China Solar and Storage Firms Face Challenging 2024: BNEF Summit

By Bloomberg

Nov 27, 2023

image is BloomburgMedia_S4R8S8T0AFB401_27-11-2023_08-00-16_638366400000000000.jpg

Jinko Solar’s Global VP Qian Jing discusses China’s solar industry and Jinko’s business strategy. She speaks from the sideline of BNEF Summit with Yvonne Man on “BloombergMarkets: China Open.”

The progress of China’s energy transition is in focus as executives from some of the world’s top power and renewables companies meet in Shanghai for the BNEF Summit, a major conference Monday and Tuesday.

The nation’s solar companies face an “incredibly challenging” 2024, and plunging module prices may squeeze out some players, industry executives said in panel discussions. Meanwhile, a lack of dynamic power markets in most parts of China is creating an uncertain future for the energy storage industry.

The event is taking place immediately ahead of the global COP28 forum in Dubai, where the focus will be on building momentum after China and the US, the biggest polluters, vowed this month to step up joint action to tackle climate change.

Time stamps are Shanghai.

Jinko Solar’s Global VP Qian Jing discusses China’s solar industry and Jinko’s business strategy. She speaks from the sideline of BNEF Summit with Yvonne Man on “BloombergMarkets: China Open.”

China Energy Storage Faces Profit Problems (2:20 p.m.)

The energy storage industry in China still faces uncertainties over how it can build a sustainable business model because of profitability concerns, executives said.

Large-scale storage needed to balance out intermittent wind and solar generation still has no way of recouping an investment payback because of a lack of dynamic power markets in most parts of the country, said Xu Hui, director of strategy development for China Three Gorges Renewables Group. That’s curbing investment in the technology — about 90% of China’s energy storage projects are built to meet government mandates, not because of market forces, according to BloombergNEF.

Overseas projects can be more profitable, and account for about 60% of Chinese-made systems, said Steven Chen, chief executive officer at Eve Energy Storage Co. Europe saw a surge in interest last year after Russia’s invasion of Ukraine caused energy prices to spike, said Tan Wen, president of Pylon Technologies Co. While that’s waned a litte amid lower prices this year, the region still has a bright long-term future, he said.

Executives Bet on Solar’s Future (12:20 p.m.)

Despite the gloomy outlook for 2024, top solar executives are bullish on the long-term future of their industry, and aren’t afraid to put their money where their mouths are.

Leaders of five solar manufacturers speaking on a panel all said they expected the industry to hit one terawatt of annual sales by either 2029 or 2030. That level would be more than double this year’s forecasted total.

Canadian Solar Inc. Chairman Qu Xiaohua even issued a challenge to the panel’s audience — if they don’t believe the industry can get to that level, he’s willing to make a bet. But don’t expect anyone to get rich off the wager: he set the stakes at 1 yuan (14 US cents).

Solar Industry May See Consolidation Next Year (11:50 a.m.)

Plunging solar module prices are a deep concern among industry leaders, causing major problems for supply chains and spurring industry consolidation. 

“Under the current bidding prices, there is no profit across the entire supply chain, and there is no way that this is sustainable,” said Gao Jifan, chairman of Trina Solar Co. As the top five or six players are expanding manufacturing capacity faster, smaller companies should be prepared to be squeezed out, he said.

However, Li Xiande, chairman of Jinko Solar Co., said falling prices could promote development as there is still room for companies with integrated capacities and technology advantages to make profits.

China Needs Better Policies on Energy Storage (11:45 a.m.)

China’s rapid acceleration of solar deployment means the country needs more energy storage, but its power market policies are hampering development, executives said in a panel discussion.

The best markets for energy storage are places like California and Australia, where there’s a large amount of solar generation and liberalized power systems that see prices fluctuate during the day, said Qu, Canadian Solar’s chairman. That gives market signals to energy storage providers, allowing them to buy cheap electricity when solar generates during the day and then sell higher-priced power after the sun sets.

In China, where solar capacity may soon hit 600 gigawatts, companies build energy storage systems but don’t put them into use because many places still have power priced at the same level no matter what time of day it is, said Trina Solar’s Gao. The country needs better policies to guide development and open the market, he said.

Lithium Battery Prices Resume Drop in 2023 (10:45 a.m.)

After a rare price increase last year, the cost of lithium-ion battery packs has resumed its downward trajectory and fallen to a record low in 2023, according to BloombergNEF.

Prices fell 14% to $139 per kilowatt-hour, researchers at the firm said in a press release. The lowest prices could be found in China, which dominates global battery manufacturing, at $126 per kilowatt-hour. Battery demand across electric vehicles and large-scale storage is expected to jump 53% this year to 950 gigawatt-hours.

Solar Needs Coordinated Development: Trina (10:30 a.m.)

The solar industry is seeing disorderly and cut-throat competition and excessive capacity as more players enter the sector, Gao of Trina Solar said during a presentation. Top players should lead an effort to restore coordinated development, he said.

China’s renewable energy growth will exceed increased power demand next year, but future solar expansion still faces challenges including grid limitation as well as consumption and transmission bottlenecks, Gao said.

Global Links Needed for Supply Chains (10:15 a.m.)

Building up clean energy supply chains outside of China is a growing focus for the country’s renewable giants, according to a panel discussion.

China and other regions like Europe shouldn’t view themselves as competitors in clean energy manufacturing, said Guo Shengwei, vice president of China National Offshore Oil Corp.’s Energy Economics Research Institute. Different regions have different advantages in manufacturing, and working together will improve efficiency, Guo said.

If cost were the only factor, Chinese firms might not look to expand factories overseas, said Dai Qinghua, a board director at wind turbine manufacturer Sany Group Co. Instead, the main driving force for global expansion is meeting local manufacturing requirements in different jurisdictions, he said.

For China to continue to accelerate its energy transition, the country needs to speed power market reforms to increase trading and transparency, said Roger Chen, managing director of Hong Kong utility CLP Holdings Ltd.

Solar Faces Challenging 2024: Jinko (9:55 a.m.)

Companies in China’s solar industry will face additional pressure next year even as the domestic market sustains significant growth, according to Jinko Solar Co., one of the world’s largest suppliers.

“2024 will be incredibly challenging, not only for single companies but for the whole industry,” Qian Jing, Jinko global vice president, said in an interview with BloombergTV. “Even facing increasing pressures from price drops and new competition, we will not cut the price in response.”

Jinko aims to work more closely with suppliers to stabilize costs, she said. The manufacturer will also continue to add more production capacity, including overseas, and seek to boost product efficiency.

©2023 Bloomberg L.P.

By Bloomberg News

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