3 clouds on the horizon for solar and storage developers

For the last eighteen months, developers have benefited from solar modules and energy storage systems being sold at rock bottom prices by Chinese manufacturers desperate to shift excess supply. However, all that is about to change. 

In a new report, we explain why changes in China signal higher equipment procurement costs for solar and storage developers globally in Q4 2025 and beyond. But what’s changing and how much higher will prices be? Fill out the form to download the full insight, or read on for a brief summary. 

For much of 2024 and through the first half of 2025, solar modules and energy storage systems were being sold at unsustainably low prices. In a market dominated by Chinese suppliers, aggressive capacity expansion drove oversupply and led to intense competition for market share, with little regard for short-term profitability.  

As the situation deteriorated, equipment prices fell to historic lows of US$0.07-0.09 per watt. While developers reaped the benefits of bargain basement procurement costs, manufacturers were posting heavy losses and being forced to cut back on reinvestment. Clearly, something had to change, and now, with the help of the Chinese government, it has - for three key reasons. 

1. Consolidation is tightening polysilicon supply 

Chinese polysilicon capacity expanded fourfold between 2022 and 2024. The resulting surplus drove down prices, causing considerable pain for producers. Now, the Chinese government has intervened to level the playing field for polysilicon manufacturers, at the same time pushing for consolidation in the sector. 

First, the Ministry of Industry and Information Technology (MIIT) introduced ‘voluntary-compulsory’ guidelines restricting business expansions and obliging firms to limit utilisation of plants. This had the desired effect, with leading producers cutting utilisation rates by between 55% and 70% by mid-2025. That led to a dramatic 48% increase in FOB price in September 2025 (the FOB or ‘free on board’ price is the cost of goods at the point of shipment).  

Fill out the form to download the insight and learn how the Chinese government is orchestrating market consolidation. 

2. Supply-side cuts are making fewer wafers, cells and modules available 

Thanks to Chinese government intervention, polysilicon producers now have room to breathe — but the pain is being felt downstream in the solar value chain. Operating rates for leading solar module manufacturers had already dropped to between 55% and 60% by the end of H1 2025. At the same, time module and cell production capacity shrank, as obsolete technology in the form of passivated emitter and rear cell (PERC) production was phased out (PERC is rapidly being replaced by more efficient N-type solar panels). 

Fill out the form to access the full insight and see a breakdown of Chinese solar module and cell production destinations in H1 2025. 

3. China has cancelled VAT rebates on exports 

With solar equipment prices already under pressure from higher input costs, the decisive factor has come in the form of a change to Chinese fiscal policy: from Q4 2025, China will no longer offer the 13% rebate previously applied to VAT paid on exports of solar modules and storage systems.  

China supplies more than 80% of solar modules and more than 90% of the Lithium Iron Phosphate (LFP) battery packs used in energy storage systems globally. With no possibility of alternative supply in the short term, the move will directly impact benchmark pricing globally.  

A structural change in the solar and storage market 

Rather than being a temporary blip, these changes are a necessary shift away from destructive price wars and towards sustainable margins for Chinese producers. For these manufacturers, it represents a welcome opportunity to reinvest and innovate. For developers globally, it means adjusting procurement expectations. And for policymakers, it’s a timely reminder of the risks inherent in concentrated supply chains. 

Learn more 

Don’t forget to complete the form at the top of the page to download the full insight, which includes a range of charts and data covering the topic in more detail — including our assessment of exactly how much module prices will rise.