Longi Green says its higher efficiency technology will win the arms race among China’s solar panel producers

Chinese solar panel manufacturer Longi Green Energy Technology believes the right technology will help its product line defy the price slump that is weighing on other suppliers, as the industry battles with rising capacity that threatens to accelerate deflationary forces during a period of weakening global demand.

Based in Xi’an, the capital of Shaanxi province in central China, Longi believes the higher efficiency of its monocrystalline silicon wafer technology will emerge as the dominant industry standard, as the less efficient competitors fail to win the hearts and minds of consumers.

Longi, the world’s largest producer of monocrystalline silicon wafers, is listed in Shanghai.

In February the company unveiled a three-year plan to triple its production capacity, from 15 gigawatts late last year to 28GW late this year, 36GW late next year and 45GW by the end of 2020. 

“We expect our products will see huge global demand because monocrystalline products have been gaining market share steadily in the past three years as technological advances cut production costs and product prices,” said Amy Ma, a spokeswoman for the company. 

“On a kilo-watt-hour [power output] basis, monocrystalline products have an absolute cost advantage in the market.” 

While declining to divulge the geographical split of the expansion plan, Ma noted it has recently opened a 10GW-a-year plant in Yunnan province where it enjoys local government incentives. 

Monocrystalline wafers have an average sunlight-to-electricity conversion efficiency of around 22 per cent, compared to about 20 per cent of the mainstay multicrystalline products that command around 65 per cent share of the global market. 

Monocrystalline products are more sought after by rooftop panel customers. Because of limited roof space, many customers prefer to have higher efficiency panels to maximise power output, especially in less sunny regions. 

Longi in February said it would invest US$309 million to double capacity to 1GW in India – China’s largest export market for solar products by value.

The company also said it expects to report a jump in net profit for 2017 of 113 to 133 per cent, or between 1.75 billion yuan (US$276.65 million) and 2.05 billion yuan. 

Meanwhile, rival GCL Poly Energy, the world’s largest maker of multicrystalline wafers and raw material polysilicon, reported a 46 per cent drop in operating profit for 2017 in its solar materials operation.

Daiwa Capital Markets’ analysts expect GCL’s materials manufacturing profit margin to continue to be squeezed as product prices fall faster than production costs, amid intensifying competition between mono and multicrystalline products.

They cited management as saying GCL will accelerate expansion of its production capacity of mono products in a bid to stay competitive. 

Jessica Jin Feng, a Shanghai-based senior solar sector analyst at industries research provider IHS Markit, projected monocrystalline panels’ global share to rise to 40 per cent this year from 35 per cent last year.