Chinese solar giants scale back expansion plans
China’s breakneck solar expansion is cooling.
The big news: The world's largest solar module manufacturer is pausing construction of the world's largest manufacturing facility.
- On Friday, Jinko Solar announced it would halt development of the second phase of its new plant in Shanxi.
Some context: The plant was due to have a staggering 56 GW of annual capacity – enough to meet the entire EU's solar demand.
- Jinko has already completed the first 28 GW and is now suspending the development of the remaining capacity.
More context: China’s solar industry has been hammered by overcapacity since late 2022, with prices for polysilicon, wafers, cells, and modules tanking by 70-90%.
- Prices have fallen below production cost, pushing solar companies into the red.
Jinko is not the only company cutting back.
- Trina Solar, the second-largest module manufacturer, recently canceled plans to raise funds for future manufacturing expansion.
- Industry giant LONGi is also undergoing mass layoffs.
Get smart: Manufacturers' focus on cost and scale has reached a limit in the face of massive overcapacity.
- Jinko and Trina won't be the last to cut their expansion plans.
Looking ahead: Slower capacity expansion and bankruptcies among smaller players will eventually rebalance the market, but the timeline is uncertain. Broadly, we're looking out for two things:
- First, are officials willing to let local manufacturers fail? Local governments have poured billions into solar companies, and will be reluctant to see them go under.
- Second, are manufacturers willing to voluntarily curb production to reduce supply and support prices?