Renewable energy costs fall amid rising margin pressure on manufacturers

The renewable energy sector is experiencing a divergence between technological growth and manufacturer profitability. While falling costs for solar modules and batteries benefit developers, utilities, and end consumers, manufacturers are facing intense margin pressure due to oversupply and price competition.

The International Energy Agency projects an addition of approximately 4,600 GW of renewable capacity between 2025 and 2030, with solar energy accounting for nearly 80% of that growth. However, this expansion is accompanied by significant risks of overcapacity, particularly within Chinese solar production.

While large-scale supply chains, such as those in China, drive down costs for global developers, they also create market dependencies and trade risks. Companies with integrated manufacturing and significant scale, such as BYD and CATL, maintain competitive advantages, whereas manufacturers of commoditized products face declining returns.