China's Photovoltaic Industry: Weak Supply and Demand, Low Industry Prosperity

01

Review of Photovoltaic Installation

Policy cycles have driven continuous growth in China's newly installed photovoltaic capacity. In 2013, the State Council formulated electricity price and subsidy policies for the photovoltaic industry. Stimulated by these policies, newly installed capacity rose from 11GW in 2013 to 53GW in 2017. The "531 New Policy" was introduced in 2018, significantly reducing subsidies, leading to a year-on-year decline in newly installed photovoltaic capacity in 2018 and 2019. However, with China's 2020 announcement of its goals to achieve carbon peaking before 2030 and carbon neutrality before 2060, the photovoltaic industry received long-term policy support, and installation demand was stimulated again, rising from 49GW in 2020 to 278GW in 2024.

 

The proportion of household distributed installations has decreased, while the proportion of newly installed centralized installations has steadily increased. In 2024, newly grid-connected centralized installations reached 159.39GW, a year-on-year increase of 32.8%; newly grid-connected household distributed installations reached 29.55GW, a year-on-year decrease of 32.04%; and newly grid-connected commercial and industrial distributed installations reached 88.63GW, a year-on-year increase of 67.85%. The proportion of newly installed household distributed installations decreased from 28.9% in 2022 to 10.6% in 2024, while the proportion of centralized installations increased from 41.5% to 57.4% during the same period. The proportion of commercial and industrial distributed installations remained at approximately 25-30%.

 

China's newly installed photovoltaic capacity may experience a temporary decline in 2025, with future growth mainly relying on centralized installations. After the implementation of new regulations for distributed installations, it will be difficult for commercial and industrial distributed installations to maintain high-speed growth. Regulations on the comprehensive entry of new energy sources also negatively impact the expected returns of centralized units, and bottlenecks in power consumption in some regions continue to directly suppress household distributed installations. There is a risk of a year-on-year decline in China's newly installed photovoltaic capacity in 2025, and future growth is expected to mainly rely on centralized installations.

 

02

Industry Chain Overview

1/ Capacity
 

 

Overcapacity in component production is certain, with recent rush installations improving the supply and demand situation. As of March 2025, China's annualized component production capacity exceeded 1200GW, while global component demand in 2025 is expected to be 700-750GW. Combined with the expansion of component production capacity overseas in recent years, overall overcapacity in the component sector remains severe. In 2025, China continued to reduce component production, with the component operating rate falling below 40%, and the oversupply of components gradually came under control. The recent rush installation boom driven by domestic policies has improved component demand, and the component operating rate has rebounded to around 50%, but demand will face a decline again after the rush installation period ends.

 

Battery production capacity is also oversupplied, with recent rush installations improving demand. As of March 2025, the global annualized photovoltaic battery production capacity is approximately 1140GW, and the battery sector is also oversupplied. In 2025, China continued to reduce battery production, with the component operating rate falling below 50%. With the recent rush installation boom driving improved battery demand, the battery operating rate has rebounded to around 60%, but demand will decline again after the rush installation period ends.

 

N-type replacement is complete, with TOPCon becoming the mainstream technology. As of March 2025, the production of photovoltaic batteries in China includes TOPCon (86.9%), HJT (2.4%), BC (4.8%), PERC (3.1%), and others (2.8%). The replacement of N-type for P-type was basically completed in 2024, with TOPCon becoming the current mainstream battery technology. Among mainstream N-type battery production lines, TOPCon has the highest operating rate, mostly between 70-80%; HJT has the lowest operating rate, mostly below 30%; and BC's operating rate is basically stable between 50-60%.

 

Silicon wafer production capacity is also oversupplied, with previous production cuts improving the supply and demand situation. As of March 2025, China's annualized photovoltaic silicon wafer production capacity is approximately 1064GW, and the silicon wafer sector is also oversupplied. After a long period of production cuts, Chinese silicon wafer manufacturers have switched to slow production increases since December 2024, with monthly production increasing from 42.12GW to 50.76GW, and the operating rate also rising to around 60%. However, there is still pressure to reduce production again after the rush installation demand is released.

 

New capacity release leads to oversupply, and polysilicon promotes self-discipline production cuts. As of March 2025, China's annualized polysilicon production capacity is approximately 2.89 million tons, equivalent to approximately 1376GW. In the past three years, China's polysilicon production capacity has increased by over 300%. The release of new production capacity has led to oversupply, and the pace of polysilicon production in China has slowed significantly since the second half of 2024, and the industry has begun to promote self-discipline production cuts. China's polysilicon capacity utilization rate has fallen from 71% in March 2024 to 31% in March 2025, and this year's production is basically controlled below 100,000 tons/month.

 

2/ Inventory

 

Downstream inventory reduction is good, while upstream still faces inventory pressure. Driven by recent rush installation demand, silicon wafer inventory has decreased from 27.3GW to around 19GW, battery export factory inventory has decreased from around 8GW to a minimum of 1.28GW, and China's photovoltaic component inventory in March also decreased significantly from 52.2GW to 32GW. However, the upstream polysilicon sector still faces significant inventory pressure, and the visible inventory level remains above 200,000 tons.

 

3/ Export

 

China's photovoltaic product exports are facing pressure in 2025. In the first three months of 2025, China's cumulative exports of photovoltaic components decreased by 3.5% year-on-year, photovoltaic batteries decreased by 57.7% year-on-year, silicon wafers decreased by 21.3% year-on-year, and polysilicon increased by 97% year-on-year. Exports of components to emerging markets such as Pakistan and the Middle East remain strong, but European demand has further shrunk, and component exports have slightly decreased year-on-year. Midstream exports have significantly decreased due to tighter overseas trade policies, and while polysilicon exports maintain high-speed growth, the volume is relatively limited.

 

03

Summary and Outlook

Weak supply and demand in the photovoltaic industry, maintaining low industry prosperity.
 

 

Weak supply and demand in the photovoltaic industry, maintaining low industry prosperity. Prices continued to fall, and companies in the industry generally suffered losses. Since the second half of 2024, new production capacity has slowed significantly, the industry has promoted self-discipline production cuts, and oversupply has been temporarily alleviated, with some sectors completing proactive inventory reduction. In 2025, policy adjustments will lead to pressure on a temporary decline in installations. At the same time, the growth rate of global newly installed photovoltaic capacity is also declining. With insufficient demand, it will be difficult for the photovoltaic industry to see a substantial improvement in prosperity in 2025, and self-discipline production cuts need to continue.