Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

China’s Solar Boom Is Big, Fast, and Unstable

China is installing a jaw-dropping amount of solar panels, but growth in electricity generation from solar is barely increasing. Meanwhile prices are remarkably volatile. What gives?

Chinese flags as solar panels.
Heatmap Illustration/Getty Images

China’s solar revolution is immense — quite literally world-changing — but that doesn’t mean everything is running smoothly.

Last year China installed a record-breaking amount of solar – 87.4 GW – but that number came amidst zero COVID lockdowns and economic turmoil. This year, things are off to a blazing start, with over 48 GW already installed through April and BloombergNEF projections exceeding 154 GW for 2023. For comparison, total installed capacity in the United States is only 142 GW, meaning China is deploying more solar this year than the U.S. has put up over the past two decades. There’s simply nothing happening that approaches the scale of what China is doing anywhere else on the planet. Many of these panels are part of gargantuan energy bases in China’s remote north and western deserts, but rooftop solar is also growing rapidly.

China isn’t just deploying solar power, it’s expanding factories up and down the supply chain. In September of last year, amid crazy natural gas prices, spiking lithium markets, and concerns about Europe freezing, Bloomberg’s David Fickling sounded an optimistic note by looking closely at the solar supply chain. Polysilicon, ingots, wafers, cells, and modules all have annual production capable of making enough to add over 400 GW, suggesting there was a lot more room to run.

Similar announcements continued the drumbeat of solar growth. LONGi declared in January it intends to spend over $6.5 billion to build the world’s biggest manufacturing site for solar. Tongwei, world-leading polysilicon producer and cell maker, is vertically integrating to capture more of the value from its output, expanding into modules.

The cumulative scale of these investments is something to behold. The IEA’s 2050 Net Zero Emission report has been a benchmark for examining the progress the world is making (or, more often not making) towards deep decarbonization. Just a few weeks ago, Exxon denounced it as unrealistic, saying that it’s “highly unlikely that society would accept the degradation in global standard of living required to permanently achieve a scenario like the IEA NZE.” But the IEA just released a report finding that in terms of solar production, the world is already ahead of their 2030 targets. And not just a little ahead. The 1.1 TW (that’s terrawatts!) of manufacturing capacity is “65% higher than the level required to satisfy deployment needs under the NZE Scenario in 2030.

To be sure, solar isn’t everything, and while the battery sector is similarly ramping up, other key technologies, like wind, are relatively stagnant. Still, we’re at the point where the question isn’t whether we can make enough solar panels to hit climate goals, but how much we’ll need to reconsider the energy mix in these scenarios and just lean more into solar.

The sufficiency of the global supply chain shouldn’t paper over the fact that the vast majority of this investment and production capacity is taking place in China.

There have been many welcome announcements about investments in clean tech production taking place in the United States and Europe, especially in the wake of last year’s Inflation Reduction Act, but nothing compares to the Chinese renewables industry. Italy’s Enel announced it would build a “massive” solar-panel facility in Sicily — its planned capacity: 3 GW. The new IEA report explicitly defines “major projects” as those over 20 GW a year, all of which so far are located in China.

This pattern of development makes clear the dangers of decoupling from China. The EU can’t come close to hitting its goal of installing 400 GW in the next seven years without relying on Chinese panels. But if Europe and North America boycott Chinese-made solar, then these game-changing investments might evaporate.

Not a Dinner Party

However, to paraphrase Mao, the solar revolution is not a dinner party.

All of this construction and production is needed to meet our climate goals, but there remain critical questions about how neatly supply and demand will sync up.

Venture capitalist Dipender Saluja calls the energy transition “the biggest opportunity in the history of the world.” He’s thinking about profits when he says this, but profits don’t arise merely from investing in a growing sector. Cutthroat competition, material constraints, time inconsistency, managerial capacity, logistical difficulties, geopolitical pressures, interest rates, financial stability, global pandemics, and more all mean profits in renewable energy are hard won.

For example, the solar sector saw prices of polysilicon, a critical component of solar panels, collapse from $36 per kilogram in December to below $20 in mid-February, only to see it quickly rebound back to $30 by the middle of February before sliding back down below $20 now. This kind of volatility wreaks havoc on the supply chain.

Indeed, the major manufacturers fear that price pressures and overcapacity are going to lead to businesses shuttering. Bloomberg’s eminent solar watcher Jenny Chase said just this week “there will be a price crash, it will hurt, and there will probably be bankruptcies across the industry.”

