Photovoltaic component prices are approaching $0.9/W! Why are the upstream and downstream of the industrial chain suffering so much...

 

In the first quarter of 2025, photovoltaic component prices experienced a rollercoaster ride from a low point to a 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 price of some distributed components even soared to 0.8 yuan/W, an increase of more than 33% compared to the low point at the end of 2024. Market rumors suggest that, the price 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 lasted for a year, but also led to fierce competition between the upstream and downstream of the photovoltaic industry chain.

 

01

Two major factors have spurred a pulse-like demand for components This 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 explosion. The industry attributes this current market explosion to the impact of two major factors: 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 price increase. According to the National Development and Reform Commission's document, after April 30, 2025, distributed photovoltaic grid connection will fully implement market-based rules; after May 31, the on-grid electricity price of new energy will enter a fully competitive era. To avoid policy risks, developers and EPC companies across the country have accelerated the implementation of projects, triggering a rush to install, leading to a pulse-like surge in component demand.
On the other hand, it is due to the 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 installed 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.
Driven by these two positive factors, short-term component demand has surged.

 

02

Industry chain game under supply-demand imbalance We know that after experiencing the severe challenges and losses caused 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 fallen back 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 was less than 50GW at the beginning of January.
Therefore, when market demand suddenly surged, these limited inventories were quickly consumed and almost wiped out. Especially in the hot market atmosphere, the hoarding and stockpiling behavior of intermediaries further exacerbated the tight supply situation in the market.
Data shows that in March, photovoltaic component production exceeded 50GW, and leading companies such as Longi, Trina Solar, Tongwei, and JA Solar had full production lines, and the spot inventory of some popular component models has been largely cleared, with production lines entering a "just-in-time" state. Delivery times range 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 News, a medium-sized component factory in Jiangsu currently ships 300 vehicles per 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 until after April.

However, it has been noted that under this "market carnival," the upstream and downstream of the industrial chain are suffering...

 

Specifically:

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

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

 

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 increased by 0.1 yuan/W twice 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 to compete for market share, or aggressively bid for projects.

 

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

 

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

 

For component manufacturers who have won low-price bids for central state-owned enterprise orders, the situation is even worse. According to industry insiders, some component manufacturers have been caught in a dilemma in the execution of projects due to low-price orders from central state-owned enterprises in the early stage : if they deliver according to the contract, they will face continuous 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.

 

2 The 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 supplying high-priced customers and breaching low-priced orders.

 

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

 

A distributed developer in Zhejiang 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 cannot be continued and needs 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, at least 13 distributed photovoltaic projects have been postponed or terminated due to component supply cuts in the first quarter of 2025, involving an installed capacity of more than 58.6 MW 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 speculating in futures; no one dares to make long-term plans." A domino effect has already appeared: some investors have suspended the launch of new projects in 2025, instead waiting to see the market trend after policy milestones (such as the full entry of new energy on May 31).

 

3 The Hardships 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, under the pretext of "tight capacity," unilaterally demanded changes to contract terms, and even "canceled orders." 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 paid was also delayed due to "production scheduling delays.

 

Faced with the breach of contract by enterprises, distributors are caught in a dilemma: choosing to increase the price for delivery means that the profit margin is squeezed, while refunds require months of capital occupation, which poses a major test to the cash flow of small and medium-sized enterprises.

 

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

 

 

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

 

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

03

In Conclusion TrendForce predicts that the price increase in the supply chain may continue until mid-to-late April, and then gradually return to rationality. Overall, the supply-demand imbalance caused by this wave of rush installation has led to the re-emergence of conflicts in multiple links of the photovoltaic industry chain, leaving many photovoltaic people with untold hardships…In the long run, this round of soaring prices 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.