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In 2026, global solar PV demand is expected to decline year over year for the first time in several years. According to InfoLink’s projections, global demand will fall from 685 GWdc in 2025 to approximately 509–597 GWdc in 2026, a decline of 13%–26%.
A closer look, however, reveals that nearly all of the contraction will come from China, where demand is expected to drop by around 40%, from 368 GWdc to 220–232 GWdc. By contrast, demand in markets outside China is expected to reach 289–366 GWdc this year, compared with approximately 317 GWdc in 2025. In other words, the global solar market has not lost its underlying momentum. Rather, China, its largest growth engine, is undergoing a temporary shift in pace.
Document No. 136 marked a turning point for China’s solar PV demand. In the first half of 2025, developers rushed to complete installations ahead of the cutoff separating existing projects from new ones, pushing demand to a quarterly peak of 152 GWac in Q2 2025, with demand remaining above 100 GWac in the second half of 2025. Following the policy’s implementation, electricity revenues for new projects became more exposed to market prices, alongside the introduction of a mechanism-based settlement arrangement, increasing uncertainty over project returns. Quarterly demand subsequently fell to 41 GWac and 30 GWac in Q1 and Q2 2026, respectively.
Compounding this, 2026 marks the first year of China’s 15th Five-Year Plan, with utility-scale projects slow to start. According to China’s National Energy Administration (NEA), newly installed PV capacity totaled 97 GWac from January through August, down 66% year on year. As utility-scale projects progress and provincial competitive bidding processes proceed in the second half of the year, capacity additions in 2026 are expected to reach 200 GWac, though still below previous levels.
Despite the sharp decline in demand, supply has not contracted accordingly, and there has been little meaningful capacity shakeout in the market. Currently in China, cell manufacturers are operating at utilization rates below 50%, while polysilicon inventories held by producers, upstream and downstream companies, and traders may total 730,000–790,000 MT. Even if polysilicon manufacturers halt production, existing inventories would still be sufficient to meet industry demand for more than six months.
To stabilize the market, China’s State Administration for Market Regulation (SAMR) issued pricing compliance guidance to the solar industry, and polysilicon manufacturers committed to refraining from selling below their full production costs. Only then did polysilicon prices return to RMB 40/kg in September.
Cell prices, meanwhile, briefly approached USD 0.06/W amid soaring silver prices before falling back to USD 0.04/W, with market participants continuing to negotiate prices near cash-cost levels. Export prices have also undergone a shift: China eliminated export VAT rebates for PV products effective April 1, pushing FOB prices for TOPCon modules destined for markets outside China from nearly USD 0.10/W to approximately USD 0.115/W. Going forward, prices are expected to fluctuate within a narrow range around this level.
Will overcapacity worsen before conditions improve? InfoLink expects 2026 to mark the worst point in the supply-demand imbalance. Supply has yet to contract meaningfully, with every segment of the PV supply chain, from polysilicon to modules, still maintaining 1,200–1,700 GW of production capacity, while demand remains near its lowest level in recent years.
Looking ahead to 2027, China’s grid integration challenges are unlikely to be resolved in the near term, as further expansion of ultra-high-voltage (UHV) transmission infrastructure and the development of additional ways to utilize renewable energy are still needed. China’s PV demand is projected at approximately 203–224 GWac in 2027, broadly in line with 2026 levels, while global demand is expected to reach 520–622 GWac. A V-shaped demand rebound sufficient to absorb excess capacity therefore appears unlikely.
A meaningful capacity shakeout will depend on the implementation and enforcement of regulatory standards. The Norm of Energy Consumption Per Unit Products of Monocrystalline Silicon (GB 47835-2026) and Norm of Energy Consumption Per Unit Products of Polysilicon and Germanium (GB 29447-2026) will take effect on January 1, 2027.
The Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Crystalline Silicon Photovoltaic Modules and Inverters (GB 47834-2026) will also take effect on the same date, establishing energy efficiency requirements for modules and inverters. All three standards are expected to facilitate the phaseout of outdated production lines and the upgrading of production technologies. Ultimately, the effectiveness of capacity consolidation will depend largely on how rigorously these standards are enforced and how committed the government and manufacturers are to implementing them.
