By Sonia Dunlop, CEO of the Global Solar Council
Bringing the solar industry together at the global level is essential to deliver our climate targets.
The rationale for the energy transition is clear. It is time to put our foot down on the accelerator for the energy transition – and that is made easier by the plummeting cost and skyrocketing build-out of solar PV. That’s what we fought for at COP28 Dubai, where more than 190 countries adopted the goal of tripling renewable energy by 2030. Although the transition to renewables is capital-intensive, it is even costlier not to invest. Solar energy creates jobs, improves air quality, provides cheap electricity, and enhances energy security by reducing reliance on volatile fossil fuels. We are heading towards a new energy system, with solar energy at its heart.
This change has no equivalent other than perhaps the shift towards fossil fuels two centuries ago. It is a revolution on many fronts: a new energy system means a new economy, and it also means new geopolitics. To achieve the tripling of renewables by 2030 target, 11 TW total installed capacity of clean electricity is needed by the end of the decade, and solar energy is expected to provide more than half of that, with over 6 TW. Indeed, with the right conditions solar could easily deliver more than that.
Now that these international government targets have been made, it is time for the solar industry to deliver. Despite supply chain disruptions, trade barriers, and tariffs, the solar industry continues to break installation records, surpassing 447 GW installed in 2023—an 87 per cent increase that defied all analysts’ predictions. India, the US, and Europe have all set new records. China installed 60 per cent of the world’s solar capacity last year, achieving an unprecedented deployment rate. The solar industry is thus aligned with the Net-Zero Scenario of the International Energy Agency. However, manufacturing capacities and the global supply chain are undergoing restructuring and facing challenges that could threaten the achievement of targets.
Despite unprecedented supply chain disruptions, the industry has proven resilient
A significant portion of global production of polysilicon, ingots, and wafers is of course concentrated in China. This shift has allowed for important economies of scale and fostered innovation, bringing down the cost of panels, reducing material use, and increasing productivity.
Source: IEA
Manufacturers have faced—and continue to face—major headwinds in recent years, squeezing industry profits. Several key factors have contributed to the current situation. COVID-19 and the freeze in the supply chain disrupted deployment, delayed and canceled projects, and cut margins. The Russian invasion of Ukraine caused a surge in commodity prices, both accelerating and disrupting developers’ business plans. When economic activity resumed post-COVID, polysilicon production experienced a bullwhip effect, driven by fears of shortages: demand was amplified at each stage of the supply chain, creating distorted market signals. This resulted in an oversupply of polysilicon, pushing the price down to an unsustainable level of $5/kg.
Furthermore, the blockage of the Suez Canal in 2021 exacerbated what COVID-19 had started: rises in shipping and insurance costs. These trends are leading to the current consolidation of the PV manufacturing sector, especially in China, where the scaling up of manufacturing capacities has led to a 56% decrease in prices over the past year. Despite these disruptions, solar deployment worldwide has never been higher, shattering records each year.
Despite the supply chain disruptions, solar growth has been unstoppable with an increase in the speed of deployment each year onward from 2012. The recent years have shown the true potential of solar with close to half a TW installed in 2023.
Cooperation is essential to the global energy transition
We have to work together, on supply chains and deployment, to make the global energy transition a success. The tariffs imposed in 2013 by the EU, creating a minimum price for Chinese solar panels entering the EU market, led to a decrease in the installation rate for three years, hampering the EU’s climate efforts and reducing energy security.
Cumulative solar installed capacity in Europe by country since 2000, SolarPower Europe
The tariffs imposed by the EU in 2013 led to the lowest installation rate for four years, even below what was installed at the beginning of the industry in 2008.
A study published in Nature found that the PV supply chain has saved consumers US$24 billion in the United States, US$7 billion in Germany, and US$36 billion in China from 2008 to 2020. Affordability is crucial to the energy transition, and to ensuring it is a just transition.
China’s manufacturing capacities have played a crucial role in supplying the world with affordable panels. In the first half of 2023, Chinese exports rose to 114 GW worldwide according to Ember. These manufacturing capacities have also met the surge in demand in Europe. Africa, meanwhile, has seen the fastest growth in relative terms, with an unprecedented growth rate of 187 per cent. As of the first half of 2024, the volume of exports remains steady with close to 120 GW.
We must do everything in our power to meet our 2030 renewable targets. Delivering is more important than ever, and this can be achieved by strengthening supply chains. We need to use policies such as tax credits, grants, and research funding while simultaneously avoiding measures that lower deployment. Furthermore, regional cooperation can drive down costs and foster innovation by creating larger markets and sharing resources to create local and regional hubs for every part of the value chain, upstream and downstream. Such cooperation will be crucial in avoiding tensions that could hinder progress toward renewable energy goals. In challenging times, dialogue and cooperation are not optional—they are essential.
Conclusion
The solar industry has demonstrated resilience amid headwinds and challenges, proving it can deliver in its pivotal role in the global energy transition. The industry continues to break records, driven by innovation, lowering costs, and growing global demand. We must ensure that this remains the case for the next decades.
Achieving a strong, just, and sustainable supply chain requires time and a concerted dialogue to avoid setbacks that would hinder the global climate effort. This is a challenging balance, but is also the only desirable future. Our ability to meet our climate commitments is too limited to afford any conflicts or backlashes. There will be no transition without cooperation. The path forward requires concerted global action, ensuring that solar energy remains at the forefront of a sustainable future and meets the challenge of the century.
