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China’s Solar Installations Expected to Decline in 2025 Amid Market Reforms
Mar 03, 2025
After six consecutive years of growth, China’s solar installations are projected to decline by up to 22% in 2025, following the introduction of market-based pricing reforms. The China Photovoltaic Industry Association (CPIA) forecasts that solar capacity additions will drop to between 215 GW and 255 GW, down from a record 277 GW in 2024.
Key Factors Behind the Decline:
- Market-Based Pricing Reform:
- Effective June 2025, the government will replace the feed-in tariff (FiT) system with a market-driven pricing mechanism.
- Renewable energy projects must now sell power at market rates, making project economics less predictable.
- Oversupply and Price Cuts:
- China installed 277 GW in 2024, a 27.79% YoY increase, leading to overcapacity issues.
- Falling solar prices forced companies to cut costs across the supply chain.
- U.S. Trade Barriers:
- The U.S. announced 50% tariffs on solar cells and polysilicon starting 2025, further pressuring Chinese manufacturers.
- China’s export tax rebate rate for solar PV products was reduced from 13% to 9% in December 2024 to address global concerns over overcapacity and trade disputes.
China’s Renewable Energy Leadership Remains Strong:
- Renewables now account for over 40% of China’s power generation capacity.
- Despite the expected decline, China will remain the dominant player in the global solar market, with the U.S. far behind—forecast to install only 32.5 GW in 2025.