The Current State and Future Trends of Solar Encapsulant Films

The Core Role of Photovoltaic (PV) Encapsulant Films

In the "sandwich" structure of Photovoltaic (PV) modules, the encapsulant film—less than 0.5 mm thick—plays a crucial role. Despite accounting for only 3%-4% of the total cost, it significantly impacts the module's core performance, such as its 25-year lifespan and electricity generation efficiency. This seemingly modest segment is undergoing a profound transformation, moving from material iteration to market restructuring, becoming an "invisible battlefield" in the PV industry's technological competition.

Material Evolution – From EVA to POE

The technological progression of PV encapsulant films primarily revolves around two key attributes: light transmittance and weather resistance. Early on, EVA (ethylene-vinyl acetate) encapsulant films dominated due to their high light transmittance (over 91%) and good flexibility, making them the standard for P-type Solar cells. However, EVA has a fatal flaw: its poor hydrolytic stability. Under high-temperature, high-humidity conditions, EVA films tend to yellow, leading to power degradation of 5%-8%, and the acetic acid they release exacerbates the PID (Potential-Induced Degradation) effect.

With the growing adoption of N-type solar cells (TOPCon, HJT), POE (polyolefin elastomer) films quickly emerged as the alternative. POE has only one-eighth the water vapor transmission rate of EVA (<0.5 g/m²•day), excellent resistance to PID, and thus became the preferred choice for bifacial modules. To balance cost and performance, the industry introduced EPE co-extruded films (a three-layer structure: EVA-POE-EVA). This maintains the lamination compatibility of EVA while enhancing water resistance with the central POE layer. By 2023, this structure captured 27.8% of the market share.

In niche applications, PVB (polyvinyl butyral) films, known for their non-crosslinking and recyclable properties, found a place in BIPV (Building-Integrated Photovoltaics) modules. However, PVB films have lower light transmittance (89%-90%) and weaker water vapor barrier properties, which limits their broader application. The commercialization of perovskite solar cells has further accelerated the demand for specialized encapsulants, as these cells are highly sensitive to water vapor and oxygen. This has made POE the only feasible choice for their encapsulation. Companies like GCL-Poly have already incorporated POE solutions in their gigawatt-scale production lines.

The Industry Winter – Price Wars and Supply Chain Squeeze

Since 2023, the oversupply in the global PV industry has led the encapsulant film sector into a "volume increase, price reduction" crisis. In 2024, Foshan’s revenue dropped by 15.23%, with net profits plunging by 29.33%. Despite maintaining a market share above 50%, its profit per square meter fell to historic lows (14.72%). Second-tier companies such as Haiyou Materials and Swegon Technologies suffered even more, facing negative gross margins and substantial losses of 558 million RMB and 285 million RMB, respectively.

The root causes of this industry-wide squeeze stem from two fronts:

Upstream:

EVA and POE resin are heavily reliant on imports, with EVA's import rate at 65% and POE’s surpassing 90%. In 2023, EVA prices fluctuated by over 40%, directly eating into encapsulant film manufacturers' profits.




Downstream:

Major module manufacturers are accelerating vertical integration. Leading companies like Trina Solar and JinkoSolar are developing their own encapsulant films and supporting suppliers like Xiangbang Technology. As a result, Foshan's sales growth rate (24.98%) lagged behind global installation growth (35%), putting its market share at risk.

In this context, overseas markets have become a lifeline. Foshan’s overseas shipments accounted for over 50% of its total sales in 2024, with margins 7 percentage points higher than in the domestic market. However, competition from local companies in Vietnam threatens its dominance. Similarly, Haiyou Materials saw a drastic 90% reduction in overseas shipments (from hundreds of millions to 37 million RMB), exacerbating its deteriorating financial performance. This highlights the double-edged sword of global expansion.

Competitive Landscape – Consolidation Amidst Fragmentation

The global encapsulant film market is currently characterized by an "one leader, many strong players" structure. Foshan leads with a 50%+ market share, having shipped 2.81 billion square meters, followed by Swegon (13%), Haiyou Materials (8%), and Baijia Nian Dai (27% growth). Smaller companies such as SAILTECH and Lushan New Materials are focusing on niche technologies for differentiation.

