Photovoltaic component prices are approaching 0.9 yuan/W! Why are the upstream and downstream of the industrial chain crying out in distress...

 

In the first quarter of 2025, photovoltaic component prices experienced a rollercoaster ride from trough to surge. Domestic mainstream photovoltaic component prices rose from 0.6 yuan/W at the end of 2024 to 0.75 yuan/W, and the spot prices of some distributed components even soared to 0.8 yuan/W, an increase of more than 33% compared to the trough at the end of 2024, and market rumors suggest that,it may reach a high of 0.9 yuan/watt before May Day!
 

 

It is worth noting that this round of component price increases not only broke the deadlock of the "price war" that had lasted for a year, but also led to fierce competition between the upstream and downstream of the photovoltaic industry chain.

 

01

Two factors have spurred a pulse-like demand for componentsThis round of component price increases is essentially due to the industry chain experiencing deep production cuts, with inventories falling to low levels, only to encounter a market surge. The industry attributes the current market surge to the two factors of the domestic policy window period and the recovery of the overseas market.
On the one hand,the domestic policy window period is the direct driver of this round of price increases.According to the National Development and Reform Commission's document, after April 30, 2025, distributed photovoltaic grid connection will fully implement market-oriented rules; after May 31, the on-grid electricity price for new energy will Enter the era of full-scale bidding. In order to avoid policy risks, developers and EPC companies across the country have accelerated the implementation of projects, setting off a wave of rush installations, leading to a pulse-like surge in component demand.
On the other hand, it is due tothe recovery of the overseas market.Data shows that by the end of 2024, European component inventories had fallen to below 5GW, the lowest level since 2022; coupled with a large number of new projects lined up in Eastern European countries, the European market in 2025 is optimistic. The photovoltaic purchasing confidence index has soared. Experts predict that the European installation capacity in 2025 may double. This also gives component manufacturers the confidence to raise prices. In January this year, the average price of photovoltaic components in the European market increased by about 5%-10% year-on-year compared to 2024.
Driven by dual positive factors, short-term demand for components has surged.

02

Industry chain game under supply-demand imbalanceWe know that after experiencing the severe challenges and losses brought about by "overcapacity" in 2024, the Chinese photovoltaic industry reached a consensus to stabilize the market by limiting production and maintaining a low operating rate. According to data from TrendForce, as of early January 2025, the inventory of N-type silicon wafers has rebounded to the range of 1.6 to 1.8 billion pieces. At the same time, according to SMM's statistics, as of February 5, the inventory of battery cells has decreased to 7.85GW. As for components, domestic inventory in early January was less than 50GW.
Therefore, when market demand suddenly surged, these limited inventories were quickly consumed and almost swept away. Especially in the booming market atmosphere, the hoarding and stockpiling behavior of intermediaries further aggravated the tight supply situation in the market.
Data shows that in March, photovoltaic component production exceeded 50GW. Leading companies such as Longi, Trina Solar, Tongwei, and JA Solar operated at full capacity, and the spot inventory of some popular Model components was significantly cleared, and the production lines entered a "just-in-time" state. The delivery cycle for each company ranges from one week to half a month. A leading component company revealed that orders have been placed until the second quarter.
In addition, second- and third-tier companies are also busy. According to a report by China Energy Net, a medium-sized component factory in Jiangsu currently ships 300 vehicles a day, and is still in short supply; a third-tier component company in Hebei has all its production lines running 24 hours a day, and orders are still scheduled for after April.

However, Hebei noticed that under this "market carnival", the upstream and downstream of the industrial chain are crying out in distress...

 

Specifically:

1The suffering of component manufacturers: low-price orders become a "hot potato"

The price surge caused by the supply-demand imbalance is not limited to the component segment. Since 2025, silicon materials, silicon wafers, battery cells, backsheets, EVA, and photovoltaic glass have all experienced varying degrees of price increases.

 

Taking silicon materials as an example, the price of polysilicon dense materials has risen from 39 yuan/kg at the end of 2024 to 55 yuan/kg, and the price of granular silicon has also risen to 45 yuan/kg; in terms of silicon wafers, the price of G12RN silicon wafers has also increased by 0.1 yuan/W in two price increases since March; in terms of battery cells, InfoLink data shows that the weekly increase in battery cell prices reached 5%, with TOPCon batteries becoming the main driver of price increases due to technological premiums, having risen for five consecutive weeks, with an average price increase of 0.05 yuan/W; photovoltaic-grade EVA has increased by 248.57 yuan per ton in half a month...

 

Previously, affected by overcapacity and inventory pressure, some component manufacturers sold to the market at prices far below cost in order to compete for market share, or made aggressive bids to participate in project bidding.

