In 2025, China's new installed capacity of photovoltaic power reached 380 GW, accounting for 55% of the global total. The cumulative installed capacity exceeded 950 GW, ranking first in the world for 10 consecutive years, demonstrating China's absolute dominance in the global photovoltaic industry. In 2026, the photovoltaic industry will continue to maintain a high growth rate, but it also faces many challenges such as overcapacity and trade barriers. Today, based on the latest industry data, we will discuss the development trends of the photovoltaic and electrical system industries in 2026 and analyze the opportunities and risks in the industrial chain.
Trend 1: New installed capacity continues to grow, and distributed photovoltaic becomes the main force. According to industry predictions, China's new photovoltaic installed capacity in 2026 will reach 420-450 GW, with a year-on-year growth of 10%-18%, and the cumulative installed capacity will exceed 1400 GW. Among them, the proportion of distributed photovoltaic (residential + industrial and commercial) will further increase to 55%, becoming the core driving force for the growth of installed capacity. This trend is mainly attributed to two factors: First, the continuous implementation of the "whole county promotion" policy has expanded the coverage to 1200 counties, greatly stimulating the installation demand for residential photovoltaic; second, the economic nature of the "self-consumption of industrial and commercial distributed photovoltaic and grid connection of surplus electricity" model has been highlighted, and in the context of rising electricity prices, industrial and commercial users have shown high enthusiasm for installing photovoltaic, with an internal rate of return (IRR) of 12%-15%. Concentrated photovoltaic will continue to focus on large-scale projects of wind and solar bases, and be scaled up in regions with abundant light resources such as the northwest and north China.
Trend 2: Acceleration of technological iteration, N-type modules become the mainstream. The development of the photovoltaic industry has always been driven by technological innovation. 2026 will be a crucial year for the complete replacement of P-type modules by N-type modules. It is expected that the market share of N-type modules (TOPCon/HJT) will exceed 60% in 2026, far exceeding the 55% in 2025. The rapid rise of N-type modules is mainly due to their higher conversion efficiency and lower degradation rate: currently, the production efficiency of TOPCon cells has reached 25.5%, and HJT cells have achieved a 20% cost reduction through silver-copper encapsulation technology. Its levelized cost of electricity (LCOE) has dropped to 0.2 yuan/kWh, 30% lower than traditional coal power. In addition, the laboratory efficiency of perovskite tandem cells has exceeded 33%. Although mass production still faces technical bottlenecks, it is expected to become a technological breakthrough direction in the next few years, further improving the conversion efficiency of photovoltaic.
Trend 3: Reconfiguration of industry chain profits, with greater differentiation in the midstream and downstream sectors. By 2025, the photovoltaic industry chain has shown a pattern where the upstream is under pressure while the midstream and downstream benefit. The price of silicon materials has dropped from 300,000 yuan/ton in 2022 to 60,000 yuan/ton, with the gross profit margin shrinking to 25%. Profits are gradually shifting towards the battery and module midstream and downstream sectors. In 2026, this trend will continue to deepen, and the differentiation in the midstream and downstream sectors will also intensify. It is expected that the gross profit margin of the silicon material sector will further compress to 15%, while component leaders with technological advantages (such as Longi and JISA) are expected to maintain a gross profit margin of over 25% by leveraging the technological premium of N-type components. The inverter sector will fully benefit from the surge in demand for energy storage, with growth rates expected to exceed 30%, especially for enterprises with bidirectional conversion technology and intelligent control capabilities, which will gain a larger market share.
With opportunities come challenges that cannot be ignored either. Firstly, there is the risk of overcapacity. By 2026, the global capacity for photovoltaic modules will exceed 800 GW, while the market demand is only 550 GW. Overcapacity may trigger price wars and squeeze the survival space of small and medium-sized enterprises. Secondly, international trade barriers are intensifying. The localization requirements of the US IRA bill and the proposed carbon border adjustment mechanism (CBAM) tax by the EU will all suppress the export of Chinese photovoltaic modules. It is expected that the export growth rate in 2026 will drop to 15%, much lower than 30% in 2025. Moreover, the bottleneck problems in power consumption in some provinces have not been resolved. The grid-connected rate in regions such as Gansu and Xinjiang has already risen to 5%. The lag in grid upgrades will restrict the further growth of photovoltaic installations.
Overall, the Chinese photovoltaic industry will remain in a high-growth phase in 2026, but the industry competition will become more intense. Technological innovation and cost control will become the core competitiveness of enterprises. For photovoltaic and electrical system practitioners, they need to closely monitor technological trends, focus on popular sectors such as distributed photovoltaic and energy storage integration, and also pay attention to changes in international trade policies to make early preparations to cope with risks. For ordinary users, as the component price drops to 0.9 yuan/W (predicted in 2026), the economic feasibility of installing photovoltaic systems further improves, and household photovoltaic will become a choice for more families. Although the development path of the photovoltaic industry is full of challenges, it is promising and will continue to provide strong impetus for global energy transformation.
