China has announced the withdrawal of the export VAT rebates for solar photovoltaic modules and other products from April 1, 2026.  The move, while announced earlier, had not formalised a final date yet. From the same date, the rebate on battery products will go down to 6% from the existing 9%. By Jan 1, 2027, the rebate on battery products will also be taken to zero. 

The announcements, made last week, mark the strongest push yet to force the sector to align prices with reality, ie, breakeven or higher, something the Chinese authorities have been nudging industry to do for the past six months. Coming just after the country's Anti-monopoly regulator cautioned solar manufactiuring firms from forming or taking any action that would lead to a monopoly like behaviour, the latest move is a soifter approach to send price signals.

The move comes at a time when China is keen to be seen as not just the strongest proponent of global trade with low distortions, but its cleantech firms also enjoy a strong hold over the global energy transition with their dominance across solar, energy storage and wind energy. One reason why the US under the Trump administration has almost turned its back on the enerfy transition for now. 

Will Prices Rise?

While social media has been buzzing with sales leaders from many of these firms making their pitch to place orders before prices go up, it is unlikely that buyers will be rushing to place orders just yet. For one, In India especially, firms have avoided keeping high inventory levels due to a historical trend of stable or falling prices. Something we have seen in storage as well now.

Secondly, there is no guarantee that prices have to rise, as other factors like currency rates, manufacturing innovations like replacing silver use in solar manufacturing as Longi has promised, and a broader consolidation in the sector might see prices staying stable. For every expert predicting a price rise, we have multiple experts predicting stable or even lower prices through 2026 as well. Internal competition for business remains intense in China, a situation they term involution. 

Indian firms will be much more focused on tracking the prices of polysilicon, and linked to that wafers, as the country transitions to a wholly domestic sourcing regime for cells as well from June this year. So the window for any Chinese imports of cells and modules will be almost closed post March in any case. The bad news is that polysilicon prices have shown a trend towards an upmove, which, if it sustains, will almost certainly lead to higher module prioces eventually as wafer imports will continue to come from China.