After riding high in 2022, China's solar industry in 2023 set historic records for installations and exports while simultaneously experiencing its most severe turmoil since the grid‑parity era. The year saw an unusual “fire and ice” phenomenon: on one hand, manufacturing output exceeded one trillion yuan and newly installed capacity repeatedly beat expectations; on the other, supply chain prices collapsed, corporate profits came under pressure, and the spectre of overcapacity hung over every industry participant. At the annual solar industry conference at the end of 2023, words such as “involution”, “brutal winter” and “breaking the deadlock” became the most frequently heard phrases among industry leaders.

I. A Bright Report Card: Record Highs in New Installations and Exports

Despite pessimistic market sentiment, China’s solar industry delivered a stunning performance in 2023, as the numbers show.

Domestic installations exploded. Wang Bohua, Honorary Chairman of the China Photovoltaic Industry Association (CPIA), noted in a review in early 2024 that newly installed PV capacity in China exceeded the 200 GW mark for the first time in 2023, reaching 216.88 GW – a year‑on‑year increase of more than 148%. That figure surpassed the world’s total new PV installations in 2022. By the end of 2023, cumulative installed PV capacity in China approached 610 GW, and for the first time in history renewable energy installed capacity overtook coal‑fired power.

Manufacturing and export volumes grew strongly. In 2023, the output of the four main links of the industrial chain – polysilicon, wafers, cells and modules – reached 1.43 million tonnes, 622 GW, 545 GW and 499 GW respectively, with year‑on‑year growth rates all exceeding 60%. On the export front, despite a slower increase in export value due to falling prices, export volumes of wafers, cells and modules grew by 93.6%, 65.5% and 37.9% respectively. Together with electric passenger cars and lithium‑ion batteries, solar cells were hailed as one of the “new three items” driving China’s foreign trade exports.

II. A Brutal Price War: Collapsing Prices Across the Chain and Unbalanced Profit Distribution

Behind these dazzling numbers, however, lay a year‑long price game along the industrial chain.

Prices plunged. Taking polysilicon as an example, its price fell from around 240,000 yuan/tonne at the beginning of 2023 to roughly 60,000 yuan/tonne by the end of the year – a drop of more than 70%. Driven by this collapse, wafer, cell and module prices were also cut by half. Module prices, in particular, fell below the psychological threshold of 1 yuan/W in some year‑end tenders, sharply squeezing corporate profit margins.

The “price‑cut dividend” did not translate into project returns. Cao Renxian, Chairman of the CPIA and Chairman of Sungrow, sounded a note of caution at the December 2023 conference. He pointed out that the benefits from falling upstream raw material prices had not effectively been turned into higher investment returns for downstream power plants. On the contrary, non‑technology costs (such as land, taxes and local protectionism) remained high, while revenue uncertainty from market‑based power trading increased, making it harder to raise the profitability of PV power generation.

Imbalance in the industrial ecosystem. The situation of “volume up, price down” hit different links of the chain to varying degrees. Despite surging shipment volumes, the module segment suffered razor‑thin margins or even losses. Vertically integrated leaders with advanced technology still had cost advantages, but they also faced huge inventory write‑down losses and intense survival pressure.

III. The Industry’s Dilemma: Disorderly Expansion and Grid Integration Challenges

The “chill” that descended on the solar industry in 2023 was rooted in a wave of capital‑fuelled expansion over the previous two years, which led to a severe but temporary overcapacity.

Overcapacity fuelled “involution”. Gao Jifan, Chairman of Trina Solar, said bluntly that many companies that had crossed over into the PV sector “will have to shut down the day they start production”. He attributed the problem to overheated capital markets and support from local governments, which had encouraged disorderly expansion and caused serious overcapacity. He called on the industry to conduct self‑examination and correction, to avoid falling into loss‑making price wars, and suggested that large state‑owned energy enterprises should no longer use “lowest price wins” in their tenders, so as to guide the industry back to rational competition.

Grid integration becomes a new bottleneck. With the explosive growth of PV capacity, grid integration problems have become increasingly prominent. Steven Zhuang, President of Canadian Solar, noted that the two major challenges ahead are integration and scaling. Lu Chuan, Chairman of Chint New Energy, also stressed the urgency and necessity of disclosing local integration capacity information. To solve the integration issue, “PV + storage” has become a consensus, but the profitability model and utilisation rate of storage remain unsolved problems.

IV. The Way Out: Technological Innovation and Industry Self‑Discipline

Faced with difficulties, the solar industry in 2023 did not stand still. Instead, it sought a way out through technological iteration and ecological collaboration.

A diversity of technology routes blossomed. 2023 marked the first year of mass production for N‑type cell technologies (including TOPCon, HJT and BC). Leading enterprises such as Longi Green Energy, JinkoSolar and Trina Solar repeatedly set world records for cell conversion efficiency, driving a rapid transition from P‑type to N‑type technology.

Industry consolidation and standardisation. On 15 December, during the 2023 PV Industry Annual Conference, leading companies including Canadian Solar, Risen Energy, TCL Zhonghuan, Trina Solar, Tongwei and Chint New Energy jointly launched the “700W+ PV Open Innovation Ecosystem Alliance”. The alliance aims to promote standardised designs for large‑format, high‑power modules, reducing waste along the industrial chain caused by size variations, and marks the official entry of the solar industry into the “700W+” era.

Conclusion

In 2023, China’s solar industry experienced a rapid transition from “high summer” to “bitter winter”. Although new installed capacity reached a record high, every participant along the industrial chain felt the piercing cold of overcapacity. That year, the PV industry bid farewell to the rough era of “easy money” and entered a high‑difficulty mode where competition revolves around technology, cost and cash flow. As Cao Renxian put it, enterprises should maintain strategic focus and believe that the law of cycles, together with survival of the fittest, will guide the industry to a new stage of high‑quality development.