Mid-year is approaching, and there are rumors of impending doom. Is the photovoltaic industry about to collapse again?

Recently, there have been rumors and anxieties.

With the approaching deadlines of the new distributed photovoltaic regulations on April 30th and the new energy market access policy on June 1st, the "rush to install" will come to an end, bringing unprecedented uncertainty and even fear.

In March 2025, China's newly installed photovoltaic capacity reached 20.1 GW, a year-on-year increase of 124%, and the newly installed capacity from January to March reached 59.71 GW, a year-on-year increase of 30.5%.

However, the "rush to install" has not brought much joy, instead, pessimism is spreading. Earlier, Power Construction Corporation of China (PowerChina) terminated a 51GW component centralized procurement plan, further fueling this pessimistic atmosphere.

In 2024, China's newly installed photovoltaic capacity reached 277 GW, accounting for nearly 50% of the global total, and the domestic market has become the fundamental base for China's photovoltaic industry. Under the severe situation of overcapacity and widespread losses in the industry, potential disruptions to domestic installations are adding insult to injury for upstream manufacturers.

The photovoltaic industry has experienced cycles. Is the sky about to fall again this time?

Obviously, there is no need for excessive pessimism. The sky of photovoltaics will never fall; it's just changing. We cannot view changes from a single perspective but should analyze the problem from a systematic perspective.

We must recognize that this is an era of transformation. Change does not necessarily represent risk but may contain new opportunities.

The dual-carbon goals, energy transformation, electricity market liberalization, and the new power system... This is an era of comprehensive transformation. From the industrial ecosystem to the pattern of interests and profit models, we must actively adapt to this transformation instead of clinging to past thinking. Those who do not advance will regress.

Let's take a look at what kind of transformative era this is, and let's cheer up this struggling industry.

01

Restructuring of the Industrial Ecosystem

Wind, solar, and energy storage are rapidly and profoundly impacting our energy and power systems.

Recently, the National Energy Administration announced that by the end of March 2025, China's cumulative installed capacity of wind and solar power reached 1482 GW, historically surpassing the installed capacity of thermal power (1451 GW). New energy has become the main energy source in terms of installed capacity.

This is just a small milestone in the transformation of the industrial ecosystem.

The next small goal will be for wind and solar power generation to "surpass" thermal power generation. In 2024, this proportion was only 18.2%, compared to the 63% share of thermal power generation.

The increase in the proportion of wind and solar power generation will inevitably be accompanied by a continuous increase in the installed capacity of wind and solar power and the corresponding continuous evolution of the industrial ecosystem.

This should be the underlying source of confidence for the new energy industry.

With the decrease in the prices of wind power, photovoltaics, and energy storage, the proportion of wind, solar, and energy storage is constantly increasing, and the pricing mechanism must keep pace with the times. At the same time, the decrease in electricity prices is also a long-term trend. Therefore, the entry of new energy into the market is something that will inevitably happen sooner or later, and we can only face it head-on and cannot avoid it.

It is crucial to correctly understand the construction of the new power system, especially the market-oriented and downward trend of the pricing system. Only with correct understanding can we respond to the trends of this era and the industry.

The photovoltaic industry cannot be limited to the manufacturing end; it must also adopt a whole-industry-chain perspective from the power plant end and a global perspective from the new power system.

02

Restructuring of the Pattern of Interests

Let's talk about a "strange phenomenon" that many people haven't realized.

In the past few years, the price of photovoltaic components has rapidly decreased from 2.0 yuan/W to 0.7 yuan/W, but the cost reduction has not led to a corresponding increase in the return rate of photovoltaic power plants. On the contrary, the return rate of photovoltaic power plants has decreased, especially for commercial and industrial distributed photovoltaics.

What went wrong?

The key is that the resource prices at the photovoltaic application end are constantly rising. The upstream manufacturing end is fiercely competitive and can only pick the bones, while the return rate of the downstream investment end is not determined by cost pricing but by the competition among funding providers. The difference is the excess profit at the application end. This is an open secret. The better the project, the higher the resource cost, whether it is distributed photovoltaics or centralized photovoltaics.

Local governments have even reached the point of open bidding, with various burdens emerging, reminiscent of the land finance of the past.

This account has previously analyzed this topic.

In other words, the continuous decline in the cost of photovoltaic manufacturing in recent years has not been fully reflected in the reduction of electricity prices for end users. There has been too much "leakage" in the middle.

This is clearly abnormal and unreasonable.

Why?

Document No. 136 and the entry of new energy into the market will inevitably push electricity prices down, which is the original intention of the technological progress of wind and solar energy.

Currently, time-of-use electricity pricing policies in various provinces are being updated, with morning prices changing from peak to flat periods and midday prices changing from flat to off-peak periods, allowing users to fully enjoy the benefits of lower electricity prices.

Isn't this the original intention and mission of the photovoltaic industry?

Whether it is the new energy market access policy or the new regulations for distributed photovoltaics, the market-oriented trend of electricity prices is the norm, and this will inevitably reshape the pattern of interests in the photovoltaic industry, reducing unnecessary friction costs and transaction fees.

The restructuring of the pattern of interests, reducing leakage, and making the industry healthier, while staying true to its original aspirations, is not necessarily a bad thing; it is the inevitable process of industrial development.

03

Restructuring of Profit Models

Recently, the National Energy Administration has intensively issued a series of policies on virtual power plants, etc.

This is not accidental.

High-level policy guidance is not to curb the development of the new energy industry but to keep pace with the times and promote the healthy and high-quality development of the industry.

To this end, the higher authorities need to find more profit models for market participants in the process of the continuous evolution of the new power system.

For example, the adjustment of time-of-use electricity pricing policies, with midday prices changing from flat to off-peak periods, is not to lead photovoltaics to a dead end but to see that midday off-peak electricity can improve the profitability of energy storage. This requires the photovoltaic industry to transition from a single profit model to a hybrid model of photovoltaics and energy storage.

For example, the decline in spot prices, especially the emergence of negative electricity prices, has become the norm in mature markets such as Germany. This requires power generation companies to have the ability to trade electricity, obtaining profits through full participation in market transactions, rather than relying on past practices of effortless earnings.

That era is gone forever.

With the marketization of electricity, the new power system, and the coordinated development of power generation, grid, load, and energy storage, photovoltaic power generation can no longer rely solely on simple profit models such as grid connection or self-generation and self-consumption. It must also pursue profits from electricity trading, ancillary services, and virtual power plants.

This complex trading capability is not mere superficial showmanship, but a crucial survival skill; the ability to earn hard-earned money is essential.

Participants who cannot adapt to this changing trend will lack basic survival capabilities and are destined to be eliminated.

A prime example is that financial investment institutions, which aim for certain returns and were major investors in the past, will find it difficult to continue participating now that photovoltaic power generation no longer guarantees quantity and price. In contrast, professional investment and operation companies with active operational management capabilities will reap greater professional returns and market share.

This is destined to be a process of survival of the fittest, a challenge, and an opportunity. There's a classic line: 'The times will eliminate you without so much as a word,' that's what it means, right?

The sky isn't falling for photovoltaics; it's just changing.

Amidst the constantly evolving industrial ecosystem, profit structure, and profit models, there will be pain, but also transformation. It requires players and game rules that keep pace with the times. Old players and old models can no longer adapt to new challenges, while a new era will present better industrial opportunities. Photovoltaic manufacturing companies must actively explore the field of power operation.