China’s Dominance in the Photovoltaic Industry
China stands as a giant in the photovoltaic industry. Not only is it installing massive solar parks, but it also exercises a monopolistic grip on production that has made the entire world reliant on its technology. In doing so, it has drastically driven down the prices of solar panels, squeezing out European and American manufacturers and triggering a domestic price war . After years of financial losses, firms are now searching for viable solutions.
Manufacturing Less Panels
In 2020 , China unveiled a plan aimed at achieving carbon neutrality by 2060. This ambitious target necessitates a significant reduction in its colossal carbon footprint and pollution levels. To help facilitate this, the government set a goal of 1,200 GW of installed solar and wind capacity by 2030. This spurred energy companies into action, while businesses from other sectors seized this lucrative opportunity, entering the solar market.
The outcome? A saturated market with such overproduction of solar modules that it hurt not only foreign companies but also the domestic market. By 2024, installed solar capacity had already exceeded 880 GW , making the 2030 goal appear increasingly attainable, even too simple.
Seeking Solutions
China’s production capacity has doubled global demand for solar panels, causing prices to plummet. Large companies within the sector have even sought state assistance to remain afloat. Faced with an unsustainable situation of losing money on every sale, a coalition akin to an OPEC for photovoltaics was formed: the China Photovoltaic Industry Association (CPIA) , with 33 major manufacturers committing to practices of self-control .
In December last year, key executives convened to seek solutions following years of price wars. Recently, the SNEC PV & ES Expo 2025 took place in Shanghai, bringing together manufacturers and companies worldwide to assess the global market’s condition. While it remains to be seen what measures will be taken, participants are clear that the current situation is untenable.
Collaboration is Key
As stated by Zhu Gongshan, President of the CPIA, “The solar industry is not a zero-sum game . We are in this together, and the extreme cost-cutting and fierce competition are akin to drinking poison to quench one’s thirst.” In 2024 , China installed approximately 278 GW of solar capacity, comprising nearly 60% of new installations globally.
This overcapacity contributed to a staggering 60% drop in solar module prices between 2020 and 2024. At the December meeting, one of the measures agreed upon was a minimum price recommendation to safeguard profit margins, which has shown modest success in early 2025 with a slight uptick in prices.
Adjusting Production Rates
The CPIA projects an installation of 215 to 255 GW for this year, a cutback compared to last year’s output. Nevertheless, the current installation pace remains staggering; from January to April alone, 105 GW was added— 75% more than the same period last year.
Expectations suggest that installations may see a 44% drop in the latter half of 2025 . A significant policy change enacted by the government on June 1 stipulates that new solar plants will sell their output at market prices rather than guaranteed tariffs.
Innovative Solutions Required
“Instead of waiting for a cyclical recovery, we must face a disruptive restructuring in the sector,” Zhu asserted. Several proposals are being floated, such as enhancing government-private collaboration to regulate supply through legislation or mergers.
Another approach involves investing in technological innovation for either solar panels or the production chain, allowing for sustainable growth and higher profit margins . This means reducing wall-to-wall production of panels anchored to rapidly outdated technology. The focus should instead be on improving quality while controlling output, maintaining higher prices, and avoiding market saturation.
Changing the Mindset
Another challenge is that there are many factors to consider. The 33 CPIA member companies are not the only manufacturers; some may not adhere to self-control agreements. Compounding these internal challenges are the significant tariffs imposed by the United States.
Under the Trump administration, tariffs on Chinese solar panel imports soared to over 3,500% , alongside a 60% tax on materials like polysilicon, wafers , and solar cells from China. As highlighted by Gao Jifan, president of Trina Solar , to adapt to these tariffs, the response from China should pivot toward internationalization . “Due to tariffs, exporting alone isn’t sufficient anymore; production localization overseas is necessary,” he remarked.
The outcomes of these strategies remain to be seen. However, the intention to curb market saturation signifies a crucial turning point, and the idea of relocating production may ignite renewed competition, reminiscent of the automotive industry’s battle for attracting manufacturers.