Zhixun Finance APP learned that Soochow Securities released a research report stating that on November 20, the Ministry of Industry and Information Technology revised the "Photovoltaic Manufacturing Industry Standard Conditions" and the "Interim Measures for the Administration of Photovoltaic Manufacturing Industry Announcement", standardizing from technical, production capacity, and energy consumption perspectives to guide the healthy development of the industry. The unified policy this time sets the minimum capital ratio for new and expanded polycrystalline silicon manufacturing projects at 30%, as well as requirements for new HJT special silicon wafers, advocating the bullish trend for low-oxygen silicon wafers and low-oxygen monocrystalline furnaces; adding water consumption requirements for new projects, bullish for low water consumption HJT. The bank expressed bullish views on the HJT equipment leader in the battery cell segment, Suzhou Maxwell Technologies (300751.SZ), and the low-oxygen monocrystalline furnace leader in the silicon wafer segment, Zhejiang Jingsheng Mechanical & Electrical (300316.SZ), maintaining an "increase holding" rating for the industry.

The main viewpoints of soochow securities are as follows:

Event

On November 20, the Ministry of Industry and Information Technology revised the "Photovoltaic Manufacturing Industry Standard Conditions" and the "Interim Measures for the Administration of Photovoltaic Manufacturing Industry Announcement".

Investment Highlights

1. Standardizing from technical, production capacity, and energy consumption perspectives to guide the healthy development of the industry.

The photovoltaic industry is facing a temporary imbalance between supply and demand, rapid price decline in the industry chain, and pressure on enterprise operations. The policy issued by the Ministry of Industry and Information Technology can give priority support to advanced production capacity and advanced technology, avoiding blind expansion at a low level in the industry. The bank believes this is a policy advocating supply-side reforms. Although it lacks strong binding force, it will encourage the healthy development of the industry.

From the demand side, the bank believes that referring to the historically successful Leaders Plan, establishing indicators for advanced technology products, and constructing advanced technology photovoltaic demonstration bases play an important role in leading the industry towards high technology and high quality. It is also an effective way to eliminate outdated production capacity. In 2015, the National Energy Administration implemented the Leaders Special Support Plan, requiring monocrystalline silicon photovoltaic cell modules to achieve a conversion efficiency of over 17%, and multicrystalline silicon photovoltaic cell modules to achieve a conversion efficiency of over 16.5%. This means that the conversion rates of monocrystalline silicon and multicrystalline silicon cells need to reach around 20% and 18.5%, respectively.

2. The minimum capital ratio for new projects has been raised from 20% to 30%.

Previously, the minimum capital ratio for new and expansion projects in multicrystalline silicon manufacturing was 30%, while for other new and expansion photovoltaic manufacturing projects, it was 20%. This time, the minimum capital ratio for new and expansion projects in multicrystalline silicon manufacturing has been unified to 30%, increasing the minimum capital ratio to encourage orderly expansion of production and discourage excessive leverage, which is bullish for long-term healthy development.

3. The efficiency requirements for solar cell modules in new projects have been increased by 3 percentage points and 3.1 percentage points respectively.

In the past, the efficiency requirement for N-type monocrystalline silicon solar cell modules in new projects was 23%. This time, the efficiency requirement for N-type monocrystalline silicon solar cell modules is 26%, a 3 percentage point increase. Previously, the efficiency requirement for N-type monocrystalline silicon modules was 20%. This time, it is 23.1%, a 3.1 percentage point increase. Especially with the increased module efficiency requirement, many TOPCon high-efficiency modules slightly exceed 23.1%. HJT module efficiency is mostly above 24%. Therefore, the bank believes that this policy is bullish for newer, more efficient technologies and production capacities.

4. The new requirement for dedicated HJT silicon wafers advocates low-oxygen wafers, which is bullish for low-oxygen monocrystalline furnaces.

This policy specifically targets HJT, adding requirements for new projects using N-type monocrystalline silicon wafers for HJT cells with a carrier lifetime of not less than 700μs, carbon and oxygen content of less than 1ppma and 14ppma respectively. Additionally, the silicon wafer quality requirements have been further increased. The carrier lifetime of N-type monocrystalline silicon wafers has been increased by 300μs to no less than 1000μs, and the oxygen content reduced by 2ppma to 12ppma, providing a bullish outlook for the low-oxygen monocrystalline furnace technology iteration (Zhejiang Jingsheng Mechanical & Electrical).

Increase the water consumption requirements for new construction projects, bullish on low water consumption HJT.

This time, new and expanded projects with water consumption lower than 360 tons/MWp and a recycled water utilization rate higher than 40% have been specifically added. Due to the short process of HJT with only 4 steps, while TOPCon, BC, and others have over a dozen steps, the water consumption of HJT is significantly lower than other technological routes. In 2023, the water consumption of TOPCon is 600 tons, HJT is 220 tons, and BC is over 1000 tons. Therefore, future new construction projects will tend towards the low water consumption HJT direction (Suzhou Maxwell Technologies).

Clearly defining the energy consumption of silicon materials is beneficial for clearing the production capacity of silicon materials.

For existing polycrystalline silicon projects, this policy requires a reduction in specific energy consumption by -14 kWh/kg and comprehensive energy consumption by -20 kWh/kg. For new and expanded projects, this policy requires a reduction in specific energy consumption by -10 kWh/kg and comprehensive energy consumption by -17 kWh/kg. The reduction in energy consumption requirements is beneficial for clearing production capacity, stabilizing and increasing silicon material prices, and returning each link to a reasonable profit level.

Risk warning

Downstream capacity expansion and technology diffusion are not as expected.