00:00To avoid a global climate catastrophe, we need to triple the amount of global renewable energy by 2030.
00:06About half of this is expected to come from solar, and since 2006, the solar panels China has produced
00:12account for 70-80% of the total global gigawatts of installed capacity today.
00:18But China's also getting the most pushback from the U.S. and Europe.
00:22So what is happening here?
00:24Why is China leading, and why, given the crisis that we are in, do some see that as a problem?
00:44China leads the global solar supply chain.
00:47The top 10 suppliers of solar manufacturing equipment are also Chinese companies.
00:52Almost all of the world's silicon wafers, the most important part of solar panels, come from China.
00:57This means that China has a vast superiority when manufacturing solar at scale and cost.
01:04So Chinese panels are 35-50% cheaper than those made in Europe, and the quality is comparable, sometimes even better.
01:12This has its roots in the 90s and early 2000s with China's privatization of industry and WTO admittance.
01:18These events triggered Chinese exports to become more cost-competitive,
01:22and European nations like Germany to invest by bringing entire production lines into the country.
01:27And in 2005, China passed its Renewable Energy Act, which mandated the purchase of renewable energy and connection to the grid.
01:35Five years later, the government elevated solar to the status of strategic necessity
01:40and began to channel subsidies, as its Western neighbors had, into the industry.
01:46Fast forward to today, and in the first half of 2023 alone, China's solar exports surpassed the total installed capacity of the U.S.
01:54Half of these exports went to Europe, and almost all of Europe's newly installed solar came from China.
02:00And last year, the EU installed record levels of solar capacity, 40% more than in 2022.
02:06It would have been very difficult to get to this level today without China, that is for sure.
02:12Even the drop in manufacturing costs that we are seeing outside of China, be it in the U.S. or Europe,
02:18is also largely driven by China and Chinese sort of developments within different PV technology.
02:27So the supply from China has been a boon for households and other power users looking to
02:32turn away from fossil fuels at a low cost. It's also increased jobs.
02:36European solar employment rose by 24% last year, mainly due to installation demand.
02:42But the supply and cost of Chinese solar in Europe has also led to pushback from
02:46some European governments and businesses who feel like they can't keep up.
02:50For European manufacturers, it's impossible to compete with the cost of production as for their Chinese counterparts.
02:58There's just no way.
02:59But the EU hopes to change this, aiming to raise the percentage of solar manufactured in Europe
03:04from the 3% it is today to 40% by 2030.
03:08And the price difference between China and European panels have reached its peak.
03:12But the 12 billion euros in funding provided by the EU's Net Zero Industry Act
03:17still lags behind the amounts provided by the U.S. and China.
03:21This also has many in the EU worried for one big reason, energy security.
03:26It's an issue that worried Europe in the last half century
03:29and pushed the continent to adopt solar earlier than anyone else.
03:32And the war in Ukraine has reminded Europe just how vulnerable it is to global shifts or conflict.
03:40So while many households get cheaper clean energy and the solar jobs market continues to grow,
03:45the current market concerns leaders and industry experts in Europe.
03:49And there's a severe competition between the Chinese manufacturers.
03:52So and all of them need to sell something to have cash, even if they sell with losses.
04:00But in the long run, an industry need to be sustainable and make money.
04:07Otherwise, we will have this kind of bubbles and they burst and everything is delayed, etc.
04:13Dr. Lindel and Marius agree.
04:14We are entering a consolidation phase in the solar industry,
04:17which will see global manufacturers out of business.
04:20But on the flip side, the fierce competition that got us here has also accelerated innovation.
04:26Chinese companies lead the world in solar technology patents,
04:29holding over twice the amount of any other country.
04:32And when it comes to overcapacity, a peer-reviewed study released a few years ago
04:36even argued that given the intermittency of sunshine,
04:39overcapacity by a factor of three was critical for making solar actually work.
04:45But limited grid capacity in Europe, combined with high interest rates that discourage investment,
04:50are leading to a surplus of Chinese solar panels stockpiled around the world, especially in Europe.
04:55Getting connected to the grid if you're a utility-scale developer now is difficult.
05:00So if you're now in Europe, you might have to wait years to get your project approved
05:05through permitting until it's actually connected to the grid.
05:08So Europe is in a bind.
05:09Nations desperately need to cut emissions,
05:11but they aren't able to install and connect solar to the grid fast enough.
05:15It's a problem that is marred in economics, geopolitics,
05:18energy security, human rights, protectionism, and quite simply, a lack of time.
05:25But the world would not have installed so much solar today without China.
05:28And this vital role that Chinese panels play for climate goals probably isn't going away.
05:33But with the right policies and investment,
05:35European solar can play a greater role than we desperately need to accomplish,
05:40pushing renewable capacity to triple before 2030.
Comments