To avoid a global climate catastrophe we need to triple the amount of global renewable energy by 2030. About half of this is expected to come from solar. And, since 2006, the solar panels China has produced account for 70-80 percent of the total, global GW of the installed capacity today. But China is also getting the most pushback from the U.S. and Europe. What's happening here? Why is China leading and why, given the crisis we are in, do some see that as a problem? 

Part 1 – The Current Status 

China leads the global solar supply chain. The top 10 suppliers of solar manufacturing equipment are also Chinese companies.  Almost all the world's silicon wafers, the most important part of solar panels, come from China. This means that China has a vast superiority when manufacturing solar at scale and cost.

So, Chinese panels are 35 to 50 percent cheaper than those made in Europe.  And the quality is comparable, sometimes even better. 

This has its roots in the 1990s and early 2000s, with China's privatization of industry and WTO admittance. These events triggered Chinese exports to become more cost-competitive and European nations like Germany to invest by bringing entire production lines into the country. And, in 2005, China passed its Renewable Energy Act, which mandated the purchase of renewable energy and connection to the grid. Five years later, the government elevated solar to the status of "strategic necessity" and began to channel subsidies - as its Western neighbors had - into the industry. Fast forward to today, and in the first half of 2023 alone, China's solar exports surpassed the total installed capacity of the U.S.. Half of these exports went to Europe and almost all of Europe's newly installed solar came from China.

And, last year, the EU installed record levels of solar capacity, 40 percent more than in 2022.

"It would have been very difficult to get to this level today without China. That is for sure. Even the drop in manufacturing costs that we are seeing outside of China, be it in the U.S. or Europe, is also largely driven by China and Chinese developments within different PV technologies," Marius Mordal Bakke, Head of Solar Supply Chain Research at Rystad Energy said. 

Part 2 – Europe's woes

The supply from China has been a boon for households and other power users looking to turn away from fossil fuels at a low cost. It's also increased jobs: European solar employment rose by 24 percent last year, mainly due to more installation demand. But, the supply and cost of Chinese solar in Europe has also led to pushback from some European governments and businesses who feel like they can't keep up.

"For European manufacturers, it's impossible to compete with the cost of production. As for their Chinese counterparts, there's just no way," Bakke said. 

But the EU hopes to change this, aiming to raise the percentage of solar manufactured in Europe from the 3 percent it is today to 40 percent by 2030. And, the price difference between China and European panels may have reached its peak. But, the 12 billion Euros in funding provided by the EU's Net-Zero Industry Act still lags behind the amounts provided by the U.S. and China. 

This also has many in the EU worried for one big reason – energy security. It's an issue that worried Europe in the last half-century and pushed the continent to adopt solar earlier than anyone else. And the conflict in Ukraine has reminded Europe just how vulnerable it is to global shifts or conflict.

Part 3 – Chinese solar here to stay?

While many households get cheaper clean energy and the solar jobs market continues to grow, the current market concerns leaders and industry experts in Europe. 

"There's severe competition between the Chinese manufacturers. So all of them need to sell something to have cash, even if they sell with losses. But, in the long run an industry needs to be sustainable and make money. Otherwise, we will have this kind of bubbles and they burst and everything is delayed,”Johan Lindhal, Secretary-General of the European Solar Manufacturing Council (ESMC) said. 

Dr. Lindhal and Marius agree we are entering a consolidation phase in the solar industry which will see global manufacturers out of business. But, on the flip side, the fierce competition that got us here has also accelerated innovation – Chinese companies lead the world in solar technology patents, holding over twice the amount of any other country.

And when it comes to overcapacity, a peer-reviewed study released a few years ago even argued that, given the intermittency of sunshine, overcapacity by a factor of three was critical for making solar actually work.

But, limited grid capacity in Europe combined with high interest rates that discourage investment are  leading to a surplus of Chinese solar panels stockpiled around the world, especially in Europe.

"Getting connected to the grid, if you're a utility scale developer now is difficult. So if you're now in Europe, you might have to wait years to get your project approved through permitting until it's actually connected to the grid," Bakke said. 

Europe is in a bind. Nations desperately need to cut emissions, but they aren't able to install and connect solar to the grid fast enough. It's a problem mired in economics, geopolitics, energy security, human rights, protectionism, and quite simply, lack of time. 

But, the world would not have installed so much solar today without China. And this vital role that Chinese panels play for climate goals probably isn't going away. With the right policies and investment, European solar can play a greater role in what we desperately need to accomplish: pushing renewable capacity to triple before 2030.

Next episode: How valuable are China's National Parks?