The Status & Trend of the Crystalline Silicon Photovoltaic Industry (Part Two)

The Status & Trend of the Crystalline Silicon Photovoltaic Industry (Part Two)

2. Porter's Five Forces Model Analysis
Porter's Five Forces Model analysis was proposed by Michael Porter in the early 1980s. Porter believes that competition in an industry is not limited to competition among existing peers, but there are five basic competitive forces, namely "five forces". The five forces are "the bargaining power of suppliers", "the bargaining power of buyers", "the ability of potential competitors", "the ability of substitutes" and "the current competitiveness of competitors in the industry". The different combinations of these five competitive forces will ultimately affect the profitability of the industry and its development potential. The five forces in the crystalline silicon photovoltaic industry are described below.
Competition from existing competitors in the industry: China's crystalline silicon photovoltaic power generation industry has advanced triumphantly for several years. In the second half of 2018, this industry encounters depression. The changes in the 531 policy have led to a rapid decline in the domestic market, product prices, and corporate profits. The development of the industry decreases rapidly. However, it is worth noting that due to recent market trends and the government's increasing emphasis on the concept of "carbon neutrality", the development trend of the crystalline silicon industry has undergone new changes. The production capacity of monocrystalline silicon products has increased rapidly, and their prices have risen. A number of companies have announced that they are preparing for the construction of related expansion projects such as monocrystalline silicon rods and monocrystalline silicon cells. Photovoltaic companies compete more intensely in cells, modules and systems than at the front end. Domestic PV companies greatly concentrate on cells, modules and systems, and the competition is extremely fierce.
Threats from potential entrants: Some domestic crystalline silicon photovoltaic enterprises have developed rapidly and their technical level has gradually improved. They have initially acquired the ability to independently develop new cell technologies and build cell and module production lines, driving the rapid development of domestic upstream and downstream enterprises. At the same time, combined with the support of relevant policies in various regions, the crystalline silicon solar cell industry has become the focus of development and popular industry in many regions. Some leading companies continue to expand, and traditional leading corporates continue to get in and want to have a finger in the pie. These new entrants will make the competition more fierce.
Threat from substitutes: At present, the cost of crystalline silicon solar photovoltaic products is still higher than that of traditional energy. Wind energy, water energy and geothermal energy in new energy have their advantages, except for traditional energy, which may replace solar photovoltaic products. In addition, alternative products represented by amorphous silicon thin-film solar cells are also developing rapidly. However, the progress of crystalline silicon photovoltaic technology is rapid, and downstream products are constantly updated, which reduces the risk of being replaced by substitutes to some extent.
Bargaining power of suppliers: The changing trend and price trend of the silicon material market is the most concerned issue for suppliers, and it is also one of the key factors affecting the development of the crystalline silicon photovoltaic industry. In the past few years, the international photovoltaic industry has developed rapidly, and the demand for polysilicon in the European market has increased greatly. China has also experienced a wave of investment in polysilicon projects. However, with the impact of the financial crisis and the European debt crisis, the market demand for polysilicon has plummeted, causing the domestic polysilicon price to fall below the production cost, and most companies are in a difficult situation. Recently, the price of silicon material has increased again due to the increase in monocrystalline silicon's production capacity and the increasing popularity of monocrystalline silicon products.
Bargaining power of buyers: In the past few years, China's photovoltaic products mainly relied on exports. However, the demand for the foreign market has decreased greatly due to the impact of the financial crisis and the European debt crisis, and the demand for the products has become less and less. The photovoltaic industry has turned into a buyer's market. The requirements and certifications of buyers are becoming more and more stringent.
3. Countermeasures and suggestions
Establish and improve the incentive policies for the photovoltaic industry; improve the industry access threshold, and integrate existing enterprises, focusing on the development of enterprises with brands, technological advantages and good innovation capabilities, and forming a certain industrial cluster and scale. In addition, accelerate financial innovation; reduce corporate financing costs, and enhance corporate competitiveness. Compared with foreign countries, domestic silicon material production is low and the cost is high in recent years. Chinese photovoltaic enterprises should master the advanced purification technology of silicon as soon as possible, reduce production costs, and improve the bargaining power of domestic silicon suppliers. It is recommended that corresponding policies should be provided to encourage and guide enterprises to develop the domestic photovoltaic market, effectively strengthen cooperation and exchanges with foreign enterprises, learn and introduce advanced technologies. It is necessary to strengthen and improve corporate management, enhance corporate brand value and corporate competitiveness.
In addition, domestic photovoltaic enterprises should strengthen the transformation of scientific and technological achievements. On the one hand, they should enhance the awareness of intellectual property rights, improve the protection of intellectual property rights in the process of new project research and development, and increase the number of patent applications, especially the number of invention patents. On the other hand, actively preside over and participate in the formulation of international standards, especially for component threshold and certification standards.
The crystalline silicon photovoltaic industry is greatly affected by government policies, and its downstream products have a high degree of industrialization. The competition from competitors in the same industry is relatively fierce. In order to enhance competitiveness, enterprises should actively develop the domestic market, strengthen independent research and development of technology, continuously develop new technologies, improve the conversion efficiency of crystalline silicon cells and components, and reduce production costs. Use the advantage of the brand to improve the bargaining power. Take advantage of the low cost to better compete on the price to stand out among the peers, and eliminate the threat of substitutes such as amorphous silicon solar cells.