China’s solar sector steams ahead of EU, US


The United States and Europe can no longer compete with China, after the cost of producing solar modules there dropped by 42% in 2023 to $0.15 (€0.14) per watt. That gives Chinese manufacturers an enormous cost advantage over international rivals, according to a new Horizons report from consultancy Wood Mackenzie.

In 2023, China’s domestic solar additions were double those of the US and the EU combined. China, the world’s solar module powerhouse, now holds 80% of global manufacturing capacity. By 2050, it will account for over 50% of the global power supply, according to Wood Mackenzie.

“China is the lowest-cost solar module manufacturer in the world. Solar module prices in dollar per watt tallied in December show China’s cost of $0.15 well below Indian ($0.22), European ($0.30) and US ($0.40) manufacturing rates,” said Steven Knell, vice president at Wood Mackenzie and an expert in power and renewables.

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“The enormous cost advantage China holds imply international rivals’ efforts to displace incumbent Chinese suppliers in renewable value chains may well be futile,” Knell told DW. “The outlook for available component supply in the market is bullish given the capacity race that’s underway, but China’s rivals are unlikely to win on cost. China’s already won the green technology capacity race.”

In 2022, solar made up 5% of domestic Chinese power generation and 13% of total installed capacity.

“A study of the photovoltaic industries in the US and China shows that China’s dominance in solar panel manufacturing is not driven solely by cheaper labor and government support, but by larger-scale manufacturing and resulting supply-chain benefits,” said Knell.

The EU and US have made huge strides in renewable energy policy in the past two years. But reaching critical mass in the solar module production sector, like in China, requires commensurate commercial application say many experts. And this is where centralized state capitalism seems to offer certain advantages.

Edited by: Tim Rooks 

This article has been updated. Numbers and quotes from an old press release have been removed.

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