China’s Troubled Solar Industry May Be Nearing a Turning Point

-- China’s solar manufacturers have just been through a bloodbath of an earnings season, but there are tentative signs the massive glut that’s plaguing the industry could be starting to ease.Longi Green Energy Technology Co. and five other leading solar firms racked up a combined $2 billion of losses in the first half after a frenzy of factory building over the last few years created excess capacity that’s driven prices to record lows.

The Chinese solar industry’s predicament can be traced back three years ago, when a surge in demand for panels boosted prices and unlocked ambitious expansion plans that resulted in far too much supply.The sector ended 2023 with the ability to produce 1,154 gigawatts of solar modules — more than double the capacity from two years earlier. Projected demand this year is just 593 gigawatts, according to BloombergNEF.

“Chinese manufacturers are responding to poor profitability and uncertainties around limitations to market access to the US and EU,” Goldman analysts including Trina Chen said in a note this month. “The China solar industry is heading into the final stage of a downcycle, with a cyclical bottom likely in 2025.”

Some of those actions are already taking place. Tongwei earlier this month bought Jiangsu Runergy New Energy Technology Co. in the industry’s first major consolidation move during this downcycle, and expansion plans at several other firms have been delayed or canceled.

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