The winter of the photovoltaic industry seems to be fading, and a new spring is slowly approaching. However, not all PV companies are ready to embrace this opportunity. After this round of industrial restructuring, only those that can meet market demands in terms of brand reputation, product quality, technological innovation, and cost control will survive. The coming spring is not just a time of growth—it’s a test of strength, marking the end of the era of uncontrolled expansion.
In Europe, traditional markets like Germany and Italy are adjusting their feed-in tariff (FIT) policies and limiting subsidies, which has led to a shrinking market in 2013. Meanwhile, global trade tensions—especially between the EU and China—are pushing up the prices of photovoltaic systems, creating a cautious market environment. As a result, we expect the global PV installation growth rate to range between 10% and 15% in 2013. However, while trade disputes have slowed down growth, they haven’t stifled demand. In 2014, emerging markets such as China, Japan, and India are expected to show strong growth due to their base effect, keeping our optimism for the global PV market high. We anticipate a recovery in growth to over 25% in 2014.
According to the “Research Report on China's Photovoltaic Industry: Panoramic Survey and Investment Strategy for 2012-2016†by the China Research and Development Institute, China’s exports of photovoltaic products to Europe and North America accounted for 73% of total exports in 2011. The U.S. "double anti-dumping" investigation has been finalized, and India has also launched its own "double countermeasure" inquiry. We expect the EU's preliminary anti-dumping ruling to be announced in the second or third quarter of 2013. It is likely that these measures will lead to higher costs, eroding the cost-performance advantage of Chinese solar modules. Currently, China's top-tier cell module production capacity is approximately 20GW. If only 50% of this is effectively utilized, overcapacity will worsen, accelerating industry consolidation and bringing the most challenging period for manufacturers. A bottoming out of the industry is expected.
So far, polysilicon prices have dropped by as much as 49%, while wafer, cell, and module prices have fallen by around 30%. Overcapacity and flat demand are the main drivers behind this decline. In the short term, prices are expected to continue dropping slightly due to supply and demand imbalances. At the same time, the profitability of the entire industry chain has reached its lowest point. First-tier companies have become more rational in inventory management, reducing the risk of a sharp price drop. Additionally, improvements in product efficiency and material usage will drive down costs. Future price reductions are likely to come from cost efficiencies rather than just market pressure. As long as overcapacity remains an issue, downward pressure on prices and profit margins will persist, keeping corporate earnings at a low level.
The U.S. "double anti-dumping" measures apply only to solar cells, not silicon wafers. Although the EU’s anti-dumping investigation includes silicon wafers, domestic wafer producers can still export to battery module companies in third countries such as North America, Japan, and the Philippines. Despite these challenges, the entire industry chain is affected. In 2011, the price of silicon materials was about 50% lower than that of silicon wafers (around 30%). This widened the cost and price gap, making silicon wafers relatively profitable within the industry chain. With continued declines in non-silicon costs, the profitability of wafers is expected to remain strong in 2013.
Unlike the 2008 PV crisis, which was triggered by an unexpected financial downturn, this round of industrial adjustment reflects deeper structural changes. Back then, demand fell sharply but remained on a fast-growth trajectory. Prices dropped significantly but still allowed companies to maintain profits. As the global economy recovered, capital flooded back into the sector, leading to another cycle of overcapacity. This time, however, the landscape is different.
According to the Sino-Prussian Research Report on China’s Photovoltaic Industry from 2012 to 2016, the current situation is that traditional markets are entering a phase of slow growth. While emerging markets show strong momentum, they face significant challenges. Production capacity is still limited compared to demand, and falling prices are driving down costs. The current production cost of key PV components has reached $0.6/W and is expected to continue declining. Under pressure from falling prices, the efficiency of photovoltaic cells is increasing rapidly. Next year, it is expected that polycrystalline modules with 60 cells will reach 250W or more, while monocrystalline modules could exceed 270W.
According to Puhua, a photovoltaic industry researcher, with stable global demand, the current global PV production capacity of 40GW is entering a plateau period. Over the next 1–2 years, the industry will likely enter a phase of capacity control, with mergers, acquisitions, and reorganizations becoming inevitable. Costs may even continue to fall, and prices are unlikely to return to previous high levels. High-efficiency, low-cost products will dominate the market. The era of rapid, unregulated growth in the global PV industry is over.
The new spring belongs to companies with advanced production capabilities. Only those with strong R&D and innovation power can keep up with the pace of technological change, stay at the top of the industry, and capture high-profit margins. Building a strong brand is essential to stand out in fierce competition and succeed in the future of mass solar energy adoption. Combining quality, cost efficiency, and economies of scale is crucial for gaining market share. And having a forward-thinking strategy ensures that companies can navigate the uncertain early stages of the industry, plan ahead, and walk confidently on the right path.
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