The photovoltaic industry is facing challenges as we approach 2025. According to the Photovoltaic Association, there is an expectation that new installations in China will decline in 2025. This raises the question: what can we look forward to in the photovoltaic sector?
1. Expected Decline in New Installations
After a tough year in 2024, the photovoltaic industry is eager to understand what lies ahead in 2025. On February 27, the Photovoltaic Association held a seminar to review the development of the industry in 2024 and to forecast the situation for 2025. The statistics released during the seminar showed that in 2024, China added 277.57 GW of new photovoltaic installations, marking a year-on-year growth of 28.3% and bringing the total installed capacity in China to over 880 GW. Globally, around 530 GW of new installations were added, representing a growth of approximately 35.9%.
According to Wang Bohua, the honorary chairman of the association, the rapid growth in installed capacity was the highlight of 2024, exceeding everyone’s expectations. The 2024-2025 China Photovoltaic Industry Development Roadmap predicts that new installations in 2025 will be between 215 GW and 255 GW, indicating a decline compared to the over 277 GW added in 2024. This forecast suggests a significant drop in new installations for 2025.
Wang Bohua further noted that factors such as distributed photovoltaic management policies and the market-based reform of renewable energy pricing are contributing to industry uncertainty, leading to a cautious outlook for new installations in 2025. However, he emphasized that despite the challenges in 2024, the Chinese photovoltaic market is expected to remain in a high-growth phase, supported by strong policies and ongoing projects that are less affected by new regulations.
Regarding the global photovoltaic market, the association predicts that there will be between 531 GW and 583 GW of new installations in 2025, with a potential optimistic growth of 10% year-on-year. Emerging markets, particularly in Latin America and the Middle East, are expected to show rapid demand growth.
Although the association’s forecasts for 2025 have disappointed many industry professionals and media outlets, those familiar with previous analyses of the photovoltaic sector were not surprised. Predictions for the new installations in 2025 have generally been low.
While some optimistic forecasts exist—such as from Bloomberg New Energy Finance, which predicts a 17% global increase in new installations and 302 GW for China in 2025—there is a consensus that growth will not be as rapid as in previous years. The question now is whether there will still be room for growth in the photovoltaic industry in 2025.
2. Demand Outlook for 2025
From a demand perspective, expectations for new installations in 2025 are relatively low, particularly in the domestic market. In fact, it could be seen as an overachievement if new installations do not decline. Most of the demand expectations are focused on international markets, especially whether emerging markets can perform better than anticipated. If they do not, the global demand forecast for 2025 is likely to fall short.
Many institutions have not set high expectations for photovoltaic demand in 2025, whereas supply-side expectations tend to be more optimistic, especially among domestic institutions. One of the biggest issues facing the photovoltaic industry today is significant overcapacity. There are efforts from the policy side and industry chains to address this issue, as noted by the Photovoltaic Association, which is leading self-regulation initiatives.
However, unlike other media outlets, the outlook from New Energy Front remains cautious. In a situation of insufficient market competition, the pace of capacity clearance may be much slower than expected. With over 10 provinces already announcing key project lists that include photovoltaic manufacturing projects with total investments exceeding 200 billion and over 300 GW in capacity, the situation looks bleak. Even if some of these projects were previously counted in past statistics, the remaining new capacity is still considerable.
The underlying issue is the relationship between local governments and photovoltaic companies. The need for investment often leads to the initiation of new projects, even in the face of overcapacity. Many companies have significant investments tied to local governments, and ceasing to build new capacity could mean losing previous investments. Additionally, local employment concerns often compel governments to continue supporting these projects, thus complicating the supply-side outlook.
3. Market Expectations
The largest discrepancy in expectations for the photovoltaic industry lies within the secondary market. There is a prevailing pessimism about the photovoltaic sector, with the market valuing it at a notably low level. After the past few years of decline, much of the excess has been removed, leaving the sector in a more favorable position.
If the current global bullish trend regarding Chinese assets continues, the renewable energy sector, as a vital emerging industry, could attract attention from capital markets, especially for potential low-level trading opportunities.
Furthermore, advancements in AI could enhance the photovoltaic industry significantly. For instance, large models could analyze operational data to provide performance optimization suggestions, such as adjusting photovoltaic panel angles or optimizing wind turbine blade angles to increase energy efficiency. AI can also predict future energy generation based on historical weather and operational data, aiding in grid management.
These advancements could lead to improved energy allocation and management, resolving many existing challenges. Given the current low position of the renewable energy sector, it presents a safer investment compared to others. It is possible that one day, the wind will shift favorably for this sector.
