Beyond Seasonality: Analyzing Q1's Record-Breaking PV Installation Surge

Revised Content:

Unexpected Off-Season Strength
On March 21, official data revealed China's January-February photovoltaic installations reached 20.37 GW, representing a remarkable 87.6% year-on-year increase – significantly exceeding market forecasts.

Traditionally, Q1 is an installation off-season. This year, however, not only was activity robust, but it also set a record high. The author contends that coupled with increasing silicon supply driving sustained price declines and module cost reductions, full-year 2023 PV demand is poised to surpass initial expectations.

Supporting Data Points

• National Energy Administration (March 21): Jan-Feb new PV installations: 20.37 GW (+87.6% YoY).

• General Administration of Customs: Jan-Feb exports:

    ▫ Solar Cells & Modules: $7.798 billion (+6.5% YoY)

    ▫ Inverters: $1.95 billion (+131.1% YoY)

Defying Seasonal Norms
The Jan-Feb installation volume was the most surprising. Historically:

• Q1 and Q3 are off-seasons.

• Q2 ("630" rush) and Q4 ("1230" rush) are peak seasons, with Q4 often exceeding 40% of annual capacity.

• Jan-Feb, impacted by the Spring Festival, is typically the slowest period.
  This year starkly contrasts: Jan-Feb installations nearly doubled YoY, approaching the scale of H1 2022's     cumulative total.

Market predictions, factoring in the Spring Festival and post-pandemic recovery, anticipated subdued Jan-Feb installations with a typical March uptick. The actual data proved substantially more optimistic.

Industry feedback suggests frontline staff worked with greater intensity and took less holiday rest around this year's Spring Festival compared to prior years, aligning intuitively with the strong data.

Drivers of the Surge
Why such vigorous activity early in the year?

1.Clear Policy Direction & Intensifying Demand: Policy support for new energy construction (State-Owned Enterprises, "Five Big Six Small," private players) remains unequivocally positive. With the "14th Five-Year Plan" and approaching "15th Five-Year Plan" deadlines, installation momentum is intensifying.

2.Project Viability Restored; Focus Shifts from Ultra-Low Prices: Last year's stalled domestic installations stemmed primarily from high upstream silicon prices (modules peaking near 2元/W), depressing project viability due to low/no profitability.

The release of silicon supply since late 2022, despite temporary fluctuations, has driven a downward price trend. Module costs have now decreased sufficiently (1.7-1.8元/W) to restore favorable economics for energy developers.

Crucially, developers prioritize project execution over chasing the lowest possible module price. Brand reputation and guaranteed on-time delivery are paramount considerations. Ultra-low priced modules often carry delivery risks, making them less attractive.

The current reality is fierce Q1 market competition, with developers aggressively securing and commissioning projects. State-owned enterprises ("Five Big Six Small") are particularly focused on meeting annual installation targets. At 1.7-1.8元/W, modules enable viable project economics, driving the push to "install as much as possible."