Energy storage presents a different picture. Over the past year, energy storage prices have risen steadily. Lithium carbonate prices climbed from approximately RMB 60,000/MT in mid-2025 to more than RMB 150,000/MT by mid-2026. Prices for 314 Ah energy storage cells rose from RMB 0.29/Wh to RMB 0.375/Wh, and prices in markets outside China increased from approximately USD 45/kWh to USD 50–52/kWh.
Yet demand remained resilient. Global energy storage cell shipments reached 468 GWh in the first half of 2026, nearly doubling year over year, with full-year shipments projected to exceed 1,000 GWh. Two factors explain this resilience. Despite the price increases, energy storage system (ESS) costs remained substantially below 2024 levels. Moreover, curtailment and growing grid integration pressures across global markets have made solar-plus-storage increasingly essential rather than optional.
The upward trend in prices across the upstream and midstream energy storage supply chain began to reverse in September. As shipments of lithium-bearing minerals resumed from African sources, including Zimbabwe, and China’s inventories of imported lithium ore recovered, market expectations strengthened significantly for a rebound in spodumene-based lithium production and lithium salt supply in Q4. As a result, the price premiums arising from earlier disruptions to lithium ore supply narrowed rapidly. Meanwhile, some energy storage battery manufacturers proactively kept their inventories in check, tempering market expectations for another substantial increase in planned production in Q4.
As prices for lithium carbonate and lithium iron phosphate (LFP) cathode materials declined significantly, battery cell raw material costs also fell. Meanwhile, China began levying a consumption tax on lithium-ion batteries in September, providing some support for prices. In the short term, however, the decline in upstream material costs was more pronounced, leading to a slight further drop in actual cell transaction prices from already low levels.
Looking ahead, energy storage demand is expected to maintain relatively strong growth in 2027. Utility-scale standalone energy storage projects in China, utility-scale energy storage in Europe and Australia, projects and behind-the-meter (BTM) storage in emerging markets, and new demand from AI data centers (AIDCs) will continue to drive growth. However, as the market expands rapidly from an increasingly large base, energy storage demand growth is expected to gradually normalize, making it unlikely to fully offset the supply pressure from continued expansion in upstream resource production over the long term.
According to InfoLink’s projection, lithium carbonate prices will fall to approximately RMB 105,000/MT by mid-2027, while continued growth in overall demand is expected to keep battery cell and ESS prices relatively stable compared with current levels. In the near term, the energy storage industry’s principal risk lies not in price levels but in regional trade barriers. China’s gradual elimination of export VAT rebates for batteries, combined with U.S. tariffs on Chinese products and non-tariff restrictions such as foreign entity of concern (FEOC) requirements, is driving regional disparities in ESS costs: such costs may edge lower in markets without trade barriers, while prices in markets with such barriers are expected to remain elevated. These developments are unlikely to significantly affect overall solar PV demand but will change the cost of procuring energy storage across markets.
In sum, capacity shakeout has become the focus of China’s PV industry following years of losses among manufacturers and intense price competition. PV supply chain prices are expected to fluctuate within a narrow range at low levels, while a broader restructuring of China’s PV manufacturing industry is only beginning. Meanwhile, the drivers of global demand growth have gradually shifted from China toward emerging markets, particularly those in the Middle East, although aggregate demand outside China remains relatively stable. Whether India can become the next major driver of global growth after 2027 will depend on whether its domestic solar cell manufacturing capacity can close the supply gap and whether its grid infrastructure and energy storage deployment can keep pace with demand growth. 
Figure 1. Module price trends and China’s export VAT rebate elimination, January 2026–June 2027

Ms. Corrine Lin brings over a decade of expertise in renewable-energy research and market intelligence, spanning solar PV, energy storage, and the net-zero transition. As InfoLink's Chief Analyst since its founding, she has led the team in delivering actionable industry insights. Since assuming the role of Chief Executive Officer of InfoLink Consulting on January 1, 2026, she has continued to advance the company’s research-driven strategy and advisory capabilities.
We are India’s leading B2B media house, reporting full-time on solar energy, wind, battery storage, solar inverters, and electric vehicle (EV)
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