The competition among leading firms has shifted towards technological positioning and global capacity expansion:

• Foshan:
  By strengthening its overseas base in Vietnam (30GW), Foshan is expanding its EPE film production for TOPCon modules. It is also exploring new growth avenues, such as electronic materials.



• Haiyou Materials:
  Haiyou launched the EXP co-extruded film for TOPCon single-glass modules, but its sales volume declined by 24.65% due to issues with accounts receivable management.



• Swegon Technologies:
  As the second-largest POE film supplier, Swegon developed the innovative white POE technology without edge overflow and is now targeting perovskite cells with its TPO thermoplastic films.



• Baijia Nian Dai:
  By forming a joint venture with GCL-Poly and moving to dominate global markets, Baijia has climbed to third place. It is also aiming for a backdoor listing by acquiring Tianyang New Materials.

Mid-tier companies are responding to the cyclical challenges by either shrinking production capacity or diversifying into new businesses. For instance, Lushan New Materials suffered losses in the encapsulant film segment but saw profits in its granulated materials. Tianyang New Materials is diversifying into electronic films and medical materials to reduce dependence on the PV sector.

Technological Breakthroughs – N-Type Cells Drive Material Upgrades

The rise of N-type solar cells (TOPCon, HJT) has imposed higher demands on encapsulant films:

• TOPCon Cells:
  These cells are highly vulnerable to PID effects due to their back passivation layer. Bifacial modules require full POE encapsulation ("POE+POE"), while single-glass modules tend to use a "POE+White EVA" combination.



• HJT Cells:
  The amorphous silicon layer in HJT cells is sensitive to water vapor and ultraviolet radiation, requiring encapsulant films with UV-blocking or light conversion properties. Swegon Technologies' Raybo® light-conversion films are now in mass production.



• Perovskite Cells:
  These cutting-edge cells demand encapsulant films with an extremely low water vapor transmission rate (<0.1g/m²•day). Companies like Zhongju are developing POE films (such as TJ400) with improved power retention and peel strength.

In response to these challenges, leading companies have ramped up R&D investments:

• Foshan:
  In 2024, Foshan allocated 520 million RMB to R&D, focusing on perovskite encapsulation and recyclable films.


• Haiyou Materials:
  They launched the EVA reinforcement layer technology (EXP films), which enhances EVA's resistance to PID.


• Swegon Technologies:
  Swegon developed a crosslinker-free POE formula to solve the edge overflow issue in lamination.

Future Trends – Globalization, Recycling, and Material Diversification

As the industry faces transformation, encapsulant film companies are navigating three major strategies to adapt:

Global Expansion:

Foshan and Swegon are building factories in Southeast Asia to avoid trade barriers. Xinyi Solar's Malaysian plant is set to produce 50 million square meters, targeting high-end markets in Europe and North America.

Recycling Technologies:

Foshan's chemical recycling technology can decompose retired films into base materials, with a recovery rate of over 90%. Industrial-scale commercialization is expected by 2025.

• Material Diversification: Companies are exploring new materials to cater to specific demands:
  • Silicone encapsulants (Swegon Technologies) are gaining market share in high-temperature regions.
  • Butyl encapsulants (Tianyang New Materials) are being explored for heterojunction (HJT) cell packaging.
  • PVB films are being enhanced for better light transmittance.

Conclusion: Long-Term Vision in the Invisible Battlefield

The competition in the photovoltaic encapsulant film sector is a dual challenge of "technical endurance" and "supply chain synergy." As the industry transitions from scale expansion to technology-driven growth, Foshan maintains its leadership with cost advantages and global expansion. Companies like Haiyou Materials and Swegon Technologies are carving out niches with innovative technologies. Meanwhile, the rise of vertical integration by module manufacturers forces the entire industry to improve efficiency. Ultimately, the companies that can weather cyclical downturns and lead the material revolution will define the future of the solar energy industry. After all, each technological advancement in encapsulant film could reshape the entire photovoltaic value chain.