Economic Observer reporter Wang Yajie

In late August, photovoltaic module manufacturers collectively raised their prices. A month later, the momentum of this round of price increases has become increasingly weak.

On August 25th, a leading photovoltaic module manufacturer raised the price of mainstream N-type (currently the mainstream high-efficiency technology route) modules by 0.01 yuan to 0.04 yuan per watt.

On the same day, according to a survey conducted by Digital New Energy DataBM, four component companies including Jinko Energy Co., Ltd. (688223.SH, hereinafter referred to as "Jinko Energy"), Ates Sunshine Power Group Co., Ltd. (688472.SH, hereinafter referred to as "Ates"), 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 prices of mainstream N-type components, also increasing by 0.01 yuan to 0.04 yuan per watt.

This is a new round of price increases after the implementation of the anti involution initiative (a self regulatory agreement that promises a selling price not lower than full cost) signed by 8 upstream polycrystalline silicon companies in the 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 above-mentioned components, and they concentrate on bidding for annual usage, purchasing several gigawatts (GW, 1 GW equals 1 million kilowatts) at once.

The bidding for such annual large orders is usually finalized at the beginning of the year or the first half of the year, with prices and scale locked in at once. By the time the price increase is implemented in August, their orders have already fallen on the old price. In other words, the large buyers who occupy the majority of demand have left early, leaving less and less room for this round of price increases to be realized.

In mid September, although the public quotations of top manufacturers have not loosened, the transaction volume has quietly shifted downwards. Second - and third tier enterprises have taken the lead in lowering prices, and some special priced components have returned to around 0.65 yuan per watt.

Price Increase

The business manager of a leading photovoltaic module manufacturer told Economic Observer reporters that this pricing reference was based on the reference cost provided by the "General Principles for Cost Accounting Models in the Photovoltaic Industry" (a group standard led by the China Photovoltaic Industry Association, providing a unified standard for industry cost accounting), as well as considering its own full cost (covering depreciation, labor, finance, and other expenses). The price increase is also to repair losses.

After the price adjustment letter was sent out, his company increased prices in sync with the industry. A few days have passed, and the numbers on the quotation have changed. The price benchmark in the customer's bidding system is still stuck in place. The person in charge said that many customers are now negotiating with price increase notices, hoping that the bidding and tendering will still use the previous price benchmark, and some are still lowering prices.

Manager Li, the person in charge of an East China energy storage system integrator, also holds a contract like this: for the low-priced project of independent energy storage (energy storage power stations built and operated separately) that the company previously took on, he dare not continue to ship according to the original contract because the contract price has been locked in, but the cost of upstream battery cells (battery units of the energy storage system) has rebounded. Strictly fulfilling the contract will result in a loss for every 1MWh (megawatt hour, energy storage capacity unit) delivered.

Manager Li had repeated talks with the owner, who had sufficient alternative suppliers and refused to accept a price increase. In the end, they agreed to extend the payment period and increase free operation and maintenance services. Manager Li's company sacrificed its own profits to maintain the project. Manager Li said that the upstream of photovoltaics is calling for price increases, but the end users are not responding, which is highly similar to the situation of the energy storage industry. The core logic of the two is similar - the manufacturing side wants to repair the price after suffering losses for a long time, but the end investor has a rigid profit red line and will not simply pay just because the manufacturer sends a price increase letter.

Manager Li has recently handled several contracts, and the final quotations were signed based on the latest price increase letter from the manufacturer. However, at the same time, he offered discounts to the buyer by increasing the supply volume, extending the warranty period, and providing free on-site technical support. He also split a contract into two parts, an equipment contract and a technical service contract, and signed them separately. The equipment contract was executed at a high price, and a portion of the price was refunded in the form of a technical service fee. The payment for goods will be settled through bills, and the cost of funds will be borne by the supplier themselves.

He said, "The common result of these measures is that the contract price has increased, but the overall cost actually paid by the buyer has not increased synchronously

A person from a polysilicon company analyzed that after 8 polysilicon companies signed the anti involution initiative, the number of orders significantly below cost price did indeed decrease. But the public quotation has kept the bottom line of costs, and competition has not disappeared. Instead, it has shifted from a simple price dispute to a competition of commercial terms and services such as payment terms and settlement methods. Enterprises strive for orders by extending payment terms, accepting acceptance bills, and offering complimentary services. This indicates that the initiative can manage public quotations, but it is difficult to restrict adjustments at the level of commercial terms. This change itself is not a bad thing. It drives industry competition from "price for quantity" to "service for order", which is actually more beneficial for the long-term operation of enterprises and the healthy development of the industrial chain.

The bulk order window is closing

When the price increase letter was sent out, the heaviest batch of components this year had already been priced according to the old benchmark.

According to the statistics of Digital New Energy Data Base, seven major power generation groups have released group level component framework procurement projects for 2026, totaling approximately 45.6GW (framework procurement, with suppliers and unit prices determined first, and then orders placed in batches), with only four remaining unpublished. The biggest transactions of this year have been signed based on the previous price benchmark.

