Daniel Slotta
Research expert covering Greater China
Solar energy in China - Statistics & Facts
The Chinese solar industry is at a pivotal point. Rapid solar capacity expansion overwhelms the grid, PV manufacturers compete for market shares, and then large target markets slap import tariffs on Chinese PV products, taking off their competitive edge. So there is a lot of uncertainty in the Chinese solar industry, but there are also irrefutable facts:
China needs to continue to expand domestic solar capacity to reach its climate target. Similarly, global demand for PV products will not cease. And despite all the turmoil, the Chinese solar industry has the manufacturing capacity to meet the demand.
China - the solar powerhouse
China’s extensive solar strategy includes decentralized panels on houses or factories, as well as large-scale solar farms. While small-scale photovoltaic has been used for decades in rural areas, the construction of large solar farms is a new development with the goal of utilizing the abundant solar resources, especially in the country’s northwestern region. However, the rapid expansion overwhelmed the energy infrastructure, so authorities had to withdraw some price subsidies 2024.Expanding solar PV manufacturing
Along with the domestic expansion of photovoltaic power capacity came the expansion of the Chinese solar manufacturing sector. Boosted by domestic demand and subsidies, many companies entered the industry, fighting for precious market shares of this prosperous sector and thriving under the rapid market expansion. Integral to the expansion was that Chinese solar PV manufacturers did not only produce to meet domestic demand, but they were targeting to meet global demand as well.Producing too much PV?
China is known as being the factory of the world, and that is not different in the solar industry. However, does the country face an issue of overproduction? The country is, however by far the largest manufacturer of wafers, solar cells, and PV modules globally. Leveraging low labor costs and economies of scale, Chinese PV manufacturers can price out competitors in most markets. As a result, the U.S. government and the European countries accuse the Chinese government of unfairly subsidizing its domestic industry and offloading the overcapacity on the world market. The U.S. administration had already announced plans to increase tariffs on solar imports in May 2024.So what now?
Ever since the central government has designated the expansion of renewable energy as a national project, the country has invested heavily in the expansion of renewable energy capacity, making China a global leader in wind and solar power. Even though it is criticized for increasing emissions, the potential of the Chinese solar industry being a ray of hope cannot be denied. Despite all, among overcapacity and international criticism, the Chinese solar industry still must find a successful path to a sustainable future.
