IEA: Over 90% of China’s major solar makers lose money

By Sophie Lindqvist

More than 90% of China’s major solar photovoltaic manufacturers reported net losses in 2026, while more than 70 companies filed for bankruptcy since 2024, the International Energy Agency said.

The findings appeared in the IEA’s Renewables 2026 report, published Nov. 6. A chapter on manufacturing supply chains, detailed by pv magazine on Wednesday, said module prices stood 10% to 30% above 2025 levels without restoring profitability.

Cumulative net losses at major Chinese solar manufacturers and polysilicon producers rose from about $4.4 billion in 2024 to almost $5.5 billion in 2025. Net margins remained negative through the first three quarters of 2026.

Are losses improving?

The IEA described losses as narrowing and wrote: “In recent quarters, the middle 50% of analysed companies reported net margins between -5% and -15%, a narrower range than the 0% to -30% recorded in 2024.”

The narrower range still placed the middle half below zero. The IEA said improvement was concentrated among companies moving into higher-margin work such as energy storage system integration. That supports storage as a partial escape route, not a complete remedy for weak solar profitability.

Why did Chinese demand weaken?

China’s switch from fixed tariffs to competitive auctions led to an almost 55% year-on-year fall in solar PV capacity additions during the first nine months of 2026, according to the IEA.

The agency also cut its forecast for China’s renewable capacity growth from 2026 through 2031 by 5%, equivalent to almost 116 GW. Even so, the IEA expects supply chains to remain highly concentrated in China at every stage from polysilicon to modules through 2031. The forecast particularly emphasizes polysilicon and wafers.

How much capacity could disappear?

Upstream segments hold most of China’s excess capacity and will have to adjust most, the IEA said. Its conditional scenarios assume continued bankruptcies and an absence of major new investment.

Under those conditions, global polysilicon capacity could contract by up to 45% by 2031. If market conditions improve, the contraction could reach only about 15%. Wafer capacity could fall 10% to 35%, while cell and module capacity could contract 5% to 15%.

These are market scenarios, not confirmed plant shutdown totals. The cited findings do not assign closure dates to individual factories. The wide polysilicon range also shows how much the outcome depends on investment and pricing rather than a predetermined industry plan.

Can manufacturers outside China stay profitable?

Selected manufacturers outside China have remained profitable, with median net margins broadly stable at 10% to 15% since 2023. The IEA linked that performance to technology differentiation, localisation and access to protected markets.

The qualifier matters. The agency did not establish that every producer outside China earns comparable margins or can sustain them as Chinese supply contracts. Its regional advantage rests on a narrower set of leading companies.

By 2031, the IEA expects India to become the only country besides China able to manufacture every major solar component at scale. India’s new hubs focus on cells and modules, which require less upfront investment than polysilicon and wafers. The 2031 statement remains an expectation, not a completed manufacturing capability.

Will battery storage absorb the excess?

Many solar makers are moving into battery storage. The IEA said the shift offers faster growth and potentially better margins. It warned that the move “risks transferring the solar industry's overcapacity dynamics into the battery supply chain if expansion again overtakes demand.”

That warning limits the case for storage as an automatic solution. Solar companies may gain better margins, but battery factories would remain vulnerable if investment again runs ahead of actual orders.

Through 2031, the key test is whether upstream capacity exits can outpace new supply. The IEA’s 15% to 45% polysilicon contraction range leaves a large gap between continued bankruptcies and improved conditions. Module pricing, storage demand and new investment will determine whether excess solar capacity clears before battery expansion creates the same problem again.