China has reached a significant milestone in its energy transition: as of May 2025, the country’s cumulative installed solar capacity has surpassed 1 terawatt (1,000 gigawatts), making it the first nation in the world to cross this threshold. According to data from China’s National Energy Administration, this figure is roughly equivalent to the combined capacity of 44 Three Gorges Dams.

The solar boom is reshaping China’s energy mix. In the first quarter of 2025, the combined capacity of wind and solar reached 1.482 billion kilowatts, exceeding coal power’s 1.451 billion kilowatts for the first time. The shift marks a gradual pivot away from fossil fuels toward renewables on the supply side.

But behind the historic figures, the industry is under mounting pressure.

Since early 2024, solar companies have been squeezed by plummeting prices and shrinking margins. Polysilicon prices fell more than 40% year-over-year, while prices for modules, wafers, and cells have also dropped across the board. Module prices have plunged from $2.50 per watt in 2010 to just $0.15 today—a more than 90% decline—while production costs have not fallen at the same pace.

This price compression is affecting China’s exports as well. In Q1 2025, China’s solar product exports totaled $6.71 billion, down 30.5% from a year earlier. Shipments to the EU saw an even sharper drop of 38.8%. Analysts attribute the export slump to over-reliance on overseas markets and a persistent race to the bottom on pricing.

At home, manufacturers are also feeling the strain. Utilization rates in some key production segments have fallen below 60%. Despite continued growth in installed capacity, many producers are grappling with inventory backlogs and capacity overhangs. With tighter cash flows, several firms have scaled back output, laid off workers, or suspended operations.

Chinese regulators are now stepping in. This year, authorities including the National Energy Administration and the Ministry of Industry and Information Technology have issued new guidelines calling for stronger industry discipline and a halt to unchecked expansion. Grid limitations are also emerging as a constraint—some western regions with high solar potential are experiencing curtailment and transmission bottlenecks, raising concerns over integration and system flexibility.

In response, some companies are exploring new business models. There is growing interest in solar-plus-storage, smart microgrids, and integrated energy solutions. Leading manufacturers are moving beyond hardware, offering bundled systems that combine generation, storage, and charging in a single package. These integrated approaches aim to improve energy efficiency and return on investment.

China’s solar industry may now be at an inflection point. Moving from volume-based growth to value-added innovation—shifting from a production powerhouse to a solutions provider—could define the next chapter of its solar journey.

Reaching the 1-terawatt mark is a major achievement. But whether the industry can sustain momentum amid falling prices, technological shifts, and tightening policy constraints remains an open question.