1、Lowering benchmark electricity prices is imperative
1.International bidding price has reached a new low
According to a report by"Electrek",the Mexican Ministry of Energy recently released the bidding results for 2.3 gigawatts/5.5 TWh(5.5 billion kWh,connected to the grid in 2020)photovoltaic procurement.ENEL Green Power Company of Italy quoted 1.77 cents/kWh(equivalent to 0.11 yuan/kWh),breaking the recent record of Saudi Arabia's lowest photovoltaic quotation of 1.79 cents/kWh.The article suggests that there may be a quotation of 1 cent/kWh(equivalent to 7 cents/kWh)in 2019.
Screenshot of Electrek's original report
In this photovoltaic project bidding in Mexico,the average quotation from other companies was 2.05 cents/kWh.The quotation from Chinese company Atlas is 2.02-2.34 cents/kWh.The specific prices of each company are shown in the table below.
As of now,the lowest project electricity price in China is the bid winning electricity price of 0.45 yuan/kWh at Yingli,a leading base in Wuhai(expected to be connected to the grid in 2018).Although there are differences in electricity prices caused by grid connection time nodes,compared to the constantly low photovoltaic electricity prices in the international market,the benchmark electricity prices of 0.65 yuan/kWh,0.75 yuan/kWh,and 0.85 yuan/kWh in China are significantly higher than the international level.
2.There is a huge gap in subsidies for renewable energy,and the schedule for affordable online access is determined
It is predicted that by 2020,China's renewable energy supplementary subsidy gap may reach a level of 300 billion yuan.Many articles have provided detailed explanations before,so I won't go into detail here.
On November 8th,the National Development and Reform Commission issued the"Opinions on Comprehensively Deepening the Reform of Price Mechanism",which clearly proposed the implementation of a mechanism for reducing the benchmark grid electricity prices of new energy sources such as wind power and photovoltaic power.By 2020,the grid electricity prices of wind power and coal-fired power generation will be equivalent,and the grid sales electricity prices of photovoltaic power will be equivalent.
Based on the above two points,the reduction of photovoltaic benchmark electricity prices in 2018 is imperative!
On the basis of the benchmark electricity price reduction,in order to ensure existing profits,the project will inevitably require a decrease in the price of photovoltaic systems,mainly the price of photovoltaic modules.
2、There has been no significant decrease in the price of photovoltaic modules
Previously,State Power Investment Corporation of China conducted bidding for ordinary projects,leader projects,and super leader projects to be executed in the first half of 2018,with a total scale of up to 3.4GW,which is known as the benchmark for component prices in the industry in the first half of 2018.The results of project bid opening are shown in the table below.
Table:Bid Opening Results of Guodian Investment
Compared with the current price results of photovoltaic modules surveyed by PVinfolink last week(as shown in the figure below),the average bidding price of Guodian Investment is 3-4 cents lower than the current price.It can be seen that the quotations of various component enterprises are basically based on current prices,and it is believed that the prices in the first half of 2018 will not significantly decrease compared to the current situation.
The price of photovoltaic modules has not significantly decreased,and other costs of photovoltaic systems(such as brackets,concrete,cables,labor costs)are all increasing.Therefore,the overall cost of photovoltaic systems will not decrease in the first half of 2018.
The following table shows the calculation of project yield for PVtools under different construction costs in three types of resource areas with good power generation.
Table:Return on Total Investment Projects for a Class of Regions(1500 Hours)at Different Construction Costs
Table:Total investment project return rate for Class II regions(1250 hours)at different construction costs
Table:Return on Total Investment Projects for Three Types of Regions(1100 Hours)at Different Construction Costs
From the three tables,it can be seen that with the current low level of total investment(6000 yuan/kW),without considering subsidy arrears(which actually require arrears of more than 3 years),
The current benchmark electricity price has been reduced by 2.5 cents/kWh.Projects with good power generation in Class I and Class II areas can basically meet investment requirements in terms of revenue,but Class III electricity price areas must have system costs reduced.
The current benchmark electricity price has been reduced by 5 cents/kWh,even for projects with good power generation in Class I,II,and III regions,the returns cannot meet the investment requirements.
However,the 5 point/kWh reduction is significantly lower than the country's expected value,and the actual reduction may reach as high as 0.1 yuan/kWh or even more.This means that the system cost may need to be reduced by 1000 yuan/kW(1 yuan/W)on the existing basis.
It is very obvious that according to the previous component price expectations,the component prices in 2018(at least in the first half of the year)cannot be reduced by 1 yuan/W!If the benchmark electricity price of photovoltaic systems is lowered and the cost of photovoltaic systems does not decrease,the profitability of the project will definitely decrease,and investors'investment willingness will inevitably decrease.
3、Industry generally optimistic about the photovoltaic market in 2018
Based on current installed capacity data,some research institutions believe that the domestic photovoltaic installation market will reach 52GW in 2017.Previously,after communicating with some friends,everyone was very optimistic about the market next year.It is widely believed that the installed capacity in China in 2018 will be over 50GW.The following figure shows the market forecast of a certain institution for 2018,which is as high as 60GW!
4、The Impossible Triangle of Electricity Price,Component Price,and Installation Scale
The expected reduction in photovoltaic benchmark electricity prices in 2018;
Only by reducing the cost of photovoltaic systems can we ensure a good rate of return for the project and maintain a large installed capacity(such as over 50GW);
However,based on the bidding prices of Guodian Investment in the past few days,it is believed that the component prices in the first half of 2017 will not significantly decrease;Therefore,in the case of an increase in the cost of other auxiliary materials,the cost of photovoltaic systems will not decrease,the project yield will inevitably decrease,and investors'investment enthusiasm will also decrease.Where does the installed capacity of 50GW come from?
The following three scenarios:
1.The photovoltaic benchmark electricity price has been significantly reduced,with a reduction of up to 0.1 yuan/kWh or even more;
2.The price of photovoltaic modules has slightly decreased compared to the current price,with no expectation of a significant decrease(maintained at over 2 yuan/W);
3.In 2018,the installed capacity of photovoltaics exceeded this year,even reaching 60GW.
The above three situations may not exist simultaneously!
