Photovoltaic New Deal keeps warming up

On August 30, the National Development and Reform Commission issued the "Circular on Exploiting Price Leverage to Promote the Healthy Development of the Photovoltaic Industry" and improved the pricing policy for photovoltaic power generation. This policy aims to implement the "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry" (commonly known as the "State of the Eight Countries") issued in July.

I thought that this new policy will bring a good applause, but in fact the industry has a different reaction to this, and it is inconclusive. It is still necessary to observe how much the industry can contribute to the photovoltaic industry. The industry is more concerned with the implementation of follow-up supporting policies.

Stimulated by frequent disputes about the New Deal of PV and Sino-European PV trade dispute settlement, the photovoltaic industry has indeed shown signs of recovery. However, many companies still face difficulties in financing. Many problems have not yet been broken, and the winter seems to continue.

Wuxi Suntech, once the benchmark of China's PV industry, is currently busy with bankruptcy and restructuring. A few days ago, industry insiders told Tencent Finance that Jiangsu Province will assume 7 billion yuan in debt for Suntech. Although it is just an rumors, it also reflects the dilemma and frustration faced by domestic PV companies. Weakness also requires the government to take the bottom.

The crisis forced the New Deal to go from one side to the other by overcapacity. On the one hand, it was a trade dispute. The Chinese photovoltaic industry, which experienced an early madness, suffered unprecedented difficulties in recent years. The days of making money with closed eyes are gone forever and “internal and diplomatic difficulties” have become photovoltaics. A vivid portrait of the industry.

In order to save this strategic emerging industry from being caught in the water, the relevant state departments have spared no effort. At the end of July of this year, under the mediation of the highest political leadership, after a one-year marathon-type game, the China-EU dispute on photovoltaic trade was basically resolved. More than 90 major export-oriented enterprises in Europe have not been imposed heavy taxes and shared With a quota of 7 GW (components), the Chinese photovoltaic industry has thus saved the major market in Europe.

In order to solve the problem of external difficulties, in order to break the passive pattern of the past two, the relevant government departments, especially the government departments, have frequently introduced various policies and hope to open the domestic market as soon as possible, standardize the entire industrial order, and guide enterprises to a sound development path.

Following the introduction of the "Twelfth Five-Year Plan for the Development of Solar Power Generation" and the "Opinions on the Implementation of Distributed Power Generation Grid-connected Services" issued by the State Council last year (the "Provisional"), the State Council's General Office issued another report on July 15 this year. "Several Opinions of the State Council on Promoting the Healthy Development of the Photovoltaic Industry".

In response to this "opinion," the Ministry of Finance issued a "Circular on the Implementation of Distributed Photovoltaic Power Generation in Accordance with Electricity Subsidy Policy and Other Issues" on July 31.

Immediately thereafter, the National Development and Reform Commission issued the "Circular on Exploiting Price Leverage to Promote the Healthy Development of the PV Industry."

The notice made it clear that the implementation of the sub-regional benchmark on-grid tariff policy for photovoltaic power plants. According to the conditions of solar energy resources and construction costs in various regions, the country is divided into three types of resource areas, with electricity prices of 0.9 yuan, 0.95 yuan, and 1 yuan per kilowatt-hour. For distributed photovoltaic power generation projects, a policy of subsidizing electricity prices according to the amount of electricity generated is implemented. The subsidy standard for electricity prices is 0.42 yuan per kilowatt-hour.

The notice pointed out that the zone benchmarking on-grid tariff policy is applicable to PV power plant projects filed after September 1 this year (approved) and put on record (approved) before September 1st but put into operation on and after January 1st, 2014. The implementation deadline for benchmarking on-grid tariffs and tariff subsidies is, in principle, 20 years.

Intensive policy introduction, can be described as dazzling, speed and content even exceed the expectations of people inside and outside the industry.

The "effect" of the New Deal is yet to be tested. However, surprisingly, the industry has different views on the above-mentioned New Deal.

“This policy will actually dampen investors’ enthusiasm for photovoltaic power plants in the short term.” Han Junli, China Industrial Solar Technology Holdings Co., Ltd., told Tencent Finance calmly over the phone.

Han Junli has been rushing around between the northwestern provinces of Beijing and Qinghai, and is mainly engaged in the photovoltaic power plant EPC business. For the elderly in the photovoltaic industry, the recent New Deal does not seem to evoke his excitement.

He analyzed with Tencent Finance that currently most of the unsolicited solar photovoltaic power plant projects implement feed-in tariffs of 1 yuan/kWh, and according to the New Deal, the price of electricity in the Class 1 and 2 resources will drop to 0.9 yuan and 0.95 yuan per kilowatt-hour, "this means The project yield rate will decline, and the investment recovery period for photovoltaic power plants in resource-rich regions such as Qinghai Province will increase from 8 years to about 10 years, which will increase financial costs."

As far as distributed generation projects are concerned, the New Deal’s intention of setting a subsidy of 0.42 yuan per kilowatt-hour is to encourage self-occupation. “If the surplus is to go online, it must implement the benchmark price of local coal-fired units, which is definitely a loss. For this reason, Han Junli pointed out that some units and individuals must consider their own power consumption capacity when they launch a distributed power generation project, and the installed capacity of photovoltaic power should be matched with energy consumption. At present, distributed photovoltaic power generation will not develop in large scale in the short term, and 10 to 20 kilowatts of “small-sized” installations will become mainstream.

Jing Run Solar Holdings Co., Ltd. Wang Runchuan expressed support for this, he believes that the new policy more attention to the long-term, may induce ground power stations in the short term, "rushing wave", but the premise is that companies must get roads and adequate funds.

