Chinese Policy Changes Could Raise Solar Energy Costs Across Africa

China's elimination of tax rebates on solar panel exports starting April 1 may increase renewable energy costs for African nations that depend heavily on Chinese technology. While experts expect gradual price increases rather than dramatic spikes, the changes could complicate Africa's efforts to expand solar power and close electricity gaps.

NAIROBI, Kenya (AP) — African nations may face higher costs for solar energy projects after China announced plans to eliminate tax rebates on solar panel exports and reduce incentives for battery storage manufacturing.

Starting April 1 for solar panels and next year for batteries, China will end value-added tax rebates that have helped keep equipment costs lower for international buyers. The policy shift could create challenges for Africa’s renewable energy expansion, as the continent depends largely on Chinese-made solar technology.

Energy analyst Wangari Muchiri, who specializes in Africa’s clean energy market, explained the potential impact. “We are likely to see solar panel prices increase in Africa because most of the inputs come from China,” Muchiri said. “Removing the rebate will add to existing costs, especially when you consider shipping, logistics, and other import fees.”

African countries already face steeper prices for solar equipment compared to other regions due to transportation expenses, smaller order quantities, and import duties.

The policy adjustment comes after intense competition among Chinese manufacturers drove solar panel prices down dramatically, from $0.25 per watt in 2022 to as low as $0.07 per watt in 2025. While this pricing helped accelerate worldwide solar adoption, it also resulted in substantial financial losses for many companies.

Many Chinese manufacturers had incorporated the VAT rebates into their export pricing strategies, essentially passing government subsidies along to international customers. Beijing is now reducing these payments as part of efforts to control overproduction and focus on more sophisticated technologies.

Industry experts anticipate gradual price adjustments rather than sudden cost increases, which should establish more stable global pricing.

John van Zuylen, CEO of the Africa Solar Industry Association, offered perspective on the changes. “The changes are significant, but not catastrophic,” van Zuylen said.

“The entire recent solar boom was built on artificially cheap Chinese pricing,” van Zuylen explained. “That era is now ending.”

Van Zuylen noted that companies typically respond to such policy changes in predictable ways. “When a structural rebate is removed, exporters typically either absorb the cost, raise prices, or reduce discounting,” he said. “African countries will likely feel this as a gradual upward shift in pricing rather than a single dramatic spike.”

Despite anticipated price increases, solar power is expected to maintain its competitive advantage across much of Africa, since it represents the most affordable energy source on the continent, according to Muchiri.

“Even with higher panel prices, it will still be significantly cheaper than alternatives like diesel,” she noted.

Sonia Dunlop, CEO of the Global Solar Council industry group, warned of potential supply chain disruptions. “It will increase project costs slightly and might delay the project construction pipeline due to supply chain shortages and contractual changes, stockpiling rush, congestion in shipment for the countries heavily reliant on Chinese imports,” Dunlop said.

Battery storage technology, essential for providing power during nighttime hours, may encounter greater obstacles as incentives are eliminated through 2027. Van Zuylen suggested that smaller-scale users could face the most significant impact from higher costs.

“Batteries matter more than panels for Africa because storage is what makes solar reliable for off-grid and backup users,” he explained.

Basil Abia, co-founder of Nigerian energy research company Truva Intelligence, provided historical context for battery usage in African solar projects. “Batteries have historically been expensive, and many solar installations in Africa were built without them,” Abia said.

“Only recently have we started seeing more systems combining solar with battery storage,” Abia added.

Abia emphasized that solar panels remain reasonably priced even without government rebates. Throughout 2024 and early 2025, panel costs dropped significantly from approximately $0.25 per watt in earlier years to as low as $0.07 per watt.

Solar energy currently accounts for 3% of Africa’s power generation, with demand expected to continue expanding as storage technology enhances system reliability. The continent’s heavy reliance on Chinese equipment has highlighted the limited local manufacturing capabilities.

“The VAT removal will slow, but not reverse Africa’s clean energy transition,” Abia concluded. “Countries that use this moment to accelerate local manufacturing will emerge stronger. Those that do not will remain exposed to Beijing’s next industrial policy adjustment.”