While the rest of the world grapples with inflation, China’s solar module market has gone in the opposite direction. Prices crashed to an absurd $0.07 to $0.09 per watt during 2024 and early 2025. That’s basically giving panels away.
Chinese manufacturers, stuck with mountains of inventory, engaged in a price war that would make retail Black Friday sales look tame.
Facing inventory gluts, Chinese solar makers unleashed a price bloodbath that makes Black Friday look like casual shopping.
The price collapse wasn’t random. It reflected China’s broader strategy to temporarily crater solar costs worldwide. Manufacturers operated at heavy losses. Not exactly a sustainable business model, but who needs profits when you’re conquering global market share?
The party couldn’t last forever. Beijing finally stepped in, canceling the 13% VAT export rebate that helped manufacturers stomach those rock-bottom prices. They also orchestrated polysilicon production cuts and market consolidation.
Surprise, surprise – module prices are projected to jump 9% in Q4 2025, with more increases coming in 2026. Developers will face significant challenges as they must absorb increased costs due to these price hikes.
Meanwhile, China’s new auction system replaced predictable feed-in tariffs with a wild west of competitive bidding. The results? Solar prices in Shandong province collapsed a staggering 32% below previous settlements.
Shorter contracts – just 10 years instead of 18 – further squeezed returns. Projects that once delivered cozy 8-11% returns now struggle to hit 6.3%.
The consequences are already showing. September 2025 installations plummeted to 9.66 GW from 20.89 GW a year earlier. August was even worse at 7.36 GW. Developers simply paused, wondering if solar still makes financial sense.
The final blow? Policy 136 forced renewable projects into the spot market instead of guaranteed tariffs. Solar bids in Shandong averaged just 0.225 yuan/kWh – 43% below coal benchmarks. Great for consumers, terrible for investors.
China’s solar industry is getting a harsh lesson in market economics. The government wanted lower prices. They got them. Now they’re scrambling to prevent their own solar revolution from stalling out. These dramatic installation drops reflect the broader impact of subsidy reforms implemented in mid-2025 that ended full grid-parity support for many projects.
References
- https://asianbusinessreview.com/in-focus/chinese-policy-shifts-bring-low-price-solar-market-close
- https://www.pvknowhow.com/news/china-solar-slowdown-unexpected-dip-after-2025-reforms/
- https://www.mercomindia.com/china-policy-shift-to-increase-solar-and-storage-costs-by-9-report
- https://www.opis.com/resources/energy-market-news-from-opis/chinas-solar-installations-hit-record-low-as-demand-softens/
- https://www.pv-magazine.com/2025/11/03/chinas-new-auction-system-drives-steep-solar-price-declines/
- https://electrek.co/2025/09/08/china-wind-solar-revolution-is-shaking-up-the-global-energy-game/
- https://ember-energy.org/latest-insights/china-solar-cell-exports-grow-73-in-2025/
- https://ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20251009-2
