China’s Solar Growth Set for a Slowdown in 2025

China’s solar power generation capacity growth this year is set for a slowdown after a record 2024, the industry association of the country said at the association’s annual gathering.

Last year, Chinese solar power developers built some 277 GW of new capacity, improving on the previous year’s additions of 217 GW, which were also a record at the time, Bloomberg noted in a report on the news. In 2025, however, the industry expects between 215 GW and 255 GW in new capacity additions.

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One big reason for the slowdown is the fact that the grid is falling behind new solar capacity additions and it needs to be expanded in order to accommodate the new capacity. Excess supply of solar panels also weighed on the industry despite the record year of 2024, according to the industry association.

Another big reason for the slowdown is the introduction of a new power pricing mechanism from June, under which solar generators would have to sell their output on a market basis, Reuters reported. This means that these companies would no longer be able to rely on state subsidies to ensure revenues and profits, and would have to survive on the free market after years of enjoying guaranteed prices paid by the state. The subsidies were an essential part of efforts to boost China’s non-hydrocarbon generation capacity.

According to the National Development and Reform Commission—the country’s economic planner—said it expected prices to remain pretty much the same despite the removal of subsidies for solar across all market segments.

China’s solar panel industry, however, needs to tackle its overcapacity problem amid slowing demand worldwide. Last year, the industry association urged companies to consolidate in order to weather the effects of that overcapacity, which has driven solar capacity growth of an average annual 25% since 2017.

By Irina Slav for Oilprice.com

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