The largest companies in China’s solar industry, including solar panel, cell, wafer and polysilicon makers, have released preliminary financial results for 2024. Most of them reported significant losses, a result of overcapacity, intense competition and prices falling below cost.

Key Facts

Overcapacity and Falling Prices:

The annual production capacity of key items exceeds 1,000 GW. The overcapacity has led to prices for solar modules and components falling below cost.

Financial results of leading companies:

Tongwei (the largest polysilicon maker):

Expected loss: 7-7.5 billion yuan (about 1 billion US dollars). For comparison: net profit of RMB 13.57 billion in 2023.

Daqo New Energy (polysilicon producer):

Expected loss: RMB 2.6 billion – 3.1 billion.
Net profit of RMB 5.8 billion in 2023.

Xinte Energy (polysilicon producer):

Expected loss: RMB 3.8 billion – 4.1 billion.

LONGi (solar module manufacturer):
Expected loss: RMB 8.2 billion – 8.8 billion (first loss in 12 years).
Net profit of RMB 10.75 billion in 2023.

JA Solar:

Expected loss: RMB 4.5 billion – 5.2 billion.

JinkoSolar (largest solar panel maker):

Slight gain expected, but profits to decline by 98-99% compared to 2023.

Reasons for losses

Intense competition: Companies are forced to cut prices to maintain market share, resulting in losses.

Technological changes: Transition to new technologies such as TOPCon and HPBC requires significant investment, which increases costs.

Overcapacity: Excess capacity amid slowing demand growth has led to falling prices.

Industry response

Coordinated output reduction: In the second half of 2024, Chinese manufacturers began to negotiate output reductions to stabilize prices.

Cost benchmark: The China Photovoltaic Industry Association (CPIA) has released a cost benchmark for solar panels to streamline competition.

Outlook and Possible Scenarios

Market Consolidation: Second- and third-tier manufacturers are likely to go bankrupt and leave the market and large companies may absorb smaller players.

Technological Innovation: Companies that invest in new technologies, such as TOPCon and HPBC, may gain a competitive advantage in the long term.

Price Rise:

Cutting output and market consolidation may lead to price stabilization, but it is difficult to predict their growth.

Conclusion

2024 has been a difficult year for the Chinese solar industry. Oversupply, falling prices, and intense competition have led to losses even for the largest market players. However, the industry continues to evolve, and companies are looking for ways out of the crisis through consolidation, technological innovation, and output regulation.

Despite the current difficulties, solar energy remains a key element of the global energy transition, and China, as the largest producer, will continue to play an important role in this process.