China’s Solar Efficiency Rule Draws Mixed Views on Enforcement
China’s pending mandatory efficiency standard for solar modules and inverters has drawn mixed views from market participants, with some expecting the rules to speed up the exit of inefficient players, while others question whether the enforcement will extend meaningfully beyond large state tenders.
The proposed standard comes as China’s solar industry continues to grapple with overcapacity, weak margins and a push by regulators to encourage technological upgrades across the photovoltaic supply chain.
Market sources said regulators may issue the compulsory standard in due course, alongside tighter energy consumption requirements for the solar supply chain, including polysilicon, wafers and modules. However, no official announcement has been made public by regulators.
According to the Standardization Administration of China, the mandatory standard for “Minimum Allowable Values of Energy Efficiency and Energy Efficiency Grades for Crystalline Silicon Photovoltaic Modules and Inverters” is currently in the ‘under approval phase’, the final stage before the final implementation.
The implementation will take place six months after the official announcement is released, according to the standardization committee. The official process for the standard first began on July 25, 2024.
Under the draft standard, module efficiency grades are categorized by technology type. For Tunnel Oxide Passivated Contact modules, Grade 1, Grade 2 and Grade 3 efficiencies must not be under 23.6%, 23.2% and 22.4%, respectively. Heterojunction modules must reach at least 23.9%, 23.3% and 22.5%, while back-contact modules must meet 24.8%, 24.3% and 23.3%, respectively.
Market participants said there had been rumors that regulators may require a minimum module efficiency of 23.2%. However, industry sources noted that the draft consultation did not explicitly state whether modules below the proposed Grade 3 efficiency would be barred from the market under the new requirement.
Views Divided on Policy Impact
Several trade sources said the introduction of mandatory efficiency standards could force the permanent closure of inefficient capacity, rather than simply allowing weaker manufacturers to cut operating rates or keep production lines idle.
“Once regulators introduce this 23.2% efficiency level, I believe it will push out a lot of inefficient players in the market. Once supply is reduced, this may support prices in the longer term,” a developer source said.
Another tier-1 manufacturer source told OPIS that the policy could affect not only the domestic market, but also exports, as regulators are tightening standards around false or inflated module power ratings.
“We believe it is unlikely for producers to export these lower-efficiency modules to overseas markets. Regulators have included measures such as banning false power ratings on modules, and if they are strictly enforced, the penalty will be significant for producers who don’t play by the rules,” the producer source said.
On May 25, the Standardization Administration of China released two mandatory standards that will be implemented from June 1, 2027 — the “Safety Requirements for Photovoltaic Modules” and “Requirements for Nameplate Marking of Photovoltaic Modules”.
The nameplate marking standard specifies labelling requirements for PV modules and is intended to prevent manufacturers from marking modules with unrealistically high power output, while safeguarding the overseas brand image of China-made products.
However, not all market participants expect the efficiency standard to be effective across the domestic solar industry.
One module manufacturer said the policy may be difficult to enforce in smaller-scale commercial, industrial and residential rooftop segments, where lower and mid-efficiency modules are still widely used.
“This policy seems to only be practical for tenders by large state-owned enterprises, where they can impose certain efficiency requirements and block low-efficiency modules,” the producer said.
“But when it comes to C&I or residential rooftop markets, it is impossible to completely block out these low-efficiency modules,” the source added.
—Reporting by Brian Ng, bng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com