Anticipated Slower Expansion: China's Solar Energy Growth by 2025 May Decrease - By 2025, China's solar power capacity is predicted to decelerate.
Lately, China's solar sector has been on an unstoppable surge. Yet, the Chinese Photovoltaic Industry Association predicts a slight deceleration in 2025. Why the change of pace? For the first time in six years, China's solar installations might not match their previous pace. The association projects a growth of 215-255 gigawatts this year, as shared at a Beijing conference.
This would mark a drop from the record-breaking 277.57 gigawatts installed in 2024, surpassing the previous high of 216.3 gigawatts. China maintains its position as the global leader in solar expansion, overshadowing even Germany's 16 gigawatts addition in 2024, according to German data.
Challenges in China's solar sector
However, the solar industry in China wrestled with setbacks last year. Domestic markets were plagued with oversupply, resulting in losses for manufacturers. Internationally, countries like the USA tightened their grip with high tariffs on cheap solar cells to shield their domestic companies. In Germany, Meyer Burger attributed its Freiberg, Saxony factory closure to the price war with Chinese manufacturers.
The Chinese Photovoltaic Industry Association suspects that the growth might decrease due to the fact that new installations reached record levels in 2024. Furthermore, a new pricing model introduces uncertainty among manufacturers and investors. The new policy, effective from June 1, shifts the pricing of electricity from renewable sources to market forces, rather than preceding fixed rates. The association anticipates renewed growth from 2026.
Enrichment Insights:
- The 2025 growth projection for China's solar installations is influenced by a series of factors, such as the record-breaking growth of 2024, domestic oversupply and losses, international trade barriers, the shifting pricing model, and global market dynamics.
- The record-breaking growth in 2024, while impressive, introduces challenges in maintaining the same pace for 2025 due to the high baseline.
- The oversupply in the domestic market led to losses for manufacturers and may impact the industry's investment and expansion plans in 2025.
- Tariffs imposed by countries like the USA on cheap solar cells from China may reduce demand and impact the industry's growth.
- The shift to market-based pricing on June 1 introduces uncertainty for manufacturers and investors, potentially slowing down new installations as companies adjust to the new pricing dynamics.
- Global market fluctuations, such as production overshoots and geopolitical vulnerabilities, may affect long-term investment strategies and industry stability, particularly considering China's dominance in the PV value chain.
The Chinese Photovoltaic Industry Association expects a decrease in China's solar installation growth in 2025, citing the association's prediction of 215-255 gigawatts, which is a drop from the 2024 record of 277.57 gigawatts. Despite this, China still leads in solar expansion, surpassing Germany's addition of 16 gigawatts in 2024.
The high growth in 2024 presents a challenge in maintaining the same pace for 2025 due to the high baseline. Furthermore, the new pricing model, effective from June 1, shifts the pricing of electricity from renewable sources to market forces, introducing uncertainty among manufacturers and investors.
The setbacks faced by the solar industry in China last year, including domestic oversupply and losses, international trade barriers, and high tariffs on cheap solar cells from countries like the USA, may impact the industry's growth and investment plans in 2025.
