“Photovoltaic + energy storage” is an important force for global clean energy transformation, providing effective support for countries to achieve climate goals. In the past ten years, with the continuous transfer of production capacity from Europe, America, Japan, South Korea and other countries to China, China has become the most important supplier in the global “photovoltaic + energy storage” industrial chain.

Under the Russia-Ukraine crisis, the global energy industry chain is facing a new round of adjustments, and the “photovoltaic + energy storage” related industry chain has also been affected to a certain extent. The demand for “photovoltaic + energy storage” configuration is rising, but the manufacturing cost is constantly rising, and the related logistics and transportation pattern has also been greatly affected by the outbreak of the Russia-Ukraine crisis. The investment layout strategy of the global renewable energy industry chain has changed from “all in China” in the past few years It has also changed to “China + N”, and the supply chain is more vulnerable to trade policy risks. However, the Russia-Ukraine crisis will accelerate the eastward transfer of global technology, manufacturing, capital, and talent, injecting new vigor and vitality into the Asian economy. For China, this is both a challenge and an opportunity.

introduction

In recent years, affected by the COVID-19 epidemic, trade protectionism, and the trend of anti-globalization by major countries, the stability of the global industrial chain has been severely challenged, and the occurrence of the Russia-Ukraine crisis has continued to worsen global conflicts. As Western countries have imposed varying degrees of sanctions on Russia in terms of energy, finance, technology, and trade, the multilateral trading system has been forced to succumb to geopolitics, further disrupting the operation of the global market, and the global energy industry chain will also face a new round of disruptions. Adjustment, “photovoltaic + energy storage” as a representative of the renewable energy industry, its related industrial chain has also been affected to a certain extent.

1. “Photovoltaic + energy storage” global industrial chain pattern

1.1 Global Photovoltaic Industry Chain Pattern

In recent years, the demand for photovoltaics in medium-sized countries in Europe and the United States has increased significantly, and the sharp rise in traditional energy prices has highlighted the cost-effectiveness of photovoltaic energy. In 2021, the cumulative installed capacity of photovoltaics in the world will exceed 942GW, and the cumulative installed capacity of photovoltaics in at least 20 countries will exceed 1GW. China ranks first, with a cumulative installed capacity of 308.5GW, followed by the European Union (178.7GW) and the United States (123GW). In 2021, the newly installed photovoltaic capacity in the world will exceed 175GW, and China will rank first in the world with an increase of 54.9GW, followed by the United States (26.9GW) and India (13GW)[1]. According to the forecast of global photovoltaic installed capacity by Bloomberg New Energy Finance (BNEF), the global newly installed photovoltaic installed capacity will be 252 GW in 2025, and the global newly installed photovoltaic installed capacity will reach 334 GW by 2030[2].

In the past decade, the pattern of photovoltaic manufacturing has undergone major changes. According to the latest report on photovoltaics by the International Energy Agency (IEA) [3], from 2010 to 2021, due to policy guidance, industrial scale effects and cost advantages, China will further Consolidated its leading position as a manufacturer of silicon wafers, cells and modules, while its global silicon production capacity has almost tripled, and China now has a total share of more than 80% of the global PV manufacturing chain (excluding construction and planned middle). In terms of silicon materials, 80% of the world’s polysilicon is produced in China, and the remaining market share is divided between Germany, Malaysia and the United States; in the silicon wafer segment, China is in a monopoly position, accounting for more than 97% of the global market share; in the cell segment, In 2021, China-made solar cells will account for nearly 80% of the global share, and the rest will be mainly concentrated in Southeast Asia and South Korea. In terms of modules, although 38 countries/regions in the world have their own module assembly capacity, but China will still account for about 70% of the total output in 2021. Other major countries/regions such as the United States focus on their domestic market, and Southeast Asia and South Korea export more to Europe and the United States.

1.2 Global Industrial Chain Pattern of Energy Storage

As the policies of various countries continue to increase, the transformation of the global energy consumption structure to low carbonization is accelerating, driving the energy storage industry to gradually enter the stage of large-scale development from the initial stage of commercialization. 2021 is the year of the outbreak of the energy storage industry. Equipped countries include the United States, China, the European Union, Australia, and more. Among them, the European Union, Australia and other countries/regions have driven the demand for installation of off-meter energy storage due to factors such as residential electricity charges that are much higher than industrial and commercial electricity charges, poor grid stability, and diversification of user-side energy storage subsidies. In the United States and China, due to various factors such as policy-driven, increased demand for grid stability after large-scale grid integration of new energy sources, and arbitrage of power market-based trading mechanisms, the demand for energy storage markets before the balance sheet is stronger. According to the latest forecast of Bloomberg New Energy Finance, from 2022 to 2030, the global energy storage market will grow at a compound annual rate of 30%, of which the new installed capacity of energy storage will reach 58GW/178GWh in 2030, which is five times that of 2021 The United States and China are still the two largest markets in the world, accounting for 54% of the expected installed capacity of energy storage by 2030[4].

