IEA warns of Chinese dominance in solar supply chain

The International Energy Agency has warned that China’s dominance of the solar panel supply chain could slow the global transition to cleaner energy.

An IEA report on the subject, the first of its kind by the organization, found that China’s share of the solar energy production steps, from polysilicon production to the panels themselves, is over 80 percent and could be as high at some stages. up to 95% by 2025.

“The world will depend almost entirely on China for the supply of key building blocks for the production of solar panels until 2025,” the agency said in a report. “This level of concentration in any global supply chain represents a significant vulnerability.”

The report found that high raw material prices and existing supply chain bottlenecks have already pushed panel prices up 20% over the past year, causing delays in their delivery around the world.

“One of the reasons we have produced this report is to highlight this important weakness in the solar PV supply chain, to call on governments to diversify to reduce supply chain vulnerability,” IEA chief Fatih Birol told the Financial Times. .

The risks of a solar supply chain centered in China “are not only a geopolitical issue. It could be a fire at large facilities. It could be floods. Violation [the solar PV supply chain] is of great importance for our transition to clean energy and energy security,” said Birol.

Solar energy is a key element in the IEA’s scenario that sees the world reach zero emissions by 2050. It is planned that by then this source of energy will account for 33% of the world’s electricity production.

A faster transition to solar energy is a more pressing issue for the European Union, which is facing the need get rid of your addiction on Russian gas. Under the RePowerEU block plan, more than 320 GW of photovoltaic solar panels are planned to be installed by 2025, and almost 600 GW by 2030.

Earlier, Birol told the Financial Times that Europe needs to prepare for a complete cessation of Russian gas exports.

According to Birol, countries and groups like the EU “need to have individual investment policies” to encourage investment in solar panel production and create their own supply chains. According to the head of the IEA, China currently has a big advantage in the production of solar panels due to lower energy and labor costs.

“Tax incentives for producers, construction of production facilities in industry clusters to reduce the cost of land – this can be a specific, quickly implemented policy that can be introduced to provide a competitive advantage. towards cheap manufacturing cost in China,” said Birol.

The report also notes that the Chinese province of Xinjiang accounts for 40% of the world’s polysilicon production. China has faced accusations of massive human rights violations there, and the US began to enforce import ban from the regionincluding materials for solar panels.

While the report does not mention the alleged use of forced labor in Xinjiang, it does say that the world needs to “strengthen international cooperation to establish clear and transparent standards, taking into account environmental and social sustainability criteria.”