China’s Solar Installations Slow on Policy Pressure
China’s solar installation momentum is set to slow in the second half of 2025, as recent regulatory oversight targeting overcapacity and financial losses introduce fresh uncertainty for downstream demand, according to industry sources.
Although government intervention has stabilized prices across the solar supply chain, it has also weighed on project economics and sentiment, market sources said. New production quotas and stricter price enforcement are curbing developer appetite and could limit deployment in the coming months.
“Recent price increases following policy discussions have already made August sales less favorable,” one downstream producer said.
As of Aug. 26, OPIS assessed China Mono Premium, the mono-grade polysilicon used in N-type ingot production, at 46.375 yuan/kg ($6.513/kg), a 36.5% increase from July 1.
Ex-works China domestic TOPCon modules rose 6.98% over the same period to 0.690 yuan per watt peak, according to OPIS data. Similarly, recent state-owned module tenders also reflected firmer pricing, with N-type module bids averaging over 0.71 yuan/wp.
The China Photovoltaic Industry Association or CPIA now estimates production costs for N-type modules at 0.701 yuan/wp, up from 0.680 yuan/wp when first published in October 2024.
However, market speculation that regulators may impose a minimum domestic module price floor above 0.75 yuan/wp (around $0.096/wp FOB China including value-added tax) has added further uncertainty. If implemented, sale prices below this level would be deemed illegal, marking a shift from CPIA’s current non-binding production cost guidance.
Other participants voiced concerns that higher module prices could compress project returns, delaying investment decisions. “If there is no demand, there is no solution to overcapacity. Once module prices climb above 0.70 yuan/wp, the IRRs (internal rates of return) for most power plants in China will fall below 6%, which reduces demand,” a market source told OPIS.
Tighter Oversight on Pricing and Production
On Aug. 19, China’s Ministry of Industry and Information Technology or MIIT, organized a high-level symposium with five other government agencies, state-owned enterprises, project developers and supply-chain stakeholders, marking the most comprehensive intervention since the sector’s 2024 financial downturn.
The meeting focused on stricter monitoring of module pricing, enforcement against below-cost sales, and the implementation of quota-based production controls. Power companies also pledged to improve transparency in tenders and adopt more rational bidding practices, as OPIS reported earlier.
Some sources viewed the involvement of power generation companies as a positive development that may improve budget alignment and coordination across the value chain.
The August meeting followed an earlier July 3 MIIT roundtable with 14 leading PV manufacturers and industry groups. That discussion centered on curbing intense price competition and encouraging outdated capacity to be phased out in an orderly manner.
Separately, on Aug. 22, CPIA issued an industry-wide proposal urging manufacturers to strengthen self-discipline in five areas. These include compliance with pricing laws, adherence to quality standards, aligning production scheduling with demand, restraint from “blind” capacity expansions, and strict observance of intellectual property protection.
July’s Installation Pace Hit YTD Low
Stricter oversight has already led to a slowdown in July’s installation figures. China added 11.04 gigawatts of new solar photovoltaic capacity in July, marking the lowest monthly addition so far this year and the second consecutive month of decline, according to data released by the National Energy Administration on Aug. 23.
Despite this dip, installations from January to July surged to 223.25 GW, almost double the 123.53 GW seen in the same period in 2024. Much of this growth was front-loaded as developers rushed to complete projects ahead of two major policy changes, market sources said.
The “531” policy, effective June 1, replaced guaranteed feed-in tariffs with a requirement for new renewable projects to sell power directly on the spot market. Similarly, the “430” policy, effective May 1, mandated that newly installed distributed PV projects prioritize self-consumption, with only surplus electricity permitted to feed into the grid. Projects connected before April 30 retained full grid access rights.
These changes led to record solar installations earlier this year, with May alone adding 92.9 GW, nearly five times the level of May 2024 and the highest monthly capacity addition in 2025. Meanwhile, April contributed 45.22 GW, more than triple the level of April 2024.
Following this surge, the CPIA raised its full-year installation forecast to 270-300 GW, up from the 215-255 GW projected in December 2024, as reported earlier.
However, analysts warned that installations in the second half of this year may average only 10-15GW per month, far below last year’s pace. H2 2024 delivered 175GW, while this year’s H2 contribution is expected to reach just 57-88 GW, based on CPIA’s revised forecast.
–Reporting by Brian Ng, bng@opisnet.com and Summer Zhang, szhang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com