The project leader of an overseas clean energy base under a state-owned power generation enterprise recently returned a project income calculation table to the finance department. He told the Economic Observer reporter that according to his overseas high financing cost projects, if the component price increases by 0.03 yuan per watt, the IRR (internal rate of return, a core indicator for measuring project investment return) of the ground power station will be lowered by about 0.4 to 0.6 percentage points. Nowadays, the financing cost of overseas new energy projects is already rising, and the yield red line of many projects is stuck at around 6%. Once it falls below this line, the project will directly lose its investment value and can only be postponed.

When the news of the collective price increase by domestic component factories reached him on August 25th, his low-priced inventory, combined with long inventory orders, could probably cover the project construction needs for the next 3 to 4 months. During this period, he doesn't want to rush to replenish spot goods with high prices.

The person in charge of the overseas clean energy base project mentioned above stated that if all purchases are made based on the latest spot prices now, the investment return calculation of the entire project will not be valid. The price increase cannot be directly absorbed internally and must be negotiated back and forth with suppliers. We will not passively accept the manufacturer's price increase notice.

The situation faced by the head of a leading A-share photovoltaic power plant operator is similar. The person in charge said, "The impact of component price increases is concentrated in the newly installed capacity sector, where components account for about 40-50% of the total investment in ground power stations. As component prices rise, the initial investment of projects of the same scale will directly increase. Our team will re calculate project returns, and some new projects with yield lines will be temporarily suspended or delayed in their construction pace.

The bargaining power of upstream and downstream is reversing. The head of the leading A-share photovoltaic power plant operation company further stated that in the past, when module supply was scarce, module factories were the strong side, and power plant owners could only passively accept quotations. Nowadays, there is overcapacity in the industrial chain, and manufacturing enterprises are suffering from widespread losses. Orders have become scarce resources. As the operator of the power plant, my negotiating position has significantly improved. However, this does not mean that we can arbitrarily lower prices, nor do we want the industry to continue to engage in vicious low price competition. If manufacturing enterprises go bankrupt on a large scale, there will be problems with equipment quality assurance and spare parts supply in the future, and the risk will ultimately be transmitted back to the substation.

The project leader of the overseas clean energy base mentioned above is making responses, such as extending the payment term for some orders from the mainstream 3 to 6 months to 9 to 12 months through negotiation, and requesting suppliers to increase spare parts and extend the warranty period. The person said, "For us investors, the total investment cost is the core assessment indicator, and paper quotations are just one dimension

The overseas market does not accept all orders. Jiang Cong, the overseas project manager of a leading light storage enterprise, told reporters that the company's overseas project procurement is divided into two modes: one is long-term orders with price locking 6 to 12 months in advance, and the other is small-scale spot procurement. In this round of upstream price increases in China, long orders that have already been signed are not affected, but for newly launched spot inquiries, the external quotes provided 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 requirements are tight, the source selection rights are limited, and the tolerance for price increases will be higher. However, large power groups in the European and Latin American markets have a very tight investment return red line for their projects and will not easily accept suddenly rising equipment quotations

Anticipate

The upstream actions are earlier than the component side.

Whether the price increase can be implemented ultimately depends on whether the product is worth the price. The price manager of the top component manufacturer mentioned above said, "The policy initiative provides a cost bottom line, but there is a mismatch between the actual demand of the end market, the project benefit model, and the cost line

The person in charge of the leading A-share photovoltaic power station operation enterprise judged that the short-term quotation can be supported by industry initiatives and policy expectations, but whether it can stand firm in the medium and long term depends on two things: first, whether the inventory of high enterprises can be effectively depleted, and second, whether the backward production capacity can be substantially cleared. If the prices of silicon materials and components can truly remain stable above the reasonable cost line, the investment payback period of ground photovoltaic power plants will be extended by 0.3 to 0.5 years, which is beneficial for the power plant operators. However, the premise is that the price increase can be transmitted and implemented, and cannot be just a paper quotation.

On August 26th, the price of midstream battery cells (core components of components) fell back to 0.32 yuan to 0.35 yuan per watt, and the previous week's price of 0.38 yuan is no longer visible; The signing and delivery time for the power range of 620 watts to 630 watts (referring to the power generation of a single component) has been shortened from one month to one week.

The component factory is also making corresponding preparations. The price manager of the top component manufacturers mentioned above has already left some room for orders in September: "If there are not enough orders to land at the new price in the future, it is not ruled out that some products will be adjusted through commercial terms and payment terms to give back the actual transaction price. The company does not want to return to the old path of losing money to grab orders, but first of all, it must ensure the survival of cash flow

Since August 25th, the public quotation for mainstream N-type components has increased by a few cents. The production schedule for September will be finalized soon. The numbers on the quotation have been changed, but for component companies, whether this round of price increases can truly make a profit depends on the remaining months.

(Jiang Cong is a pseudonym at the request of the interviewee)

(Author Wang Yajie)