Why Solar Panels Are Piling Up

Every industry has its feast years.

Those golden stretches where demand is high, margins are fat, and factories hum with the rhythm of prosperity.

But what they don’t tell you is that feast years often plant the first seeds of famine.

India’s solar manufacturers know that feeling well.

Over the last decade, it wasn’t just sunlight that was abundant.

Capital, subsidies, and confidence were too.

New plants came up faster than roads.

Production lines expanded before market studies did.

Export deals piled up like festival orders.

It felt unstoppable…

Until the numbers started whispering another story.

Shelves fuller than rooftops, capacity outrunning consumption, and global prices sliding like a landslide no one saw coming.

It’s ironic, really.

The sector didn’t stumble because it was weak.

It stumbled because it grew too powerful, outpacing its own demand curve.

The Boom Before the Burn

India’s solar story has been nothing short of dazzling.

Almost too dazzling for its own good.

As of September 2025, the country’s installed solar capacity has soared to 127.3 GW, up from a modest 3.9 GW a decade ago.

Solar PV now lights up nearly a quarter (25.7%) of India’s total power generation capacity.

If that’s not a glow-up, what is?

And the manufacturing engine behind it? Running at full throttle.

By the end of 2025, India’s solar module manufacturing capacity is set to cross 125 GW.

This is more than three times the domestic demand of 40 GW.

Thanks to the Production-Linked Incentive (PLI) scheme, India’s factories are no longer just assembling panels.

They’re building them from the ground up.

Polysilicon to wafers, cells to modules.

Gigafactories are sprouting like sunflowers across Gujarat, Tamil Nadu, and Telangana, all chasing the same golden light.

But here’s where the shine starts to sting.

In FY25 alone, India installed 17.4 GW of utility-scale and 5.15 GW of rooftop solar, while another 68.2 GW sits in the development pipeline.

With adoption lagging behind capacity, a 29 GW inventory pile-up is projected by Q3 2025.

Translation? Too many panels, not enough rooftops.

And when the shelves get crowded, prices start to slide.

Global overcapacity, fuelled by China’s output surge, has already dragged module prices down by nearly 40% in a year.

For India’s manufacturers, who’ve been basking in policy sunshine and export enthusiasm, the margins are beginning to melt.

The sector’s dilemma now feels almost poetic: a market born in the sun, struggling with too much of its own light.

The challenge ahead?

Learning to shine sustainably without burning out.

When Tariffs Turn the Tide

If domestic overcapacity wasn’t enough, global trade winds just turned stormy.

Between May and September 2025, India’s solar exports to the US plunged from $202.6 million to just $79.4 million.

Across industrial hubs, boxes of unsold solar modules are now piling up in warehouses - a physical reminder of how fast the export tide has turned.

Thanks to new tariffs that jumped from 10% to a punishing 50% within months.

Wood Mackenzie notes a 52% drop in module exports to the US in H1 2025, forcing several Indian manufacturers to pause American expansion plans and refocus on home turf.

What’s worse is that India now faces a tariff gap, while its panels face 50% duties.

Whereas, China and Vietnam get away with 30% and 20%. The fallout?

After the US once accounted for a staggering 97.5% of India’s solar exports in 2024, that share is now collapsing.

Exporters are already rerouting through third-country hubs and scouting new buyers in Europe and Africa.

Because in this sun-soaked trade war, survival now depends less on wattage and more on agility.

The Great Supply Chain Shuffle

Inside boardrooms, strategy decks are being rewritten.

Firms are scouting Southeast Asia for assembly partnerships, stockpiling imported components ahead of policy deadlines, and renegotiating contracts to cushion price volatility.

In essence, India’s solar sector is learning that manufacturing leadership isn’t just about gigawatt capacity, it’s about resilience.

The new competitive advantage lies in who can navigate trade barriers without burning cash.

Still, there’s optimism.

Domestic demand remains robust, with India’s solar installation targets aligning perfectly with the global pivot to renewables.

The local ecosystem, from polysilicon to glass and backsheet manufacturing is slowly taking shape.

That’s the longer-term story investors shouldn’t lose sight of.

The Market’s Ray of Hope

For traders, the story has layers.

In the short term, module manufacturers could feel the heat as exports face turbulence and prices stay under pressure.

Mid-tier players may struggle with working capital as margins tighten.

But over a longer arc, downstream beneficiaries, like Engineering, Procurement, and Construction (EPC) firms, energy storage players, and renewable asset developers, might emerge as the real winners of this shakeout.

Think of it as solar’s version of natural selection.

The sector’s second act isn’t about who can produce the most, but who can survive the squeeze.

Reading Between the Sunbeams

The global energy transition has entered its competitive phase.

China still dominates upstream production, but India’s ambition lies in building the full stack, from wafer to watt.

The US tariffs may have dimmed the near-term export glow, but they’ve also accelerated a crucial shift.

India must now produce not just for the world, but from within it.

For investors, this is where the story gets interesting.

Volatility in module prices could create tactical opportunities in listed solar and clean-energy firms.

Infrastructure funds and green energy ETFs may find fresh momentum as domestic demand outpaces global headwinds. Because in markets, as in nature, every bright cycle needs its cooling phase.

And sometimes, the best trades aren’t in chasing the shine, but in spotting where the shadows fall.

The Final Reflection

The solar boom isn’t over.

It’s just maturing.

India’s clean energy dream is too vast, too vital, to be undone by a few tariffs or price swings.

But the next leg of growth will look different - leaner, smarter, and far more selective.

For investors, the message is simple:

The sun’s still shining, but it’s time to wear your analytical sunscreen.

Sources and References:

1. BUSINESSWORLD
   
2. ECONOMICTIMES
   
3. BUSINESSTODAY
   
4. MERCOMINDIA
   
5. THEHINDUBUSINESSLINE
   
6. JMKRESEARCH
   
7. THEWEEK