The global solar manufacturing sector is hurtling towards an unprecedented crisis. Amid plummeting prices, fierce competition, and insurmountable supply gluts, solar manufacturers worldwide are selling products at prices well below their production costs. The result? An intensifying negative-sum game that threatens to derail the entire industry.
This year alone, most solar companies are staring at significant losses, unable to stave off the relentless drop in prices. Polysilicon, a critical raw material, saw its prices edge up to $5.85 per kilogram at the end of September after a historic low in July. While some Chinese factories have shut down, the country still produced a staggering 1.45 million metric tons of polysilicon in the first three quarters of 2024—enough to churn out some 700 gigawatts of solar modules.
Desperate times, desperate measures: Price war deepens
With wafer prices crashing by 49% this year, reaching a shocking $0.134 per piece in September, and module prices slumping to record lows of under 10 cents per watt, manufacturers are caught in a vicious cycle. Even TOPCon, the industry’s latest “standard” technology, is failing to differentiate products as once hoped. As the cost war heats up, companies are forced to undercut one another just to clear stock, leading to a relentless race to the bottom.
The situation is so dire that BloombergNEF has declared the sector is locked in a “negative-sum price war,” where every price cut digs the industry deeper into the red. Mainstream module prices dropped below $0.098 per watt in September, and some bids in China’s state-owned projects have plummeted to as low as 7.8 cents per watt.
Solar giants struggle, and the pain spreads globally
Global solar trade, meanwhile, remains paradoxically strong, driven by a desperate scramble for cheaper modules in new markets. China, the epicentre of the solar industry, has seen a jaw-dropping 45% surge in cell exports and a 29% jump in module shipments in the first eight months of 2024 alone. Yet, this surge is only worsening the oversupply.
Major solar manufacturers are now facing the grim reality that their differentiation efforts are futile against this brutal price battle. Solar cells, which held their ground in August, saw a slight drop to $0.037 per watt in September. Even Europe, which was previously a reliable high-price market, is now flooded with cheaper alternatives, with module prices plunging 20% since the start of the year.
A game of survival: Who will emerge unscathed?
The ripple effects are being felt across the entire value chain. Polysilicon makers outside of China are buckling under the weight of extra tariffs and a widening cost gap, with prices for non-Chinese polysilicon hovering around a painful $24/kg—a staggering $20 premium over Chinese alternatives. Meanwhile, spot prices for aluminum, silver, and PV glass have all seen dramatic fluctuations, further squeezing already razor-thin margins.
With more than 90% of wafers produced by leading manufacturers now of the negatively doped n-type variety, and the new TOPCon technology quickly becoming the industry standard, the hope for innovation-led reprieve is fading fast. The looming fourth quarter is expected to bring even more chaos, with manufacturers likely to slash prices further just to hit shipment targets.
Record high exports amid market crash
Despite—or perhaps because of—the chaos, mainland China’s solar exports have skyrocketed. The country shipped $22.7 billion worth of solar cells and modules between January and August 2024. This translates to an eye-popping 38GW of cells and 183GW of modules, representing a 31% growth in shipment volumes over the same period last year. Europe alone bought 79GW of Chinese solar products, a 30% increase, as developers looked to capitalise on the rock-bottom prices.
India, too, is seeing its own solar revolution, with module imports soaring by 50% in dollar terms this year. The country’s module installations are expected to touch a record 26.8GW in 2024, fuelled by a surge in cheap imports. Even Saudi Arabia, Turkey, and Pakistan are boosting their purchases from China, cementing the Asian giant’s dominance in the global solar market.
US manufacturers buckle under pressure
Across the Atlantic, the US solar market is grappling with a different beast. New tariffs and trade rules have thrown supply chains into disarray, but even here, module imports surged by 27% this year, reaching 38GW by July. However, the price crash has led to an enormous inventory build-up, with 45GW of unsold modules now sitting in warehouses across the US.
Indian manufacturers, benefitting from the ongoing tariff investigations, are finally making headway. Their shipments to the US have more than doubled this year, with some firms seeing a 62% jump in module exports by July. But these gains could be short-lived if the price war continues to spiral out of control.
The endgame: Can the Industry survive?
The future of the solar industry hangs in the balance as manufacturers, regulators, and market players grapple with a perfect storm of falling prices, rising costs, and a fiercely competitive global landscape. With no signs of price stabilisation, and companies prepared to bleed cash just to keep their market share, the sector is teetering on the edge of a full-scale crisis.
Will the industry manage to pull back from the brink, or is this just the beginning of a long, drawn-out implosion? One thing is certain: the stakes have never been higher. As the solar price war rages on, survival itself has become the only victory that matters.
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is this article timed to sabotage waree IPO ? Or a genuine concern…. then expecting what actions from Govt which is the main actor to move the country to Solar energy penetration.