But the supply and demand issue is not only on the manufacturing side of China’s solar boom. Deploying dozens of gigawatts of solar means unleashing tons of cheap electrons onto a grid that can quickly fall victim to duck/canyon curves where spot prices are essentially zero on a sunny day but ramp up immensely when the sun sets. California was a world leader here, and Chinese provinces like Shandong are increasingly grappling with similar dynamics.

These kinds of difficulties can be seen in data around electricity generation. Despite record expansion in installed solar capacity across China, the growth displayed in generated electricity is mediocre. Solar provided 84.6 TWh in China over the first four months of the year, only 7.5% more than the same period in 2022. And, of course, it’s the energy generation that matters.

Now it just might have been unusually cloudy, and the dust storms and air pollution surely aren’t helping. We know grid connections are lagging as well.

But all of this potential needs to actually start generating electricity fast because climate change isn’t waiting for us. It’s here now. Beyond the storms and droughts and heatwaves, in the electricity sector, climate change is demolishing hydropower production. The past two months have seen China produce the least amount of electricity from hydro since 2015. And, as ever, scale matters. Even with such low production, hydro is about three times the generation from solar, meaning coal makes up the gaps.

The pieces for an energy and economic revolution are assembling, but in China and elsewhere, it’s going to require a lot of effort in designing and planning the future.

Jeremy Wallace

Jeremy Wallace is a Professor of Government at Cornell University. He writes on authoritarianism focusing on China, cities, statistics, and climate change. His most recent book is Seeking Truth and Hiding Facts: Information, Ideology, and Authoritarianism in China. Read More

Read More
Sparks

Forever Chemical Enforcement Just Got Even Stronger

In addition to regulating PFAS presence in water, the EPA will now target pollution at the source.

Drinking water and the periodic table.
Heatmap Illustration/Getty Images

Last week, I reported on the Environmental Protection Agency’s monumental new restrictions on “forever chemicals” in Americans’ drinking water. At the time, I stressed that the issue doesn’t end with the water that flows out of our kitchen and bathroom taps — the government also has a responsibility to hold polluters accountable at the source.

On Friday, the EPA did just that, designating perfluorooctanoic acid and perfluorooctanesulfonic acid, a.k.a. PFOA and PFOS, as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act, more commonly known as the Superfund law.

Keep reading...Show less
Yellow
Donald Trump.
Heatmap Illustration/Getty Images

If there was ever any question that Donald Trump would be the 2024 Republican nominee, there isn’t anymore. Since he vacated the White House in 2021, the former president has silenced numerous rivals within his party — most recently ending Nikki Haley’s campaign in a Super Tuesday near-sweep — as well as legal challenges to his ability to run for federal office, leaving him the last Republican candidate standing. And if current general election polls are any indication, Trump isn’t slowing down as he turns his attention to unseating President Joe Biden.

The Trump vs. Biden rematch will serve in part as a referendum on the latter’s climate agenda — namely, the Inflation Reduction Act, the landmark climate legislation enacted in 2022. In the years since the IRA’s passage, Republicans have become savvier in their attacks on climate change, honing their rhetoric and misinformation about EVs, the energy transition, and climate science more broadly. The Heritage Foundation even published an extensive playbook for how, exactly, Trump should dismantle most of the progress on the green transition.

Keep reading...Show less
Red
Electric Vehicles

AM Briefing: Cybertruck, Recalled

On sticky accelerators, Alaskan oil, and sinking cities

Tesla Just Recalled Nearly 4,000 Cybertrucks
Heatmap Illustration/Getty Images

Current conditions: Unseasonably heavy rainfall killed at least 130 people across Pakistan and Afghanistan • Temperatures will soar to 111 degrees Fahrenheit today in Mali • It will be cool and cloudy in NYC, where thousands of high school students are expected to leave class to join a climate strike.

THE TOP FIVE

1. Tesla recalls Cybertrucks over sticky accelerator pedals

Tesla is recalling 3,878 Cybertrucks due to potentially faulty accelerator pedals. According to the National Highway Traffic Safety Administration, “the accelerator pedal pad may dislodge and become trapped by the interior trim,” causing the vehicle to accelerate unintentionally. Or, as Rob Stumpf at Inside EVs put it, this issue “could potentially turn the stainless steel trapezoid into a 6,800-pound land missile.” The recall affects every single Cybertruck that has shipped so far,according toTechCrunch. Owners will be notified by mail, and Tesla will replace or repair the accelerator pedal at no charge. The news caps off a rough week for the embattled EV maker that started with mass layoffs.

Keep reading...Show less
Yellow