At the start of 2026, one event rattled global energy markets: the closure of the Strait of Hormuz after the United States and Israel struck Iran. The crisis put oil under particular pressure, choking off part of the supply coming from the Middle East and driving prices higher on the main benchmark markets. Over the following months, though, the world discovered a striking paradox: there is a historic surplus of clean, cheap energy. Solar panels have been produced in enormous quantities — even in excess of demand — and the problem now is that the market is struggling to absorb them.

Economist Adam Tooze spelled it out clearly in the Financial Times: clean energy at a scale that, back in 2015 at the time of the Paris Agreement, looked almost utopian is today a concrete reality. China holds a dominant position above all in the manufacturing of solar panels. After a massive wave of investment that began in 2020, Chinese companies have reached a production capacity of nearly 1,000 GW of solar panels per year — far beyond global demand, which in 2023 stood at around 451 GW.

The result has been what economists call «involution»: competition so aggressive and destructive that it leaves no real winners. More than 40 Chinese producers have gone bankrupt, been acquired, or delisted. JinkoSolar, the world’s largest supplier of solar panels, closed 2025 with revenue down 29%. A similar dynamic has hit other companies in the sector. The price of a solar module has fallen to $0.10 per watt — a level below the cost of production itself.

Over fifteen years, China has invested roughly $18 billion to build an industry capable of supplying clean energy in quantities greater than the world can easily absorb. China’s grip on the supply chain is unprecedented: more than 80% of global production comes from the Asian country.

A production surplus whose losses became unsustainable

The Chinese government stepped in early in the year. The tax administration announced the elimination, as of April 1, of export rebates on photovoltaic products. The move has already produced its first effects: module prices have risen by as much as 30%, with a further 9% increase forecast over the course of the year. The era of dirt-cheap solar panels, then, may be nearing its end.

Beyond the economic and industrial problem, there is also a technical one. China has installed so many solar panels that the power grid is struggling to transmit and store all the energy produced. In February, installed solar capacity in the country topped 1,230 GW, up 33%, but storage infrastructure has not grown at the same pace. The upshot is that part of the energy is wasted: it is generated, but it cannot be properly stored or distributed.

Finally, there is a quality risk. The race to the bottom on prices has pushed some manufacturers to cut corners on testing and materials, fueling the suspicion that the cheapest panels could show a significant drop in performance ten years from now.

In short, 2026 risks being remembered as the year the world found itself with an enormous quantity of solar panels — more than the power grids were actually able to absorb.

Editor’s note

This article was originally published in Italian on money.it by Alessandro Nuzzo on June 20, 2026 as «In un solo anno la Cina ha prodotto più pannelli solari di quanti il pianeta possa assorbirne». It has been translated and adapted for an international audience by the Money.it International desk.