Overcapacity and price declines: navigating market instability

The explosive growth in PV manufacturing has also created overcapacity, leading to a substantial decline in PV prices, a trend that has persisted throughout 2024. While this overcapacity benefits consumers by making PV systems more affordable, it has also placed financial strain on PV manufacturers.

China's overcapacity has intensified competition, particularly in the EU, where prices have fallen sharply due to surplus Chinese products targeting the European market after fulfilling domestic demands. The USA and India have somewhat shielded their markets from this impact due to protective measures, highlighting the disparities in PV market openness and competitiveness.

Moreover, manufacturers globally, including those in Europe and China, are increasingly struggling as older production lines become less competitive in the current market landscape. Many manufacturers are opting to pause or close older production lines, reducing operating costs in response to thin profit margins. This consolidation reflects a maturing industry where only the most efficient manufacturing lines remain operational, pushing companies toward technological innovation and cost efficiency.

Distributed PV growth and improved grid efficiency

The report indicates that more than 40% of PV installations are distributed systems located directly at the consumption point, minimizing energy loss compared to centralized power sources. PV’s distributed nature allows it to serve local communities effectively, reducing transmission and distribution losses within electrical grids.

For this reason, PV is projected to account for 8.3% of global electricity consumption in 2024, up from 5.4% of total production in 2023, highlighting PV's efficiency in delivering electricity to consumers with minimal loss. This distributed setup means that PV is in an excellent position to meet rising global energy needs with greater efficiency.

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