of over a thousand types of photovoltaic products into the US market. However, the US photovoltaic industry chose to import photovoltaic products from Chinese-owned factories in Southeast Asia, which accounted for over 85% of the total US photovoltaic imports.
In March 2022, the United States further blocked China's photovoltaic industry by launching an "anti-circumvention investigation" on photovoltaic products from four Southeast Asian countries, imposing punitive tariffs of over 240%. However, this move severely affected the US domestic photovoltaic industry, with an installed capacity of only 18.6 million kW that year, a 23% decrease compared to 2021. As the restrictive measures failed to achieve the desired effect, the United States, under pressure from its domestic photovoltaic industry, had to gradually relax the restrictions. In June 2022, the US lifted restrictions on importing photovoltaic modules from Thailand, Malaysia, Cambodia, and Vietnam and exempted them from import tariffs for 24 months. In early March 2023, White House officials confirmed that the United States has allowed direct imports of photovoltaic panels from China.
In the game of the photovoltaic industry, China and the Western world have engaged in intense competition. After years of development and confrontation, the outcome is already apparent. Chinese photovoltaic companies have achieved remarkable success, thanks to their enormous scale, mature industry chain, and continuous technological innovation. The export market for photovoltaics has also shifted to emerging markets such as Vietnam, Ukraine, Mexico, and Pakistan, leading to a flourishing global photovoltaic market. In contrast, the European and American photovoltaic industries have encountered a series of challenges in the competition. Despite the increasing support and policy guidance from European and American countries, their competitiveness in the global photovoltaic market is gradually weakening due to high costs, lack of economies of scale, and relatively lagging technological innovation.
However, the competition in the photovoltaic industry will continue to evolve, and new challenges and opportunities will emerge constantly. With the growing global demand for renewable energy, technological advancements and market innovation will be key factors determining competitive advantages. Meanwhile, factors such as policy environment, international trade disputes, and technological cooperation will also have a significant impact on the landscape of the photovoltaic industry. In the future, the Chinese photovoltaic industry will focus on capacity output, and overseas plant construction to establish industry chains will become the next phase of exploration for Chinese companies.
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