Wood Mackenzie: By 2026, China will have more than 80% of the world’s photovoltaic manufacturing capacity

Research shows that despite the introduction of local manufacturing policies in overseas markets, China will still dominate the global photovoltaic supply chain and widen the gap in technology and cost.

Wood Mackenzie's estimated photovoltaic module production capacity (GW) around the world from 2021 to 2026

According to a recent research report titled "How Will China's Market Expansion Affect the Global Photovoltaic Module Supply Chain?" released by research firm Wood Mackenzie, after investing more than US$130 billion in the photovoltaic industry in 2023, China will By 2026, it will have more than 80% of the world's polysilicon, silicon wafer, photovoltaic cells and photovoltaic module manufacturing capabilities.

Huaiyan Sun, author of the research report and senior consultant at Wood Mackenzie, said: "While the expansion of China's PV manufacturing industry has been affected by falling polysilicon prices, technology upgrading and the development of local manufacturing in overseas markets, China will still dominate the global PV supply chain and Continue to widen the technology and cost gap with competitors."

According to Wood Mackenzie's annual market demand growth forecast, China's silicon wafer, photovoltaic cell and photovoltaic module production capacity is expected to exceed 1TW by 2024, which means that China's production capacity is sufficient to meet global annual demand from now to 2032.

China's capacity expansion will continue its dominant position in the global photovoltaic industry with its advanced technology, low cost and complete supply chain

The introduction of strong policies in overseas markets has begun to strengthen local photovoltaic manufacturing, but compared with photovoltaic products supplied by China, it is still not cost-competitive. According to this research report, the price of photovoltaic modules made in China is 50% lower than that of photovoltaic modules made in Europe, and 65% lower than that of photovoltaic modules made in the United States.

Since 2022, the United States and India have announced planned PV module production capacity of more than 200GW, driven by the US Inflation Reduction Act (IRA) and India's Production-Linked Incentives Act (PLI).

Huaiyan Sun said: "Although there are considerable expansion plans for photovoltaic modules in overseas markets, in the next three years, overseas markets will still be unable to eliminate their dependence on China's silicon wafers and photovoltaic cells."

N-type photovoltaic cells are the next generation technology after p-type photovoltaic cells. China plans to manufacture n-type photovoltaic cells of more than 1TW and will continue to maintain its global technology leadership. This means that China's n-type photovoltaic cell production is 17 times that of the rest of the world.

Looking beyond China, India is expected to overtake Southeast Asia as the second largest PV module production region by 2025, driven primarily by incentives under India's Production Linked Incentives Act.

Oversupply and fierce competition will characterize the future PV product supply chain and have led to the cancellation of some expansion plans

Industry insiders are concerned about an oversupply in the market due to old production lines that produce less efficient photovoltaic products, such as p-type photovoltaic cells and M6 photovoltaic cells. Demand for p-type photovoltaic cells will begin to decline from 2023, and Huaiyan Sun expects that by 2026, demand for p-type photovoltaic cells will account for only 17% of supply.

He added: "Oversupply will undoubtedly hinder some current expansion plans. In the past three months, more than 70GW of production capacity in China has been terminated or suspended."

China's photovoltaic manufacturing industry is entering a challenging period, and some photovoltaic module manufacturers may be forced to accept orders at a loss, reduce production capacity or shut down completely.