China's solar power installations are expected to decline in 2025, as the industry cuts excessive production and shifts toward a more rational deployment of photovoltaic projects, according to industry forecasts.
China's newly installed photovoltaic capacity is expected to reach 215-255 gigawatts this year, according to data released by the China Photovoltaic Industry Association. This will be a year-on-year decline of between 8.13 percent and 22.54 percent, compared to the nation's newly installed photovoltaic capacity of around 277 GW last year.
Wang Bohua, honorary chairman of the association, said factors such as the implementation of distributed photovoltaic power generation management measures and market-based pricing reforms for new energy grid connections will lead to industry uncertainty.
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This uncertainty is expected to affect the 2025 installation forecast, he said.
Rystad Energy echoed this view.
The global consultancy expects diminishing returns for renewable projects this year compared to stable revenues under the previous fixed-pricing framework.
The National Development and Reform Commission and the National Energy Administration issued a notice earlier this month to promote the integration of new energy sources like wind and solar power into the electricity market, to better reflect the market value of renewable power through supply and demand dynamics and ensure electricity prices are determined through competitive market mechanisms.
"Under the new pricing rules, electricity from renewables will drive the average price to decline due to its low variable cost, as the price would further go down especially during daytime when solar power continues generating power," said Deng Simeng, a senior analyst for renewables and power research at Rystad Energy.
"The fluctuations in price would be more significant because of the intermittent nature of renewable power."
"The downward trend in prices brings uncertainty to investors when considering new project development, and developers need to adapt to market-based rules through signing power purchase agreements, utilizing battery storage and optimizing power output to compete with other energy sources," she added.
Li Ting, head of the electronic information department of the Ministry of Industry and Information Technology, said the government has been stepping up efforts to resolve structural contradictions in key industries, guiding local governments to adopt region-specific strategies for the rational deployment of photovoltaic projects, and aiming to reduce the expansion of photovoltaic manufacturing projects that focus solely on increasing capacity.
This includes raising the capital ratio before project construction and setting higher technical standards for products after construction to increase the industry's entry barriers.
Li added that the government will further enhance the role of regulatory policies, strengthen coordination with other departments and promote the high-quality development of the photovoltaic industry.
The government has been stepping up efforts to rein in overcapacity in the solar industry, to continue upgrades and structural adjustments in the sector.
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MIIT issued an investment guideline for solar manufacturing projects in July, directing companies to ensure a minimum capital ratio of 30 percent for solar PV projects, and encouraging local governments to rationally allocate manufacturing projects based on local resource endowments and industrial foundations.
Global photovoltaic installations, according to the association, will continue to grow in 2025. In an optimistic scenario, global photovoltaic installations are expected to increase by 10 percent year-on-year, with rapid demand growth expected from emerging markets, such as the Middle East, said Wang.
In 2024, exports of photovoltaic products, including solar cells and modules, saw significant growth. The number of markets where exports exceeded 1 GW increased from 29 in 2023 to 38, with Asian markets, especially Pakistan and Saudi Arabia, emerging as key highlights, it said.
Companies looking to expand overseas should adopt strategic approaches, such as linking upstream and downstream operations and diversifying overseas production strategies, said Wang.