 

Now, with the rising costs, these low-price orders are starting to backfire. A manager of a TOPCon component factory frankly stated: "The current production cost has approached 0.72 yuan/W. If we supply goods at the original contract price of 0.6 yuan/W, the loss per watt will exceed 0.1 yuan."  

 

Faced with huge pressure from losses, some companies have been forced to adopt a "selective fulfillment" strategy: some companies choose to postpone delivery on the grounds of "insufficient capacity",attempting to complete delivery after the component price dives in June; others require "raw material price difference subsidies".

 

For component manufacturers who have won low-price bids for central and state-owned enterprises, times are even tougher. According to industry insiders, since the end of 2024,some component factories have found themselves in a dilemma due to low-price orders for central and state-owned enterprises in the early stages: if they deliver according to the contract, they will face continued losses, losing 0.1 yuan for every watt sold; if they choose to breach the contract, they may be put on the buyer's credit blacklist.

 

2The suffering of developers: signing contracts now is like gambling on futures; no one dares to make long-term plans

With rising raw material prices and inverted profit margins on orders, many component manufacturers are choosing to prioritize supply to high-priced customers and defaulting on low-priced orders.

 

This "the higher the price, the better" allocation logic has rendered many long-term supply agreements between downstream companies and component manufacturers null and void.

 

A distributed developer in Zhejiang province revealed that they signed a one-year supply contract with a component manufacturer for the construction of multiple photovoltaic projects. However, they recently received a notice from the manufacturer that due to market price fluctuations, the original contract price could not be continued and needed to be increased by 20%. If the price increase is refused, the project will be indefinitely stalled, and the developer will not only face customer claims but may also lose future market opportunities due to business stagnation.

 

 

A small developer revealed that several of their projects have been delayed due to sudden supply cuts from component manufacturers, and the indirect losses caused by the delay have exceeded the total cost of component procurement.

 

Similar cases are not isolated. According to incomplete statistics, in the first quarter of 2025, at least 13 distributed photovoltaic projects have announced delays or termination due to component supply cuts, involving an installed capacity of over 58.6MW and direct economic losses of 250 million yuan.

 

It is worth noting that while this breach of contract has alleviated the cash flow pressure on component manufacturers, it has led to the collapse of the trust mechanism in the industry chain—as an EPC contractor frankly stated: "Signing contracts now is like gambling on futures; no one dares to make long-term plans." A domino effect has already appeared: some investors have suspended new project approvals in 2025, instead observing the market trend after policy nodes (such as the full entry of new energy on May 31).

 

3The Hardship of Distributors: A Survival Game in the Cracks

Distributors, caught between manufacturers and end customers, are the biggest victims of this round of industry chain game.

 

On the one hand, there is a "price negotiation" game with component manufacturers. Many distributors said that some component companies, citing "tight production capacity," unilaterally demanded changes to contract terms, and even "cancellation of orders" occurred. One distributor revealed that their initial order of 0.7 yuan/watt was required to be increased to 0.75 yuan/watt for delivery, and the full payment previously made was also delayed due to "delayed production scheduling."

 

Faced with the breach of contract by enterprises, distributors are in a dilemma: choosing to increase the price for delivery means that the profit margin is squeezed, while a refund requires facing months of capital occupation, posing a significant test to the cash flow of small and medium-sized enterprises.

 

A distributor in Jiangsu province said: "Now we dare not sign long-term orders; the risk of manufacturers breaching contracts is too high."

 

 

On the other hand, after the price increase of upstream manufacturers, it has become much more difficult for distributors to negotiate with customers. Some distributors revealed that the bargaining space between buyers and sellers was relatively stable before, but now the adjustment frequency of the Price of leading Brand component has changed from weekly to "every two or three days," and the price terms of many project contracts have to be renegotiated with customers.

 

“Some customers are directly adopting a wait-and-see attitude, and orders have become very cautious, which has put considerable pressure on our capital turnover and business expansion.”

03

In ConclusionTrendForce predicts that the upward trend in supply chain Prices will continue until mid-to-late April, and then gradually return to rationality. Overall, the supply-demand imbalance caused by this wave of rush installations has led to the recurrence of contradictions in multiple links of the photovoltaic industry chain, making many photovoltaic people suffer... In the long run, this round of price surge is both a stress test for the photovoltaic industry chain and an important opportunity for industry transformation.
As the tide gradually recedes, the market will eventually return to rational competition. For both enterprises and individuals, finding a balance between short-term interests and long-term cooperation will become the key to future competition in the photovoltaic market.