What other difficulties will the photovoltaic industry, which has experienced numerous setbacks, face?

The photovoltaic industry has recently experienced extreme highs and lows!

01 Photovoltaic prices have fallen again

On the one hand, the high commissioning rate brought about by the 531 distributed new policy has created a scene of short-term prosperity. Friends' circles and social networks are full of photovoltaic employees reporting that their machines are running hot. Although the online claims are of varying veracity, statistical data does not lie. In the first quarter, China's newly installed photovoltaic capacity reached 59.71 GW, a year-on-year increase of 30.5%, with 20 GW installed in March alone, a year-on-year increase of nearly 80%.

On the other hand, despite the booming commissioning, prices in the photovoltaic industry chain are unable to hold up, with all four main material sectors experiencing declines.

Information released by the Silicon Industry Branch on April 17 shows that silicon wafer prices continued to fall. The largest drop was seen in N-type G12R silicon wafers, with an average transaction price of 1.43 yuan/piece, a week-on-week decrease of 5.92%; N-type G10L followed closely behind with an average transaction price of 1.22 yuan/piece and a week-on-week decrease of 3.17%; the average transaction prices of P-type G12 and N-type G12 were 1.63 yuan/piece and 1.53 yuan/piece respectively, down 1.81% and 1.29% respectively.

The module and cell sectors also saw continued price reductions. According to Infolink Consulting data, on April 17, the price of double-sided double-glass N-type TOPCon modules fell to 0.735 yuan/W. 182 and 210 TOPCon modules used in distributed projects fell to 0.75 yuan/W. All series of cells are experiencing price reductions, with the largest drop being the TOPCon 210R cell, with an average transaction price of 0.29 yuan/W, down 4 cents, a decrease of 12.1%; the average transaction price of TOPCon 182/183.75 series cells was 0.3 yuan/W, down 1 cent/W week-on-week; even the average transaction price of PERC 182/183 series fell by 1 cent/W.

The silicon material sector is particularly dire. During the initial wave of commissioning at the beginning of the year, other main material sectors actually saw price increases, but silicon material prices have not risen. Now that other main materials are falling in price, silicon material prices are also falling. The average transaction prices of N-type dense material, N-type recycled material, and P-type polysilicon material fell by 900 yuan/ton, 700 yuan/ton, and 500 yuan/ton respectively, with a decrease of 2.42%-1.47%.

The across-the-board price reductions in the four major sectors of the photovoltaic industry chain signal the end of the price increase wave that began in mid-to-late February. The photovoltaic industry is once again facing an uncertain future, prompting concerns about the challenges that lie ahead for this beleaguered industry.

02 Overcapacity is the main challenge

Among all the risks, overcapacity remains undoubtedly the most direct and significant challenge. According to incomplete statistics from securities firms, in 2024, the capacity of various sectors in the global photovoltaic industry chain will be more than double the installed capacity, entering a state of overall overcapacity. The capacity utilization rate of most photovoltaic companies has fallen below 60%, and the industry has essentially entered a state where production leads to losses, and the more produced, the greater the losses.

Inventory pressure is mounting across all sectors and manufacturers, with silicon material facing the most severe pressure. Even after the downstream commissioning boom, industry inventory in March still reached 400,000 tons.

This key issue is difficult to fundamentally resolve until lagging capacity is completely eliminated, small and medium-sized manufacturers are gradually forced out, and even some giants collapse. Industry self-discipline may have some short-term effects, but it will not have a fundamental effect in the long run, as can be seen from the commissioning rate of various companies since the beginning of this year's commissioning boom.

For the foreseeable future, overcapacity will remain a sword of Damocles hanging over all photovoltaic companies.

03 Demand slowdown highlights the problem Ultimately, resolving overcapacity relies on increased demand. However, after nearly a decade, and especially after the installation boom triggered by the global consensus on carbon neutrality in recent years, the global photovoltaic industry is entering a period of slower development.

According to CPIA data, global new photovoltaic installations reached 390 GW in 2023, a year-on-year increase of 69.57%, setting a historical high; in 2024, global new photovoltaic installations will be approximately 530 GW, a year-on-year increase of approximately 35.9%. However, 2025 may not be so optimistic. Currently, various parties hold a pessimistic view of the installed capacity of the most important global market, China, in 2025, with many believing that a decline is highly likely. If there is a decline in China, it is highly questionable whether other countries can make up for this shortfall.

