In recent years, the photovoltaics market has faced unexpected challenges related to overproduction. Despite the growing popularity of and growing demand for renewable energy sources, the global supply of solar panels significantly exceeds current needs. This situation has had a significant impact on the global economy and has created several problems for manufacturers around the world.
The abundance of cheap solar panels has led to an increase in photovoltaic installations by consumers and businesses. According to the International Energy Agency (IEA), by 2028, electricity generated by solar energy is expected to surpass wind and nuclear power.
The photovoltaic industry employed more than 800,000 people in Europe at the end of last year, according to SolarPower Europe. In the United States, almost 265,000 people are employed in this sector, according to data from the Interstate Renewable Energy Sources Council. BloombergNEF reports that panel prices have fallen more than 60% since July 2022.
Currently, the production capacity of solar panels exceeds demand by 2 terawatts (TW), causing a sharp drop in product prices. The main reason for this situation is the state support provided to Chinese manufacturers, which has allowed them to dominate the market and create serious challenges for companies in Europe and the United States. While this has resulted in lower prices for consumers, manufacturers are facing financial difficulties and are forced to find ways to adapt.
Solarwatt, a Dresden-based company that emerged in the early 1990s as a symbol of Europe’s renewable energy ambitions, has also come under pressure. Although the opening of a new plant in late 2021 was considered a victory in the battle against Chinese competitors, Solarwatt is now preparing to move its production to China to remain competitive.
This problem has not only affected European companies. Oversupply on the global market over the past two years has caused solar panel prices to collapse, leaving many European companies unprofitable and threatening US President Joe Biden’s ambitions to make the United States a leader in renewable energy. Even the Chinese companies that dominate the market have felt the consequences of this situation.
However, falling solar panel prices have led to an increase in installations among consumers and businesses. According to forecasts by the International Energy Agency (IEA), in 2028 the electricity generated by solar installations will exceed that generated by wind and nuclear plants.
According to SolarPower Europe, at the end of last year more than 800,000 people were working in the solar energy sector in Europe. In the United States, about 265,000 people work in this industry, according to the Interstate Renewable Energy Council. BloombergNEF reports that panel prices have fallen more than 60% since July 2022.
The significant impact of overproduction has led to calls for protectionist measures. The magnitude of the damage is causing concern and is prompting Brussels to protect European companies from subsidized Chinese products. The United States has already introduced new tariffs on Chinese solar panels, ranging from 25% to 50%, and Europe is considering similar measures.
However, some US companies believe the protective measures may be insufficient. With industries in Europe and the United States under pressure, the question arises whether Chinese companies will be able to maintain current price levels or will have to reduce production to stabilize their finances. In March, China’s Longi, the world’s largest solar panel manufacturer, reduced its workforce by 5%, affecting 4,000 employees.
