China’s export growth in the first eight months of this year has narrowed compared with previous years. In particular, due to multiple factors such as China’s “zero clearing” policy for epidemic prevention and control, extreme weather, and weakening overseas demand, China’s foreign trade growth momentum in August has slowed sharply, while China’s photovoltaic industry has achieved remarkable export results. According to Chinese customs data, in the first eight months of this year, China’s solar cell exports increased by 91.2% over the same period last year, including 138% to Europe. As the war in Ukraine led to the rise in European energy prices, Europe has a strong demand for the photovoltaic industry, and the price of polysilicon, the raw material for the production of solar panels, has also continued to rise.
China’s photovoltaic industry has achieved rapid growth in the past decade, and the global photovoltaic module production center has been transferred from Europe and the United States to China. At present, China is the largest country in the world’s photovoltaic industry, Europe is the main destination for China’s photovoltaic products export, and emerging countries India and Brazil also have strong market demand. European countries have limited production capacity, and dependence on Chinese photovoltaic products has been put on the agenda of the EU during the energy transformation process. At the same time, the call for the return of European photovoltaic manufacturing industry has emerged.
The rise in energy prices caused by the crisis in Ukraine prompted Europe to consider the diversification of energy sources. The analysis shows that the energy crisis is an opportunity for Europe to accelerate the process of energy transformation. Europe plans to stop using Russian natural gas by 2030, and more than 40% of electricity will come from renewable resources in the future. EU member states are striving to increase the market share of solar power generation and wind power generation, making them an important source of electricity in the future.
In order to achieve the emission reduction goal, all countries are making great efforts to develop photovoltaic power generation. Currently, the global photovoltaic capacity is mainly concentrated in China, which is believed by analysis to further increase the dependence on Chinese products. The report of the International Energy Organization shows that China’s share in the key production steps of solar panels has exceeded 80%, and it is estimated that by 2025, the share of certain key components will exceed 95%. This data has aroused the vigilance of analysts, who pointed out that the pace of developing photovoltaic manufacturing industry in Europe is far slower than that in China. According to Eurostat data, 75% of the solar panels imported by the EU in 2020 will come from China.
At present, China’s capacity of solar power generation and wind power generation equipment has taken the lead in the global market and comprehensively controlled the supply chain. According to the report of the International Energy Organization, by 2021, China has 79% of the world’s polysilicon production capacity, accounting for 97% of the world’s wafer manufacturing, and has produced 85% of the world’s solar cells. The total demand for solar panels in Europe and North America exceeds one third of that in the world. In all stages of actual manufacturing of solar panels in these two regions, Europe and North America each account for less than 3% on average.
Alexander Brown, a researcher at the Chinese Institute in Mercato, Germany, said that EU leaders responded quickly to the war in Ukraine and introduced a new strategy to deal with Russia’s energy dependence, but this did not show a major weakness of European energy security. For this reason, the EU has formulated a plan called REPowerEU, which aims to reach 320 gigawatts of installed solar power capacity by 2025, It will increase to 600 GW in 2030, and the current installed capacity of solar power in Europe is 160 GW.
At present, the two major markets in Europe and North America are heavily dependent on the import of Chinese PV products. The local manufacturing capacity of Europe is far from meeting its own demand. European and North American countries are beginning to realize that relying on Chinese products is not a long-term solution, so they are actively seeking localization solutions for the supply chain. Alexander Brown pointed out that Europe’s heavy dependence on the import of Chinese photovoltaic products has aroused the concern of European political circles, which is considered a security risk. Although it does not threaten European infrastructure as much as network security threats, China may use solar panels as a lever to leverage Europe. “This is indeed a supply chain risk, which to some extent has brought high costs to European industries. Whatever the reason, once imports from China are cut off in the future, it will bring high costs to European enterprises, and will potentially slow down the installation of European solar energy facilities”.
Post time: Oct-25-2022