World Needs More Solar Panel Supply Chains to achieve Net-Zero
The International Energy Agency has called on governments around the world to rapidly develop supply chains of solar panels to reduce the global reliance on Chinese manufacturers for the achievement of net-zero emissions by 2050.
According to the agency in a new report, 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, but have led to structural imbalances in the supply chains. The report, titled Solar PV Global Supply Chains, stressed the need for reduced dependence on China.
Global manufacturing capacity for solar panels has increasingly 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. The report stated that China’s share in all the key manufacturing stages of solar panels exceeded 80% today and for key elements including polysilicon and wafers, it projected that it would rise to more than 95% in the coming years based on current manufacturing capacity under construction.
The Executive Director of the IEA Fatih Birol said in a statement, “China has been instrumental in bringing down costs worldwide for solar PV, with multiple benefits for clean energy transitions. At the same time, the level of geographical concentration in global supply chains also poses potential challenges that governments need to address. Accelerating clean energy transitions around the world will put further strain on these supply chains to meet growing demand, but this also offers opportunities for other countries and regions to help diversify production and make it more resilient.”
According to the agency, meeting international goals and requirements required the global deployment of solar PV to grow on an unprecedented scale. This demands a major additional expansion in manufacturing capacity, the IEA said whilst raising concerns about the world’s ability to rapidly develop resilient supply chains.
Birol noted, “As countries accelerate their efforts to reduce emissions, they need to ensure that their transition towards a sustainable energy system is built on secure foundations. Solar PV’s global supply chains will need to be scaled up in a way that ensures they are resilient, affordable and sustainable.”
The report examined solar PV supply chains from raw materials to the finished product, covering areas such as energy consumption, emissions, employment, production costs, investment, trade and financial performance. It found, for example, that the electricity-intensive manufacturing of solar PV was mostly powered by fossil fuels because of the prominent role of coal in the parts of China where production was concentrated – but that solar panels still only need to operate for four to eight months to offset their manufacturing emissions.
Because diversification is one of the key strategies for reducing supply chain risks worldwide, the special report assessed the opportunities and challenges of developing solar PV supply chains in terms of job creation, investment requirements, manufacturing costs, emissions and recycling. It found that new solar PV manufacturing facilities along the global supply chain could attract US$120 billion of investment by 2030. And the solar PV sector had the potential to double the number of PV manufacturing jobs to one million by 2030, with the most job-intensive areas in the manufacturing of modules and cells.
