Surge in Solar Prices: Market Changes and Industry Future under New Policies

April 1, 2025 – The first quarter of 2025 has brought a long-awaited “price surge” to the solar market. Key components such as modules, battery cells, and silicon wafers have seen a continuous rise in prices, with some module quotes even surpassing 0.8 RMB/W, marking an increase of over 20% from last year’s low point.

This price increase is not merely a result of fluctuations in supply and demand but is driven by two significant new policies: the “Management Measures for Distributed Photovoltaic Power Generation Development and Construction” and the “Notice on Deepening the Market-Oriented Reform of New Energy Grid Pricing to Promote High-Quality Development of New Energy” (Document No. 136). These policies have initiated a “rush for installation.”

The core of these policies lies in adjusting the profit model for distributed solar energy:

• “430” Deadline: Projects that are connected to the grid by April 30 can still enjoy full-grid access and higher subsidy electricity prices. After this date, new projects will only be able to choose the “self-consumption + partial grid access” model, increasing revenue uncertainty.
• “531” Deadline: After May 31, all incremental projects will enter the electricity market for trading, with prices determined by market competition, eliminating fixed subsidies.

As the policy deadlines approach, companies are rushing to install systems to secure higher returns, directly fueling market demand and driving up prices along the supply chain.

Price Increases Across the Supply Chain

In March 2025, the price of TOPCon modules rose to between 0.75-0.8 RMB/W, with some orders approaching 0.9 RMB/W, a significant recovery from last year’s low of 0.6-0.7 RMB/W. Prices for battery cells and silicon wafers have also surged, with N-type silicon wafers being particularly in demand due to their technological advantages.

Reasons Behind the Price Surge:

• Surge in Demand: Policies are compelling companies to accelerate grid connections, with distributed solar installations expected to peak in the second quarter.
• Limited Supply: Leading companies had previously controlled production to reduce inventory, and logistics slowed down around the Lunar New Year, resulting in short-term supply constraints.
• Recovery in Overseas Markets: Prices for components in Europe have stopped falling and are beginning to rise, further supporting domestic price increases.

Impact of New Policies: From Guaranteed Profits to Market Competition

The introduction of Document No. 136 marks the end of the “fixed electricity price” era for new energy, indicating that future profits from solar power plants will heavily depend on electricity market transactions.

Key Changes in Policies:

• Market-Based Pricing: Solar electricity prices will be determined by market supply and demand, with spot prices during peak solar hours potentially dropping below 0.1 RMB/kWh.
• Mechanism Price Support: Incremental projects can participate in bidding to obtain a “mechanism price,” but settlements will be based on market average prices, not guaranteed profits.
• Increased Value of Energy Storage: Although the new policies do not mandate energy storage, combining solar and storage can mitigate price fluctuations and enhance project economics.

Long-Term Industry Implications:

• Increased Investment Threshold: Revenue calculations will become more complex, requiring companies to possess electricity trading capabilities; the traditional “land grab” model will no longer be sustainable.
• Accelerated Industry Restructuring: Less competitive small and medium enterprises may exit the market, while leading companies will further consolidate their advantages through technology and capital.

Diverse Behavior Among Market Participants

In this rush for installations, different market participants have shown distinct behavior patterns and strategic choices.

Component manufacturers are among the biggest beneficiaries. Leading companies such as JinkoSolar and Longi Green Energy have ramped up production, with some reporting significant month-on-month increases in output for April. Notably, manufacturers have exhibited relative restraint during this price surge, focusing on a “balance of volume and profit,” reflecting a shift in the industry from reckless growth to rational development.

Distributors and installers find themselves in a more complicated situation. On one hand, they are experiencing a surge in orders and robust business. On the other hand, they face the dilemma of “having money but unable to buy goods.” At the Shandong Solar Expo, several agents reported, “Payments made months ago have still not yielded product shipments,” leading to a market environment where “the highest bidder wins.” This supply tension has forced some distributors to cancel orders, failing to deliver as per contracts and demanding price increases.

Behavior among end investors shows clear divergence. Large investors from state-owned enterprises are exercising caution, with some halting solar project developments and shifting focus to wind energy, which is less affected by policy changes. In contrast, commercial property owners and distributed investors are more proactive, eager to lock in higher returns before the policy window closes. This divergence is also reflected in market prices, with distributed component prices increasing significantly more than centralized systems.

Market Outlook: A Peak Rush with Underlying Concerns

As we enter the second quarter, the solar market is approaching a critical “policy window period,” with two important deadlines on April 30 and May 31. The market is expected to exhibit the following characteristics:

• Demand Peak: The rush for installations is expected to peak in April. TrendForce forecasts that March and April will see a small surge in demand, particularly for distributed solar projects, which are projected to reach installation highs in the second quarter. This concentrated surge may further exacerbate supply chain tensions and support high prices.
• Price Trends: Most analysts believe the current price increase trend will persist until late April. Silicon material prices are expected to reach 45 RMB/kg, with silicon wafer prices anticipated to rise over 3.5% in April, and battery cell prices likely to increase by 7%. Component prices may fluctuate between 0.7-0.8 RMB/W, with a more pronounced premium in the distributed market.

However, beneath this prosperity lies risk. As the “531” deadline approaches, market concerns are beginning to mount. Some central state-owned enterprise investors believe that after the rush, component prices will decline to around 0.6 RMB/W in the second half of the year. This expectation may lead some investors to slow down their purchasing pace, setting the stage for a market shift towards the end of the second quarter.

Regional differences are also expected to become more pronounced. Areas with mature distributed solar development, such as Shandong and Hebei, are experiencing more intense installation rushes, while provinces with unclear policy details exhibit stronger wait-and-see sentiments. Such disparities may impact the overall installation pace nationwide.