Report on Industrial Economics

This is a collaborative project with Shan Huang. We investigate Laplace New Energy Technology Co., Ltd. and the dynamics of China’s photovoltaic cell industry.

I am responsible for the sections on the photovoltaic equipment manufacturing industry, the company, and the models, as well as the creation of all the figures and charts. Shan Huang is responsible for the photovoltaic industry section and the conclusion. The data, introduction, and other content are the result of our joint effort.

Here is the translated version of introduction.

In the energy revolution of the 21st century, the development of renewable energy is not only a symbol of technological progress but also a core issue in the global energy market and new energy policies. As a crucial part of clean energy, the rapid development and widespread adoption of the photovoltaic (PV) industry are reshaping the global energy structure and driving the evolution of related manufacturing technologies and markets. Domestically, according to data released by the National Energy Administration in 2023, the total installed power generation capacity in the country is approximately 2.92 billion kilowatts, with solar power accounting for about 610 GW, representing 20.89% of the total. This has officially surpassed the installed capacity of hydropower, which is around 420 GW, making solar power the second-largest power source in the country by installed capacity and the largest form of new energy. Globally, China’s achievements in exporting photovoltaic-related products are remarkable. By 2016, China was producing 52% of the world’s polysilicon, 81% of silicon wafers, and had 70% of the global crystalline module production capacity (Ball, 2017). In recent years, despite a sluggish macroeconomic environment, photovoltaic cells have become one of China’s “new three major export items.” Therefore, an in-depth examination of the photovoltaic industry’s supply chain is of great practical significance. This paper will use Laplace New Energy Technology Co., Ltd. as a case study to explore its position in the photovoltaic cell production equipment manufacturing industry, analyze the current state and future trends of its supply chain, and how this industry can find opportunities for sustainable development in the global energy transition.

Before discussing the current status and future prospects of the photovoltaic cell production equipment industry, it is necessary to first elaborate on the development background of the photovoltaic industry and its profound impact on the upstream equipment manufacturing industry.

For a long time, it has been believed that the robust development of China’s photovoltaic industry is mainly due to government industrial policies. Regardless of the controversy surrounding this view, it is undeniable that the substantial subsidies provided by the Chinese government have helped many companies through their most difficult initial stages. In recent years, numerous companies have turned their profits from negative to positive. Lin (2011) pointed out that government subsidies in the new energy sector have helped companies develop self-sustaining capabilities, placing them in advantageous positions for long-term development and international competition. Therefore, any discussion about the photovoltaic industry cannot be separated from government industrial policies. We are particularly concerned about how much these policies have promoted industry development and their structural impacts on the industry.

Focusing within the industry, the expansion speed of the photovoltaic industry is closely linked to the pace of technological innovation, all driven by the continuous demand and updates for production equipment. Currently, the photovoltaic market is experiencing a certain imbalance between supply and demand, with overcapacity and price competition pushing the leading manufacturers’ cost lines. This phenomenon not only directly affects the profitability models of cell manufacturers but also deeply impacts the market demand for production equipment. With severe overcapacity in photovoltaic modules, causing module prices to approach the cost lines of leading manufacturers, what is the outlook for the upstream cell production equipment industry? Through in-depth analysis and quantitative assessment of the photovoltaic industry, we believe the prospects come from two aspects.

Firstly, leading photovoltaic manufacturers are implementing vertical integration strategies by purchasing cell production equipment and entering the cell manufacturing sector. This strategy not only optimizes supply chain management but also significantly reduces production costs, enhancing market competitiveness. Therefore, the demand for vertical integration from module manufacturers is a key factor driving equipment upgrades.

Furthermore, the iteration of cell technology often involves upgrading or completely replacing existing production lines, allowing equipment manufacturers to find growth points within a reasonable range of technology premiums. This upstream equipment upgrade demand driven by downstream market needs indicates that despite facing many challenges, the photovoltaic cell production equipment industry still possesses a certain market vitality.

The remainder of this paper is organized as follows: Section 2 provides an overview of the photovoltaic industry and the corresponding photovoltaic production equipment manufacturing industry. Section 3 specifically introduces Laplace New Energy Technology Co., Ltd. Section 4 offers an operable model.

The report is attached here. (In Chinese)