China's solar surplus: waste it or use it wisely?

China currently manufactures the vast majority of the world's solar panels, with production capacity far exceeding domestic demand. The resulting global oversupply has driven module prices to historic lows, which — depending on policy response — can either accelerate the energy transition or trigger a protectionist backlash that ultimately delays it.

A historic price drop for solar

Over the past two years, solar panel prices have fallen by roughly 50%, largely driven by Chinese manufacturing scale. For households and businesses across Europe, North America, and the developing world, this means rooftop and utility-scale solar installations are cheaper than ever. A standard 5 kW residential system in Central Europe now costs a fraction of what it did in 2021.

Storage and self-consumption: the real prize

The same dynamic applies to battery storage. Chinese-driven cost reductions in lithium-ion cells mean that pairing a solar array with a home battery is increasingly cost-effective. This combination — solar plus storage — is the key to genuine energy independence for households, reducing grid dependence and lowering electricity bills regardless of wholesale price volatility.

The FT's core argument is that trade barriers and import tariffs, while politically understandable, slow down the very energy transition that climate goals demand. The rational response is not to waste this surplus through protectionism, but to invest in grid infrastructure, permitting reform, and installer capacity so that cheap panels can be deployed at scale — and quickly.