The new pricing dynamics of photovoltaic modules

On January 9th, the Chinese government announced the end of the 9% VAT refund (value-added tax) for exports of photovoltaic modules.

However, since mid-December 2025, the market has been experiencing high pressure for increased equipment prices, resulting in an increase of approximately 30% to date. Adding this to the 9% VAT, we can reach an increase of nearly 40% in 3 months.

This is a historic price movement, unprecedented in this industry, which has become accustomed to consecutive price drops resulting from the frenetic increase in capacity throughout the production chain, originating a phenomenon we call overcapacity.

In other words, there is currently more installed production capacity than market demand. This ratio has remained at approximately 3x since 2024.

The end of Chinese incentives is approaching: solar kits will see another price increase.

Factors that are redefining the price of photovoltaic modules.

Given such an uncertain and volatile scenario, the best approach we can take is to focus on the data and conduct a multifactorial analysis to break down the factors that are redefining the price dynamics of photovoltaic modules.

Upward pressure

Silver

Since the beginning of 2025, silver has undergone extraordinary appreciation: after closing 2025 at around US$71,99/ounce, following an annual increase of approximately 167%, the metal advanced another 60% between January 2nd and 29th, 2026, when it reached a record high of US$118,45/ounce on the LBMA; even after the recent sharp correction, silver remains well above the levels of the beginning of 2025.

This surge was fueled by supply deficits, inflows of financial capital, and robust industrial demand, especially from the photovoltaic sector, where silver paste already accounts for up to 30% of the cell manufacturing cost.

Copper

Since the beginning of 2025, copper has accumulated strong appreciation and has consolidated itself as one of the main drivers of cost pressure for the photovoltaic chain. After operating near US$ 9 per ton at the beginning of 2025, the metal advanced throughout the cycle and reached over US$ 14/t in January 2026, before a subsequent correction; in a January-on-January comparison, this represents an increase of over 55%.

The movement was supported by significant supply disruptions, especially in mines in Indonesia, Chile, and Congo, leading the International Copper Study Group (ICSG) to revise its global refined market forecast from an expected surplus of 209 tons to a deficit of 150 tons in 2026.

At the same time, ICSG itself reduced its projection for mine production growth in 2025 from 2,3% to 1,4%, reinforcing the perception of structural tightness. As copper is a critical input for cables, busbars, inverters, transformers, and connection infrastructure, this increase translates into widespread pressure throughout the entire solar supply chain.

Exchange

In addition to commodities, the exchange rate between the dollar and the renminbi has exerted additional upward pressure on photovoltaic modules exported by China. The yuan appreciated 4,5% against the dollar in 2025, its best annual performance since 2020, and continued to gain strength in early 2026, accumulating an additional increase of 0,5% to 0,7% in January and taking the currency to its highest level in 32 months.

On an annual average basis, the USD/CNY rate went from 7,19 in 2025 to around 6,93 in 2026, while the market traded in the region of 6,89–6,90 per dollar in February and March.

This currency appreciation has a direct effect on the pricing of the Chinese solar industry, since a large part of its cost structure, including labor, energy, factory expenses, and a significant portion of locally processed inputs, is denominated in renminbi.

Thus, when the Chinese currency strengthens, the dollar cost of exports rises even without a physical change in the cost of inputs. In a sector where manufacturers already operate with squeezed margins, the appreciation of the RMB reduces external competitiveness and increases the need for price adjustments, acting as yet another upward driver for international module prices.

Downward pressure

Polysilicon

In the case of polysilicon, the dynamics were the opposite. A key raw material in the solar energy chain, this input remained at historically depressed levels throughout 2025 and early 2026, reflecting oversupply, high inventories, and intense competition among major Chinese producers.

According to Bernreuter Research, the global spot price reached US$5,65/kg in March 2025 and was at US$6,36/kg on March 18, 2026, representing only a marginal recovery of about 12,6% from an extremely low base and still far from the levels observed in previous scarcity cycles.

The backdrop remains aggressive capacity expansion at a rate exceeding demand growth, even with the global photovoltaic market still projected at 720 GW to 750 GW of new additions by 2025.

In practice, this means that polysilicon continued to function more as a mitigating factor than an upward pressure on the modules, helping to partially cushion the impact of the appreciation of metals and other components in the chain.

The balance of power

In 2026, the main inflection point for the photovoltaic market lies not only within the solar industry itself, but in the interaction between external cost forces and Chinese state intervention in supply.

On one hand, the main upward drivers today are not exactly "created" by the solar sector: copper and silver are global commodities, with prices formed in broad international markets, influenced by supply constraints, financial flows, geopolitical tensions, electrification of the economy, expansion of networks, electric vehicles, data centers and investments in energy infrastructure.

In other words, this is an exogenous cost pressure on the photovoltaic industry, with a tendency to remain at high or structurally higher levels even if the demand for modules continues to fall short of installed capacity.

On the other hand, the solar sector continues to grapple with its own imbalance: the supply of modules, cells, wafers, and polysilicon still far exceeds global consumption, limiting the ability to fully pass on these upward pressures to final prices. It is precisely at this point that the Chinese government becomes the deciding factor.

As the largest manufacturing hub in the global solar supply chain, Beijing is currently the only player with the scale and tools to arbitrate this contradiction, whether through measures to discipline predatory competition, by inducing consolidation via M&A in the upstream sector, or by removing incentives that fueled the price war, such as adjustments to the VAT regime for exports.

Thus, more than the existence of higher costs, which is already a reality, what will define the intensity and speed of price recovery for modules will be the degree of Chinese intervention in supply and its willingness to accelerate the rationalization of a market that is still structurally oversupplied.

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