China’s export growth rate in the first eight months of this year narrowed compared with previous years. Especially due to multiple factors such as China’s “zero” policy for epidemic prevention and control, extreme weather, and weakening overseas demand, China’s foreign trade growth slowed down sharply in August. However, the photovoltaic industry has achieved outstanding results in exports.
According to Chinese customs data, in the first eight months of this year, China’s solar cell exports increased significantly by 91.2% compared with the same period last year, of which exports to Europe increased by as much as 138%. Due to the rising energy prices in Europe due to the war in Ukraine, the demand for the photovoltaic industry in Europe is strong, and the price of polysilicon, the raw material for producing solar panels, has also continued to rise.
China’s photovoltaic industry has achieved rapid growth in the past ten years, and the global photovoltaic module production center has been transferred from Europe and the United States to China. At present, China is the largest country in the world’s photovoltaic industry, Europe is the main destination for China’s photovoltaic products exports, and emerging countries such as India and Brazil also have strong market demand. European countries have limited production capacity, and the dependence on Chinese photovoltaic products in the process of energy transformation has been put on the EU’s agenda, and the call for the return of European photovoltaic manufacturing industry has also emerged.
The rise in energy prices caused by the Ukrainian crisis has prompted Europe to consider diversification of energy sources. Analysts believe that the energy crisis is an opportunity for Europe to accelerate the process of energy transformation. Europe plans to stop using Russian natural gas by 2030, and more than 40% of its electricity will come from renewable sources. EU member states are working to increase the market share of solar and wind power, making them an important source of future electricity.
Fang Sichun, an analyst at photovoltaic industry consulting firm InfoLink, said: “The high electricity price has affected some European photovoltaic factories to suspend production and reduce load capacity, and the production utilisation rate of the photovoltaic supply chain has not reached full production. In order to cope with the current predicament, Europe also has this year. The demand for photovoltaics is very optimistic, and InfoLink estimates the demand for photovoltaic modules in Europe this year.
According to Professor Karen Pittel of the German ifo Institute for Economic Research and the Leibniz Institute for Economic Research of the University of Munich, after the outbreak of the Ukrainian war, the public’s acceptance of renewable energy has increased again, which is not only related to climate change factors , but also involves the issue of energy security. Karen Pieter said: “When people think about accelerating the energy transition, they will consider its pros and cons. The benefits are higher acceptance, better competitiveness, and the EU has put more emphasis on it. For example, Germany is accelerating the creation of conditions for (photovoltaic products) The application process is faster. There are indeed drawbacks, especially the financial factors available in times of crisis, and the issue of public acceptance of individual acceptance of installing facilities in their own homes.”
Karen Pieter mentioned a phenomenon in Germany, such as people accepting the idea of wind power, but disliking the fact that wind power plants are close to their homes. Plus, when people don’t know future returns, investing can be more cautious and hesitant. Of course, renewable energy is more competitive when fossil fuel energy becomes expensive.
China’s photovoltaic overall leading
All countries are vigorously developing photovoltaic power generation in order to achieve emission reduction targets. At present, the global photovoltaic production capacity is mainly concentrated in China. The analysis believes that this will further increase the dependence on Chinese products. According to the International Energy Organization report, China already accounts for more than 80% of the key production steps of solar panels, and some specific key components are expected to account for more than 95% by 2025. The data has sparked alarm among analysts, who point out that Europe’s pace of developing PV manufacturing is far slower than China’s. According to Eurostat data, 75% of the solar panels imported into the EU in 2020 came from China.
At present, China’s solar power and wind power equipment production capacity has led the global market, and it has full control over the supply chain. According to a report by the International Energy Organization, as of 2021, China has 79% of the world’s polysilicon production capacity, accounts for 97% of global wafer manufacturing, and produces 85% of the world’s solar cells. The combined demand for solar panels in Europe and North America exceeds one-third of the global demand, and these two regions average less than 3% each for all stages of actual solar panel manufacturing.
