Profits in PV upstream supply chain have risen in 2024 Q1 and are expected to continue in the next two quarters, but at a slower rate

In 2023, the gross profit of the PV supply chain will be about 514 billion yuan, with a year-on-year growth rate of -8.23%. The calculation process includes industrial silicon, silicon materials, silicon wafers, cells, modules, inverters, brackets, silver pastes, bceack sheets, adhesive films, glass, and frames. In 2024, the profit of the photovoltaic supply chain in the first quarter will be about 58.5 billion, a year-on-year decrease of 61% from the first quarter of 2023. In 2023, the proportion of profits from polysilicon, cells, inverters, and silver pastes will continue to be higher than the five-year averages, at 15.4%, 24.3%, 14.4%, and 1.6%, respectively. They were higher than the five-year average of 1.3%, 6%, 4% and 0.6%, respectively. In the first quarter of 2024, the proportion of profits in the midstream and upstream segments such as polysilicon, wafers, cells, and modules fell sharply, falling below the five-year average, while inverters, silver pastes, brackets, and glass rose. It is expected that upstream prices will continue to be under pressure in the second and third quarters of 2024, and profits in the PV supply chain will continue to shift downward.

In the first quarter of 2024, polysilicon and module prices fell rapidly, and the downstream installed yield of PV improved rapidly. When the silicon material is 50 yuan/kg, the average internal rate of return of industrial and commercial PV in China is 8.5%, 12.6% and 19.4% respectively. Compared with 80-90 yuan/kg polysilicon, the increase is about 0.6%-0.8%. Although the cost of installed capacity in Europe has fallen sharply, the income from electricity prices has also continued to decline, resulting in a divergence in the yield changes of different types of PV. Among them, the yield of concentrated PV in Europe has increased in the face of falling electricity prices. Although the electricity price will be low year-on-year in 2024, the yield of centralized PV in Europe in 2024 will reach 10.27%-11.28% in the case of 0.8-0.9 yuan modules, an increase of about 1%-2% compared with 2023; Distributed PV yields fell 4%-5% to 16.9%-17.7%.

Source：CITIC Futures