Subsidies and the solar panel industry

The production of solar panels was the most subsidised industrial sector over the period 2005-24, which saw the People’s Republic of China becoming dominant across the entire solar value chain. The scale of subsidisation in China’s solar sector has contributed to continued investment in production capacity regardless of market conditions and to the concentration of manufacturing activities in China. Despite the high levels of subsidies they have received over the last two decades, Chinese manufacturers of solar panels have experienced severe economic difficulties in recent years. In 2024, the sector witnessed significant price declines, leading to falling revenue and profitability and significant job losses. While some OECD Members have recently adopted new policy measures aiming to spur investment in domestic solar manufacturing capacity, it remains unclear whether these will be enough to reverse China’s market dominance.