- Chinese PV manufacturers warn of weak demand, oversupply and price pressure amid calls for industry consolidation.
- BloombergNEF sees long term strength for solar driven by storage, emerging markets and India despite short term headwinds.
- Africa, Middle East and Asia set to play a growing role in global solar deployment.
The global solar photovoltaic industry is entering a challenging near term phase, marked by excess manufacturing capacity, pricing pressure and policy uncertainty, even as long term fundamentals remain strong. This was the key message delivered by Bloomberg New Energy Finance Solar Analyst Youru Tan during a recent presentation at the annual conference of the China Photovoltaic Industry Association in Xian, China.
Addressing a packed conference hall of policy makers, manufacturers, developers and investors, Tan said the mood within the Chinese solar industry has shifted after several quarters of financial losses. Concerns around sluggish demand, supply chain disruption and unstable module pricing are driving discussions around potential consolidation, particularly among polysilicon producers. While consolidation is being viewed by some as a way to stabilise the market, it has sparked debate across the value chain and presents significant execution challenges.
Despite these short term pressures, BloombergNEF maintains that solar remains structurally well positioned. As the lowest cost source of new electricity generation, solar continues to benefit from strong long term demand. Its fuel free nature shields it from fuel price volatility and geopolitical risk, making it increasingly attractive to governments and investors.
Storage integration is also strengthening the solar value proposition. More than 23 percent of large utility scale solar projects globally now include energy storage, according to BloombergNEF data. Advances in storage technology are improving grid flexibility and resilience, while shorter development timelines are making solar suitable for markets requiring rapid and disruption resistant power supply, including parts of the Middle East and Eastern Europe.
Growth broadens beyond traditional markets
India remains one of the most important global growth engines for solar. Supported by strong policy backing and rising electricity demand, the country is expected to add around 35 gigawatts AC of solar capacity in 2025 and 37 gigawatts AC in 2026. This equates to roughly 47 gigawatts of module demand annually. BloombergNEF expects strong growth to continue through 2035, although policy uncertainty could introduce volatility.
Beyond India, Southeast Asia is expanding solar deployment as part of energy transition and security strategies. Countries such as Indonesia and Vietnam are increasing installations, while the Middle East, North Africa and Sub Saharan Africa are also gaining momentum. BloombergNEF estimates solar installations in these regions will reach 27 gigawatts in 2025 and 30 gigawatts in 2026. Rising Chinese module exports into these markets underline growing interest and demand.
Cost pressure remains concentrated upstream
Solar modules currently represent around 30 percent of total system costs globally and less than 25 percent in China. According to Tan, further reductions in project costs will increasingly depend on lowering balance of system expenses, as module price declines now have a limited impact on the levelised cost of electricity.
Global manufacturing capacity continues to exceed demand. BloombergNEF expects installations of around 655 gigawatts in 2026, rising to 684 gigawatts by 2035, indicating prolonged overcapacity and margin pressure. While upstream segments such as polysilicon, wafers and cells experienced sharp price declines in early 2025 followed by a rebound later in the year, module prices have remained largely stable, with average international prices staying below USD 0.09 per watt.
Polysilicon inventories reached an estimated 500,000 tonnes by the end of 2025, enough to support more than 200 gigawatts of module production. Although industry self discipline reduced polysilicon output by 24 percent in 2025, overall supply still exceeds demand, keeping prices close to cost levels. Downstream developers have resisted price increases, limiting the ability of upstream players to pass on higher costs.
Rising silver prices are adding to manufacturing cost pressure, but broader commodity volatility is expected to keep module prices relatively stable. In contrast, tariffs and supply chain restrictions in the United States and parts of Europe have pushed module prices significantly above global averages, slowing deployment and raising project costs. In the United States, module prices are roughly double the international average, yet the market remains attractive due to strong demand, particularly from data centre growth linked to artificial intelligence.
China retains manufacturing advantage
Trade barriers and local content rules are reshaping global manufacturing and supply chains. While overseas module capacity has expanded rapidly in markets such as India and the United States, upstream manufacturing outside China remains limited due to higher capital costs and technical complexity.
BloombergNEF estimates that building a fully integrated photovoltaic manufacturing chain in Europe or the United States costs more than four times as much as in China. Modules exported from China cost around USD 0.08 to USD 0.09 per watt, compared with significantly higher costs for production in Southeast Asia or fully integrated manufacturing in Western markets.
Looking ahead, BloombergNEF forecasts global solar installations of around 649 gigawatts in 2026, a slight contraction from 2025 levels. While the near term outlook remains difficult, the industry’s long term growth story remains intact, driven by cost competitiveness, energy security needs and expanding demand across emerging markets.
Author: Bryan Groenendaal
