Renewable energy: IEA says the world needs to diversify from reliance on China’s solar panels to ensure net-zero transition

China supplies more than 80 per cent of the world’s market of solar photovoltaic (PV) products

China invested over US$50 billion since 2011 in new PV supply capacity – 10 times more than Europe − and created 300,000 jobs across the value chain, IEA said

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Electrical workers checking solar panels at a photovoltaic power station built in a fishpond in Haian in eastern China’s Jiangsu province. Photo: AFP

Published: 1:30pm, 7 Jul 2022

The world should diversify from its reliance on China’s solar panel supply chain to adapt to the growing demand for clean energy under the net-zero emissions, the International Energy Agency (IEA) said in a special report released today.

China’s ongoing efforts in expanding solar panel production and global markets have helped solar photovoltaic (PV) to become the most affordable electricity generation technology around the world. However, its dominance with more than 80 per cent share of the worldwide market has led to imbalances in solar PV supply chains, the report said.

“China has been instrumental in bringing down costs worldwide for solar PV, with multiple benefits for clean energy transitions,” said the IEA’s 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.”

The world’s transition to clean energy could put more pressure on solar PV supply chains, but create opportunities for other countries and regions to get into the industry to diversify production and develop more resilient supply chains, said Birol.

Solar panels arranged into the likeness of a giant panda at the Datong Panda Power Plant in the Shanxi provincial city of Datong in northern China on 25 July 2017. Photo: EPA

Over the last decade, the global production capacity of solar panels has increasingly shifted away from Europe, Japan, and the United States towards China, which took the lead on investment, innovation, and government support. China invested over US$50 billion since 2011 in new PV supply capacity – 10 times more than Europe − and created up to 300,000 manufacturing jobs across the value chain, the IEA’s report said.

China’s share of all the key manufacturing stages of solar panels now exceeds 80 per cent, more than double its share of global PV demand, IEA said. For critical parts such as polysilicon and wafers, China’s share may climb to more than 95 per cent in the coming years, based on the current manufacturing capacity under construction.

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