Concerns Rise Over China’s Photovoltaic Industry as 2025 Predictions Signal Potential Decline

Official Statements have set the tone: Is the photovoltaic industry really at risk in 2025?

As the solar energy sector looks ahead, the China Photovoltaic Association predicts a decline in new photovoltaic installations for 2025. What can we expect from the photovoltaic industry in 2025?

Decline in New Installations Expected

The challenging year of 2024 for the photovoltaic industry has passed, leading many in the sector to ponder what 2025 will hold. On February 27, the Photovoltaic Association held a seminar to review the development of the industry in 2024 and discuss the outlook for 2025. According to the statistics released during this meeting, China’s new photovoltaic installations in 2024 are projected to reach 277.57 GW, which represents a year-on-year increase of 28.3%, pushing the cumulative installed capacity in China beyond 880 GW. In the same period, global photovoltaic installations are expected to be around 530 GW, reflecting a growth of approximately 35.9%.

Wang Bohua, the honorary chairman of the Photovoltaic Association, noted that the rapid growth in installed capacity was the standout feature of 2024, surpassing all expectations.

Furthermore, the association’s 2024-2025 China Photovoltaic Industry Development Roadmap forecasts that new photovoltaic installations in China will be between 215 GW and 255 GW in 2025, indicating a significant slowdown compared to the high growth rates seen since 2019.

This forecast suggests that, compared to the more than 277 GW installed in 2024, there will be a decrease in installations in 2025. Wang Bohua added that this decline can be attributed to various factors, including the new management measures for distributed photovoltaic generation and the market-oriented reform of electricity tariffs for renewable energy. These changes have created some uncertainty in the market as stakeholders await the specific implementation guidelines at the provincial level.

Despite the challenges faced in 2024 and the expected decline in new installations for 2025, he emphasized that the Chinese photovoltaic market is still poised for robust growth, supported by policies and ongoing projects like large-scale wind and solar initiatives. The demand for electricity in society continues to rise steadily, further advancing the green transformation of energy consumption. Additionally, ongoing technological advancements in the photovoltaic supply chain will help uncover more applications.

On a global scale, the Photovoltaic Association anticipates that the total new photovoltaic installations will reach between 531 GW and 583 GW in 2025, with a possible optimistic growth rate of 10%. Emerging markets, particularly in regions such as Latin America and the Middle East, are expected to see rapid demand growth.

While the association’s predictions for new installations in 2025 have left many industry professionals and media outlets feeling disappointed, those who have been observing the photovoltaic sector should not be overly surprised, as previous analyses indicated a lower expectation for new installations in 2025. Overall, forecasts from various domestic and international agencies suggest a lack of optimism regarding the growth rate of new installations for both China and the global market in 2025.

However, not all institutions share a pessimistic outlook. For instance, Bloomberg New Energy Finance predicts that in a moderate scenario, global photovoltaic installations could increase by 17% in 2025, with China’s new installations reaching 302 GW, still showing some growth compared to 2024.

Regardless of whether the forecasts are optimistic or pessimistic, there is a consensus that the pace of new global photovoltaic installations will not be as rapid as seen in previous years, making the question of whether there are still expectations for the photovoltaic industry in 2025 a crucial consideration for identifying opportunities in the secondary market.

Anticipated Differences in the Photovoltaic Industry for 2025

On the demand side, the expected decline in new installations for 2025 appears to be limited, especially in the domestic market. It could be considered a positive outcome if installations do not decrease. The real uncertainty lies primarily in international markets, especially whether emerging markets can perform beyond expectations. If they fail to do so, global demand for photovoltaic installations in 2025 is likely to fall short of projections.

Many institutions have expressed relatively low expectations for demand in 2025, while supply-side expectations are somewhat more optimistic, particularly among domestic entities. It is undeniable that the primary issue plaguing the photovoltaic sector is the significant overcapacity. The policy environment and the industry chain, with efforts from the Photovoltaic Association to promote self-regulation, aim to address this concern, which many view as a potential area for exceeding expectations.

However, unlike other media outlets, we at New Energy Ahead maintain a relatively low outlook. In conditions of insufficient market competition, the pace of capacity clearance is likely to be much slower than anticipated. Recent data compounds this pessimism. As of 2025, over ten provinces have released lists of key provincial projects, with total investments exceeding 200 billion and total capacity surpassing 300 GW in photovoltaic manufacturing projects.

While some of these projects may have been included in previous years’ statistics, the volume of new capacity anticipated in 2025 remains considerable. Despite the widespread acknowledgment of severe overcapacity in the industry and the resulting losses and debts, numerous new projects continue to be introduced. The root of this issue lies primarily with local governments.

The need for attracting investment often aligns with the fundraising requirements of photovoltaic companies. In many cases, there is no alternative but to proceed with new projects, including upgrades of outdated capacities. Many companies have already invested heavily and are deeply tied to local governments. Not proceeding with new capacity would mean that previous investments are wasted. Continuing to invest might allow them to outlast competitors and recover costs, while also addressing local employment issues, which often forces local governments to provide ongoing support.

In this context, expecting the supply side of the photovoltaic industry to exceed expectations is quite challenging. The only hope lies in whether the comprehensive market entry of new energy can accelerate the disentanglement of the deep ties between photovoltaic companies and local governments. Only if this occurs can we anticipate a discrepancy in supply expectations, which will require further observation.

In conclusion, based purely on fundamentals, the photovoltaic industry in 2025 is unlikely to present significant discrepancies in expectations. Simply avoiding further deterioration would be considered exceeding expectations. However, this does not imply that the secondary market lacks potential for expectation differences.

Potential Expectation Differences in the Secondary Market

The most significant expectation difference in the secondary market for the photovoltaic sector stems from the market’s overall pessimism and the relatively low valuations of photovoltaic stocks. Following the downturn over the past two to three years, the sector’s bubble has largely been eliminated, and current photovoltaic stocks are positioned at sufficiently low levels. If the ongoing global re-evaluation of Chinese assets continues, the new energy sector, as a crucial emerging industry in China, could attract considerable attention from capital markets, particularly at these low levels.

Moreover, discussing AI’s role in the sector is not far-fetched. As analyzed in previous discussions, AI’s end is linked to photovoltaics. The potential for AI to enhance performance in solar energy applications is evident. For instance, large models like DS can analyze operational data to provide optimization suggestions for solar panels and wind turbines, improving energy generation efficiency. AI can also analyze weather data and operational metrics to predict future energy generation, facilitating better grid management and energy allocation.

Additionally, by leveraging real-time generation data and electricity demand, AI can optimize the distribution of solar and wind power, enhancing energy efficiency and addressing consumption challenges more effectively. AI’s ability to analyze fluctuations in generation and consumption can also improve the charging and discharging strategies of energy storage systems, extending their efficiency and lifespan.

These represent future applications of AI in the photovoltaic sector, with the industry progressively advancing in this area. AI serves as a catalyst for all industries, including new energy, which remains a vital sector.

The greatest advantage for the new energy sector is that it is currently at a low point. Compared to other sectors, it presents a higher safety margin. Who knows? The winds of change may soon favor the new energy sector.