China to Dominate 80% of Global Solar Manufacturing Capacity Until 2026

beijingwalker · Nov 18, 2023

China to Dominate 80% of Global Solar Manufacturing Capacity Until 2026

November 15, 2023

With an investment of $130 billion in the solar industry this year, China will hold more than 80% of the world’s polysilicon, wafer, cell, and module manufacturing capacity in the next three years.

According to a recent report by Wood Mackenzie, with more than 1 TW of wafer, cell, and module capacity forecasted to come online by 2024, China’s increased capacity will meet global demand until 2032.

“China’s solar manufacturing expansion has been driven by high margins for polysilicon, technology upgrades, and for developing local manufacturing in overseas markets; China will still dominate the global solar supply chain and continue to widen the technology and cost gap with competitors,” said Huaiyan Sun, senior consultant at Wood Mackenzie.

China also has plans to build more than 1,000 GW of N-type solar cell capacity, which amounts to 17 times more capacity than the rest of the world, the report said.

Despite local solar supply across overseas markets increasing, it is yet to be as cost-effective as China’s. A module made in China is 50% cheaper than that produced in Europe and 65% cheaper than the U.S.

The U.S. and India, driven by the Inflation Reduction Act and Production Linked Incentive, respectively, have announced more than 200 GW of planned module capacity since 2022. However, this has not eliminated their dependence on China for wafers and cells in the next three years.

Looking outside China, India is forecasted to overtake Southeast Asia as the second-largest module production region by 2025.

Concerns about the market’s oversupply are mainly aimed at old production lines that produce lower-efficiency products, such as the P-type and M6 cells. Demand for P-type cells began to decline in 2023, and Wood Mackenzie analysts expect it to be only 17% of supply by 2026.

Sun said, “Oversupply will undeniably hinder some of the current expansion plans. More than 70 GW of capacity in China has been terminated or suspended in the past three months.”

The solar manufacturing industry in China is entering a challenging time. Module manufacturers will be forced to take orders at a loss, reduce capacity, or shut down entirely.

In the first half of 2023, Chinese solar manufacturers scaled up expansion plans across silicon wafers, rods, slices, solar modules, batteries, and silicon materials, which amounted to a total of ¥100 billion (~$13.89 billion).

In 2022, the country’s annual export of solar photovoltaic products surpassed $51 billion, registering an 80.3% year-over-year increase.