The photovoltaic industry is about to usher in another huge transformation.

The factories are running at full capacity, and products are being sold at increasingly lower prices. Technology is becoming more advanced year by year, yet enterprises are finding it harder and harder to make profits.

Over the past few years, China's photovoltaic (PV) industry has gone through a seemingly absurd phase: the entire industrial chain was frantically cutting costs and competing on price, only to drive down the profits of the whole industry, even leading to widespread losses.

Now, this brutal competition that has lasted for several years has finally seen some distinctive changes.

The lower the price, the harder it is to make profits

If we only look at the industrial achievements, there are barely any flaws in China's PV industry.

Over the past two decades, Chinese enterprises have grown from industry followers to global leaders. From polysilicon, silicon wafers, solar cells to modules, they have built globally leading production capacity and cost advantages in almost all manufacturing links.

It can be said that PV is one of the few industries that has truly brought high-tech products down to "cabbage prices", but the problem also arises exactly here.

Once a technological breakthrough emerges, competitors will soon follow and replicate it. If one enterprise reduces costs by expanding production capacity, other enterprises will catch up immediately. Once a link becomes profitable, a large amount of capital will pour in instantly. From diamond wire cutting, PERC to TOPCon, this model was almost unbeatable during the industrial growth stage. The larger the scale, the lower the cost; the lower the cost, the easier it is for PV to gain popularization; the larger the market, the stronger the global competitive advantage of Chinese enterprises.

However, every model has its limits. When the expansion rate of production capacity far outpaces the growth of demand, this mechanism that once created miracles may in turn squeeze the entire industry.

According to incomplete public statistics, from 2021 to 2025, the total disclosed investment in PV manufacturing links amounted to about 3 trillion yuan, leading to a fierce expansion of production capacity in all links and severe overcapacity.

Take polysilicon as an example. By the end of 2025, China's total production capacity has exceeded 3.5 million tons, while the global annual demand is only about 1.4 million tons. Even if the capacity utilization rate is reduced to a rare 40%, supply still exceeds demand.

When supply far outruns demand, price-cutting and cutthroat competition become inevitable. Thus, the most abnormal scene in the PV industry in recent years has emerged: technology keeps advancing, global installed capacity remains at a high level, and the manufacturing capabilities of enterprises are getting stronger, yet multiple links in the industrial chain are trapped in continuous profit pressure.

Since October 2024, the PV industry has started to "fight against cutthroat competition". Initially, industry associations tried to guide the market back to rational competition through self-discipline initiatives and other means. In July 2025, relevant government departments held many symposiums, and leading enterprises began to discuss production control and promote the acquisition and disposal of backward production capacity.

For enterprises, if they cut their own production while their rivals maintain high operating rates, it means their market share may be taken away by others. Therefore, in the past two years, everyone knew that further price cuts would do no good, but without mandatory constraints, no one was willing to leave the game first, and no substantial effect of capacity reduction was achieved.

To truly change the industry, what is needed is not just the slogan of "let's stop the cutthroat competition", but the change of the rules themselves, which is exactly the biggest variable in the PV industry in 2026.

New Changes

Recently, an interesting change has taken place in the PV market. Amid high inventory levels, the futures price of polysilicon has risen by more than 14% from the bottom in eight trading days. At the same time, the PV sector that had been silent for a long time has become active again, with leading enterprises represented by GCL Technology rebounding by nearly 20%.

This upward momentum is hidden in a series of recent policy changes, and this time the "fight against cutthroat competition" is different from previous ones.

On July 2, mandatory national standards such as the Energy Consumption Quota per Unit Product of Polycrystalline Silicon and Germanium were officially released. Subsequently, the General Rules for Cost Accounting Model of Photovoltaic Industry was implemented, which unified the cost accounting methods for links including polysilicon, silicon wafers, cells and modules. At the end of July, market regulation authorities launched price compliance guidance for the PV industry.

