In early 2026, the closure of the Strait of Hormuz shook energy markets. Consumers, frightened by the volatility of fossil fuels, looked in all directions for alternatives. What they found was a disconcerting paradox: the planet had—has—a historic surplus of clean, cheap energy. There was no shortage of solar panels. There were plenty of them. And no one really knew what to do with them.
Economist Adam Tooze summed it up bluntly in his column Financial Times: “Clean energy, on a scale that would have seemed utopian at the time of the Paris Agreement in 2015, is now within our reach. The price of solar panels has plummeted. And yet factories are paralyzed.” It’s not rhetoric. It’s a diagnosis.
After a huge increase in investment since 2020, Chinese companies reached a production capacity of 1,000 gigawatts of solar panels per year. To get an idea: in 2023 global demand was only 451 GW, according to Energy News. Chinese production of solar cells that year—588 GW—already doubled international demand. And they continued building.
The result was what economists call “involution”: a spiral of destructive competition where companies destroy each other with none winning. More than 40 Chinese manufacturers have gone bankrupt, been acquired or delisted. A third of the staff of the surviving big five were laid off. JinkoSolar, the world’s largest supplier, registered in 2025 a drop in revenue of 29%, a drop in gross profit of 86% and net losses of 4.45 billion yuan.
In this way, in June of last year, more than 30 manufacturers They agreed to an OPEC-style pact to stabilize prices and curb supply. Six months later, the result was a disaster: far from stabilizing, production reached historic highs, installations tripled and losses continued to accumulate. “Since when are solar panels just another commodity? They are a technological miracle. They make us cultivators of the sun,” details Adam Tooze in his column. And in all that time, the price of a solar module fell to $0.10 per watt, according to EnkiAI —well below the $0.16/W production cost of the most advanced TOPCon modules. It is, strictly speaking, the largest climate technology sell-off in history.
This is not a steel crisis. It’s something else
When economists talk about Chinese overproduction, the debate usually revolves around steel, cement or electric cars. But Tooze makes a distinction worth hearing: Solar panels are no ordinary commodity. They are the result of half a century of research—from NASA spinoff programs in the 1970s to the big energy push of the Carter era—and, along with batteries, they are the master key to a sustainable future. Wasting that surplus is not just an economic problem. It is a civilizational irrationality.
According to the OECD, China invested less than $18 billion in sector support over 15 years to build an industry capable of providing more clean energy than the world can easily absorb. That figure is less than the cost of building a medium-sized international airport in Europe, or what the US spent on a single Gerald Ford-class aircraft carrier.
The concentration of power in the supply chain is also unprecedented in the history of energy. China controls more than 80% of the entire global solar production chaindirect result of the plan Made in China 2025 with which Beijing decided to stop being the world’s cheap factory and become its technological supplier. By the end of 2025, its operational module capacity exceeded 900 GW, several times the total global demand. The five largest Chinese manufacturers concentrate more than 50% of the market. LONGi Green Energy alone shipped more than 45 GW in 2025 – more than the entire US domestic manufacturing capacity (73 GW).
Never in the history of energy has a single nation so completely dominated a key technology for the decarbonization of the planet. Not even oil at its peak. And the climate paradox is painful: since the Paris Agreement of 2015, a scale of deployment like the current one would have seemed like science fiction. The goal was to stop global warming. The instruments to do so are manufactured and stacked in warehouses. What fails, Tooze points out, is coordination: what Keynes would call a global “chaos,” a catastrophe of collective planning.
The global bet
Chaos has its own correction mechanisms, even if they are painful. In China, the crisis has already forced the Government to act a few months ago, Beijing called for ‘concerted efforts’ to end price war. The proposed measures include capacity control, minimum guideline prices, mergers and acquisitions, and intellectual property protection “to promote the high-quality development of the photovoltaic industry.” In practice: the Chinese State orchestrating an orderly rescue of the sector that it itself encouraged to grow without limits.
The consolidation had already started before. In August of last year, several players in the sector launched a plan for large manufacturers to jointly invest $7 billion in buying and closing the least efficient facilities, according to OilPrice.com. In practice, a cartel to stop the bleeding.
Prices already reflect the shift. According to ABC SolutionsChinese modules have risen between 10% and 20% in 2026 due to the adjustment of overproduction and new logistics tariffs. Wood Mackenzie forecasts a further rise of 9%. The window for the big bargain is closing, although prices remain historically low. The critical variable for 2027 is how the surplus is resolved: through orderly consolidation or through new business disruptions.
