China's Photovoltaic Industry in Crisis
The Chinese photovoltaic industry is going through a deep crisis, with major companies like JinkoSolar, Longi Green Technology, and Trina Solar recording significant losses and being forced to sell their solar panels below production cost. This situation is exacerbated by global overcapacity and Western trade sanctions.
Chinese manufacturers, encouraged by optimistic prospects around decarbonization and post-pandemic recovery, invested heavily to increase their production capacity. However, this expansion has led to an oversupply of solar panels, with 1,100 GW produced for a global demand of only 425 GW, according to the International Energy Agency. As a result, factories are operating at half capacity, leading to a significant decline in revenue for these companies.
For example, JinkoSolar saw its revenue drop by 68.77% in the first half of 2024 compared to the previous year, while Longi and Trina Solar also recorded notable declines.
Faced with this crisis, the Chinese Photovoltaic Industry Association has proposed a floor price to stabilize the market, but this measure remains insufficient, especially since sanctions limit Chinese manufacturers' access to American and European markets. In response, some are relocating their production to Southeast Asia to circumvent these restrictions, but this solution is only temporary.
Although Africa is perceived as a potential market, it faces several obstacles, including dependence on coal and limited energy infrastructure. Countries like Nigeria and South Africa impose taxes on imported solar panels to encourage local production, which restricts the prospects of Chinese manufacturers.
To revitalize their sector, Chinese companies will need to go beyond simply exporting solar panels and offer more integrated solutions, including relocation, storage, and financing.
