China’s photovoltaic industry is entering a decisive phase of structural transformation as persistent oversupply, weakening demand and falling prices continue to place pressure on manufacturers across the value chain, according to InfoLink Consulting.
Despite market driven efforts to rebalance production, significant volumes of outdated and inefficient manufacturing capacity remain in operation, preventing the industry from resolving its long standing supply demand imbalance.
Global photovoltaic manufacturing capacity exceeded 1,000 GW in 2023, while the industry’s supply demand ratio has remained close to two times over the past two years. At certain points this ratio is expected to exceed two times, highlighting the scale of excess production capacity.
Previous periods of severe overcapacity in 2012 and 2018 required government intervention to accelerate capacity rationalisation and industry restructuring. The current imbalance is even more pronounced, prompting Chinese authorities to introduce mandatory national energy efficiency standards for crystalline silicon photovoltaic modules and inverters.
The new regulations are expected to establish minimum efficiency thresholds that will accelerate the retirement of outdated manufacturing capacity while encouraging investment in higher efficiency technologies.
Signs of oversupply became increasingly evident during 2024 as rapid capacity expansion resulted in rising inventories and continued declines in module prices. In response, Chinese regulators launched the development of mandatory national standards covering minimum energy efficiency values and energy efficiency grading for photovoltaic modules and inverters.
The move quickly influenced procurement practices across the market. Within six months of the standards development process beginning, several central and local state owned enterprises introduced utility scale module tenders requiring minimum conversion efficiencies of 23.8% for high efficiency N type modules.
Following almost two years of consultation with industry stakeholders, the mandatory standard has now been largely finalised and is expected to be officially released in the near future. At the same time, a complementary industry standard covering the classification and grading of photovoltaic modules has also been issued for public consultation, further tightening efficiency requirements for premium products.
The new framework is expected to create a clear performance threshold that will determine which manufacturing technologies remain competitive.
TOPCon technology has progressed through several generations. Early TOPCon products currently achieve mainstream module power ratings of between 620 W and 630 W. The latest TOPCon 3.0 products combine multiple technology improvements to deliver module outputs of between 645 W and 655 W while increasing bifacial performance to as much as 90%.
Back contact technology has also emerged as a leading high efficiency option, with mainstream module outputs exceeding 650 W while production costs continue to decline.
By comparison, heterojunction technology has experienced slower improvements in commercial production efficiency and currently delivers performance broadly comparable with first generation TOPCon modules.
Under the proposed standards, TOPCon modules will require conversion efficiencies of at least 23.6% to qualify for first tier applications. Future industry requirements are expected to exceed 24%, a threshold that can currently be achieved only by TOPCon 3.0 and back contact technologies.
According to InfoLink Consulting, manufacturing capacity incorporating advanced TOPCon technologies had exceeded 200 GW by the end of May 2026, while dedicated TOPCon 3.0 capacity had reached approximately 90 GW. Much of this capacity is expected to enter commercial production during the second half of 2026.
Back contact manufacturing capacity is also expanding through factory upgrades and is projected to reach at least 95 GW by the end of 2026, with the potential to increase to around 115 GW.
The transition highlights significant differences in manufacturers’ technology portfolios. Companies with greater exposure to older TOPCon 1.0 production lines are expected to face higher upgrade costs, while manufacturers that have already invested in advanced TOPCon and back contact technologies will be better positioned to meet future market requirements.
The forthcoming regulations are expected to reshape competition across China’s photovoltaic sector by rewarding higher efficiency products rather than aggressive price reductions. High efficiency modules are likely to command pricing premiums and gain market share, while lower efficiency products face increasing price pressure and accelerated production cuts.
As the photovoltaic industry moves beyond a prolonged period of capacity expansion, the market is expected to enter a new phase focused on operational efficiency, product quality and long term value creation.
While crystalline silicon technologies continue to lead the current transition, the industry’s next major milestone will be the commercial readiness of perovskite tandem solar cells, which are widely viewed as the next significant step in photovoltaic efficiency.
Information source: InfoLink Consulting
Author: Bryan Groenendaal






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