Chinese industrial and innovation policies focused on expanding solar panel production and markets have helped solar PV become the most affordable electricity generation technology in many parts of the world.
However, this has also led to imbalances in solar PV supply chains, according to the IEA Report on Solar PV Global Supply Chains.
Global manufacturing capacity for solar panels has moved out of Europe, Japan and the United States over the last decade and into China, which has taken the lead on investment and innovation. China’s share in all the key manufacturing stages of solar panels exceeds 80 percent.
China’s share in polysilicon and wafers is set to rise to more than 95 percent in the coming years, based on current manufacturing capacity under construction.
“China has been instrumental in bringing down costs worldwide for solar PV, with multiple benefits for clean energy transitions,” said IEA Executive Director Fatih Birol. “At the same time, the level of geographical concentration in global supply chains also poses potential challenges that governments need to address.”
IEA said annual additions of solar PV capacity to electricity systems around the world need to more than quadruple by 2030 to be on track with the IEA’s pathway to reaching net zero emissions by 2050.
Global production capacity for the key building blocks of solar panels – polysilicon, ingots, wafers, cells and modules – would need to more than double by 2030 from today’s levels and existing production facilities would need to be modernised.
Governments and other stakeholders around the world have begun to pay increasing attention to solar PV’s manufacturing supply chains as high commodity prices and supply chain bottlenecks have led to an increase of around 20 percent in solar panel prices over the last year.
These challenges – particularly apparent in the market for polysilicon, a key material for making solar panels – have resulted in delays in solar PV deliveries across the globe and higher prices.
The report said new solar PV manufacturing facilities along the global supply chain could attract $120 billion of investment by 2030. The solar PV sector has the potential to double the number of PV manufacturing jobs to 1 million by 2030, with the most job-intensive areas in the manufacturing of modules and cells.