Photovoltaic giants are raising prices collectively, but the window for large orders is closing.
This is a new round of price hikes following the implementation of the anti-involution initiative (a self-discipline agreement promising that the selling price will not be lower than the full cost) signed by 8 polysilicon enterprises in the upstream photovoltaic industry. However, the order window that can accommodate this round of price increases is closing. Several large power generation groups are the largest buyers of the aforementioned modules, which conduct centralized bidding for their annual consumption, with a single procurement volume reaching several gigawatts (GW, 1 GW equals 1 million kilowatts).
In late August, photovoltaic module manufacturers collectively raised their quoted prices. A month later, the momentum of this round of price hikes is weakening.
On August 25, a leading photovoltaic module manufacturer raised the quoted price of mainstream N-type (the current mainstream high-efficiency technical route) modules by RMB 0.01 to 0.04 per watt.
On the same day, according to the research of DataBM New Energy, JinkoSolar Co., Ltd. (688223.SH, hereinafter referred to as "JinkoSolar"), Canadian Solar Inc. (688472.SH, hereinafter referred to as "Canadian Solar"), GCL Integrated Technology Co., Ltd. (002506.SZ, hereinafter referred to as "GCL Integrated"), and Shenzhen Skyworth Photovoltaic Technology Co., Ltd. (hereinafter referred to as "Skyworth Photovoltaic") have raised the quoted prices of their mainstream N-type modules, with an increase of RMB 0.01 to 0.04 per watt as well.
This is a new round of price hikes following the implementation of the anti-involution initiative (a self-discipline agreement promising that the selling price will not be lower than the full cost) signed by 8 polysilicon enterprises in the upstream photovoltaic industry.
However, the order window that can accommodate this round of price increases is closing. Several large power generation groups are the largest buyers of the aforementioned modules, which conduct centralized bidding for their annual consumption, with a single procurement volume reaching several gigawatts (GW, 1 GW equals 1 million kilowatts).
The bidding for such large annual orders is usually finalized at the beginning of the year or in the first half of the year, with the price and scale locked in at one time. By the time this round of price hikes landed in August, the orders in their hands had already been settled at the old prices. In other words, the large buyers that account for the majority of demand have left the market in advance, and the space left for this round of price hikes to be realized is getting narrower and narrower.
In mid-September, although the public quoted prices of leading manufacturers have not loosened, the transaction prices have quietly dropped. Second- and third-tier enterprises took the lead in cutting prices, and some special-priced modules returned to around RMB 0.65 per watt.
01
Price Hike
A business leader of a leading photovoltaic module manufacturer told the reporter of Economic Observer that this pricing refers to the reference cost given by the General Rules for Cost Accounting Model of Photovoltaic Industry (a group standard led by the China Photovoltaic Industry Association, which provides a unified standard for industry cost accounting), and is also based on its own full cost (the cost line covering all expenses such as depreciation, labor, and finance). This price hike is also aimed at reversing losses.
After the price adjustment letter was issued, his enterprise followed the industry to raise prices synchronously. A few days passed, the figures on the quotation sheet were changed, but the price benchmark in the customer's bidding system remained at the original level. The person in charge said that many customers are now coming to negotiate with the price increase notice, hoping that the bidding will still follow the previous price benchmark, and some are even pressing for lower prices.
Li, the person in charge of an energy storage system integrator in East China, also has such a contract in hand: for the low-price independent energy storage (a standalone energy storage power station constructed and operated separately) project that his company previously took over, he dared not continue to deliver goods according to the original contract, because the contract price was locked, but the cost of upstream cells (the battery unit of the energy storage system) rebounded, and strictly performing the contract would lose money for every 1MWh (megawatt-hour, the unit of energy storage capacity) delivered.
Li repeatedly negotiated with the owner, who had sufficient alternative suppliers and refused to accept the price increase. Finally, they reached an agreement to extend the payment period and add free operation and maintenance services. Li's company sacrificed its own profits to keep the project running. Li said that the upstream photovoltaic industry is calling for price increases, but the end market does not accept it, which is highly similar to the situation of the energy storage industry. The core logic of the two is similar — the manufacturing side has suffered losses for a long time and wants to restore prices, but the end investors have a rigid red line of return, and will not pay for it just because the manufacturer issues a price increase notice.
For several contracts that Li has handled recently, the final quoted prices were signed in accordance with the manufacturer's latest price increase notice. But at the same time, he gave benefits to the buyer by increasing the supply volume, extending the warranty period, and providing on-site technical support for free, and split one contract into two: equipment contract and technical service contract. The equipment contract is executed at a high price, and part of the price is returned in the form of technical service fee. The payment is settled by bill, and the capital cost is borne by the supplier.
He said: "The common result of these measures is that the contract price has risen, but the actual total cost paid by the buyer has not risen synchronously."
A person from a polysilicon enterprise analyzed that after the 8 polysilicon enterprises signed the anti-involution initiative, orders with prices significantly lower than the cost have indeed decreased. However, while the public quotation has kept the bottom line of cost, competition has not disappeared. Instead, it has shifted from pure price competition to competition in commercial terms and services such as payment period and settlement method. Enterprises strive for orders by extending the payment period, accepting acceptance bills, and giving away additional services. This shows that the initiative can control public quotations, but it is difficult to restrict adjustments at the level of commercial terms. This change itself is not a bad thing. It promotes industry competition from "exchanging price for volume" to "exchanging services for orders", which is more beneficial to the long-term operation of enterprises and the healthy development of the industrial chain.
02
The Large Order Window Is Closing
When the price increase notice was issued, the prices of the heaviest batch of large module orders this year had already been locked according to the old benchmark.
