Summary of Key Points
This summer of 2026, China's photovoltaic (PV) industry is undergoing a transformative process akin to "driving out the toxins through surgery": on one hand, local authorities are aggressively clearing thousands of inactive PV projects that have occupied resources without producing any actual output; on the other hand, the industry is suffering from severe price competition due to a mismatch between supply and demand, resulting in losses for most companies and a sharp decline in new installations. At the same time, the government has introduced a series of policies focusing on cost accounting and energy efficiency standards, aiming to shift the industry from a focus on scale to a emphasis on quality and efficiency, thereby forcing out inefficient capacity and bringing prices back to a more reasonable range.
1. Thousands of Inactive Projects Being Eliminated
During the boom in the PV industry, companies competed to secure "grid connection indicators" and land quotas (which were once core assets for projects), but many of these projects were left unfinished for years, causing unnecessary waste of resources. Now, local authorities are re-evaluating their investment decisions, shifting the focus from the declared scale of projects to the actual amount of money invested, electricity generated, and taxes paid. As of early August 2026, a total of 1,266 projects have been eliminated across various provinces, including Anhui and Sichuan. Anhui has taken the most stringent measures, with 789 projects being cleared since July—for example, in Nanling County, Wuhu City, 44 projects that had been in progress for years were terminated, and in Lujiang County, Hefei City, projects that failed to start construction within the deadline were required to begin work within 15 days, otherwise they were canceled. These actions aim to free up resources for companies that are truly committed to producing.
2. Intense Competition Leads to Profits for Few
The entire PV industry chain is trapped in a vicious cycle of price-cutting, with few companies making a profit. Among the 26 PV listed companies that have released their semi-annual financial reports, only 4 reported profits, while 22 suffered losses amounting to between 18.3 and 21.4 billion yuan. The prices of key components such as silicon materials, wafers, cells, and modules have fallen below their production costs, leading to increasing losses for manufacturers. This situation is largely due to a severe imbalance between supply and demand; while capacity was expanded rapidly in the past, current market demand has not kept up, resulting in a glut that forces companies to compete on price.
3. New Installations Halved
In the first half of 2026, new PV installations totaled only 72.07 GW, a year-on-year decrease of over 66%, indicating a decline in demand across all segments of the market. This decline has further exacerbated competition, as companies continue to cut prices in an attempt to sell their products and thus suffer even greater losses.
4. Government Measures to Control Costs
To address this situation, the government is working to improve cost transparency. At the end of July, the China Photovoltaic Industry Association released a unified cost accounting model, which standardizes the method for calculating costs and ends the previous chaos where different companies reported vastly differing figures. For instance, the chairman of Trina Solar stated that a transparent cost disclosure system will encourage inefficient companies to exit the market, as everyone will know what a reasonable cost should be. The director of the National Engineering Research Center for Silicon-Based Materials also emphasized that with a unified cost benchmark, "selling below cost" becomes a quantifiable issue that can be more effectively regulated.
5. Enhanced Regulations on Energy Efficiency and Safety
In addition to cost control, the government is addressing issues related to product quality and energy consumption. In May, the Ministry of Industry and Information Technology issued two mandatory national standards for PV components, and in July, it jointly with the National Development and Reform Commission and the State Administration for Market Regulation, introduced three more standards covering key aspects of the industry chain. These standards aim to ensure the safety of PV products (e.g., preventing fires) and to limit the operation of high-energy-consuming, inefficient facilities. Over time, this will drive the industry towards a focus on quality and sustainable production methods.
Conclusion
This transformation in the PV industry is essential for transitioning from unregulated growth to regulated, sustainable development. By clearing inefficient projects, standardizing costs, and improving energy efficiency, the industry will gradually eliminate low-capacity facilities and allow only those companies with genuine technology and efficiency to thrive. For consumers, this will likely result in safer, more reliable PV products at more reasonable prices.