“In the past, some companies that got roads were waiting for component prices to drop and they would not start work. Now the policy is forcing them to finish construction and put them into operation before January 1st of next year in order to avoid the risks brought about by the cut in the on-grid tariff. “Wang Runchuan disclosed that China National Nuclear Power’s more than 100 megawatt terrestrial power station project has recently started construction. There will be follow-up projects for other companies, but the total installed capacity will not exceed 1 GW.

In fact, the industry is now paying more attention to the next series of supporting ancillary policies, including personal financial policies for the development of distributed photovoltaics, halving VAT for power plant operations, and guidelines for grid access.

"Now banks have little lending for photovoltaic companies, and difficulties in financing are still not broken." Han Junli introduced to Tencent Finance that many developers of photovoltaic power plant projects are currently "hand-in-hand" and use project contractors as financing platforms. The contractor’s pre-investment of the contractor will build the project first, and then the developer will use various channels to find money to repay the project construction costs.

In addition, as far as distributed projects are concerned, there is still some resistance in the application for project approval, especially for grid connection. The internal mechanism and interests of grid companies need to be coordinated. Therefore, only the implementation of supporting policies such as finance, taxation, and grid-connected power can really stimulate the enthusiasm of investors, and most of them are still waiting to see.

Contrary to the above-mentioned prudent people, Shen Fuxin, secretary general of the Zhejiang Solar Energy Industry Association, believes that the introduction of the New Deal is itself a major advantage. First of all, the “classification and pricing” of photovoltaic power plants is scientific and reasonable. Secondly, the implementation period of the policy was determined to be 20 years, which is beneficial to the company's guarantee of revenue. In addition, the subsidy standard of RMB 0.42 per kilowatt-hour is generally enough to ensure that the developer obtains a stable yield of at least 8%.

There is warmth but the cold winter will continue to escalate the Sino-European trade dispute settlement and the introduction of the New Deal or bring a hint of warmth to the photovoltaic industry. However, when the cold weather passes, it is still unclear when the arrival of spring.

Zhejiang is a major photovoltaic manufacturing province in China, and it is dominated by small and medium-sized enterprises. It accounts for 35% of the total domestic PV production capacity and the number of companies is about one-third of the country's total. Shen Fuxin told Tencent Finance that the photovoltaic industry in Zhejiang has bottomed out, influenced by various factors, especially policy-driven.

According to data provided by him, in the first half of this year, total sales of photovoltaic products in Zhejiang were 23 billion yuan and profits were 300 million yuan, which was better than the same period of last year. It is expected that the industrial performance will exceed the first half of the second half. Last year, the total industrial output value of the entire industry was 48 billion yuan, and the accumulated loss was as high as 5 billion yuan.

From the corporate level, in addition to Zhejiang Hengji Photovoltaic announced in bankruptcy in June and suspended production, there has been no large-scale photovoltaic companies closed down the tide.

Zhejiang PV is just a microcosm. Shen Fuxin thinks that in terms of the entire photovoltaic industry in China, the space for continued downturn is not much, and the rising period may have already arrived. Han Junli expressed a similar view: "As the approval of roads increases, domestic consumption capacity increases, and exports to Europe break ice, the days of photovoltaic companies are better than before." Wang Runchuan also said, "The industry is slowly picking up, last year's The third and fourth quarters should be the bottom of the industry, and now the company's gross profit has picked up."

The performance of some leading companies in the industry also seems to support this view. Recently, the photovoltaic company in the United States listed two quarterly financial reports. The financial report shows that the operation status of each photovoltaic company has stabilized and improved, and the loss ratio has substantially narrowed compared to the same period last year. JinkoSolar also achieved its first profit since the third quarter of 2011. At the same time, shipments from many companies have increased significantly. Both Trina Solar and Artes Solar expect to turn around in the fourth quarter.

On September 3, a few of the major stocks were even more eye-catching. Among them, Hanwha Solar Energy soared 15.86%, Yanhui Sunshine soared 14.88%, Yingli New Energy rose 9.07%, and Trina Solar gained 8.95%, setting a new closing high since February 21, 2012.

Wang Runchuan pointed out to Tencent Financial Analysis that the outbreak of stocks in this round was mainly due to the previous stock price was seriously underestimated, and now is the process of market revaluation. He believes that the market value of the US-China stocks should be maintained at 80 to 900 million U.S. dollars.

Although the stock market has been “flying red,” some analysts also told Tencent that the winter of the photovoltaic industry is clearly not yet in the past. Many companies are still “half dead” or “dead but not dead”, and the overall pattern of losses is very difficult for a short period of time. change. Some corporate accounts receivable amounted to RMB 5.0 billion to 7 billion, revealing potentially significant risks.

As the "living specimen" of the ups and downs of China's photovoltaic industry, the destiny of Wuxi Suntech has become the focus of attention in all walks of life. A few days ago, an anonymous person revealed to Tencent Finance that Jiangsu Province would use 7 billion yuan to fill the hole for Suntech's “wiping ass”. If this news is true, it means that Suntech's debt burden of 10.7 billion yuan will only have 3 billion at a time. This undoubtedly cleared up further obstacles for its restructuring, especially the introduction of strategic investors.

However, it is still unclear who will control Wuxi Suntech. The views of the above-mentioned people in the industry seem to be quite the same, that is, Jiangsu Province and Wuxi Municipality will not allow control to sidestep, most likely the local government backing, Wuxi Guolian or other local enterprise holdings, Yourui and other private companies in the photovoltaic industry Corporate shares, retain Suntech's brand and local business cards. "Obviously, the Wuxi municipal government now does not want Suntech to dump, and does not want to pay." Shen Fuxin stressed.