Alexander Brown, a researcher at the Mercator Institute of China in Germany, said that EU leaders responded quickly to the Ukraine war and launched a new strategy to deal with Russia’s energy dependence, but this did not show that European energy A major weakness in security, for which the European Union has developed a plan called REPowerEU, which aims to reach 320 GW of solar power generation capacity in 2025 and increase to 600 GW in 2030. The current European solar power generation capacity is 160 GW. .
The two major markets of Europe and North America currently rely heavily on the import of Chinese photovoltaic products, and the local manufacturing capacity in Europe is far from meeting their own demand. European and North American countries have begun to realize that relying on Chinese products is not a long-term solution, so they are actively seeking supply chain localization solutions .
Alexander Brown pointed out that Europe’s heavy reliance on imported Chinese PV products has raised political concerns in Europe, which is considered a security risk, although not as threatening to European infrastructure as a cybersecurity threat, China could exploit solar panels as a lever to move Europe. “This is indeed a supply chain risk, and to a certain extent, it brings a high price to the European industry. In the future, for whatever reason, once imports from China are cut off, it will bring a high price to European companies and will potentially slow down Installation of European solar installations”.
European PV reflow
Writing in PV Magazine, the photovoltaic industry magazine, Julius Sakalauskas, CEO of Lithuanian solar panel manufacturer SoliTek, expressed concerns about Europe’s heavy reliance on Chinese PV products. The article pointed out that imports from China are likely to be affected by a new wave of viruses and logistics chaos, as well as political disputes, as Lithuania has experienced.
The article pointed out that the specific implementation of the EU’s solar energy strategy should be carefully considered. It is not clear how the European Commission will allocate funds for the development of photovoltaics to member states. Only with long-term competitive financial support for production will European photovoltaic products recover. Large-scale production capacity is economically feasible. The EU has set a strategic goal of rebuilding the photovoltaic industry in Europe, regardless of the cost, because of its economic strategic importance. European companies cannot compete with Asian companies on price, and manufacturers need to think about sustainable and innovative long-term solutions.
Alexander Brown believes that it is inevitable that China will dominate the market in the short term, and Europe will continue to import a large number of cheap Chinese photovoltaic products, while accelerating the process of promoting renewable energy. In the medium to long term, Europe has measures to reduce its dependence on China, including European self-built capacity and the European Union’s European Solar Initiative. However, it is unlikely that Europe will be completely separated from Chinese suppliers, and at least some degree of resilience can be established, and then alternative supply chains can be established.
The European Commission this week formally approved the formation of the Photovoltaic Industry Alliance, a multi-stakeholder group that includes the entire PV industry, with the aim of scaling up innovative solar PV products and module manufacturing technologies, accelerating the deployment of solar energy in the EU and improving the resilience of the EU energy system.
Fang Sichun said that the market continues to have manufacturers to collect and understand the overseas supply capabilities that are not made in China. “European labor, electricity and other production costs are high, and the investment cost of cell equipment is high. How to reduce costs will still be a major test. The European policy goal is to form 20 GW of silicon wafer, cell, and module production capacity in Europe by 2025. However, at present, there are definite expansion plans and only a few manufacturers have begun to deploy them, and the actual equipment orders have not yet been seen. If local manufacturing in Europe is to improve, it still needs to see whether the European Union has relevant support policies in the future.”
Compared with European photovoltaic products, Chinese products have an absolute competitive advantage in price. Alexander Brown believes that automation and mass production can strengthen the competitiveness of European products. “I think automation will be an important factor, and if production facilities in Europe or other countries are highly automated and of sufficient scale, this will alleviate China’s advantages in terms of low labor costs and economies of scale. Chinese production of solar modules also relies heavily on fossils Fuel energy. If new production facilities in other countries can produce solar panels from renewable energy, this will significantly reduce their carbon footprint, which will be a competitive advantage. This will pay off in future EU-introduced mechanisms such as carbon borders The Carbon Border Adjustment Mechanism, which will penalize the high carbon emissions of imported products.”
Karen Pieter said that the labor cost of producing solar panels in Europe has dropped significantly, which will help enhance the competitiveness of the European photovoltaic industry. The return of the photovoltaic industry to Europe requires a lot of investment and must have sufficient capital. The initial stage of the industry may require the European Union support and investment from other countries. Taking Germany as an example, Karen Pieter said that many German companies have accumulated sufficient technical knowledge and experience in the past, and many companies were closed due to high costs, but technical knowledge still exists.
