China poised to remain dominant PV supplier through 2030

New research from Switzerland showed that the recent efforts to counterbalance the dominance of China in the PV industry may lead to "cost-significant" inefficiencies across the entire supply chain. The scientists found, however, that achieving regional supply chain goals can benefit the global PV ecosystem.

Scientists at Switzerland's ETH Zurich have analyzed the potential impacts of the efforts currently being made by the European Union to rebuild a photovoltaic industry and have found that China will remain a dominant supplier in all scenarios at least until 2030.

“The study is aligned with a high-demand, net-zero scenario,” the research's lead author, Giovanni Sansavini, told pv magazine. “Under this scenario, meeting global climate goals requires a rapid scale-up of solar PV deployment. To ensure sufficient supply, manufacturing capacity must increase well in advance, by at least 1.5 times the 2022 level globally, and even more in specific regions.”

“Capacity planning is forward-looking, and production capacity needs to be in place before demand peaks,” Sansavini said, when asked about how the manufacturing capacity of the global PV industry may grow, given the current overcapacity scenario. “Additionally, some regions are building local capacity either to reduce reliance on imports, support local jobs, or improve energy security, even if it leads to temporary overcapacity. The effects of these choices are studied in our model, always taking a global optimization perspective.”

According to Sansavini, utilization rates will be continuously uneven, ranging between 58% and 79% globally, and below 10% in some countries. “This reflects inefficiencies and geographic mismatches rather than a lack of future need,” he went on to say. “So, while there is overcapacity today, a large share is underutilized or not ideally located. The longer-term optimization in our work still supports the need for expansion, but with more balanced regional planning.”

“In short, today’s market faces overcapacity and underutilization. But based on high-demand projections and long-term energy goals, global capacity still needs to increase by 2030, with better planning to reduce geographic mismatches,” he added. “Additionally, some expansion may also be driven by policy focusing on local needs-driven, and not purely based on short-term market signals.”

In the study “Policy-driven transformation of global solar PV supply chains and resulting impacts,” published in nature communications, Sansavini and his colleagues investigated, in particular, how the European policy actions aimed at building a local solar PV supply chain could affect global trade flows over the period from 2021 to 2030. Their analysis considered the production of polysilicon, ingots, wafers, cells, and modules in 12 regions across the world under several global scenarios.

“In all scenarios, Europe is completely self-sufficient in module production, due to the relatively low cost of building manufacturing capacity and the goal of maximizing jobs,” the scientists highlighted, noting that rebuilding a European PV module supply chain may require investments in the range of $50 billion to $120 billion. Furthermore, they estimated the costs of reshoring polysilicon and ingot manufacturing between $20 billion and $52 billion.

The analysis showed that China will remain a superpower in the solar PV supply chain thanks to its manufacturing capacity and production costs, and the above-mentioned need to expand global capacity by over 1.5 times, with trade barriers raising the cost of job creation by up to 30%. “Moreover, trade barriers may simply shift rather than resolve trade dependency,” the academics emphasized, adding that subsidizing a European industry may provide more advantages than closing the market to Chinese products.

“Subsidies for producers are conducive to increasing the self-sufficiency in module production by shifting some costs from companies to the government,” they concluded. “Compared to trade barriers on China, subsidies can cut industry expenses by 23.6%, create jobs 27.5% more cost-efficiently, and provide a similar gain in self-sufficiency.”