At present, China accounts for nearly 80% of the global lithium-ion battery manufacturing capacity (about 520 GWh), while the United States ranks second with 13% of global production capacity. The four main components of lithium-ion batteries: anode, cathode, electrolyte and separator, account for more than 60% of the world in China (including planned production capacity), of which anode materials account for 84%, which has an overwhelming advantage [5]. The decisive factor of the entire industrial chain lies in the upstream raw materials. In recent years, new energy vehicle batteries and renewable energy storage have been particularly favored by lithium-ion batteries. The increase in demand and the tight supply have promoted a sharp increase in the price of raw materials. Since 2021, the price of lithium has increased by more than 7 times, while the prices of cobalt and nickel have doubled [6]. Despite this, lithium-ion battery energy storage is still cost-competitive [7], but with technological progress and the improvement of battery recycling capabilities, it is expected to achieve cost reduction.

2. “Photovoltaic + energy storage” manufacturing industry chain

2.1 Photovoltaic

The photovoltaic industry chain is divided into upstream (silicon materials, silicon wafers), midstream (cells, components), and downstream (inverters, power stations, etc.), and the main manufacturing links are concentrated in four major areas: silicon materials, silicon wafers, cells and components. Part of it, the gross profit margin of silicon materials and silicon wafers is higher than that of batteries and components.

The competition pattern in the silicon material link is the most concentrated, and the capital and technical barriers are relatively high. Focusing on process experience and yield rate is the decisive link in the photovoltaic industry chain. However, the production capacity cycle of this link is long and the production capacity elasticity is low. The time from the start of construction to production is not less than 18 months. If there is a shortage, it will be difficult to provide effective supply in the short term for new production capacity. In 2021, the sharp increase in global installed capacity will lead to an imbalance between the supply and demand of silicon materials. Taking China as an example, the price of silicon materials rose from 80 yuan per kilogram at the beginning of the year to a maximum of 273 yuan per kilogram in November, an increase of more than three times that year [8]. The soaring price of silicon materials has also severely impacted the middle and downstream links, thus raising the cost of the entire industrial chain, but with the gradual implementation of new production capacity, this phenomenon will ease.

The concentration of the silicon wafer link is relatively high. This link is located directly downstream of the silicon material link. Because of its long-term lock-in, technology, scale and other advantages, its bargaining power is higher than that of the cell and module links, and it is a high-quality profitable link in the industrial chain. Silicon wafers are mainly divided into polycrystalline silicon wafers and monocrystalline silicon wafers. Due to the photoelectric efficiency of monocrystalline cells and rapid technological progress, the demand for monocrystalline silicon wafers has gradually increased in recent years, and the market share has rapidly increased from less than 20% in 2016 to 2021. 95% of the year [9]. With the addition of new enterprises and production capacity in the silicon wafer manufacturing process, enterprises with strong competitiveness began to actively enter the vertical integration layout. In addition, with technology upgrades such as high efficiency of N-type silicon wafers, large-scale silicon wafers, and optimization of business models such as slicing and foundry processing, new cost reduction space has also been brought to silicon wafer manufacturing.

The cell link plays a connecting role in the entire photovoltaic industry chain. This link has high requirements for technical content and is also the main battlefield for a new round of technological iteration. According to the type of substrate silicon wafers, solar cells can be divided into P-type solar cells and N-type solar cells. At present, the market share of P-type monocrystalline silicon PERC cells ranks first. According to the calculation of the Institute of Solar Energy Research Hamelin (ISFH) in Germany, the theoretical conversion efficiency limit of PERC cells is 24.5%, while the efficiency of LONGi’s green energy has reached 24.06% (currently the highest). , which is very close to the theoretical limit [10]. The cost difference determines competitiveness, and the market urgently needs technological innovation. N-type batteries are recognized by the market as the next-generation battery technology that is most likely to replace P-type batteries. Major manufacturers are gradually beginning to transform their layouts. Among the N-type cells, TOPCon and HJT cells have attracted the attention of the market because their theoretical conversion efficiency is above 28%, which is much higher than that of PERC cells.

