Photovoltaic industry to start a new cycle at the end of next year

Overcapacity, Europe and the United States "double reverse" (anti-dumping, countervailing), product prices plummeted across the board, China's photovoltaic industry is in the midst of severe winter, but the 3M company based in Minnesota (NYSE: MMM, hereinafter referred to as 3M) has said that Hear the footsteps of the industry turning point.

Xu Jiwei, Senior Vice President of the 3M Global Central Executive Committee, 3M China and Hong Kong Industrial Products Division, revealed in an exclusive interview with the Morning Post reporter: “Our PV customers, such as Jingao (Jiao Solar) and Hairun (Hairun Photovoltaic Technology Co., Ltd.) Co., Ltd., etc., have done a lot of work lately and effective production capacity has been fully opened. The balance point of the supply and demand relationship of the entire industry is slowly approaching."

As a diversified company, 3M is one of Dow Jones 30 industrial indexes. In fiscal year 2011, it achieved sales of nearly US$30 billion and produced more than 70,000 products. The latest development direction of 3M in China is precisely what the PV industry is not optimistic about.

On September 30, 2011, 3M invested 3 billion yuan in 3M material technology (Hefei) Co., Ltd., which broke ground as the global photovoltaic industry fell into a trough. This is the 11th production base of 3M in China. It is mainly responsible for solar module and other photovoltaic components. The base is scheduled to be completed and put into operation in the fourth quarter of 2013.

“With the balance of supply and demand, and the driving of PV installations in China and Japan, we expect that the PV industry will usher in a new round of the end of next year.” Xu Jiwei said that the countercyclical expansion not only reduces the expansion costs, but also the key However, when large-scale mass production is started, it may catch up with the recovery of the photovoltaic industry.

According to reports, 3M has been involved in the photovoltaic industry since the 1970s and 1980s. In 2008, the global photovoltaic industry made great strides. 3M then set up a Ministry of Renewable Energy, mainly directed to solar energy.

Reporter: What is 3M's forecast for China's photovoltaic industry?

Xu Jiwei: We expect that China's PV applications will grow by an average of 20% to 30% in the future, which is a reality. If the growth rate of China's GDP is about 7%, and the growth rate of photovoltaics will reach 3 times GDP growth, we can expect that.

Reporter: With the decline in the profits of the entire photovoltaic industry, the price of customers is very severe. Do you feel the pressure of this industry?

Xu Jiwei: Actually, when we were very hot in the industry in 2010, it was expected that there might be a wave of adjustments, whether or not there was “double reverse”. In particular, our component customers have almost lost for four or five consecutive quarters, and everyone is pushing down prices. I think it is necessary to reduce costs, but it is not the only path. The most important thing is to increase the efficiency of components. Our customers sell components, which are calculated in watts. Cost innovations need to reduce the number of molecules (referring to component prices), but more importantly, the denominator (component wattage) becomes larger. This reduces the cost per watt.

Reporter: In 2010, the global photovoltaic industry was booming, and shipments saw a doubling increase. In 2011, the photovoltaic industry was suddenly turned cold. By the third quarter, China's photovoltaic industry was even met with the “double reverse” in the United States. Why did 3M choose to expand at this time?

Xu Jiwei: There is a concept in economics - Lawrence's curse effect, that is, when the economy is hot, everyone builds skyscrapers. After four or five years, the building is made well and the economy begins to decline. And when the company is building, the cost is almost the highest, because everyone is very hot.

We are on the contrary, in the trough we are also continuing to go forward, the entire construction cost is relatively low, wait until the factory is built, probably by the end of next year, the photovoltaic industry's economic cycle can come back. But the degree of fieryness coming back will not be like 2010.

Reporter: At present, what proportion of China's PV business accounts for 3M's PV business?

Xu Jiwei: It accounts for 60% of 3M's global PV business revenue. However, China's PV production is the largest in the world, but the installed capacity in China is very small. We expect that the application potential of PV in China will be very large in the future.

Reporter: How do you see the "double opposition" between the United States and Europe?

Xu Jiwei: From a certain point of view, "double opposition" has its positive significance. Because it caused the oversupply bubble to blow up early. If there is no double reaction, many problems in the industry will continue to ferment, and one day it will burst out, but the consequences of the explosion will be much more serious than it is now.

After the "double reverse", there are two new catalysts:

One is that many companies have started to actively reduce their production capacity because they have been squeezed by the market, all of which are ineffective. These things were impossible for the government to do before the "double reaction," and it was equivalent to going ahead with the bubble.

Another catalyst is that the Chinese government has never seen such a big effort to promote the application of photovoltaics. Before the export situation was good, as long as the Chinese government provided land, electricity, human resources, material resources, and financial resources locally, it did not need to create too many local markets, and the entire industry rose. Exports also contributed to the local economy and employment rate. Why not?

Now that there are barriers to exports, the government has to increase investment in local applications. The "12th Five-Year Plan" that has already been announced is 21GW, and this figure may also be raised. We estimate that it is possible to reach 25GW in the next three years, which may require 10GW in one year. What is the concept of 25GW? Last year was the global installation. Previously in China, these were unimaginable.

Reporter: How to look at overseas markets?

Xu Jiwei: Japan will be a key point. Japan's 54 nuclear power plants have been shut down by 52. ​​Now that the Japanese and the ruling parties, including the people, all want to abandon their nuclear programs, they are very active in the application of solar energy. For example, the Japanese government is now in about one year. The purchase price of the new solar power station installed remains unchanged for 25 years, and the demand in Japan is very large now. Therefore, next year, the net growth in the entire photovoltaic market, China and Japan will account for 60%. There is a lot of demand in Europe right now, but Europe’s contribution to net growth is very small, less than 10%. Japan and China will definitely dominate the net growth next year. You now see that the effective production capacity of Jingao, Hairun, Yingli Group and Artes Solar (ATS Solar Power Technology Co., Ltd.) are all sufficient, and the relationship between supply and demand is slowly approaching. I am not saying that it has already reached 1: 1, but it is indeed close to.