Solar and storage equipment costs to rise from Q4 2025

Solar and energy storage developers will face higher equipment prices from Q4 2025 due to Chinese policy changes and production cuts, according to Wood Mackenzie. This marks an end to the 18-month period of unusually low prices in the market.

The report identifies three main factors driving the increase: consolidation in the polysilicon sector, supply-side production cuts, and the cancellation of China’s 13% VAT export rebate. Together, these measures are expected to increase solar module prices by approximately 9% in Q4 2025, with further increases likely through 2026.

Chinese polysilicon capacity grew rapidly between 2022 and 2024, creating oversupply and low prices. New guidelines have limited expansion and reduced production rates to 55-70%, causing polysilicon costs to rise 48% in September 2025. Module operating rates also dropped, and older PERC lines were phased out.

The VAT rebate cancellation affects exports of solar modules and storage systems. China supplies over 80% of global solar modules and 90% of lithium iron phosphate batteries, meaning the change will impact global and US project costs.

Wood Mackenzie calls this a structural market correction toward sustainable pricing. Developers may need to renegotiate supply agreements for production after November 2025 to reflect the new cost environment.