Karen Pieter said that labor costs have fallen by almost 90% over the past decade, “We are now in a period where solar panels have to be shipped from China to Europe. In the past labor costs dominated and transportation was not that important, but In the context of falling labor costs, freight is more important than before, which is the key to competitiveness.”
Alexander Brown said that Europe and the United States have strong advantages in research and development. Europe, the United States and Japan can cooperate with China to develop new products that are more efficient and eco-friendly. Of course, European governments can also protect Europe if they want to compete at the technical level. business or provide support.
A report by InfoLink, a photovoltaic industry consultancy, pointed out that there are incentives for European manufacturers to expand production in Europe, mainly including the huge European market capacity, the EU policy to support local development, and the high market price acceptance. Product differentiation still has the opportunity to become a photovoltaic manufacturing giant.
Fang Sichun said that there is currently no specific incentive policy in Europe, but it is true that the subsidy of the policy will give manufacturers the motivation to implement related production expansion plans, and the introduction of new technologies can also be an opportunity for manufacturers to overtake in corners. However, the imperfect supply of overseas raw materials, high electricity prices, inflation and exchange rates will remain hidden worries in the future.
Development of China’s PV Industry
At the beginning of this century, China’s photovoltaic industry was still in its infancy, and China’s photovoltaic products accounted for a very small share of the global market. In the past 20 years, the world’s photovoltaic industry has undergone tremendous changes. China’s photovoltaic industry first experienced a stage of brutal growth. By 2008, China’s photovoltaic industry The production capacity has already surpassed Germany, ranking first in the world, and the production capacity accounts for nearly half of the world. With the spread of the global economic crisis in 2008, Chinese photovoltaic companies have also been impacted. China’s State Council listed the photovoltaic industry as an industry with excess capacity in 2009. Since 2011, the world’s major economies such as the United States, the European Union, Japan, and India have launched anti-dumping and anti-subsidy investigations on China’s photovoltaic industry. China’s photovoltaic industry has fallen into a period of confusion. bankruptcy.
The Chinese government has supported and subsidized the photovoltaic industry for many years. In the early stage of the development of the photovoltaic industry, local governments issued attractive preferential policies and loan conditions for photovoltaic projects when attracting investment due to their political achievements. Yangtze River Delta regions such as Jiangsu and Zhejiang. In addition, the problem of pollution caused by the production of solar panels has sparked mass protests by residents.
In 2013, the State Council of China issued a subsidy policy for photovoltaic power generation, and China’s installed photovoltaic power generation capacity has surged from 19 million kilowatts in 2013 to about 310 million kilowatts in 2021. The Chinese government began phasing out subsidies for photovoltaics and wind power from 2021.
Due to the encouraging policies issued by the Chinese government and the technological innovation of the photovoltaic industry, the average cost of the global photovoltaic manufacturing industry has dropped by 80% in the past ten years, which has led to an exponential increase in the production capacity of photovoltaic manufacturing. Europe is 35% lower, 20% lower than the US, and even 10% lower than India.
The United States, the European Union and China have all set targets for controlling climate change and increasing the use of renewable energy until they reach carbon neutrality. The Biden administration intends to expand the use of solar energy in order to achieve the goal of reducing carbon emissions. The goal set by the U.S. government is that by 2035, all electricity in the United States will be provided by solar, wind and nuclear energy, with zero emissions. In the EU, renewable energy generation surpassed fossil fuels for the first time in 2020, and the EU will further increase the market share of renewable energy, with solar and wind power being the main targets. The European Commission proposes to reduce greenhouse gas emissions by 50% by 2030 and achieve carbon neutrality by 2050. China proposes that by 2030, the proportion of non-fossil energy in primary energy consumption will reach about 25%, the total installed capacity of wind power and solar power will reach more than 1.2 billion kilowatts, and carbon neutrality will be achieved by 2060.
Post time: Oct-28-2022