China’s Solar Sector Faces Crossroads as Overcapacity and Policy Shifts Cloud Outlook – EQ
In Short : China’s solar industry is facing deepening challenges as demand weakens and prices plunge below production costs, causing heavy losses. At the SNEC conference in Shanghai, firms confront overcapacity, falling exports, and reduced government support. Output is declining, while provinces halt price guarantees. Industry leaders are now focusing on pricing reforms and strategies to navigate this downturn.
In Detail : China’s solar industry is grappling with mounting challenges as the sector gathers for the SNEC PV+ conference in Shanghai. Once a symbol of unstoppable growth, the industry now faces oversupply, weakened demand, and sharply falling prices. This downturn has sparked concern among manufacturers and investors alike.
Many solar panel producers are selling at prices below production costs, triggering billions in losses. These conditions have forced some companies to cut back on output and delay expansion plans. The mood at the conference reflects a significant shift from optimism to caution.
In May, global solar module output dropped by 7%, with expectations of a further 4–5% decline in June. This reflects a deepening mismatch between manufacturing capacity and market demand. Despite record capacity, the actual uptake of panels has failed to keep pace.
Compounding the problem are recent policy changes in China. Subsidies for solar projects have been rolled back, and new capacity must increasingly compete in market-based auctions. These changes have dented investor confidence and made returns less predictable.
Several provinces, including Inner Mongolia, have withdrawn guaranteed electricity prices for solar projects. This move may signal a slowdown in new renewable energy investments and further exacerbate uncertainty within the industry.
Amid this challenging backdrop, major players like Longi and Trina Solar are expected to offer guidance on navigating the crisis. Discussions at the SNEC conference are centering around price reform, overcapacity solutions, and strategies to stabilize the market during a period of transformation.
