IEA Report Pitches For More Diverse Solar Panel Supply Chains

The IEA has released a report stating that if the world is to securely transition to net zero emissions, it has to augment efforts towards the expansion as well as diversification of the worldwide production of solar panels. Currently, China has a dominant position in the market with regards to the supply chains of solar panels.

While China has pioneered policies and innovations facilitating the expansion of solar panel production and helped make solar PV become an extremely affordable source of electricity generation technology in many countries,  this has also been a cause of imbalances in solar PV supply chains, the IEA Special Report on Solar PV Global Supply Chains, has maintained.

In a telling trend, the capacity of manufacture of solar panels has transitioned from Europe, Japan and the United States in the last ten years to China. China has invested over USD 50 billion in new PV supply capacity – ten times more than Europe − and created more than 300 000 manufacturing jobs across the solar PV value chain since 2011.The country takes the market lead when it comes to key manufacturing stages of solar panels and has a market share of more than 80% as of today. The report further points out that elements such as polysilicon and wafers, are poised for an increase to 95% in the coming years. This is basis the present manufacturing capacity under construction.

“As countries accelerate their efforts to reduce emissions, they need to ensure that their transition towards a sustainable energy system is built on secure foundations,” IEA Executive Director Fatih Birol, revealed, “Solar PV’s global supply chains will need to be scaled up in a way that ensures they are resilient, affordable and sustainable.”

The report also indicates that there has been a rise in prices of close to 20% in solar panels over the last year. Bottlenecks such as these are more evident in the polysilicon market- the primary element required to make solar panels. Delays in solar PV deliveries is another cause of concern. The report states that these challenges demand the attention of policymakers.

Furthermore, the report evaluates the opportunities and challenges of developing solar PV supply chains in terms of job creation, investment, manufacturing costs, emissions and recycling. As per the finding of the report, the new solar PV manufacturing facilities have the potential for USD 120 billion worth of investment by 2030.

The report comes at a time when there is a major push across key consuming markets, especially India, the US and Europe, to establish domestic supply chains for solar. However, Chinese majors that dominate have sought to counter this push either by scaling up even further at home, or by setting up plants in these local markets. The latter, if these continue to depend on China for essential inputs, will remain an issue from the long term view of robust supply chains.