Ensuring a safe transition to net-zero emissions requires greater efforts to expand and diversify global production of solar panels, whose global supply chains are currently heavily concentrated in China, the IEA said in a new special report published today.
China’s industrial and innovation policies, which focus on expanding solar panel production and markets, have helped solar become the most affordable power generation technology in many parts of the world. But it has also caused imbalances in solar supply chains, according to the IEA’s special report on global solar supply chains, the agency’s first study of its kind.
Over the past decade, global solar panel manufacturing capacity has increasingly shifted away from Europe, Japan and the United States to China, which has taken the lead in investment and innovation. According to the report, China’s share of all key manufacturing steps in solar panels exceeds 80% today, and for key elements including polysilicon and wafers, it is expected to rise to more than 95% in the coming years based on current production capacity. under construction.
“China has helped drive down the cost of solar power worldwide, providing a number of benefits for the clean energy transition,” said IEA Executive Director Fatih Birol. “At the same time, the level of geographic concentration in global supply chains also creates potential challenges for governments to address. Accelerating the clean energy transition around the world will put additional pressure on these supply chains to meet growing demand, but it will also provide opportunities for other countries and regions to help diversify and make production more resilient.
Meeting international energy and climate goals requires an unprecedented global deployment of solar energy. This, in turn, requires significant additional expansion of manufacturing capacity, raising concerns about the world’s ability to rapidly develop resilient supply chains. For example, the annual addition of solar capacity to electricity systems worldwide must more than quadruple by 2030 to be consistent with the IEA’s path to zero emissions by 2050. Global production capacity for the main building blocks of solar panels – polysilicon, ingots, wafers, cells and modules – is expected to more than double from current levels by 2030, and existing production facilities should be modernized.
“As countries accelerate their efforts to reduce emissions, they need to ensure that their transition to a sustainable energy system is built on solid foundations,” Dr Birol said. “Global solar supply chains must be expanded in ways that ensure their resilience, affordability and sustainability.”
Governments and other stakeholders around the world are increasingly paying attention to solar cell manufacturing supply chains, as high commodity prices and supply chain bottlenecks have led to a roughly 20% increase in solar panel prices over the past year. These challenges — particularly evident in the market for polysilicon, a key material for making solar panels — have led to delays in solar cell shipments worldwide and higher prices. The IEA special report argues that these challenges require even greater attention and effort from policymakers.
The report examines solar energy supply chains from raw material to finished product, covering areas such as energy consumption, emissions, employment, production costs, investment, trade and financial performance. For example, electricity-intensive production of solar cells today is found to run mostly on fossil fuels, as coal plays an important role in parts of China where production is concentrated, but solar panels still only need to operate for four hours. up to eight months to offset production emissions. This short payback time compares to the average lifespan of solar panels, which is around 25-30 years. The report notes that decarbonising electricity supplies and greater diversification of solar energy supply chains should both help reduce this footprint in the future.
As diversification is one of the key strategies to reduce supply chain risks worldwide, the special report assesses the opportunities and challenges for developing solar energy supply chains in terms of job creation, investment requirements, production costs, emissions and recycling. It finds that new solar power generation facilities in the global supply chain could attract US$120 billion worth of investment by 2030. The solar energy sector has the potential to double the number of photovoltaic jobs to 1 million by 2030, with the most jobs being intensive areas in module and cell manufacturing.
The special report summarizes the policy approaches governments have taken to support domestic solar and highlights priority areas for action to improve security of supply and address key challenges such as environmental and social sustainability, investment risks and cost competitiveness.