- China is overproducing solar panels, creating overcapacity problems both at home and abroad.
- The United States, the EU and China are facing challenges due to an oversupply of solar panels.
- In China and Germany, excess solar energy production is distorting energy markets.
China is producing solar panels in huge quantities, significantly driving down prices and helping the country transition to clean energy.
The problem is that Chinese manufacturers appear to be overproducing solar panels, according to the United States, the European Union and their allies. They are now calling on Beijing to curb excess production of panels and other products, raising the possibility of a trade war.
China is facing a problem of domestic overproduction due to the rapid growth of solar energy, one of the key pillars of the country’s “New Three Major Economic Drivers.” Reuters reported on Wednesday that China has installed so many solar panels that it is generating so much surplus electricity that it has no domestic capacity to store or transmit it.
This overcapacity has prompted Chinese authorities to withdraw some price supports for the solar panel industry, resulting in a decline in solar panel installations, according to Reuters.
Solar panel installations in China continue to surge in the first quarter of 2024, with official data showing the installation rate increasing by more than a third year-on-year, but the growth rate is much slower than in the first quarter of 2020. 154% increase In the same quarter of 2023.
As of March this year, China, the world’s largest solar market, had installed 660 gigawatts of solar power capacity, while the United States had installed 179 gigawatts of solar power capacity by the end of 2023, enough to power 33 million American homes.
China’s excess solar panel production capacity could be exported
Chinese manufacturers are producing more solar panels domestically than people want to buy. Bloomberg Analysis During April.
Given the country’s domestic oversupply, the development signals something the West may not welcome: China continuing to dump surplus solar panels onto the international market.
Chinese manufacturers are feeling the solar heat The same goes for excess panel capacity.
March, Longi Green Energy Technology, The world’s largest solar cell maker said it would lay off thousands of employees due to overcapacity and low prices.
China’s solar panel overcapacity is so severe that the country’s Photovoltaic Industry Association is calling for more mergers and acquisitions and limits on domestic competition to control production, the association said in a post on its official WeChat account on Tuesday.
Earlier this month, U.S. President Joe Biden announced he would double tariffs on solar cell imports from China from 25% to 50%.
China has refuted Western claims of industrial overcapacity. Beijing claims the West is trying to stifle its economic growth.
German energy prices pressured by solar energy glut
China is not the only country suffering from an oversupply of solar energy.
Germany also produces so much solar energy that energy prices fall into negative territory when production peaks.
But experts say these are just hurdles in the global energy transition from fossil fuels to green energy, and that the next phase will focus on optimizing supply and demand.
“Countries around the world introducing large amounts of renewable energy and facing challenges from erratic and intermittent generation are looking for smart ways to distribute this power and use it most efficiently and effectively – approaches that are AI-enabled, or at least model-backed,” David Fishman, senior manager at economic consultancy Lantau Group, told Reuters.
“Certainly China is heading there,” he added to the news agency.