Modules are located at the end of the photovoltaic manufacturing chain, which is a capital and labor-intensive industry. The core competitiveness of components mainly reflects cost, brand and channel. Under the general trend of integration, the cost advantages of leading enterprises have emerged, and the industry concentration has increased rapidly in recent years. However, the bargaining power of components is relatively weak. Under the dual pressure of upstream price adjustment and strong pricing on the end demand side, component manufacturers are facing huge pressure to reduce costs.

2.2 Energy storage

Energy storage is an indispensable link in the global energy transition. The positioning of energy storage in the new power system dominated by renewable energy is mainly to use its fast power adjustment performance and energy storage characteristics. Take on different roles to improve the flexibility, economy and security of the new power system [10]. The current mainstream energy storage methods in the market mainly include mechanical energy storage, electrochemical energy storage, and electromagnetic energy storage. The table below provides a comprehensive comparison of energy storage utilization efficiency, response time, service life, and installed capacity. Among them, pumped water energy storage, compressed air energy storage, and electrochemical energy storage are suitable for large-scale and large-capacity applications such as renewable energy access and emergency power supplies due to their large installed capacity and high storage time; electromagnetic, flywheel, and gravity storage Due to the fast response speed, it is suitable for occasions that need to provide short-term large pulse power, such as improving the power quality of users, suppressing low-frequency oscillation of the power system, and improving the stability of the power system.

At present, the world’s largest cumulative installed capacity is pumped hydro storage and electrochemical energy storage. As of the end of 2021, the installed power of the global energy storage market is 205.3 GW, of which the installed power of pumped storage is 177.4 GW, accounting for 86.42%; the cumulative installed capacity of electrochemical energy storage is close behind, with installed power of 21.1 GW, accounting for 10.30%. Electrochemical energy storage is dominated by lithium-ion batteries, accounting for 93.9% [11]. Energy storage is a powerful boost for renewable energy to replace traditional energy. With the continuous optimization of technology and cost, electrochemical energy storage may become the mainstay of energy storage technology. Since lithium-ion batteries are the most widely used in electrochemical energy storage and are the first choice for the grid side and the residential side, the discussion of the energy storage industry chain in this paper revolves around it.

3. The impact of the Russia-Ukraine crisis on related industrial chains

3.1 Rising demand for optical storage configuration

The Russia-Ukraine crisis has prompted countries to increase support and investment in the renewable energy industry, further pushing up the global demand for photovoltaic + energy storage configurations. The Russia-Ukraine crisis has disrupted the pace of global economic recovery after the epidemic, and the comprehensive sanctions imposed by Western countries on Russia have cast a cloud of gloom on the world’s energy economy, followed by energy shortages, key commodities and prices of traditional fossil energy. All countries are facing tremendous pressure, especially in Europe. In the past decade or so, in order to help climate change and reduce energy dependence, the European Union has made great efforts to reduce traditional fossil energy and adopted some relatively radical energy strategies. The original energy and power structure is not strong. Russia’s counter-sanctions have cut off more than half of Europe’s oil and gas supplies, exacerbating its energy supply security problems. The European Union is formulating the REPowerEU energy plan to speed up the progress of renewable energy installations. Other countries are also deploying energy transitions one after another. In addition, the “electricity bill madness” and “power outages” caused by the energy crisis have accelerated the development of residents in the United States, the European Union, Australia and other countries. Household “photovoltaic + energy storage” configuration rhythm.

Photovoltaic is the most important pillar of renewable energy, and energy storage is the backup force for new energy and grid stability. The newly installed capacity may exceed the upper limit of public expectations. According to Bloomberg’s forecast, the global photovoltaic installed capacity will increase by 30% this year, and is expected to reach 250GW, while the global cumulative installed photovoltaic capacity will be close to 1 TW; from 2022 to 2030, the global energy storage market will grow at a compound annual rate of 30% [12]. After the Russian-Ukrainian crisis, various international organizations have also raised their forecasts for photovoltaic installations, which will be an impressive milestone on the road to energy transformation.

