Recent discussions surrounding two major policies in China’s renewable energy sector have intensified, highlighting the challenges facing the short-term demand for solar energy and storage. At the Bloomberg New Energy Finance summit in Beijing on March 20, Longi Green Energy’s Vice President Zhang Haimeng emphasized, “Currently, predicting China’s new solar installations is quite difficult. Various organizations have significantly underestimated solar forecasts from 2016 to 2023, while projections for 2024 are being overestimated. The outlook for 2025 carries substantial uncertainty; being on par with 2024’s figures would be a positive outcome.”
Since the beginning of 2025, the implementation of the “Distributed Photovoltaic Development and Construction Management Measures” and the “Notice on Deepening Market-Oriented Reforms of Renewable Energy Grid Connection Pricing to Promote High-Quality Development” (referred to as Document 136) has continued to influence industry trends and demand assessments. In recent forums, predictions regarding the domestic demand for new photovoltaic installations have been a hot topic. Zhu Daocheng, President of JA Solar’s Photovoltaic and Energy Storage Business Group, suggested that domestic demand might drop by 10-20% this year, with the actual outcomes closely tied to how market transactions are executed across different provinces and cities. “Overall, a decline is highly probable,” he asserted.
Sunpower’s Senior Vice President Zhao Wei noted that besides Document 136, there are significant restrictions on current electrical grid construction in China, particularly in the northwest regions where solar energy is often wasted. Although previously accumulated projects are expected to materialize, these constraints may hinder their rollout according to the initial schedule. He also believes that the Chinese photovoltaic market will likely remain flat or experience a slight decline this year. In February, the China Photovoltaic Industry Association predicted that by 2025, new solar installations in China would reach between 215-255 GW, representing a year-on-year decrease of 8.13%-22.54%.
Despite these forecasts, Bloomberg New Energy Finance maintains a positive outlook for year-on-year growth in the Chinese market. Analyst Zhao Tianyi indicated that demand growth in China would slow to 9%, reaching 302 GW, with corresponding demand on the direct current side estimated at around 368 GW. He also noted that since the introduction of the two key policies at the start of the year, concentrated installations are expected to reach 177 GW, marking an 11% year-on-year increase. Document 136 is anticipated to act as a catalyst for the development of concentrated storage projects.
According to Bloomberg’s database, from 2022 to 2024, there are still 280 GW of concentrated solar projects under construction in China that have not yet been connected to the grid. This substantial reserve capacity will support this year’s installations. Zhao pointed out that Document 136 might particularly stimulate regions where the market for renewable energy is still underdeveloped. “As a result of Document 136, there has been a surge in demand in the commercial and industrial sectors in the first half of the year, causing spot prices for components to rise significantly,” he remarked. Unlike concentrated projects, commercial and industrial projects tend to be smaller in scale, require lower voltage connections, have shorter construction periods, and are less sensitive to component price fluctuations. Thus, they hold a competitive advantage in the current installation rush.
Commercial and industrial applications are a crucial part of distributed photovoltaics, alongside residential solar installations. “Overall, encouraging the entry of commercial and industrial solar projects back into the market essentially reinforces their two core attributes: commercial viability and local consumption capacity,” Zhao stated. In the future, identifying reputable entities with stable electricity demand and targeting regions with higher electricity prices will be crucial for investing in new commercial solar projects.
The recent policies have led to a “rush for installations” in the solar market during the first half of the year, resulting in a sustained increase in component prices for over a month. Zhang Haimeng expressed that companies prefer stable product prices. The current price hike is not a typical occurrence, making future price fluctuations difficult to predict. For companies, managing internal variables such as production schedules, client communications, and inventory levels of raw materials and products is essential to minimize disruptions.
Zhu Daocheng mentioned that industry capacity clearance is gradually underway. During this process, manufacturing companies are reluctant to incur losses as they vie for market share. Leading enterprises and upstream players should maintain a shared understanding and address market changes rationally. Zhang Haimeng is less optimistic about the current market clearance situation but believes that the cash-burning phase in the industry is nearing its end. Therefore, irrationally low pricing is unlikely, although achieving a balance in supply and demand will take time.
Bloomberg’s solar analyst Tan Youru shared a similarly cautious perspective on the competitive landscape. “Looking at price trends for 2024 and the first half of 2025, companies have extended the duration of competitive pressure by reducing production, and we haven’t observed significant capacity clearance during this period.” Tan noted that solar companies are facing severe homogenization challenges, and with the expected clearance channels being less smooth than anticipated, there has not been substantial mergers or acquisitions to alleviate capacity and business pressures. Consequently, the entire solar sector may experience a prolonged downturn.
The solar manufacturers continue to grapple with price challenges in the supply chain, suggesting that it may take additional time to resolve. This year also marks the conclusion of the 14th Five-Year Plan. By the end of 2024, ten provinces and regions in China are still projected to fall short of their installation targets set for the plan. “Given the final year of the 14th Five-Year Plan, each province has clear goals to accelerate the deployment of renewable energy significantly, aligning with China’s strategy for proactively advancing the supply side of renewable energy,” Zhao noted. From the perspective of solar project development under the upcoming 15th Five-Year Plan, a shift from policy-driven installations to market-oriented pricing signals will be essential.
On a global scale, the demand for solar energy is also experiencing a gradual cooling. According to Bloomberg, this is partly due to the traditional major markets facing increasing development bottlenecks. As renewable energy penetration rises, expected returns are declining, reducing the investment appeal of solar projects. Additionally, many emerging markets are showing limited overall growth, which fails to compensate for the downturn in traditional markets. The agency forecasts that global new solar installations will reach approximately 700 GW by 2025, representing a 17% year-on-year increase.
During the roundtable forum, Zhang Haimeng expressed optimism about the development potential in the Indonesian market, hoping it could become a new energy export hub. Both executives from Sunpower and JA Solar mentioned the Middle East. Zhao Wei noted that the region is striving to reduce its dependence on oil and boasts excellent renewable energy potential, particularly in solar. Development in this market has been relatively slow, as local stakeholders seek a balance from a commercial standpoint. Since last year, the decrease in solar costs has significantly enhanced profitability. “For Sunpower, the Middle East will be a key market to explore, with immense potential in storage and hydrogen energy as well,” Zhao stated, referencing a substantial storage order of 7.8 GWh secured in the Middle East last year, with many more orders currently under discussion. Zhu Daocheng revealed that JA Solar has also landed several large projects in the Middle East and will focus on this market moving forward. Additionally, he mentioned that there is growing potential to examine future developments in Africa.
The much-discussed Document 136 will also have a profound impact on the energy storage industry. Zhao Wei noted that the market will likely witness increased recognition of the value of virtual power plants. Document 136 opens up greater flexibility for the use of storage. Photovoltaics, storage, and load can be flexibly controlled through internet technologies, allowing for real participation in grid regulation and becoming integral to the grid. Furthermore, it supports grid construction, as energy storage provides unique value in stabilizing and ensuring the reliability of the grid.
Bloomberg’s energy storage analyst Zou Xiangning predicts that new installations in energy storage may also see a slight decline this year. This is primarily due to many provinces having already achieved or nearing their installation targets well ahead of the end of 2024, which somewhat constrains the installation volume for 2025. Regarding whether comprehensive energy storage requirements will be entirely lifted and if new policies will be extended to all facets of renewable energy development, Zou believes it is necessary to await detailed implementation rules from each province, which are expected to be released progressively by the end of this year. Zou forecasts that by 2025, new energy storage installations in China will reach 79 GWh, and by 2035, this figure will expand fivefold to 466 GWh annually.