According to statistics from DataBM New Energy, 7 major power generation groups have released group-level 2026 module framework procurement (framework procurement, which determines suppliers and unit prices first, and then places orders in batches) projects, totaling about 45.6GW, and only 4 have not been released. Several of the largest businesses this year have been signed in accordance with the previous price benchmark.
The person in charge of an overseas clean energy base project under a central power generation enterprise recently returned a project income calculation form to the finance department. He told the reporter of Economic Observer that according to the calculation of his overseas projects with high financing costs, if the module price rises by RMB 0.03 per watt, the IRR (Internal Rate of Return, the core indicator to measure project investment return) of the ground power station will be reduced by about 0.4 to 0.6 percentage points. Now the financing cost of overseas new energy projects is rising, and the rate of return red line of many projects is around 6%. Once it falls below this line, the project will directly lose investment value and can only be suspended.
When the news that domestic module manufacturers collectively raised prices on August 25 reached him, his low-price inventory, combined with the existing long-term orders, could cover the project construction demand for the next 3 to 4 months. During this period, he did not want to rush to replenish spot goods at high prices.
The aforementioned person in charge of the overseas clean energy base project said that if all purchases are made at the latest spot quotation now, the investment return calculation of the entire project will not be valid. This price increase cannot be directly absorbed internally. It is necessary to negotiate with suppliers repeatedly, instead of passively accepting the manufacturer's price increase notice.
The person in charge of a leading A-share photovoltaic power station operation enterprise is facing a similar situation. The person in charge said: "The impact of module price hikes is concentrated in the new installed capacity sector. Modules account for about 40% to 50% of the total investment of ground power stations. When the module price rises, the initial investment of projects of the same scale will directly increase. Our team will re-calculate the project income, and some new projects whose rate of return is on the edge will be suspended, and the construction pace will be delayed.
The bargaining power of upstream and downstream is reversing. The aforementioned person in charge of the leading A-share photovoltaic power station operation enterprise further said that when the module supply was tight in the past, module manufacturers were in a strong position, and power station owners could only passively accept the quotation. Now the industrial chain has excess production capacity, and manufacturing enterprises are suffering widespread losses. Orders have become scarce resources. As a power station operator, his negotiation position has been significantly improved, but this does not mean that prices can be suppressed indefinitely, nor does he want the industry to continue vicious low-price competition. If a large number of manufacturing enterprises go bankrupt, subsequent equipment warranty and spare parts supply will have problems, and the risk will eventually be transmitted back to the power station side.
The aforementioned person in charge of the overseas clean energy base project is taking countermeasures, for example, the payment period of some orders has been negotiated and extended from the mainstream 3 to 6 months to 9 to 12 months, and at the same time, suppliers are required to add spare parts and extend the warranty period. The person said, "For us investors, the total investment cost is the core assessment indicator, and the paper quotation is only one of the dimensions."
The overseas market does not accept all price increases either. Jiang Cong, the person in charge of overseas projects of a leading photovoltaic and energy storage enterprise, told reporters that the procurement of the company's overseas projects is divided into two modes: one is long-term orders with prices locked 6 to 12 months in advance, and the other is small-batch spot procurement. This round of upstream price hikes in China will not affect the signed long-term orders, but for new spot inquiries, the external quotations given by manufacturers have indeed increased.
Jiang Cong said: "In some emerging markets in the Middle East and Southeast Asia, the local photovoltaic supply chain is weak, the project delivery cycle is tight, and there are few options for goods sources, so the tolerance for price increases will be higher. However, large power groups in the European and Latin American markets have very strict red lines for project investment returns, and will not easily accept sudden increases in equipment quotations."
03
Prediction
The upstream action came earlier than the module side.
Whether the price increase can be realized ultimately depends on whether the product is worth the price. The aforementioned person in charge of pricing of the leading module manufacturer said: "Policy initiatives set the bottom line of cost, but there is a mismatch between the actual demand of the end market, the project return model, and the cost line."
The aforementioned person in charge of the leading A-share photovoltaic power station operation enterprise judged that short-term quotations can be supported by industry initiatives and policy expectations, but whether they can stabilize in the medium and long term depends on two things: first, whether the high inventory can be effectively reduced, and second, whether the backward production capacity is substantially cleared. If the prices of silicon materials and modules can really remain stably above the reasonable cost line, the payback period of investment for ground photovoltaic power stations will be extended by 0.3 to 0.5 years, which is good for power station operators, but the premise is that the price increase can be transmitted and implemented, not just a paper quotation.
On August 26, the quotation of mid-range cells (the core component of modules) fell back to RMB 0.32 to 0.35 per watt, and the previous week's quotation of RMB 0.38 was no longer visible; the order delivery period for the 620W to 630W power range (referring to the power generation of a single module) was shortened from one month to one week.
Module manufacturers are also making corresponding preparations. The aforementioned person in charge of pricing of the leading module manufacturer has already left leeway for the orders in September: "If there are not enough orders settled at the new price afterwards, it is not ruled out that some products will give back the actual transaction price through the adjustment of commercial terms and payment period. Enterprises do not want to go back to the old path of grabbing orders at a loss, but the first priority is to ensure cash flow to survive."
Since August 25, the public quotation of mainstream N-type modules has increased by a few cents. The production scheduling (production plan) arrangement for September will be finalized soon. The numbers on the quotation sheet have changed, but for module enterprises, whether this round of price increases can really be reflected in their revenue still depends on the remaining few months.
(At the request of the interviewee, Jiang Cong is a pseudonym)
This article is from the WeChat Official Account "Economic Observer", written by Wang Yajie, and published with authorization from 36Kr.