Abundance of solar energy exports by China promotes growth in developing eco-friendly economies
China Leads the Global Transition to Green Energy
China, the global leader in renewable energy, is accelerating the global transition to green energy. The country's robust government subsidies have enabled domestic solar giants like Longi and Tongwei Solar to achieve vast economies of scale and fund innovation throughout the supply chain.
One of the key advantages China has over other countries is the heavy subsidization of its green energy sector. Industrial subsidies in China are 3-9 times higher than in OECD countries such as the US and Germany. This has resulted in lower production costs for solar panels, with the price of solar panels in China reportedly falling by 42% in 2023.
The US Treasury secretary, Janet Yellen, and the European Commission executive vice president, Margrethe Vestager, have expressed concerns about China's solar panel policy. However, China's aggressive approach seems to be paying off. The country is on track to double its wind and solar power capacity and produce 1,200 gigawatts of green energy by 2025, reaching its 2030 goal five years ahead of time.
Longi, the world's largest solar manufacturer, opened its first solar module plant in Malaysia in October 2023. However, the plummeting PV panel prices caused by oversupply could lead to up to one-third of its workforce being released. The estimated PV wafer, cell, and module capacity of China in 2024 is sufficient to meet annual global demand up until 2032.
Key target markets for Chinese solar module exports include the United States, the European Union countries, India, and Southeast Asian nations. Chinese solar exports to Saudi Arabia, South Africa, Pakistan, Thailand, and Malaysia significantly increased in 2023. Growth in nascent markets for renewable energy in these countries could help offset China's losses from shrinking exports to the US and EU.
The PV supply chain begins with the purification of polysilicon from industrial silicon ore. The emissions from electricity-intensive PV panel manufacturing can typically be offset within 4-8 months of solar panel operation. Solar panels, lithium-ion batteries, and electric vehicles are part of the 'new trio' of emerging technologies in China.
The global solar manufacturing utilization rate is expected to drop below 40% over the next four years, down from 60% in 2023. This could present challenges for China, but the country's ambitious green energy targets remain within reach. According to the Global Energy Monitor report, China is expected to exceed its own ambitious energy targets.
China's advancements in green energy are not limited to solar panels. The country established Qatar's first non-fossil fuel power plant in 2022, further demonstrating its commitment to a sustainable future. Solar panels, lithium-ion batteries, and electric vehicles are all integral parts of China's green energy strategy, positioning the country as a global leader in the transition to a sustainable future.
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