Summary of Key Points
Under the guidance of the state, the China Photovoltaic Industry Association has released the "General Rules for Photovoltaic Industry Cost Accounting Models," which establish a set of standardized cost calculation methods for the entire supply chain (silicon material → silicon wafer → battery → module). This initiative addresses the previous issue of inconsistent cost calculations within the industry, aiming to provide regulators with a clear understanding of companies' actual costs and to encourage them to shift from competing on price to focusing on technology, quality, and brand. By integrating these standards with energy consumption and safety regulations, a comprehensive management system is established to promote the high-quality development of the photovoltaic industry and enhance its global competitiveness.
Detailed Explanation
1. Industry Challenges: Inconsistent Cost Calculation Methods
In the past, different companies used various methods to calculate costs within the photovoltaic industry. Some included certain raw material costs, while others did not; some used coefficient A for labor costs, and others used coefficient B. For example, Company A might claim that its module cost is 1 yuan per watt, while Company B claims it’s only 0.8 yuan per watt, but the actual cost bases for both companies were vastly different, leading to chaotic pricing. Some companies could dump products at low prices by hiding costs, while others appeared more expensive due to more rigorous calculation methods, making fair competition difficult to achieve.
The new "General Rules" provide a unified framework for the entire industry, specifying exactly what costs should be included at each stage (such as raw materials, labor, and equipment depreciation), what coefficients to use (e.g., standard production loss rates), and which calculation models to employ. From now on, all companies will use the same set of rules when comparing costs, eliminating any opportunities for manipulation.
2. Timing of the Release: The Industry is in a Price War Phase, Needing a Change in Strategy
The photovoltaic industry is currently undergoing a period of adjustment, with excess capacity and declining product prices in certain segments (such as silicon wafers and modules), resulting in thin profits for many companies. To secure orders, companies often lower prices, sometimes at a loss, which prevents them from investing in research and development or quality improvement. This cycle can lead to a decline in the industry's overall performance.
The "General Rules" aim to change this trajectory by encouraging companies to focus on value rather than just price. They suggest investing in more efficient battery technology, improving module durability, and building strong brands. This shift will help the industry move from low-level competition to high-quality development.
3. Enhanced Regulation: From Unclear to Transparent Management
Regulators previously struggled to address the issue of chaotic pricing due to the lack of standardized cost calculations. With the new standards, they can accurately assess companies' costs. If a company reports prices significantly lower than those calculated using the unified method, it may be engaging in dumping behavior, and regulators can take appropriate action. Additionally, these cost standards complement two other key regulations: energy consumption standards (regulating production processes) and safety standards (ensuring product quality). Together, these three sets of standards form a comprehensive management system that shifts industry governance from reliance on voluntary compliance to institutionalized controls.
4. Long-Term Impact: Better Cost Awareness and Enhanced Global Competitiveness
For companies, using the unified cost calculation models will help them understand where their expenses are high and where they can optimize operations. For example, if a company finds that its raw material loss rates exceed industry averages, it can make targeted improvements to reduce costs. With all companies competing under the same rules, there will be less focus on low prices, allowing for more investment in innovation.
For the entire industry, this will strengthen China's photovoltaic sector’s advantages. With its large scale and advanced technology, China can use these standards to improve product quality and competitiveness in the global market. Photovoltaic products exported will not only have reasonable prices but also better quality and efficiency, contributing to the green energy transition in other countries and supporting the long-term success of the industry.
5. Next Steps for the Association
The association plans to implement two main actions: first, to educate companies about the new standards; second, to collect data on industry prices and costs to support regulatory efforts. Once the standards are fully implemented, competition in the photovoltaic industry will become more fair, and companies can focus on producing higher-quality products rather than simply competing on price.
In summary, these standards are not just theoretical; they provide a clear framework for the photovoltaic industry to move from chaos to orderly, value-driven development. For consumers, this will result in more transparent and reasonable photovoltaic products, enhancing their confidence when purchasing such products.