LONGi, the Chinese photovoltaic module giant, issued a profit warning in the summer of 2024. After years of profits, the group posted a loss of $770 million for the first six months of 2024. A watershed for the solar panel market. Here are a few explanations and analyses from the experts at AURIS Finance, a consultancy firm that specialises in mergers and acquisitions.
Have we gone too far? The global market for solar panels has grown rapidly in recent years, driven largely by demand for energy efficiency. In 2024, the solar panel market is forecast to be worth $172 billion. According to Market Data Forecast, it will double to $350 billion by 2029.
Supply outstripping demand
China is the world leader in photovoltaics, accounting for 80% of global solar panel production. This leadership is underpinned by the country’s massive investment in photovoltaic technologies: China’s share of global solar panel production has risen from 6% in 2005 to 70% in 2021. At the same time, Europe’s share has shrunk from 28% to less than 3%. According to data provided by Wood Mackenzie and published in the French newspaper Les Echos, Chinese solar module production capacity almost tripled in 2022 alone, rising from 198 GW per year to 562 GW per year. In 2023, this capacity doubled again, reaching almost 1TW per year – more than the demand forecast for… 2035.
Excess manufacturing capacity
The Middle Country is facing an overproduction of solar panels due to excessive manufacturing capacity in relation to global demand. This imbalance has led to downward pressure on prices and significant financial losses for companies in the sector. LONGi, China’s largest solar panel manufacturer, has borne the brunt. The group, which had forecast a profit of $1.3 billion in 2023, posted a loss of $770 million in the first half of 2024. As a result, the group announced a 5% reduction in its workforce.
A consolidating sector
In response to the challenges of overproduction, Beijing has taken several measures. In 2024, Chinese factories were operating at only half capacity. This rate is expected to rise gradually, leaving Chinese capacity still above global demand, but at a lower level. At the same time, a series of mergers have taken place. In China, a number of companies are looking to consolidate in order to optimise their production capacity and improve their competitive position in the global market. The Chinese company Trina Solar has made several acquisitions in recent years to consolidate its position as a leader in high-efficiency solar panel technology.
Our experts at your service
Faced with overcapacity, the photovoltaic panel market is undergoing a transformation. AURIS Finance has experts specialising in different industries. Whether you want to identify potential targets, optimise your production chain or attract financial partners, our experts are at your side.
