The recent introduction of two major policies in China has sparked extensive discussions regarding the future of the solar energy sector. The new regulations, namely the “Distributed Photovoltaic Power Generation Development Management Measures” and the “Notice on Deepening the Market-Oriented Reform of New Energy Grid Connection Prices to Promote High-Quality Development of New Energy” (referred to as Document 136), are influencing industry trends and demand forecasts.
During the Bloomberg New Energy Finance Beijing Summit on March 20, Zhang Haimong, Vice President of Longi Green Energy, highlighted the unpredictability of China’s photovoltaic (PV) installation growth. He noted that forecasts from various institutions for the period from 2016 to 2023 have significantly underestimated actual growth, and predictions for 2024 are overly optimistic. He expressed a cautious optimism for 2025, suggesting that if installation levels can match those of 2024, it would be considered a success.
This year, many forums have debated the projected demand for new PV installations in China. Zhu Daocheng, President of JA Solar Technology’s PV and energy storage business group, anticipates a potential decline of 10-20% in domestic demand this year. He emphasized that the final outcomes will be closely linked to the execution of market-oriented transactions across provinces and cities, indicating that a decline is likely.
Similarly, Zhao Wei, Senior Vice President of Sungrow Power Supply, pointed out that, apart from Document 136, the current construction of power grids in China faces significant limitations, particularly in northwestern regions where curtailment of solar energy is evident. Even if previously planned projects are executed, these constraints may hinder their progress as originally scheduled. He also indicated that the Chinese PV market may remain flat or experience a slight decline compared to last year.
In February, the China Photovoltaic Industry Association predicted that new installations in China would reach between 215-255 GW in 2025, representing a year-on-year decrease of 8.13%-22.54%. Despite this, Bloomberg New Energy Finance maintained a positive growth outlook for the Chinese market, forecasting a 9% increase in demand this year, reaching 302 GW—equating to a direct current side requirement of approximately 368 GW.
Following the introduction of the new policies, it is expected that centralized incremental installations will amount to 177 GW, a year-on-year increase of 11%. The implementation of Document 136 is anticipated to act as a catalyst for centralized reserve projects. Bloomberg’s database indicates that 280 GW of concentrated PV projects in China are still pending grid connection between 2022 and 2024, providing a substantial capacity reserve to support this year’s installations.
Zhao also noted that Document 136 is likely to stimulate markets in regions where new energy market penetration is still low. He observed that due to the demand surge in the commercial and industrial sectors in the first half of the year, the spot prices of components have risen significantly. Unlike centralized projects, commercial and industrial projects are typically smaller in scale, have lower connection voltage levels, shorter construction periods, and are less sensitive to price fluctuations. Therefore, they hold a competitive advantage in this current installation rush.
Commercial and industrial solar projects represent a key segment of distributed photovoltaics, alongside residential installations. Zhao emphasized that the push for commercial PV projects effectively brings the focus back to two core attributes: their commercial viability and local consumption potential. Identifying reliable, quality loads with stable electricity demand, as well as high electricity price regions, will be crucial for investing in new commercial solar projects.
The introduction of these two new policies has led to a “installation rush” in the PV market during the first half of the year, resulting in a sustained increase in component prices for over a month. Zhang expressed that companies prefer stable product pricing, as the current price increases are not deemed normal, making future price fluctuations difficult to predict. Companies must manage their variables effectively, including production planning, customer communication, and stock levels, to minimize disruptions.
Zhu mentioned that the industry’s capacity clearing process is gradually underway. In this context, manufacturing companies are reluctant to incur losses and are vying for market share in the final stages. Leading companies and upstream suppliers must maintain a shared understanding and approach market changes rationally. Zhang expressed skepticism about the current market clearing status, but he believes that the cash-burn phase for the industry is nearing its end, implying that irrationally low pricing will not persist; however, achieving a balance in supply and demand will still require time.
Bloomberg’s PV analyst, Tan Youru, shared a conservative view regarding the competitive landscape. He noted that the price trends for 2024 and the first half of 2025 suggest that companies are prolonging the competitive cycle through production cuts, with limited capacity clearing observed during this period. The PV sector is facing serious homogenization challenges, and without significant mergers or capacity clearing, it is predicted that the bottom cycle for the entire PV industry will last longer. Price challenges within supply chains may require additional time to resolve.
This year marks the concluding year of China’s 14th Five-Year Plan. As of the end of 2024, ten provinces and regions have yet to meet their installation targets. Zhao pointed out that the goals set for the final year of the plan are clear, urging provinces to accelerate the pace of new energy deployment in alignment with China’s strategy for proactive supply-side construction.
Globally, PV demand is also experiencing a gradual cooling phase. Bloomberg noted that traditional major markets face increasing development bottlenecks, leading to diminishing return expectations and reduced attractiveness for PV project investments. Emerging markets, while present, do not sufficiently fill the gap left by the shrinking traditional markets. The agency forecasts that global PV installations will reach approximately 700 GW in 2025, marking a 17% year-on-year growth.
During the roundtable discussion, Zhang expressed optimism for the development of the Indonesian market, hoping it can become a new energy export hub. Executives from Sungrow and JA Solar mentioned the Middle East, noting its drive to reduce dependence on oil and its favorable renewable energy conditions, particularly for solar power. Zhao highlighted that this market has been slow to develop and requires a commercial balance. Since last year, decreasing PV costs have significantly enhanced profitability. He stated that the Middle East is a key market for Sungrow, with substantial potential in energy storage and hydrogen energy. After securing a major 7.8 GWh storage contract in the Middle East last year, numerous orders are still in negotiation.
Zhu revealed that JA Solar has also secured several large projects in the Middle East and will focus on this market moving forward. He also mentioned the potential growth opportunities in Africa.
The much-discussed Document 136 will also have profound implications for the energy storage industry. Zhao asserted that we can expect to see more value from virtual power plants in the future. Document 136 opens up greater flexibility for energy storage applications. Photovoltaic systems, energy storage, and load can be controlled flexibly through internet technologies, enabling them to participate in grid management and become integral to the grid. Furthermore, energy storage has unique value in supporting grid stability and reliability.
Bloomberg’s energy storage analyst, Zou Xiangning, anticipates a slight decline in new storage installations this year, primarily because many provinces are on track to meet or approach their 2024 installation goals, which may limit 2025’s capacity. Additionally, due to a lack of economic viability, the surplus beyond targets in various provinces is relatively small. Regarding the potential cancellation of full storage configurations and the applicability of new policies across all phases of new energy development, Zou emphasized that specific implementation details from each province are needed and are expected to be released by the end of this year.
By 2025, he predicts that new energy storage installations in China will reach 79 GWh, and by 2035, this figure could expand fivefold to 466 GWh annually.
