In 2023, China invested over $130 billion in the solar industry, projecting that between 2023 and 2026, it will hold more than 80% of the world’s production capacity of polysilicon, modules, and other elements used in the construction of photovoltaic panels. This information is detailed in a recent report by the specialized company Wood Mackenzie.
China’s Solar Module Production Dominance
Forecasts suggest that by 2024, China will have operational more than 1 TW of solar cell and module production capacity. This means the country’s production capacity will suffice to meet the global demand until 2032, based on Wood Mackenzie’s annual demand growth forecasts.
Huaian Sun, Wood Mackenzie’s lead consultant and report author, stated, “The expansion of solar production in China is driven by high polysilicon margins, technological upgrades, and political support. Despite strong government initiatives for local production in overseas markets, China will continue to dominate the global solar supply chain and keep expanding its technological and price difference.”
USA and Europe Lagging Behind China
Due to the ongoing advancements, the United States, Europe, and other markets have launched strong support for solar production. Together, the United States and India have announced over 200 GW of planned photovoltaic panel production capacity. The rapid surge in U.S. production is bolstered by an inflation reduction law, while India’s increase in production is facilitated by a state incentive.
However, according to Wood Mackenzie, these countries are still not competitively priced compared to Chinese deliveries. As per the report, a solar module made in China is 50% cheaper than one produced in Europe and 65% cheaper than in the USA. Sun added, “Despite their production expansion plans, overseas markets cannot eliminate their reliance on Chinese modules in the next three years.”
Moreover, in terms of technological innovation, China will continue to lead. It was announced that the country will build over 1000 GW of N-type cell capacity, using cutting-edge technologies. These N-type cells exhibit a longer lifespan and higher efficiency compared to the previous P-type generation. This represents a 17x greater production capacity of N-type cells than the rest of the world.