PV Industry Rational "Anti-involution": How to Deal with Inefficient Modules? – SMM Analysis

Recently, the National Energy Administration issued a document titled "How to Combat Involution in the PV Industry," which pointed out that China's PV industry is striving to overcome the "growing pains." The root cause of involution lies in the misalignment of development logic—shifting from competing on technology and innovation to competing on price and scale. To eradicate this "root cause," the key lies in reversing the development logic, implementing differentiated policies based on the characteristics of different segments of the industry chain, and forging a path characterized by supply-demand coordination and targeted measures.

According to SMM analysis, the article points out that "modules failing to meet conversion efficiency standards will not be connected to the grid" and "measures such as differentiated tax rebates should be used to curb the disorderly export of low-quality, low-priced products." Combined with the "Announcement by the Ministry of Finance and the State Taxation Administration on Adjusting Export Tax Rebate Policies for PV and Other Products," we estimate that approximately 15%–20% of modules in China will fail to meet standards by 2026, and these low-power modules are more suitable for overseas power grids.

By 2026, with technological advancements, the power generation capacity and conversion efficiency of existing PV modules will have significantly improved. Taking LONGi's Hi-MO X10 as an example, the maximum module power reaches 670W with a conversion efficiency of 24.8%. Dealers report that this product series is one of the popular models for distributed applications this year. According to the "Photovoltaic Manufacturing Industry Standard Conditions (2024 Edition)" issued by the Ministry of Industry and Information Technology, the average efficiency of existing monocrystalline silicon PV N-type module projects must not be lower than 22.3%, while new projects must achieve an average efficiency of no less than 23.1%. An SMM survey indicates that the vast majority of modules already comply with relevant standards. However, some low-efficiency modules still enter the residential market at low prices through methods such as white-labeling. These modules often lack quality inspection certificates, compromising not only safety during use but also making it difficult for users to obtain subsequent operation and maintenance services.

Admittedly, managing low-efficiency module inventory is challenging. However, if left uncontrolled and allowed to flow into the market, they will inevitably impact the high-end product market and undermine user trust in the entire PV industry. In 2025, a special spot check conducted by the National Center for Quality Inspection and Testing of Solar Photovoltaic Products (CPVT), a mainstream testing authority, revealed a failure rate of nearly 16% for module efficiency. Currently, it has become a trend to bundle PV modules, mounts, cables, inverters, and ESS as integrated packages for customers. Subsequent operation and maintenance services are valued not only by owners but also by central state-owned enterprises under the "Big Five and Small Six" groups. According to a procurement manager from an anonymous central state-owned enterprise, the company encountered a solar panel fire in an overseas power plant project. However, due to inadequate follow-up operation and maintenance services, the company became entangled in prolonged legal disputes. Similar cases are common. Throughout its 25-year life cycle, a PV module is consistently backed by its brand. To honor customer trust, we must eliminate low-efficiency modules from the industry.

In fact, there is another way to absorb this portion of inventory: exporting it to underdeveloped countries. According to the SMM survey, Africa is expected to add 13.1 GW of new PV installations in 2026, making it the region with the fastest growth in new installations globally. Additionally, the region's power grid is relatively underdeveloped, with an electricity access rate of less than 50% in Sub-Saharan Africa and an average grid loss rate in North Africa nearly twice the global average, making frequent power outages a common occurrence. Low-power modules happen to be well-suited to the local grid. The key reasons are their technical characteristics highly align with the grid's shortcomings, low operational and maintenance barriers, and economic viability better suited to the regional reality, making them a more optimal solution for PV applications in the area at this stage. For example, from 2023 to 2024, the Kenyan government promoted 3 kW low-power household PV systems, resulting in cumulative installations exceeding 100,000 households, a grid connection success rate of 98%, a 60% reduction in user electricity expenses, and an investment payback period of 4.5 years. Beyond this, four Southeast Asian countries also face self-sufficiency challenges, and their local grid construction can accommodate low-power modules. In summary, after the module tax rebate is canceled, overseas underdeveloped countries will become the primary destination for absorbing low-efficiency modules.