In This Article:
Investing.com -- The ongoing oversupply in China’s solar market, combined with global policy uncertainty, could create new advantages for U.S. solar companies, according to a recent Bank of America report.
BofA analysts highlighted insights from an expert call with Frank Haugwitz, Director of AECEA, noting that "China commands ~80% of key solar manufacturing steps and nearly all wafer production."
Advertisement: High Yield Savings Offers
Despite efforts in regions like the U.S., India, and Türkiye to localize manufacturing, BofA said these face "steep hurdles: expertise gaps outside China, slower equipment innovation, and significantly higher capex costs."
Oversupply issues are said to be intensifying. BofA pointed out that "2024 YTD price declines are stark: polysilicon (-39%), wafers (-50%), cells (-30%), N/P-type modules (-29%), HJT modules (-57%)," with module prices in China hovering at "~$0.08/W and could drop to ~$0.07/W by mid-year."
Meanwhile, "industry-wide negative net profits could persist through at least 2027," forcing many Chinese firms to continue burning cash.
At the same time, policy-driven uncertainties are reportedly hampering efforts to diversify the solar supply chain.
"Escalating AD/CVD risks and potential IRA modifications are driving caution in new investments," BofA warned, adding that "FEOC restrictions and broader tariff threats compound early-stage challenges for non-Chinese manufacturing."
Despite these challenges, global solar demand continues to grow. BofA stated that "global solar installations reached 600GW in 2023 growing ~30% yoy," although growth outside Europe was more pronounced, led by India, the U.S., Brazil, and Pakistan.
Looking ahead, BofA believes First Solar (NASDAQ:FSLR) could be a key beneficiary. "Persistent Chinese oversupply, mounting trade headwinds, and formidable barriers to non-Chinese manufacturing reinforce our conviction that FSLR’s market positioning is more durable than broadly appreciated," the firm wrote.
Related articles
Could policy paralysis and China oversupply benefit U.S. solar stocks?
Is now a good time to build or top up a position in cybersecurity stocks?