For a long time, the photovoltaic (PV) industry has faced criticism from outside observers due to overcapacity in its production chain. Over the years, this issue has led to significant market imbalances and has become a major burden for many PV companies, especially during periods of industry downturn. Although the PV sector has seen some recovery this year—particularly in areas like silicon wafers, solar cells, and modules—as demand stabilizes, many firms are accelerating their efforts to reduce excess capacity and shed the "overcapacity" label.
However, the problem is shifting downstream. As the development boom of photovoltaic power plants continues, the overcapacity issue is slowly resurfacing. A clear indicator of this trend is that China currently has over 130 GW of disclosed photovoltaic projects under development, which is more than three times the target set by the "Twelfth Five-Year Plan" for 2015. This massive scale of investment raises concerns about whether these projects will be able to generate returns or face the same fate as wind power, where uncoordinated development led to curtailment and inefficiency.
Behind the surge in investments, one major issue is the uncertainty surrounding return on investment. More seriously, there's a growing risk of "solar curtailment"—where large-scale solar farms produce electricity but can't sell it due to grid limitations. This phenomenon is becoming increasingly common in the PV sector, mirroring past problems faced by wind energy. Grid connection remains a key bottleneck for renewable energy industries, and the PV sector seems to be repeating similar mistakes.
Industry experts note that while the issue of curtailed solar power is not yet widespread, it could become more severe as projects grow larger. Solar energy is even more intermittent and harder to predict than wind, making it more challenging for grids to manage, especially in regions with weak infrastructure, such as western China. The construction of large ground-mounted solar farms in these areas may lead to widespread "sunbathing" situations, where power is generated but not utilized effectively.
Recent reports from the Ministry of Industry and Information Technology highlight that the timing of solar plant construction and grid development is often misaligned. Coordination between power generation and grid expansion remains critical for the continued growth of the domestic PV market.
To avoid repeating the mistakes of wind power, the key is to expand PV installations gradually, guided by sound policies that encourage rational investment and promote a diversified market. In countries like Germany and Italy, policy adjustments have been used effectively to manage market supply and demand, ensuring stability and sustainability.
In China, the feed-in tariff for large-scale ground-mounted solar projects in the west is expected to decrease as costs fall. As a policy-driven industry, PV relies heavily on subsidies. Learning from international best practices, governments should adjust support mechanisms based on market conditions to maintain healthy growth.
At the same time, the push for distributed solar power in urban and rural areas is gaining attention. Policies promoting distributed PV and rural solar initiatives are being actively implemented, offering new opportunities for investors. However, challenges remain, including gaps in financing, taxation, property rights, and subsidy mechanisms. These uncertainties make it difficult for investors to see clear returns.
To fully realize the potential of distributed solar, all stakeholders must work together to refine policy frameworks and draw lessons from successful global models. With proper guidance and coordination, the future of China’s photovoltaic industry can be both sustainable and profitable.
Heilongjiang Junhe Building Materials Technology Co., Ltd , https://www.junhejiancai.com