The world of solar energy is experiencing a dramatic shift. In a recent development, the International Energy Agency (IEA) has highlighted a massive accumulation of solar panels in the US and the European Union, indicating a significant market oversupply. This unexpected glut is reshaping the solar landscape, slashing prices and sparking intense competition among manufacturers.
As of the end of last year, an estimated 45 gigawatts of solar modules were stockpiled in the US, with the EU’s inventory reaching a staggering 90 gigawatts. This volume is nearly double the projected installations for 2024, pointing to a profound imbalance in the market. The impact on prices has been swift and severe, with a nearly 50% drop in 2023 alone.
What’s more, the IEA anticipates that this oversupply will persist. Manufacturing levels, already triple what they were in 2021, are expected to continue their upward trajectory. “We are likely to see manufacturing capacity soar to over 1,100 GW in 2024, and even higher to 1,300 GW by 2028,” the IEA report stated, emphasizing that this growth will outpace the rate of solar panel installations.
China remains the dominant force in solar module manufacturing, poised to account for 85% of the capacity expansion by 2028. However, this burgeoning supply isn’t matched by an equivalent rise in demand, leading to plummeting global manufacturing utilization rates. From 60% in 2023, these rates could dip below 40% in the coming years.
This oversupply spells not just lower prices but intensifies the battle for survival among manufacturers. Companies with less efficient operations are particularly vulnerable, as the combination of overcapacity and depressed module prices piles on financial pressure.
In response, manufacturers are pivoting towards cost reduction and innovation. “Large, vertically integrated companies are better positioned to weather this storm,” the IEA report notes. “These firms can manage costs more effectively across their entire value chain, giving them a competitive edge in this challenging market.”
As the solar industry navigates this turbulent period, the ramifications could be far-reaching, potentially reshaping the sector’s dynamics for years to come.