Overseas institutions: The price increase of Chinese photovoltaic modules is a "short-term phenomenon"

According to a solar researcher at Rystad Energy, the manufacturing cost of Solar Panels in China will rise in the first half of 2026, although module prices may fall again before the end of the year.

Marius Mordal Bakke, Vice President of Solar Research at Rystad Energy, stated that production costs for Chinese photovoltaic manufacturers will increase due to a combination of factors, including policy changes and market prices for polysilicon and silver.

Earlier this year, Chinese authorities confirmed the elimination of the 9% export tax rebate on solar silicon wafers, cells, and modules starting in April. This will cause some of the costs previously offset by the tax rebate to be passed on to the supply chain.

Bakke stated that while the elimination of subsidies will not fundamentally change the supply and demand dynamics of the solar industry, it will create a new cost environment that will determine the price of Chinese exported Solar Modules, especially in Europe.

However, he noted that demand for Chinese modules is expected to decline in 2026 due to a slowdown in the Chinese domestic market and reduced demand in Europe and Australia. Growth markets such as India, Turkey, and the United States are largely inaccessible to Chinese module manufacturers due to protectionist policies.

In fact, Bakke believes that Europe will experience a "supply surplus of Chinese modules" for some time due to a "surge" in procurement before the April subsidy withdrawal, coupled with a market contraction in 2026 and supply safeguards under the Net Zero Industry Act (NZIA) effectively excluding Chinese modules, cells, and inverters from certain European public procurement contracts.

This will put further pressure on module manufacturers producing and exporting new products with cost-adjusted prices.

Silver and Polysilicon Costs

Soaring silver prices and the struggling development of China's polysilicon industry will also affect module production costs and prices in the coming year.

Bakke states that silver prices have "risen sharply" since the beginning of 2026 because demand exceeds supply, and the mining industry lacks the flexibility to adjust. This will affect the production cost of solar cells, potentially leading to higher selling prices.

One solution is to replace silver with copper and copper paste in cell production. The solar industry has been undergoing this shift for the past year, and Bakke stated, "A significant portion of China's first-tier capacity has now shifted from silver to copper, a shift that will begin in 2026." Adopting copper, a cheaper material than silver, will alleviate pressure on module prices, and silver prices may fall again. Bakke noted that some analysts believe current silver prices are inflated and not "the true price of silver." Adopting copper also presents its own technical challenges, particularly in terms of efficiency and degradation. "Degradation is accelerated when using copper instead of silver, especially under humid conditions. Copper also has lower conductivity than silver," Bakke explained.

Since Beijing introduced measures and industry consolidation plans surfaced late last year, polysilicon prices have also rebounded slightly. However, Bakke stated that these changes are unlikely to be sustainable because, with increased profits, China's largest companies have begun to increase inventory, which contradicts the trend of slowing demand for Chinese products. Earlier this year, polysilicon market analyst Johannes Bernreuter expressed similar views, when China's anti-monopoly and anti-unfair competition regulators expressed concerns about consolidation plans among leading companies in the industry.

Although polysilicon producers have returned to profitability, rising cell costs and stagnant demand have kept them operating at a loss, even with price increases. "Even if solar cell quotes and actual transaction prices rise, they may not necessarily be profitable," Bakke stated. What is the long-term outlook for solar prices?

Ultimately, Bakke indicated that all these factors will lead to price increases in the coming months, but after April, European purchases of Chinese modules will slow, and "prices will fall after the initial rise." A sharp price increase in a context of oversupply and reduced demand is unlikely to be sustainable in the long run.

He stated that module prices will rise because the 9% tax rebate is unsustainable for large module manufacturers given the fluctuations in cell and polysilicon costs. But ultimately, "you'll see prices rise in the short term, then fall, and often below cost," Bakke said. "It's difficult to predict the future, but if manufacturers don't adapt to the slowing market demand, prices will fall back below cost."