Following a series of policies and regulatory measures, PV polysilicon enterprises also responded actively. On August 6, eight leading polysilicon enterprises including Tongwei Co., Ltd., GCL Technology and Daqo Energy gathered in Shanghai and jointly signed the Initiative to Fight Against Cutthroat Competition.

It is worth noting that the total production capacity of the eight enterprises is nearly 2.8 million tons, accounting for about 80% of China's nominal polysilicon production capacity. They promised that the selling price of all PV products will not be lower than the corresponding cost calculated according to the standard, and will accept the supervision of regulatory authorities.

With multiple measures implemented simultaneously: national energy consumption standards set red lines, general cost accounting rules set benchmarks, price compliance promotes law enforcement, and enterprises respond actively, the optimization and clearance of production capacity has shifted from soft self-discipline to hard constraints.

In the past, it was difficult to clarify costs. For the same ton of polysilicon produced, different enterprises have completely different equipment depreciation, energy prices, technical routes and production efficiency, leading to vastly different final costs. It was hard to truly judge and implement the rule of "selling below cost price". Now the general rules for cost accounting solve the problem of "how to calculate accounts", and the energy consumption standards solve the problem of "what efficiency level counts as qualified", further clarifying the boundary of market competition.

This makes the "fight against cutthroat competition" quantifiable, verifiable and enforceable, and the clearance of polysilicon capacity has finally been on the right track. This change will first be reflected on the supply side.

Take polysilicon as an example. The new energy consumption standard will be officially implemented on January 1, 2027. Both rod-shaped silicon and granular silicon will face clearer energy consumption thresholds, which are 6.3kgce/kg and 4.6kgce/kg respectively, stricter than the draft for comments.

According to data from Bocom International, currently about 45% of the rod-shaped silicon production capacity can meet the 6.3kgce/kg access threshold, which means that about half of the existing capacity faces the risk of failing to meet the standard. Of course, this does not mean that all the remaining capacity will exit the market directly. Some production lines can still improve energy efficiency through technological transformation.

After the clearance of low-efficiency capacity is completed, the effective production capacity of PV polysilicon may eventually drop to 2-2.4 million tons, about 28%-40% lower than the current nominal production capacity.

At the same time, the demand side is also waiting for new variables.

In 2026, the global new PV installed capacity is expected to see a rare negative growth in 20 years. According to a report released by SolarPower Europe, the global total scale is expected to be 612GW, a year-on-year decrease of 8%. Affected by factors such as electricity price marketization, distributed policy adjustment and consumption accommodation, the Chinese market is facing more obvious short-term pressure.

Despite the adjustment in 2026, the industry consensus is that the growth will return to an upward track from 2027. By 2030, under the neutral forecast, the global new installed capacity will rise to 864GW, and even exceed 1.16TW under the optimistic scenario. Among them, the core variable driving the rapid growth of PV comes from the breakthrough of energy storage technology and the explosive growth of installed capacity.

In recent years, with the continuous maturity of energy storage lithium batteries, PCS converters and energy storage system integration technologies, large-scale mass production has driven the rapid decline of energy storage costs. The economy of PV+storage integration has been able to fully cover project costs in some overseas regions with high electricity prices. Energy storage will also fundamentally solve the grid connection problems of PV's intermittency and volatility, greatly improving the accommodation capacity of the power system, which in turn will stimulate the rapid growth of PV installed capacity.

In fact, the energy storage industry has gradually shown a trend of explosive growth since the second half of 2025. According to the forecast of Guojin Securities, the global new energy storage installation in 2026 will reach 438GWh, a year-on-year increase of over 60%.

The growth logic on the PV demand side has changed. In the past, it relied more on new installed capacity itself, but in the future, it may increasingly rely on "PV + energy storage" to jointly promote the accommodation capacity of the power system for new energy. The larger the energy storage scale, the more space there is to accommodate PV power.

