Infolink Projects 13-26% Global Solar Demand Drop Amid China Supply Glut

Infolink projects a significant contraction in global solar PV demand for 2026, estimating a decline of 13% to 26%. The research firm forecasts that worldwide installations will drop from 685 GWdc in 2025 to a range of 509–597 GWdc the following year. This outlook points to a marked slowdown in the sector’s growth trajectory, driven by the current imbalance between production capacity and market absorption.

The figures, as reported by Saur Energy, suggest that the industry is facing headwinds that could temper expansion plans. While 2025 is expected to see robust deployment, the projected 2026 range indicates a substantial pullback. This potential dip highlights the volatility inherent in the solar supply chain, where rapid capacity build-out has outpaced consistent demand growth, leaving the market vulnerable to corrections in the coming year.

China’s Policy Pivot

The projected global contraction is heavily concentrated within the world’s largest solar market, where Infolink anticipates domestic demand will fall by 40%. This sharp reduction sees installations dropping from an estimated 368 GWdc in 2025 to a narrower range of 220–232 GWdc in 2026. Such a steep decline in the primary consumption hub effectively dictates the broader international outlook, as the sheer volume of Chinese deployment has historically driven global supply chain dynamics. The magnitude of this drop underscores how sensitive the sector remains to regional shifts, particularly when the largest buyer signals a substantial retreat from previous growth rates.

This demand correction follows the introduction of Document No. 136, a policy adjustment that has introduced heightened uncertainty regarding project financial returns. By altering the regulatory and economic framework for new installations, the document has likely influenced developer decision-making, contributing to the projected slowdown. The timing of this policy shift coincides with a period of intense market activity, as China’s National Energy Administration reported 97 GWac of newly installed PV capacity between January and August. This strong first-half performance highlights the volatility inherent in the current market cycle, where record-breaking deployment in early periods can be followed by significant pullbacks in subsequent forecasts. The interplay between policy revisions and installation data illustrates the complexity of predicting long-term demand in a market undergoing rapid structural changes.

Manufacturing Oversupply

The demand contraction coincides with a severe imbalance in upstream and midstream production. China’s cell manufacturers are currently operating at utilization rates below 50%, indicating that less than half of their installed capacity is active. This low throughput reflects the inability of the market to absorb output at current volumes. Concurrently, polysilicon inventories in China have accumulated to a total of 730,000–790,000 metric tonnes. These stockpiles represent raw material sitting in warehouses, awaiting processing into wafers and cells, which further exacerbates the surplus.

Metric	Current Status
Cell Utilization	Below 50%
Polysilicon Inventories	730,000–790,000 MT
Total PV Production Capacity	1,200–1,700 GW

The broader PV supply chain maintains a total production capacity ranging from 1,200 to 1,700 gigawatts. When this massive potential output is compared against the projected 2026 installation figures, the oversupply becomes starkly apparent. The high inventory levels in polysilicon suggest that upstream producers are holding back or slowing down processing to manage cash flow, while the low cell utilization confirms that downstream demand is failing to keep pace with built-out factories. This structural mismatch means that even if demand stabilizes, the existing capacity buffer will continue to pressure margins and pricing power across the value chain.

Price Volatility

• Polysilicon prices returned to RMB 40/kg in September following SAMR guidance.
• Cell prices fluctuated between USD 0.04/W and USD 0.06/W.
• FOB prices for TOPCon modules rose from nearly USD 0.10/W to approximately USD 0.115/W.

The raw material market has shown specific sensitivity to regulatory intervention. Polysilicon prices, which had fallen due to the massive inventory build-up described in the previous section, rebounded to RMB 40/kg in September. This movement occurred following guidance from the State Administration for Market Regulation (SAMR), indicating that administrative signals can temporarily stabilize upstream pricing even amidst physical oversupply. The return to this price point suggests a floor has been established, at least in the short term, for the feedstock that feeds into wafer and cell production.

Downstream, the market exhibits a different dynamic. Cell prices have remained unstable, fluctuating within a band of USD 0.04/W and USD 0.06/W. This volatility reflects the intense competition among manufacturers operating below full capacity, where pricing power is limited by the need to clear existing stock. In contrast, finished module pricing shows a modest upward trend. FOB prices for TOPCon modules, a standard high-efficiency technology, increased from nearly USD 0.10/W to approximately USD 0.115/W. This rise indicates that while upstream raw materials are stabilizing and cell costs remain suppressed, the final product is commanding a slightly higher price, possibly due to shifting margin structures or specific supply constraints at the module assembly stage.

What to watch

Focus shifts to 2027, with Infolink forecasting China’s internal PV demand at roughly 203–224 GWac and worldwide demand between 520–622 GWac. While these numbers hint at a possible recovery following the anticipated 2026 downturn, the outlook stays unpredictable. A significant regulatory deadline occurs on January 1, 2027, as updated efficiency mandates for modules and inverters commence. These regulations could redefine production strategies and product portfolios as firms adjust to heightened performance criteria.

Simultaneously, the cancellation of export VAT incentives for PV goods, which started on April 1, has already modified expense profiles for exporters. The effect on global competitiveness will become more apparent as commercial exchanges adapt. In the energy storage domain, increasing raw material expenses represent a major factor. Lithium carbonate costs surged from RMB 60,000/MT during mid-2025 to above RMB 150,000/MT by mid-2026, driving the price of 314 Ah storage cells up from RMB 0.29/Wh to RMB 0.375/Wh. With global energy storage cell deliveries expected to surpass 1,000 GWh in 2026, producers must manage these rising material prices while combining storage systems with solar installations.