The slowdown in demand will further highlight the pressure of overcapacity, continuously delaying the turning point of the industry cycle bottom.

04 Technological iteration challenges

The transition from P-type to N-type is an undeniable trend, but there is still considerable uncertainty surrounding the competition among N-type technologies. It remains unclear whether TOPCon, HJT, or BC will ultimately prevail, or whether all three will coexist. This presents significant challenges and difficulties for companies in the industry.

The capital-intensive nature of the photovoltaic industry means that the consequences of betting on the wrong technology path are not something everyone can bear. At best, it leads to being surpassed by competitors; at worst, it leads to obsolescence. Faced with this uncertainty, companies have adopted different approaches: some focus on a single technology path, some pursue multiple paths simultaneously, and some prioritize one path while hedging their bets.

Crucially, the N-type technology path has yet to produce a clear winner, while the perovskite technology wave is advancing rapidly. Some aggressive photovoltaic entrepreneurs even claim that perovskite technology will enter the commercial stage within the next one or two years. Whether this is hype or a genuine technological breakthrough remains to be seen.

In short, in the face of continuous technological iteration in the photovoltaic industry, no photovoltaic company can truly rest easy. Perhaps this is fate: the nature of technological iteration means that photovoltaic professionals must always pursue the most efficient technology, forever on the road, with no opportunity for rest.

05 Global geopolitical fluctuations

Global geopolitics has recently become turbulent, especially with the US President Trump deliberately initiating a tariff war against the world. Although we have analyzed this many times before, there is no need to be overly fearful or worried about the tariff war, especially since the photovoltaic industry has already experienced numerous tariff measures from European and American countries. Having weathered many storms over the years, photovoltaic companies have developed their own ways of survival.

Objectively speaking, however, the trade war will bring considerable uncertainty to the industry. Although the proportion of China's direct exports of photovoltaic products to the United States is relatively low, the United States is one of the world's largest photovoltaic markets. The current tariff rates between China and the United States can be regarded as a severance of ties. Although transactions can still be conducted through re-export trade, the United States has imposed high tariffs on all countries, and has specifically targeted Southeast Asia and other major transit points for Chinese re-export trade, which has significantly curbed re-export trade.

There is no clear statement yet on how the US policy is being implemented, but domestic companies have started to make adjustments according to the regulations. It is indeed quite difficult, not only troublesome, but also significantly impacting business operations.

Considering the chain reaction triggered by US tariffs in various countries around the world, and the uncertainty of the impact on the global economic and trade system, it is even more difficult to say what impact it will have on the photovoltaic industry.

Recently, there have been reports that other countries, especially the European Union, are concerned that Chinese companies, after losing the US market, will increase their dumping efforts in other markets and implement certain import restrictions. Although the final outcome remains unknown, it has at least created considerable downward pressure on industry valuations in the short to medium term.

06 Financing environment deterioration

In addition to the intensifying market and industry competition, the deteriorating financing environment faced by the photovoltaic industry in recent years is also difficult to reverse in the short term, which will put heavy pressure on photovoltaic companies already suffering from overcapacity.

Banks are tightening credit, raising loan interest rates for photovoltaic companies, and the capital market is also tightening. The IPO approval rate for photovoltaic companies has dropped significantly, and the bad debt rate is increasing, making cash flow a major problem for many photovoltaic companies.

If effective solutions for financing cannot be found soon, and industry prices continue to deteriorate, many manufacturers will face the risk of cash flow disruptions.

In addition, policies such as the full-scale entry of new energy electricity into the market and the practical limitations of insufficient grid absorption capacity have all posed challenges to the photovoltaic industry in the near future.

Fortunately, looking to the longer-term future, the certainty of global energy transformation and the fact that photovoltaic power generation accounts for a relatively low proportion of global energy provide long-term certainty for the photovoltaic industry. In addition, after more than two years of decline in the secondary market, companies have squeezed out the bubbles, and there is potential upside from a turnaround.

This is what New Energy Forward has always emphasized: We should not be overly optimistic about the photovoltaic industry, nor should we be overly pessimistic. Instead, we should continue to observe and wait for the moment when the marginal improvement arrives.