The Zhitong Finance App learned that on November 20, the Bank of China Securities released a research report saying that on November 20, the Ministry of Industry and Information Technology issued the revised “PV Manufacturing Industry Specification Conditions (2024 edition)” to strengthen the energy efficiency and water consumption requirements of all links in the industrial chain. The difficulty of building new silicon, silicon wafers, and batteries is further increasing, and the PV supply side continues to be optimized; in addition, CPIA released a month-on-month increase in module prices, which is expected to drive the profit industry to recover and gradually establish the bottom of the industry.

BOC Securities's main views are as follows:

The Ministry of Industry and Information Technology issued the “PV Manufacturing Industry Specification Conditions (2024)”, and indicators such as energy consumption and water consumption were tightened

On November 20, the Ministry of Industry and Information Technology issued the revised “PV Manufacturing Industry Specification Conditions (2024 Edition)” and the “Administrative Measures on the PV Manufacturing Industry Specification Notice (2024 Edition)”, which aim to further strengthen the regulatory management of the photovoltaic industry and accelerate the transformation, upgrading and structural adjustment of the industry.

Compared to the draft solicitation of comments disclosed in July of this year, the main changes are as follows: 1) The restored electricity consumption of the new construction and renovation project is less than 40 kWh/kg (44 kWh/kg in the original consultation draft), and the comprehensive electricity consumption is less than 53 kWh/kg (the original draft for comments was 57 kWh/kg). 2) New requirements for silicon wafers: Encourage enterprises to use recycled water; the water consumption of new construction and renovation silicon wafer projects is less than 540 tons/million wafers, and the usage rate of recycled water is higher than 40%. 3) New battery requirements: Encourage enterprises to use reclaimed water; the water consumption of new construction and renovation projects is less than 360 tons/MWp, and the usage rate of recycled water is higher than 40%.

The increase in the threshold for industry expansion is expected to drive supply-side optimization

According to the 2023-2024 photovoltaic development roadmap issued by CPIA, the water consumption of silicon wafers and n-type batteries in 2023 was 870 tons/million tablets and 600 tons/MW respectively, far higher than the new construction capacity requirements mentioned in the “Specification Conditions”. Bank of China Securities believes that under the latest “PV Manufacturing Industry Specification Conditions”, it is more difficult for upstream polysilicon high-energy enterprises to expand production. Because industry leaders have the advantage of low electricity consumption and the ability to expand production, supply-side reforms continue to advance. In addition, water consumption requirements for silicon wafers and batteries have increased, and there is a high threshold for additional production capacity. We judge that the increase in the production expansion threshold will not affect projects that have already obtained energy assessment and EIA indicators, and that high-quality production capacity for silicon wafers and batteries is expected to benefit.

CPIA released product cost analysis of the main photovoltaic industry chain, and module prices rose month-on-month

On November 20, the China Photovoltaic Industry Association released the November module cost data. The November module cost remained flat compared to October, maintaining 0.603 yuan/W. The minimum price of components was raised to 0.69 yuan/W, an increase of 0.01 yuan/W compared to October. The main reason for the difference is that the minimum necessary cost was taken into account. According to the CPIA survey, the current component freight is 0.015 yuan/W/kilometer. BOC Securities believes that the rise in the lowest price of components issued by the CPIA has unleashed determination to promote anti-internal competition in the industry, can drive up the sales price of component terminals, and is also conducive to a recovery in industry profits.

The bottom of the industry is gradually being established

Bank of China Securities believes that in the context of the industry promoting anti-internal competition, production restrictions in various sectors are expected to increase. Production restrictions on silicon wafers and the like have been gradually implemented, and expectations for silicon production cuts have continued to strengthen; price increases for photovoltaic cells and modules have already been implemented. Under the influence of policies and markets, the photovoltaic industry chain or phased price increases, and the fundamentals of the industry are gradually being established.

Recommended targets

Jingao Technology (002459.SZ), Jinko Energy (688223.SH), Longji Green Energy (601012.SH), Tianhe Solar (688599.SH), and Junda (002865.SZ), it is recommended to pay attention to Shuangliang Energy Saving (), Tongwei (USD), GCL Technology (03800), and Daquan Energy (Shui). 600481.SH 600438.SH 688303.SH

risk factors

Unfavorable fluctuations in raw material prices; risk of international trade friction; progress in new technologies falling short of expectations; new energy policy risks; consumption risks.