Over the past months, European buyers have been confronted with something many thought was behind us: rising prices for solar modules and battery systems. After years of relentless decline, the sudden reversal has felt abrupt, even uncomfortable. The most commonly cited explanation is the rollback of Chinese export incentives.
While that may have set things in motion, it does not fully explain what we are seeing today. What is unfolding is not a single policy effect but a layered market reaction, combining upstream cost pressures, seasonal disruptions and tactical margin recovery by manufacturers.
PV Index: stable pricing and sentiment uplift in January
When China adjusted its export rebate regime, manufacturers were forced to reset their pricing logic. The lowest price levels had become structurally unsustainable, particularly for Tier-1 players operating at scale. The policy shift provided cover to reintroduce margins that had effectively vanished over the past two years. Yet prices rose far beyond what tariff arithmetic alone would justify. That signals a deeper recalibration: producers using a narrow window to repair balance sheets, while buyers hesitate, unsure whether this is a temporary spike or the start of something structural.
Stability upstream doesn't mean certainty downstream
On the solar side, polysilicon costs have stopped falling and, in some segments have edged upward. This has helped stabilise module prices in the short term. However, stability should not be confused with equilibrium. Supply remains ample, and capacity has not disappeared. What has changed is sentiment. The era of panic pricing appears to be over. Manufacturers are no longer willing to sell below cost indefinitely, even if that means accepting lower shipment volumes for a period. For European buyers, this creates short-term friction, not long-term scarcity.
Europe races to secure supply as China ends export incentives
Lithium carbonate prices continue their downward trajectory, reinforcing the long-term expectation that battery systems will become cheaper. At the same time, the industry is in a technology transition phase, with increasing focus on next-generation and solid-state concepts. This creates a paradox: Raw materials are cheaper, but system prices remain volatile. The explanation lies in market timing rather than fundamentals. Manufacturers are defending prices during a moment when logistics, production planning and technology investment cycles overlap.
Every year we know it's coming – and every year Europe is surprised
With the Chinese New Year starting around mid-February, production and trading slow dramatically. Factories restart only in early March, leaving a compressed window leading up to 1 April. This annual pause amplifies uncertainty, tightens short-term availability and fuels price volatility. This year is no different. The current "price madness" will likely persist until production fully normalises. But once it does, the underlying reality becomes unavoidable again: global supply still exceeds demand.
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From the US to Israel and Ukraine, the geopolitical backdrop remains tense. While this influences risk perception and investment sentiment, it is not the primary driver of solar and storage pricing. The market remains fundamentally industrial, not political. The decisive factor is still demand synchronisation. Europe is installing, but not yet at a pace that absorbs the full weight of global manufacturing capacity.
For manufacturers, this is a margin window, not a comeback story
The coming weeks offer producers a brief opportunity to improve margins and close the year with some relief. But expectations should be realistic. As production ramps up after Chinese New Year, competitive pressure will return quickly. Prices are likely to ease again after the first quarter – not collapse, but resume a gradual downward trend. The recent spike is best understood as a correction phase after years of extreme pricing, not the start of a new high-price era. (Gerard Scheper/hcn)
