CHINA’S world-beating solar sector will start seeing smaller equipment makers being forced out next year as prices keep falling, according to one of the leading manufacturers.

Extremely low panel prices are harming profitability across the sector, Gao Jifan, chairman of Trina Solar, said during a panel at the BloombergNEF Shanghai Summit on Monday (Nov 27).

“Under the current bidding prices, there is no profit across the entire supply chain, and there is no way that this is sustainable,” he said. With the top five or six manufacturers still expanding capacity, smaller companies will be “squeezed out,” he said.

The predicted shake-out is happening even as installations continue to pick up pace. There has been 142.6 gigawatts added in China in the first 10 months of the year, compared with a record 87.4 gigawatts in the whole of 2022.

The installations, however, have been dwarfed by a surge in manufacturing capacity as the sector gears up to meet an even-bigger expected increase in consumption later in the decade. This disconnect has hit major manufacturers, with Longi Green Energy Technology’s net income falling 44 per cent from a year earlier in the third quarter.

Next year will be “incredibly challenging” for China’s solar industry, Qian Jing, global vice-president at Jinko Solar, said in a Bloomberg TV interview. The manufacturer would continue to add more production capacity, including overseas, and seek to boost efficiency, she said.

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Jinko chairman Li Xiande said at the summit that the falling prices could also spur innovation in the sector, and that there was still room for companies with integrated capacity and technological advantages to make profits. Jinko’s net income surged in the third quarter due to its early adoption of a new type of solar cell technology.

Despite the current challenges, solar leaders at the summit were still optimistic about the industry’s prospects over the longer term. Senior executives from five major Chinese manufacturers all said they expected annual sales would reach 1 terawatt by 2029 or 2030, which would be more than double this year’s forecast total.

There will still be rapid growth in the next three to five years, said Liu Shuqi, chairwoman of Tongwei. “We are very optimistic given the energy transition consensus reached in China and globally,” she said. BLOOMBERG