3.2 Cost increase of solar storage

The Russia-Ukraine crisis has increased the manufacturing cost of the “photovoltaic + energy storage” industry chain. The cost difference determines the competitiveness of the renewable energy industry, and the high manufacturing cost is not conducive to the diversification and long-term development of the photovoltaic + energy storage supply chain. The global energy shortage caused by the Russia-Ukraine crisis and the short-term surge in demand for renewable energy have triggered a surge in raw material prices. Silicon material is a decisive link in the photovoltaic industry chain, and its cost determines the price change of the entire industry chain. According to the data disclosed by the Silicon Industry Branch of China Nonferrous Metals Industry Association, the price of silicon material has reached a maximum of 310,000 yuan/ton since the beginning of the year. In addition, the increase in natural gas prices triggered by Russia has further increased the cost of photovoltaic modules such as photovoltaic glass, which use natural gas as the main energy source. According to the Photovoltaic Industry Composite Price Index (SPI) released by SOLARZOOM, from January 2022 to the present, the rise in the price of silicon materials has affected its downstream. Index changes remain basically stable, which means that the cost pressure of the entire photovoltaic industry chain is concentrated on components and batteries.

The price of batteries, an important part of energy storage, is driven by the demand for new energy vehicles and renewable energy. The supply of lithium carbonate, the main raw material, is limited, and the price of batteries has been severely affected. The cost of lithium iron phosphate (LFP) cells after raw material price adjustment has increased by 84% relative to the level in May 2021, reaching a peak of US$153/kWh in March 2022, and its cost has not been lower than US$140/kWh so far [13] . According to the forecast of Bloomberg New Energy Finance, lithium prices will remain high throughout 2022, and the market is in a highly tense state. Ukraine supplies 70% of the world’s neon gas (special gas for chip production). The Russia-Ukraine crisis has caused the price of neon gas to rise from 1,700 yuan/cubic meter to 15,000 yuan/cubic meter, an increase of nearly 8 times[14]. The supply of neon gas resources is in short supply. Increased manufacturing costs will also affect the production of photovoltaic inverters and energy storage inverters.

In addition, the European Union has put forward specific legislative proposals on carbon tariffs. At present, the scope of industries covered by carbon tariffs is initially set at five major industries: cement, iron and steel, aluminum, chemical fertilizers and electricity. In the future, this scope will gradually include all imported goods. Proposals Implementation is expected to begin in 2023 [15]. If this carbon tax is implemented, it will increase the cost of countries exporting solar energy storage products to Europe.

The Russia-Ukraine crisis has had a huge impact on the global renewable energy-related logistics market. China’s rail freight to Europe has been shifted to sea freight, and the tight supply of energy and fuel has caused drastic changes in the sea freight market. There is a shortage of large-scale international terminals in Europe, America and other regions, and the phenomenon of “port congestion” is serious. The cost of transporting raw material diesel is rising, the overall transport capacity is constantly being weakened, and the supply chain of container transportation is in a tight situation. promote. Freight rates for containerized fuels such as gasoline and diesel, known in the industry as clean tanker rates, have more than doubled this year to their highest level since April 2020, according to data from the Baltic Exchange [16]. At present, the price of a 40-foot-high container commonly used for photovoltaic modules has exceeded 13,500 US dollars per box (the basic port in the west of the United States), and the price increase will be as high as 5 times from 2020 [17]. In addition, under the bottleneck of the throughput capacity of the logistics ports of various countries, Russia and Ukraine have also taken the initiative to stop the transportation of some ports or sea areas, etc., and the international transportation along the way is affected, which further pushes up the international freight of solar energy storage supply chains such as components, batteries and auxiliary materials. price.

3.3 Changes in Global Layout

The Russia-Ukraine crisis has affected the investment layout strategy of the global renewable energy industry chain. In order to disperse the impact of international political and military events and the unresolved urgency of the new crown epidemic, the layout of factories has changed from “all in China” in previous years to “China + N “.

At present, various countries are actively promoting the expansion of local production capacity. In order to help the EU get rid of its dependence on Russian energy, on March 31, 2022, EU Energy Commissioner Kadri Simson stated at the Solar Summit held in Brussels that the EU will spare no effort to make the solar energy manufacturing industry In addition, the local manufacturing capacity has been set to reach 20GW by 2030[18]. At present, the annual production of polysilicon in Europe can meet the production capacity of about 16GW, most of which are produced by Wacker Chemical Company in Germany, but the European polysilicon The supply chain is constrained by its ingot and wafer capacity, which is only 1.5-2.0GW [19].

