Solar Market Recovery

How Technology Efficiency-Driven Policies are Driving the Recovery of the Global Solar Market

After years of soaring growth, the solar manufacturing sector now finds itself navigating the aftermath of a severe downturn. Between 2023 and early 2025, a storm of overcapacity and declining global demand for solar panels sparked a price war that plunged many solar manufacturers into negative margins. What followed was a sharp downturn—coined by analysts as the Second PV Manufacturing Downturn.

But as the chart from Terawatt PV Research indicates, the industry is now entering a critical phase of margin recovery, with 2025 poised to be a pivotal year in shaping the trajectory of the solar technologies landscape.

How Did We Get Here from the Chart

From 2021 to 2023, major solar panel manufacturers aggressively scaled production to keep up with the booming global demand for solar energy. But as the market matured, demand growth slowed, especially in key regions. Meanwhile, factories kept expanding.

This mismatch triggered massive inventory build-up, and by 2024, prices collapsed. The “margin compression” period saw profit margins fall below sustainable levels, forcing many players to sell at a loss. Even Tier-1 manufacturers were not spared.

The Policy Response: Regaining Control Through Regulation

To avoid a deeper crisis, the solar sector—particularly in China—has initiated corrective actions via policy frameworks and self-regulation, aimed at limiting destructive internal competition and supporting sustainable growth.

The “Self-Discipline Convention”, now being adopted by several state-owned enterprises, focuses on controlling both production output and pricing strategies. In parallel, it promotes high-efficiency module technologies, such as TOPCon and Back Contact (BC) cells, as a requirement for future production lines.

This move is designed to phase out outdated, low-margin capacity and drive the industry toward premium solar panel offerings. By pushing efficiency thresholds higher, manufacturers are being forced to invest in R&D and focus on high-quality development, rather than volume-based competition.

What This Means for Sustainergy’s Clients

At Sustainergy, we view this as a positive and necessary shift. While short-term prices may rebound slightly from their historic lows, the long-term outlook is clear: a stabilized market capable of delivering reliable, high-efficiency solar panels at consistent pricing—projected within the range of €0.11–0.12/Wp DDP.

The Road Ahead: Rapid Rebound or Slow Recovery?

According to Terawatt PV’s forecast, the industry is entering a margin recovery phase through 2025, with two possible paths: a rapid rebound led by continued policy enforcement and efficiency-based competition, or a slower recovery if internal discipline fades.

Either way, from 2026 onwards, we anticipate a return to profitability—anchored in leaner operations, disciplined capacity expansion, and greater technical differentiation.

Stay tuned and connect with Sustainergy to secure the most competitive, fair-market prices for high-efficiency solar modules—backed by a full EU warranty and trusted performance.