According to DNE, recently, the "Announcement of the Bid Results for the Photovoltaic Module Procurement Project Supporting the Bohu County 600 MW Photovoltaic Project of the Guoneng Bazhou Pumped Storage Power Project of Xinjiang Electric Power Bazhou Power Generation Company" was published. According to the announcement, the 350 MW photovoltaic module procurement project (Lot I) supporting the Guoneng Bazhou Pumped Storage Power Project in Bohu County was awarded to Shanghai Electric Hengxi Photovoltaic Technology (Nantong) Co., Ltd.
Lot I includes "the supply of no less than 350 MWp and no fewer than 573,771 pieces of N-type 610Wp or above monocrystalline bifacial double-glass photovoltaic modules, as well as associated connectors for module strings, spare parts, specialized tools, factory testing, packaging, insurance, transportation to the destination, delivery, training, installation guidance, functionality realization, assistance in completing project optimization plans, on-site debugging and testing, participation in trial operation, final acceptance, and quality warranty responsibilities."
Based on publicly available information, Shanghai Electric Hengxi Photovoltaic Technology (Nantong) Co., Ltd.'s bid amount was RMB 2,185,799,765.80, with a unit price of RMB 0.625/W.
Is the low bid by Shanghai Electric reasonable?
From the bid price of RMB 0.625/W, it is lower than the integrated module cost of RMB 0.692/W published by the China Photovoltaic Industry Association in December, approximately 10% lower. Compared with the TOPCon bifacial photovoltaic module price index released by Digit Energy, this price is also significantly lower. Therefore, while it is clear that Shanghai Electric Hengxi Photovoltaic Technology (Nantong) Co., Ltd. won the bid with a low price, does a low price necessarily imply unreasonableness?
According to Article 33 of the "Tendering and Bidding Law of the People's Republic of China," "bidders shall not participate in bidding with a price lower than cost, nor shall they bid in the name of others or engage in fraudulent activities to win bids by other means." According to the "Implementation Regulations of the Tendering and Bidding Law of the People's Republic of China," in cases where "the bid price is lower than the cost or higher than the maximum bid price set in the tender documents," the evaluation committee shall reject the bid.
Thus, whether Shanghai Electric Hengxi Photovoltaic Technology (Nantong) Co., Ltd.'s bid price of RMB 0.625/W is reasonable depends on whether it is below cost. If it is below cost, it is unreasonable, and Xinjiang Electric Power Bazhou Power Generation Company should not confirm it as the winning bidder and should consider the bid invalid. Otherwise, it is reasonable. Clearly, low bidding does not mean it is unreasonable, but rather, the price should be compared with cost.
How to Determine If It Is Below Cost?
In photovoltaic module bidding, determining whether the price quoted by a photovoltaic module company is below cost is inherently challenging.
First, for every photovoltaic module company, its cost price is an absolute trade secret. No photovoltaic module company would disclose its cost price to a third party. According to the China Photovoltaic Industry Association's "Current Cost Analysis of Mainstream Photovoltaic Products (December 2024)," the cost of photovoltaic modules published as RMB 0.692/W (including tax and minimum necessary expenses) is primarily based on extensive surveys to establish cost models and periodic collection, analysis, and compilation of cost information from the photovoltaic industry for reference by the entire industry and government regulatory authorities.
The formation of this cost is based on extensive surveys and then calculated through modeling. As mentioned above, the cost price is an absolute trade secret, and enterprises cannot disclose trade secrets to third parties. Similarly, no association can obtain a company's trade secrets through surveys. The cost of RMB 0.692/W, while somewhat referential, cannot be used as a direct basis to determine the cost of every photovoltaic module company. Therefore, a company's quotation lower than this value cannot automatically be deemed below cost.
Second, the evaluation committee should professionally assess whether the bid price is below cost. The primary body for determining whether a low-price bid is below cost is the evaluation committee. Article 4 of the "Provisional Regulations on the Evaluation Committee and Evaluation Methods" states, "Evaluation activities shall be conducted in accordance with the law, and no unit or individual shall illegally interfere with or influence the evaluation process and results." Article 21 states, "During the evaluation process, if the evaluation committee finds that a bidder's price is significantly lower than other bids or the benchmark price, which may cause the bid price to be lower than individual costs, the bidder shall be required to provide a written explanation and relevant evidence. If the bidder cannot reasonably explain or provide relevant evidence, the evaluation committee shall determine that the bidder is bidding below cost, and the bid shall be invalid."
Hence, if the evaluation committee has evaluated the bidding for the Guoneng Bazhou Company's tender, the result should stand.
According to the "Tendering and Bidding Law of the People's Republic of China," bidders and other stakeholders who believe the bidding activity violates the provisions of this law have the right to raise objections to the tenderer or file complaints with the relevant administrative supervision department. Therefore, the previous "Four Questions: Xinjiang Electric Power Bazhou Power Generation Company's RMB 0.625–0.631/W Winning Module Projects" by the China Photovoltaic Industry Association holds no obligation for Xinjiang Electric Power Bazhou Power Generation Company to respond, as the association is neither a bidder nor another stakeholder.
Third, the results of the evaluation should be respected. The Ministry of Finance previously addressed the question, "Should determining whether a price is below cost be confirmed during the evaluation phase?" They clarified that "if the evaluation committee considers the bidder's price significantly lower than other prices passing the conformity review and potentially affecting product quality or contract performance, the bidder shall provide written explanations within a reasonable timeframe during the evaluation stage and, if necessary, submit relevant evidence. If the bidder cannot prove the reasonableness of its quotation, the evaluation committee shall treat it as an invalid bid. The evaluation committee's judgment on the reasonableness of the bid price should be made during the evaluation stage, and responses to inquiries should refer to the clarifications during the evaluation phase."
After the evaluation is completed, all parties should fully respect the results.
The Challenges of Photovoltaic Market Competition
The tender notice from Guoneng Bazhou Power Generation Company explicitly set a maximum bid price of RMB 0.6313/W. However, multiple companies submitted bids below this limit.
The winning bidder for Lot I, Shanghai Electric Hengxi Photovoltaic Technology (Nantong) Co., Ltd., is a subsidiary of Shanghai Electric Group, a state-owned enterprise. The company has an initial plan for a 4.8 GW high-efficiency heterojunction (HJT) cell and module production capacity, with the first phase of 1.2 GW located in Haimen, Nantong. In April this year, its TOPCon production line achieved mass production, and the HJT production line started operation in June. In November, the company also successfully qualified for Lot 9 of China Energy Engineering Group's 2024 centralized procurement of photovoltaic modules, with a bid price of RMB 0.653/W, also relatively low.
Whether the company's costs are low enough remains unknown. However, such low prices should not come at the expense of product quality and service.
Addressing the Challenges
From a supply-demand perspective, the price of photovoltaic modules is influenced by supply and demand. To prevent such low-price bidding and increasingly lower prices, the key is to improve the supply-demand balance. The solution must come from within the photovoltaic industry itself. Adjusting the supply of photovoltaic modules to match market demand is essential.
From the perspective of market competition, companies should shift their competitive mindset. Instead of seeking market share through loss-making bids, they should emphasize return on investment, which would restore rationality to the market.
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Source：https://mp.weixin.qq.com/s/jiSahXrdcFyMyA01gOI-pw