The new energy industry has struggled since peaking in late 2021. The CSI New Energy Index has fallen over two-thirds, trapping many investors. Despite occasional rallies on policy news, lasting recoveries remain elusive. Here’s why:
1. Severe overcapacity
Excess supply is the industry’s biggest problem. For example, global demand for new solar installations in 2024 may reach around 400-500 GW, while total production capacity already exceeds 1,000 GW. This leads to intense price wars, heavy losses, and asset write-downs across the supply chain. Until surplus capacity is cleared, the market is unlikely to see a sustained rebound.
2. Fast technology shifts
Rapid innovation helps reduce costs and compete with traditional energy, but also turns existing investments into burdens. In solar, new technologies like TOPCon are quickly replacing older PERC cells, hurting past market leaders. This creates uncertainty even for top players.
3. Rising trade risks
China dominates global new energy production, making it a target for trade barriers. The U.S. and EU are considering or implementing tariffs and investigations on Chinese solar and EV products. This threatens key export markets that provide critical profits to fund domestic R&D and price competition.
4. Slower climate policy momentum
Energy security concerns, the Russia-Ukraine war, and pandemic disruptions have led many regions to delay carbon goals, slowing new energy demand growth.
In short
Overcapacity drives price wars and losses.
Tech shifts make current leaders vulnerable.
Trade risks threaten exports and profits.
Climate policy delays may slow demand.
Though the sector trades at historic lows and its long-term outlook is strong, these challenges mean a real turnaround will take time and patience.
Post time: Jul-08-2025