Meanwhile, Chinese foreign business continues to boom. As Tooze points out in the FTexports of Chinese solar technology to virtually every country except the United States are skyrocketing. And manufacturers have evolved: they now integrate batteries into systems to offer greater stability to the grid, pushing the product towards the complete solution instead of the isolated module. Storage batteries, which They have also reached historical lows in cost Pushed by the same dynamic of overproduction, they thus complete the package: panel plus storage, at a knockdown price.
Domestic demand will also recover. China exceeded 1,230 GW of installed solar capacity in February 2026, with year-on-year growth of 33.2% (SaurEnergy). The total installed capacity in the country is now close to 4,000 million kW, almost 30% of the world total. Chinese emissions could begin to fall up to six years earlier than expectedprecisely thanks to this disproportionate investment in renewables.
When too much sun is not enough
Excess manufacturing capacity is not the only problem. China has also installed so many panels that it generates more solar electricity than can be stored or transmitted. Grid and storage infrastructure has not grown at the same pace as panel installation—in fact, Chinese provincial regulations that required the installation of batteries by law led to systems that were barely used due to a lack of incentives in the electricity market. The result: clean energy generated that is lost because there is nowhere to put it. A paradox within the paradox.
Added to this is a quieter but potentially serious problem: quality. The race to the bottom on prices has led some manufacturers to cut back on testing and materials. The sector speaks openly of companies that sacrifice durability for survival. Panels installed today at bargain prices could perform less than expected in a decade.
A recent OECD report, cited by Tooze in the FT, notes that the solar industry is the most subsidized sector in the world. The paradox is that these subsidies produced the greatest technological reduction in the history of renewables. The real debate is not whether China subsidized — it did — but whether the West should have taken advantage of the result instead of blocking it with tariffs. China plans for decades what the West measures in financial quartersand that asymmetry of time horizons is part of the problem.
The thesis of “global imbalances”—to which Tooze refers—points to another structural cause: if China had consumed more and imported more instead of pouring everything into productive investment, sectors such as solar would not suffer from this excess. The Chinese mercantilist model, driven by state investment, It is in some ways its own worst enemy.– Accepts negative domestic and international consequences while pursuing its manufacturing goals. But this review has a problem: it worked. At an enormous social cost for the Chinese workers in the sector, but it worked.
At the most visionary – and speculative – end of the story, Tooze mentions in the FT an initiative by a consortium of Chinese companies to install hundreds of gigawatts of panels in space, with orbital data centers as the destination. The ultimate dream: an artificial intelligence lunar base with 10,000 GW of capacity. While the land factories remain idle.
The year we look at the sun and look away
There is something deeply revealing about the image of Chinese warehouses full of solar panels that no one buys while the Strait of Hormuz burns and gasoline rises. It’s not just a market failure. It is a failure of collective imagination.
The solar sector is not going to disappear. Chinese players are too big and too efficient to fail. Consolidation is underway, prices will rise somewhat, and demand—both domestic and export—will revive. The energy transition will come. But it will do so later, more expensively and more chaotically than it could have been.
“Involution”—that brutal technical term for an industry that devours itself—is not just a Chinese problem. It is the symptom of a world that has the tools to solve the climate crisis and cannot agree on how to use them. US tariffs. They have not created a relevant American solar industry: they have only made panels more expensive for American consumers. Subsidy cuts in China have not rebalanced the market: they have only bankrupted thousands of workers. China sold cheap clean technology for years, and the problem is that in the meantime no one built an alternative.
As the analysis of EnkiAIthe critical variable for the coming months is whether the consolidation will be orderly or chaotic. If the large Chinese manufacturers survive the storm and maintain their warranty commitments, the world will have achieved, at an enormous cost in industrial destruction, a cheap and consolidated solar industry. If not, it will have to be rebuilt.
Tooze close your column Financial Times with a phrase that should be engraved on some wall: “Let’s remember the year 2026 as the moment when the world found itself with ‘more than enough’ solar panels and we shrugged our shoulders.” At some point in the future, when the history books rest on this moment, the uncomfortable question will be this: How do we pass up the cheapest bargain in the history of clean energy?
Image | Unsplash
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