China to Dominate Global Solar Industry by 2026: Report

Wood Mackenzie forecasts more than one terawatt (TW) of wafer, cell, and module capacity to come online by 2024, enabling China to meet annual global demand until 2032.

November 09, 2023. By News Bureau

In a report by Wood Mackenzie titled "How will China’s expansion affect global solar module supply chains?" it has been revealed that China is set to hold more than 80 percent of the world’s polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026, following an investment of over USD 130 billion in the solar industry this year.

Huaiyan Sun, senior consultant at Wood Mackenzie and author of the report, highlighted that China's solar manufacturing expansion has been fuelled by high margins for polysilicon, technological upgrades, and a strategic focus on developing local manufacturing in overseas markets. Sun emphasized, "China will still dominate the global solar supply chain and continue to widen the technology and cost gap with competitors."

Wood Mackenzie forecasts more than one terawatt (TW) of wafer, cell, and module capacity to come online by 2024, enabling China to meet annual global demand until 2032. Despite efforts in overseas markets to increase local solar manufacturing, China's capacity expansion, driven by advanced technology and low costs, is expected to perpetuate its dominance in the global solar industry.

Strong government policies in the US and India, driven by the Inflation Reduction Act (IRA) and the Production Linked Incentive (PLI) respectively, have led to the announcement of over 200 gigawatts (GW) of planned module capacity since 2022. However, the report indicates that overseas markets still cannot eliminate their dependence on China for wafers and cells in the next three years.

China's commitment to building more than 1,000 GW of N-type cell capacity, the next-generation technology after P-type, positions it as the global technological leader, representing 17 times more capacity than the rest of the world combined.

While oversupply and intense competition are anticipated in the solar supply chain, concerns are mainly directed at older production lines producing lower efficiency products. Demand for P-type cells is expected to decline, comprising only 17 percent of supply by 2026.

The solar manufacturing industry in China is entering a challenging phase, with module manufacturers facing tough choices, including taking orders at a loss, reducing capacity, or shutting down entirely.

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Global Solar Industry by 2026

Production Linked Incentive Scheme