The global solar module industry is anticipated to achieve a sustainable balance within the next six months, according to Yana Hryshko, the head of Solar Supply Chain Research at Wood Mackenzie. She explains that solar module prices are likely to rise soon, predicting that prices for Tier 1 modules could reach between $0.14 and $0.15 per watt by the end of this year. Hryshko also discusses the ongoing consolidation within the global photovoltaic (PV) sector.
Hryshko stated, “Prices must increase, as the Chinese solar manufacturing industry will do everything it can to ensure this happens.” She highlighted that as much as 300 GW of wafer, cell, and module capacity could soon be eliminated from the market, primarily affecting non-Tier 1 manufacturers. Unlike Tier 1 producers, there is little incentive to support these lower-tier manufacturers. Those companies focused solely on cell and wafer production, as well as module manufacturers utilizing outdated technologies like PERC and low-efficiency TOPCon, will likely be the most adversely affected.
Hryshko expects that this wave of insolvency will predominantly impact Tier 2 and Tier 3 manufacturers, potentially rebalancing the market and helping to align supply with demand. “Many of the affected manufacturers may not go bankrupt but instead repurpose their facilities for other sectors,” she noted, adding that polysilicon prices are already on the rise, with wafer and cell prices expected to follow suit.
On the other hand, Tier 1 producers have not reduced their production capacity but have limited output since December, adhering to a self-discipline agreement from the Chinese government. This agreement allows for approximately 650 GW of production this year, which is adequate to meet global PV demand projected between 600 GW and 700 GW.
According to Wood Mackenzie data, the current global operational module manufacturing capacity stands at 1.491 TW, with 1.188 TW located in China. Hryshko explained that this operational cap in China would lead to an artificial module shortage. She elaborated that new PV manufacturing guidelines released by the Chinese government are designed to strengthen the production landscape, favoring larger manufacturers. “If you are not efficient and have outdated technology, you cannot expand your capacity,” she stated.
Hryshko also pointed out that most recently announced manufacturing capacities in China are geared towards heterojunction (HJT) or back-contact technologies. “There have been no announcements for new TOPCon facilities this year, and PERC technology is set to be phased out by the end of 2025, or even sooner,” she added. “The transition to new technology is occurring much faster than anticipated.”
She expects that prices for high-quality Tier 1 solar modules will soon surpass $0.12 per watt. “This means that module prices will finally at least meet production costs for the first time in several months,” she emphasized. “This should happen within six months. However, we will still see a significant number of low-quality modules in the market for a while, but that will eventually change. It’s important to note that cell, wafer, and polysilicon suppliers have all been operating at a loss, particularly those also involved in the solar cell and wafer production. They will want to recover those losses, and buyers will have limited options.”
The analyst forecasts that the PV industry may revert to pre-COVID price levels, with module prices ranging from $0.13 to $0.14 per watt or even higher. “I believe that module prices will fall between $0.12 and $0.15 per watt, depending on technology, by the end of 2025,” she concluded.
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