OPIS Insights

As we pass the halfway point of 2025, the global solar industry is confronting a landscape marked by paradox: installations are surging, new technologies are emerging, but pricing remains volatile, and uncertainty is pervasive. This tension between progress and disruption was a core theme in the latest OPIS solar market webinar, which brought together analysts to examine key dynamics across the upstream and downstream supply chains, as well as shifting regional policies and evolving solar cell technologies.

Polysilicon: Two Markets, One Pressure Point

Summer Zhang from OPIS opened the session with an in-depth analysis of the polysilicon market. The polysilicon landscape has effectively been divided into two distinct segments: one serving domestic demand within China, and the other—referred to as the Global Polysilicon Marker (GPM)—whose derivative and downstream products are primarily exported to the U.S.

Prices for the Global Polysilicon Marker (GPM) have declined by nearly 30% over the past 18 months, largely due to U.S. trade actions—primarily in the form of increased import tariffs under various designations—which have significantly impacted solar imports from Southeast Asia and, in turn, reduced demand for non-Chinese polysilicon. In response, manufacturers have begun relocating downstream operations from Southeast Asia to lower-tariff countries such as Turkey, Egypt, and Ethiopia. However, these efforts have yielded limited results thus far, as progress on new cell manufacturing projects in these regions remains slow, and demand recovery has yet to materialize meaningfully.

Meanwhile, China’s domestic polysilicon market is reeling under extreme overcapacity. With production capacity exceeding 3 million metric tons — three times more than domestic demand — prices have been depressed for nearly two years. Although government interventions, including pricing floors and efforts to consolidate producers, have triggered short-lived rebounds, the underlying supply-demand imbalance remains unresolved. A recent high-level government meeting signaled more aggressive actions to curb price wars and eliminate outdated capacity, but as of mid-year, overcapacity is still weighing heavily on the market’s long-term prospects.

Downstream Imbalance: Capacity Outpaces Demand

Turning to the downstream sector, analyst Brian Ng highlighted the severe oversupply in China’s solar manufacturing. Despite installations and exports reaching an estimated 550 GW this year, the country has built over 1,600 GW of module capacity, leaving more than 800 GW idle. Even with slower capacity additions ahead, current utilization rates of around 50% seem unsustainable without meaningful production cuts or new export markets to offtake the supply.

Although Beijing has introduced reforms to raise quality standards and curb below-cost bidding, enforcement remains patchy. Industry consolidation is underway, but gradual. The result is continued margin pressure, particularly on smaller players.

Technology in Flux: Can BC and HJT Disrupt TOPCon’s Dominance?

OPIS analyst Jun Won Lee examined whether next-generation solar technologies can replicate TOPCon’s market takeover, exploring historical and regional technology adoption trends. The rapid rise of TOPCon — a more efficient upgrade to PERC — was enabled by two key factors: the ease of retrofitting existing PERC lines (at relatively low cost), and the coinciding collapse in polysilicon prices.

In contrast, next-generation technologies like Back Contact (BC) and Heterojunction (HJT) face much steeper barriers to mass adoption. High CapEx requirements, greater complexity, and higher silver consumption make them less feasible in today’s cost-sensitive climate. Still, both technologies are finding success in niche applications where their higher costs can be justified: BC is gaining traction in rooftop markets due to its premium aesthetics, while HJT shows promise in high labor cost regions due to its high automation potential.

Further out, perovskite tandem offer unmatched efficiency potential, prompting some major manufacturers to bypass BC and HJT entirely. However, with commercial viability still years away, Lee expects TOPCon to remain dominant in the near term.

Europe: High Ambitions, Structural Gaps

Benita Dreesen offered a comprehensive look at Europe’s efforts to establish a domestic solar supply chain. While the EU is on track to hit 380 GW of cumulative installed capacity by the end of the year, it remains highly dependent on imports for most of its module and cell needs. In 2024, Europe produced just 12.6 GW of modules and 2 GW of cells — a fraction of its demand.

Policy frameworks like the Net Zero Industry Act (NZIA) and the Clean Industrial Deal aim to close this gap by introducing subsidies, auction reforms, and strategic procurement criteria. Yet, challenges remain — particularly in scaling domestic manufacturing fast enough to compete on price with Asian imports. While the EU hopes these policies will make local modules cost-competitive by 2027–2030, the current price premium for European-made panels remains more than double that of Chinese equivalents.

U.S. Market: Caught in a Web of Incentives and Investigations

In the final segment, Colt Shaw provided an update on the U.S. solar market, where uncertainty continues to dominate. The recent passage of a massive budget bill has extended the runway for some Inflation Reduction Act (IRA) incentives, but its implementation remains mired in confusion. The upcoming phaseout of key tax credits, coupled with new reciprocal tariffs and a fresh anti-dumping investigation into Laos, Indonesia, and India, is clouding the outlook for both imports and domestic manufacturing.

Most U.S. module factories still rely on imported cells, but rising tariffs on those cells — along with the potential expiration of the domestic content bonus — threaten to undercut the value proposition of U.S.-assembled modules. At the same time, major players are shifting investments toward the Middle East and Africa, where tariffs are currently lower. The net result is a fragmented and volatile supply chain that is increasingly hard to navigate.

Final Thoughts: Fragmentation, Policy, and the Need for Granular Insight

As the OPIS team emphasized in the closing remarks, solar is no longer a globally integrated industry — it’s becoming a fragmented landscape shaped by local policies, regional manufacturing strategies, and diverging technological paths. The next phase of growth will depend not just on cost or innovation, but on navigating regulatory uncertainty, ensuring supply chain resilience, and making data-driven decisions across markets.

With continued volatility expected in the second half of 2025, granular market intelligence and region-specific analysis are no longer optional—they’re essential for staying ahead.