IEA Report: Solar PV Global Supply Chains 

Global PV manufacturing capacity has increasingly shifted from Europe, Japan, and the United States to China over the past decade. China has invested over $50 billion in new PV supply capacity - ten times more that Europe. Today, China's share of solar module components represents over 80% with an increasing tendency. Chinese industrial policies focuses on solar PV as a strategic sector and a significant export for China.

This trend has caused reduction in cost of solar PV and fostered continuous innovation on the global scale, which has positive impact on clean energy transition. At the same time, uneven geographic concentration in global supply chains brings also potential challenges (and risks for the EU). It has also led to supply-demand imbalances in the PV supply chain and represents a significant vulnerability.

Solar PV manufacturing is electricity-intensive and currently mostly based on fossil fuels. Today, coal produces over 60% of the electricity used for global solar PV manufacturing, what is significantly more than its share in global power production (36%). The primary reason for the fossil intensive manufacturing of PV is that the production is mainly concentrated in China.

Despite improvements in the efficient use of materials, the PV industry's demand for critical minerals will increase remarkably. IEA estimates that demand for silver for PV manufacturing, for example, will increase to 30% of total global silver production in 2030 - up from about 10% in 2020. This rapid growth, combined with long lead times for mining projects, raises the risk of a supply-demand imbalance, which can lead to cost increases and supply shortages. China plays a dominant role in securing access to critical minerals. Recycling of solar PV panels can enhance security of supply in the long term and also provide social, environmental and economic benefits. (could meet over 20% of the solar PV industry’s demand for aluminium, copper, glass, silicon and almost 70% for silver between 2040 and 2050).

The cost of PV production in China is 10% lower than in India, 20% lower than in the United States, and 35% lower than in Europe. Thus, the cost competitiveness of existing PV manufacturing is one of the biggest challenges for supply chain diversification.
Diversification can diminish/minimize supply chain vulnerabilities and provide economic and environmental opportunities. Governments should pay attention to ensuring PV supply security as an integral part of a clean energy transition.

The IEA proposes five key policy measures to ensure solar PV security of supply:

  • Diversify manufacturing and raw material supplies
  • De-risk investment – finance and tax policies
  • Environmental and social sustainability - clear and transparent standards, social inclusion
  • Foster innovation and research
  • Develop and strengthen recycling capabilities

More information can be found here