In the United States, the government stated that it will purchase 10GW of photovoltaic systems in the next ten years, and will use the full power of federal procurement to improve domestic photovoltaic module manufacturing capacity [20]. On June 15, 2022, after the online meeting “About Accelerating the Localization of Photovoltaic Modules” held by the White House and American photovoltaic companies, American power producers AES Corporation, Clearway Energy Group and other companies established the American Solar Energy Buyers Alliance to Support the extension of the domestic photovoltaic supply chain and the growth of the domestic photovoltaic industry in the United States. The Alliance of Solar Energy Buyers of the United States stated that it will purchase more than US$6 billion of domestic PV modules to support local PV goals, and the alliance launched a competitive RFP to find qualified manufacturers that meet the goals of the alliance [21]. However, according to Zhuang Yan, CEO of Canadian Solar, a US listed photovoltaic company, it will take more than ten years to establish a complete industrial chain in the United States, during which problems including industrial chain complements, imports, and commercial barriers may be encountered. Judging the current photovoltaic manufacturing capabilities and cost control in Europe and the United States, the human, material and financial resources required to achieve this goal will be huge. In addition, the United States has also funded $500 million to help India produce photovoltaic modules and accelerate the “localization” of photovoltaic manufacturing on the grounds of promoting the quadrilateral alliance in the Indo-Pacific region (the United States, Australia, India, and Japan) to jointly solve supply chain problems. However, if there is no corresponding industry in the country, the division of labor does not have specialization and scale, and it lacks natural resource endowment, the localization of each country will also provide business opportunities for Chinese photovoltaic manufacturers in disguise.

Semiconductor chips are an important component of photovoltaic energy storage components. In order to alleviate the shortage of chips in the United States, on July 27, 2022, the United States passed the Chip Act, which not only provides a one-time subsidy and tax of 77 billion U.S. dollars for domestic chip manufacturers The credit has also stepped up restrictions on the technology export of chips to China, and hopes to promote the formation of the CHIP 4 alliance and guide the return of advanced technology and manufacturing. In addition, China’s photovoltaic industry is also investing in Southeast Asia. According to JinkoSolar’s announcement, in order to accelerate the construction of overseas integrated production capacity and expand the company’s share in overseas markets, the production capacity of 5GW batteries and 5GW components in Vietnam has been raised to 8GW.[ twenty two].

Due to the long development and construction period, complicated approval procedures and slow growth rate, the delivery time of the EU and the United States is significantly longer than that of other countries and regions. Based on the current situation of tight supply, high energy cost and strong installation demand, “low cost and high efficiency” is still the main line of market development. In the short term, the development of the “photovoltaic + energy storage” industry chain will still be centered on China, supplemented by global division of labor, and capital- and labor-intensive industries such as components in the later stage may be partially replaced by some countries in Southeast Asia. But for China, the diversion of Chinese industries in Southeast Asia has more advantages than disadvantages. Due to their geographical proximity, the industrial chains of Southeast Asia and China are closely integrated. This can be regarded as a form of China’s economic extension. The transfer of low-end manufacturing is more conducive to the extension of Chinese manufacturing to both ends of the smiling curve.

3.4 Increased trade uncertainty

With the globalization of the renewable energy manufacturing industry chain, countries have also begun to adopt trade protection measures of varying degrees. At present, the United States, the European Union, China, India and other countries have introduced trade sanctions against other countries, and the Russia-Ukraine crisis has made the “photovoltaic + energy storage” supply chain more vulnerable to trade policy risks. Since 2011, European and American countries have imposed five rounds of sanctions against China’s photovoltaic industry. Anti-dumping and anti-subsidy sanctions on photovoltaic products have transitioned to imposing 10% tariffs on photovoltaic components such as modules and inverters imported from China, and checking whether Chinese photovoltaic module manufacturers have evaded tariffs to curb China’s transfer of production capacity to Southeast Asian countries. China has also imposed anti-dumping and countervailing duties on silicon wafer producers such as the European Union, the United States and South Korea since 2014. In 2022, India will impose “double anti-tax” on solar glass and EVA particles from neighboring countries China, Malaysia, Saudi Arabia and Thailand. In addition, the United States has also launched investigations into the evasion of anti-dumping and countervailing duties on imports from Vietnam, Malaysia, Cambodia, and Thailand. However, in order to ensure the stability of its own energy, it will again cancel tariffs on batteries and components from Southeast Asian countries in June 2022 (the last 2 years), in July 2022, three companies, LONGi, Jinko, and Xinte, were removed from the list of import bans. The introduction and withdrawal of this series of trade policies has intensified the risk and uncertainty of the relevant industrial chain.

(The author Lu Zhengwei is a director of China Chief Economist Forum, chief economist of Industrial Bank, chief economist of Huafu Securities)