Chinese manufacturers are literally “pumping“ so much energy from the solar panels that the global market became oversaturated, and hence the price fell.
Nearly 80% of solar panels are produced in China. Their price is so affordable that in Germany and the Netherlands they are even used to cover garden fences, the Financial Times reported.
Solar panels are usually installed on rooftops where they can capture the most sunlight, but the supply is so great that people in these two countries are now putting them on fences. This also saves expensive labor and scaffolding costs required for roof installations.
Fences covered in solar panels are starting to spread in the UK, North America and Australia. “Why put up a fence when you can just put up a bunch of solar panels, even if they are not exactly facing the sun," says Martin Brough, head of climate research at BNP Paribas Exane.
Global shipments of solar panels are expected to reach 1,100 gigawatts by the end of this year — three times more than demand, the International Energy Agency reported in a report published in January.
Spot prices have already halved in 2023 and are likely to continue down another 40% by 2028.
China's dominance of the solar panel market is now in a state of oversupply, meaning that other manufacturers such as the US and Europe are unable to compete effectively.
The oversupply of cheap Chinese solar panels is among the main tasks of US Treasury Secretary Janet Yellen during her visit to the country this week.
„China's overcapacity is distorting global prices and production patterns and hurting American firms and workers, and firms and workers around the world," Yellen said, adding that she would raise the issue of overcapacity on her next trip to China.
„I will express my belief that excess capacity poses risks not only to American workers and businesses and to the global economy, but also to the productivity and growth of the Chinese economy," Yellen added.
Chinese manufacturers are also feeling the pressure of overcapacity in solar panels. In March, Longi Green Energy Technology, the world's largest solar cell maker, announced it was laying off thousands of workers amid overcapacity and low prices.