The global photovoltaic (PV) market is facing a crisis of oversupply, plunging prices, and mounting losses across the entire supply chain, from polysilicon to modules. According to BloombergNEF’s 3Q 2024 Global PV Market Outlook, the solar industry, long hailed as a beacon of hope in the transition to renewable energy, is grappling with systemic overcapacity that threatens the financial viability of manufacturers worldwide.
In what should have been a landmark year for the solar sector, global PV installations are expected to reach 592 gigawatts (GW), a staggering 33% increase from 2023. Yet, this boom in installations has not translated into financial success. Instead, solar manufacturers are reeling from the lowest-ever prices for modules, which have dropped to just $0.096 per watt. This has driven many producers into the red, with numerous firms expected to report losses by the end of 2024.
The root of the issue lies in a supply-demand imbalance that has been exacerbated by aggressive capacity expansions over the past few years. Manufacturing capacity across the solar supply chain has far outpaced demand, leaving factories operating below break-even levels and pushing prices below production costs.
Polysilicon, a critical raw material for solar cells, has seen its price collapse by 40% from the beginning of the year. As of late August, the price stood at $4.9 per kilogram, down from $7.9 per kilogram in early 2023. This sharp decline is a result of oversupply, with China alone producing over 1.06 million metric tonnes of polysilicon in the first half of 2024, a 61% increase from the same period the previous year.
Faced with plummeting prices and widespread losses, many polysilicon manufacturers have reduced output by shutting down factories for maintenance. Despite these cutbacks, global polysilicon production is still expected to exceed demand by a wide margin, with estimates for 2024 production now reduced to 1.96 million metric tonnes.
The price decline is not limited to polysilicon. Prices for n-type wafers, a key input for solar cells, have halved since the start of 2024, hitting a record low of $0.136 per piece in August. Modules and cells have followed a similar trajectory, with PERC (passivated emitter and rear contact) cells and modules rapidly losing ground to newer technologies like TOPCon (tunnel oxide passivated contact) cells.
In particular, the cost reduction for TOPCon cells, which are now priced 0.1 cents cheaper than PERC, is accelerating the obsolescence of older technologies. As manufacturers race to adopt the more efficient TOPCon technology, the market for outdated products is rapidly shrinking, forcing further price cuts to clear inventories.
Solar exports from China, which accounts for the majority of global solar manufacturing, have plummeted in 2024. Exports in dollar terms are significantly lower compared to 2023, reflecting the depressed prices and ongoing market turbulence.
Countries such as the US and India are increasingly wary of relying on Chinese imports, with new tariffs and local manufacturing policies creating additional headwinds for China’s solar industry.
The financial pressure on solar manufacturers has been immense. Many companies have resorted to issuing convertible bonds to stay afloat, but the market for these financial instruments has also been battered. The value of convertible bonds issued by leading Chinese solar manufacturers has sharply declined since June 2024, reflecting investor concerns over the solvency of these firms.
The influence of Chinese state-owned banks and regulators on the solar market is significant but difficult to predict. They could reduce financing and call in loans, pushing some companies into bankruptcy or forcing exits, leading to a rapid and painful supply adjustment. Alternatively, they might provide more loans and guarantees, injecting capital to maintain production until the bubble eventually bursts or an unexpected surge in demand occurs. Another possibility is that they could push for faster mergers and consolidation within the industry.
There are some potential lifelines for the beleaguered industry. Saudi Arabia is making strides in local solar manufacturing, aiming to produce 10GW/year of cells and modules. India’s solar manufacturing sector is expected to grow, spurred by local content requirements and anti-dumping tariffs on Chinese imports.
However, these efforts may not be enough to stem the tide of global overcapacity and falling prices. Without significant policy intervention or a sharp reduction in manufacturing capacity, the solar supply chain will continue to face extreme financial strain.
The solar industry is at a crossroads. While demand for PV installations is higher than ever, systemic overcapacity, falling prices, and financial losses across the supply chain threaten to undermine the industry’s long-term sustainability. Without concerted efforts to rebalance supply and demand, and greater policy support to protect local manufacturers, the solar sector could face years of turbulence ahead.
For now, the message is clear: the solar industry must adapt to survive, or risk becoming a victim of its own success.
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I am not sure if the prices at the retail have plummeted. All I know is that many people like me still find solar energy unaffordable.
Furthermore, all governments must ensure that prices of all inputs for thermal and nuclear power plants also capture the environmental costs.
On top of that, whatever Govt subsidy is proposed, getting it back is a cumbersome process.
I don’t know about solar manufacturing industry but retail users are finding it unaffordable even now which is hampering demand.customers are being fleeced
600 acor land seal from odisha solar industry
Solar is NOT a superior technology and grid came installation is subsidy and mandate driven
Interesting is that there is no Solar without Coal
You need coal as a carbon source for reducing silica oxide
You also need coal to provide electricity and heat for manufacturing of polysilicon wafers and modules
You need coal to provide backup and balance in the grid
See details here
https://unpopular-truth.com/2024/05/09/coals-importance-for-solar-panel-manufacturing/
Industry players should come together & engage with government bodies for better & faster ways of paying subsidies to the end consumers.