In February 2025, the Chinese government released Policy Document No. 136, marking a pivotal shift in the renewable energy feed-in tariff mechanism—from a “guaranteed procurement with fixed pricing” model to a new framework based on “full participation in the power market.” The effects of the policy emerged rapidly in the first half of the year: newly installed capacity hit a record 93 GW in May alone, while second-quarter additions surged to 152.5 GW (data from the National Energy Administration), a year-on-year increase of 169%.
However, after this front-loaded surge in demand quickly receded, battery prices fell sharply, nearly breaching—and in some cases dropping below—the industry’s average cash cost line. In a bid to secure orders, battery manufacturers engaged in a price war that lasted nearly two months from May to June, plunging the sector into a period of severely distorted pricing, low-quality development, and widespread operational risk.
In early July, the central government stepped in to curb “anti-involution” practices, taking aim at irrational low-price competition. Polysilicon producers soon raised price, which were subsequently followed by wafer and cell segments of the supply chain.The three segments saw price increases of 39%, 39%, and 16% in July and August, effectively narrowing losses across the sector.
Supported by rising cost change and producers' willingness, cell prices are expected to remain above the average cash cost level throughout Q3, with limited room for decline.
