Chinese policy shifts bring low-price solar market to a close

The cancellation of the 13% VAT export rebate will fuel prices.

Changes in China’s policies and supply production cuts are seen to push prices of solar module prices up by 9% in the fourth quarter of 2025, according to a new report from Wood Mackenzie.

"For the last eighteen months, developers have benefited from solar modules and energy storage systems being sold at rock bottom prices by Chinese manufacturers attempting to shift excess supply,” said Yana Hryshko, senior research analyst and head of Global Solar Supply Chain at Wood Mackenzie.

"However, this is about to change. The Chinese government has intervened to stabilise the market, and developers globally will have to adjust their procurement expectations accordingly,” the expert added.

The analysis showed that solar module prices fell to historic lows of $0.07 to $0.09 per watt during 2024 and early 2025, as Chinese manufacturers engaged in price competition despite posting heavy losses. This unsustainable situation has now reached a turning point through coordinated government intervention.

WoodMac noted that polysilicon consolidation, supply-side production cuts, and the cancellation of China's 13% VAT export rebate will fuel solar module prices, with further increases expected through 2026.

“With no possibility of alternative supply in the short term, developers will have little choice but to absorb these higher costs,” Hryshko said.

The research suggests that even developers who secured supply agreements earlier in 2025 will face renegotiation for production scheduled after November 2025, as the new pricing environment takes hold.