NEWS reports over the last several days have delivered some bad tidings for China’s solar sector — which is, in a couple of different respects, a big chunk of the global solar sector — with several leading manufacturers issuing earnings warnings for 2025. The combined forecast losses are at least $5 billion and likely to go higher, as a couple of companies have warned of losses but not yet disclosed forecast or actual figures. The situation is probably best viewed as a phase in an inevitable industry shake-out rather than a permanent collapse, but it will have implications for solar power development everywhere.
China is by far both the world’s biggest manufacturer and user of solar photovoltaic panels, accounting for about 80 percent of production — including close to 80 percent of the world supply of silicon used in solar panels manufactured anywhere — and more than 40 percent of the global total solar generation capacity. China’s installed capacity of just over 1 terawatt of solar is roughly three times the installed capacity of the US, the second-biggest solar user in the world. Although solar power still only accounts for about 9 percent of China’s total, solar has been expanding in China at about 45 percent annually, at least until now.
The losses the top manufacturers have disclosed may put the brakes on that heady growth trajectory, although the distressing full-year results have not come as a complete surprise. The top four manufacturers — LONGi Green Energy, JinkoSolar, Trina Solar and JA Solar — had already announced combined losses of $1.54 billion for the first half of 2025, and with nothing substantial having changed in the second half of the year, the descent into the red simply continued.
In the latest details, LONGi said it expects a net loss attributable to shareholders of 6.0 billion yuan to 6.5 billion yuan ($886 million to $930 million) for 2025; Tongwei Solar forecast a net loss of 9.0 billion yuan to 10.0 billion yuan ($1.29 billion to $1.44 billion); Aiko Solar, 1.6 billion to 2.3 billion yuan ($23 million to $33 million); TCL Zhonghuan, 8.2 billion to 9.6 billion yuan ($1.18 billion to $1.38 billion); and JA Solar forecast losses of 4.5 billion yuan to 4.8 billion yuan ($650 million to $690 million). Trina Solar and JinkoSolar have not specified their expected losses, but have already said their net profit attributable to shareholders will be negative, while other major manufacturers such as Drinda Solar and Daqo New Energy have also signaled expected losses.
Common causes
The explanations for the losses are the same for every one of the companies. First, there is a massive supply demand mismatch; despite only making up a modest percentage of China’s generation mix, the huge amount of solar that has been installed far outstrips near-term demand. Second, even though solar panel prices have steadily decreased — in part due to massive oversupply — raw material and input costs for things such as polysilicon and silver paste have been rising, particularly in the last quarter of 2025. Third, there was a significant slowdown in new solar installations in the second half of the year, even though the growth rates both in China and globally remain positive.
Overseas trade barriers were also cited as negative factors by most companies’ disclosures, but at this point, that is beginning to sound like a stock answer from any company, no matter what the industry. However, and this was something stated in delicate terms for obvious reasons, the solar manufacturers are generally critical of China’s power-market reforms and “anti-involutionary” economic policies, which have failed to arrest the oversupply declining prices spiral. Or as LONGi put it, “have complicated the operating environment.”
2026 outlook
Most industry players and analysts seem to feel that an extended period of pain is in the offing for the solar sector in China, but that circumstances could begin to improve toward the end of the year, depending on the effectiveness of China’s policy response. Chinese regulators have recently signaled that tighter oversight will be applied, with the Ministry of Industry and Information Technology describing 2026 as “a key year for sector governance.” What this means, evidently, is that there are plans to implement even tighter manufacturing capacity controls and generation project management, including removing some of the less competitive excess generating capacity. Likewise, smaller struggling manufacturers will be encouraged to exit, either through dissolution or merger with bigger firms.
All of this should be watched very carefully by the Philippines, which is almost exclusively dependent on China for its ambitious solar energy development goals. For one thing, assuming that China’s regulatory efforts bear some fruit, the cost of solar panels is going to go up.
Perhaps more importantly, the supply demand mismatch in China is not something that should be dismissed as “some other country’s problem,” as policymakers here are wont to do. Even though Chinese solar is a relatively small part of its generation mix, and even though China has similar policies prioritizing the dispatch of solar power, there are still a lot of solar generators in China with stranded capacity.
The problem lies in its capacity factor, which averages about 11 percent in China. That narrows the demand for solar power, or rather narrows the band of electricity demand that solar power can meet. China’s solar capacity factor is actually rather pathetic; other countries, including this one, do a bit better, but the best in the world (in Germany, mostly due to a large amount of rooftop solar) is still only about 26 percent. That means that planning an appropriate amount of capacity to match both near-term and long-term demand is extremely complicated. It is not at all clear that kind of fine-tuning is being done here, which probably means that it really isn’t, and that is something that could be a huge problem in the near future.
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Bluesky: @benkritz.bsky.social

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