It can be seen that driven by the new round of "fight against cutthroat competition", the supply side will truly start to cut production capacity, the bottoming-out and reversal of the demand side is just around the corner, and the PV polysilicon industry will also usher in the inflection point of a new upward cycle.

The Next Round of Competition

Against this background, the underlying competition logic of China's PV polysilicon industry will also undergo qualitative changes.

The past "cutthroat" low-price order-grabbing model that relied on sacrificing cash flow will be blocked, and the core of competition will return to "who can maintain production capacity at lower compliant costs". This is a real case of good money driving out bad money, and leading enterprises with technological and cost advantages will gain pricing power and reasonable profits.

Among these players, Tongwei Co., Ltd. and GCL Technology have provided two representative excellent samples.

Tongwei Co., Ltd. follows the route of continuous evolution of mature technology. With long-term technical accumulation and refined management, all consumption indicators of Tongwei's polysilicon production continue to lead the industry: silicon consumption is as low as 1.03kg/kg.si, reduction power consumption is controlled within 40kWh/kg, and the actual conversion rate of cold hydrogenation reaches up to 32.5%. It has remarkable management and control advantages, and continues to consolidate its leading position in the polysilicon sector.

At the same time, the company has also laid out multiple links including polysilicon, cells and modules. The value brought by integration lies not only in scale, but also in the synergy between different links of the industrial chain. When industry fluctuations intensify, multi-link layout can enhance operational resilience. When competition returns to efficiency itself, the advantages of mature technology, stable mass production and scale effect will become more prominent.

In the first quarter of this year, Tongwei Co., Ltd. also planned to acquire Lihigh Clean Energy, trying to further expand its market share and consolidate its competitive advantages. It is worth noting that Lihigh Clean Energy has formed a polysilicon production capacity of 200,000 tons, ranking sixth in the world, and obtains lower manufacturing costs relying on the energy advantages of Qinghai province.

GCL Technology, on the other hand, opens up new efficiency space through technological route innovation.

The company has long focused on granular silicon and took the lead in realizing large-scale mass production. By 2025, the production capacity of granular silicon has reached about 500,000 tons per year, ranking second in the industry.

Compared with traditional rod-shaped silicon, the comprehensive power consumption of granular silicon has dropped to below 14.8kWh/kg, about 70% lower than that of the improved Siemens process. On the manufacturing side, its cost is about 30% lower than that of rod-shaped silicon. Meanwhile, with the characteristics of no need for crushing, good fluidity and continuous feeding, it can further improve the downstream production efficiency and reduce the comprehensive cost.

That's why granular silicon is gradually moving from a differentiated technical route to larger-scale market application. In 2025, its share in the polysilicon market has risen to more than 20%.

Tongwei Co., Ltd. and GCL Technology represent two very important evolution modes of China's PV industry. One is to continuously dig deep in the mature route, bringing large-scale manufacturing, process optimization and industrial synergy to a higher level. The other is to open up new cost reduction space through technological innovation, and gradually promote the new technical route to large-scale application.

The two routes reach the same goal through different paths, both aiming at lower energy consumption, higher efficiency and more competitive manufacturing costs. This is the root cause for China's PV industry to maintain global competitiveness for a long time: the industry never relies on a single route, but continuously pushes up the ceiling of efficiency through competition between different technical routes and different manufacturing modes.

The real meaning of "fighting against cutthroat competition" is that competition has shifted from competing on price to competing on technology, energy consumption and manufacturing efficiency. When competition returns to these more underlying capabilities, the manufacturing advantages accumulated by China's PV industry over the past two decades will also have the opportunity to be further amplified.

No one can give a definite answer as to when the spring of PV will truly come.

But a new round of competition and elimination has already begun. It has started to calculate a new account: whose technology is more valuable, who has higher efficiency, and who is more capable of going further.

This article is from the WeChat official account "Market Value Observation", author: Li Xiaofei, published with authorization from 36Kr.