China's new solar regulations, set to take effect on January 1, 2027 , will not affect all manufacturers equally . Companies with modern production lines, lower energy consumption, and recurring investment capacity will be better positioned, while lagging producers will need to allocate capital to maintain competitiveness.
Under this scenario, Alberto Cuter, Vice President for Latin America and Italy of JinkoSolar and Enrique García, Director for Latin America & Iberia of GCL , spoke on the microphones of Se tenía que decir y se dijo , the streaming program of Energía Estratégica , where they analyzed the change that is coming for the photovoltaic sector.
“Regulation will bring order, to a greater or lesser extent, to what is happening in a market that has become truly complicated, especially for panel producers. And I am sure that some companies will make the necessary investments and manage to adapt, but I don't think all of them will be able to,” Cuter warned.
“In a way, the Chinese government is pushing the entire industry in the same direction that the largest manufacturers were already moving: optimizing and improving. That's why the regulations will primarily penalize those who haven't made those investments,” García added.
Watch the full program: https://www.youtube.com/watch?v=U7ePntnWh0Q&t=1s
The analysis from both manufacturers establishes a clear division between winners and losers . JinkoSolar and GCL do not foresee major problems for industry leaders who have spent years increasing technological efficiency and reducing energy consumption, but they do anticipate difficulties for older installations and players whose competitive advantage was based on lower-performance, lower-priced products.
Cuter points out that in China a production line that is four or five years old can already be considered old , so meeting the new parameters will mean renewing equipment and adapting both the consumption of the facilities and the final performance of the modules.
“According to some analysts, if the regulation had come into effect immediately when we started analyzing it, just over 50% of the installed capacity would have been in a position to meet the requirements set for January,” the vice president of JinkoSolar stated.
The percentage does not mean that the rest will automatically disappear on January 1st, because some plants will be able to modernize processes, invest in efficiency, or adapt their lines before the new regulations come into effect. However, it highlights the magnitude of the gap that some stakeholders see between existing nominal capacity and the capacity that could be competitive under the new framework.
García identifies lesser-known brands and companies that for years marketed low-efficiency products in niches where price was the main selling point as being more exposed.
On the contrary, large producers have been following the path now promoted by the regulatory framework for years: less consumption per unit manufactured, greater performance and permanent technological renewal .
However, the impact could extend beyond the directly affected companies, since, as the CGL representative explained, limiting wafer production could affect the entire supply chain and reduce the amount of product available .
Reduced availability would also change negotiations with utilities, developers, and distributors. In other words , the market no longer offers buyers the certainty that waiting will necessarily result in a cheaper module.
For procurement managers, the challenge then becomes defining when to hire , in a business where the cost to the manufacturer in six, seven or eight months remains uncertain.
“Nobody knows exactly what will happen in six months in a market that is a real roller coaster. We have already experienced similar situations. In 2020 and 2021 the price of silicon increased significantly, and we managed to get through that period,” Cuter emphasized.
The risk is twofold. Buying today may mean paying more than in a few months , but signing a long-term sale also exposes the supplier to a potential increase in the cost of polysilicon, silver, logistics, or other inputs; plus, not all orders allow the same waiting period .
The selection of the module adds a second level of decision, since the new regulation in China implies that 620W and 625W models, widely sold today, would fall below the new parameter set by the industry.
This can translate into a price difference between modules of different power levels and the availability of products when carrying out projects.
“Demand for 630 and 640 W modules may increase, and that could either support or raise their price. But a utility company also has a certain percentage of breakages and replacements every year. If you buy a 620 W module today and need to replace units in a year, you have to ask yourself if that model will still be available. It's a calculation that each company will have to make,” García explained.
Can a "solar billboard" slow down below-cost sales?
The loss of profitability in upstream opened successive attempts to avoid below-cost operations , although both executives see major obstacles for manufacturers to coordinate a common floor.
“ Manufacturers meet, but trying to set a minimum price among competitors is a cartel and is illegal . Furthermore, although it has been attempted several times, the same thing usually happens. Companies agree not to go below a certain price, and a few days later, a deal appears below that level. The explanation is usually that it was a contract that was already in advanced stages, but ultimately the agreement falls through,” Cuter stated.
“The Chinese are incredibly competitive and they like to win. There’s a mentality where first comes first and second place practically doesn’t matter. That’s why my interpretation is that government regulation eventually emerges: if the companies themselves aren’t able to regulate the market, the government sets the rules,” he added.
García observes a similar dynamic in polysilicon. Producers have discussed a merger aimed at ceasing losses, establishing benchmarks, and eventually making cost information public, even to competitors .
However, it remains just a statement of intent. A previous attempt was halted after a Chinese antitrust authority ruled it could not be carried out .
“This would be a second attempt by polysilicon producers to stop selling at a loss. The question will be whether everyone maintains the commitment or if any company breaks the agreement,” warns García.
The alternative to a price agreement then emerges through another avenue: industrial selection . Companies with lower costs, modernized factories, competitive technology, and financial strength are better equipped to withstand a prolonged period of tight margins.