The global solar module market is going through a turbulent phase, with prices dropping due to slowing demand and increased competition, especially in China. Concerns are rising over the sluggish development of solar projects there, casting doubt on future demand growth for 2024. Despite this, investments in clean energy technologies worldwide are set to hit $2 trillion by year-end, with over $500 billion earmarked for solar power, making it the most financed energy source for the second straight year.
Renewable energy capacity soared by nearly 50% to over 500 GW by 2023, with solar accounting for the lion’s share of growth. This shift has made electricity cheaper, with most new large-scale solar projects undercutting the costs of new coal and gas plants. Solar prices continue to plummet, dropping nearly 50% by 2023. For instance, solar prices in Spain and Germany hit record lows, making solar power more competitive than ever against traditional fuels.
In the United States, the Inflation Reduction Act of 2022 introduced new tax credits to further slash solar energy costs, part of a broader effort to cut emissions significantly by 2030. Europe’s Net-Zero Industry Act aims to ramp up clean technology manufacturing, including solar PV, to meet ambitious deployment targets.
China, the world’s largest PV market, remains pivotal, projected to drive more than half of global solar module demand by 2023. Despite robust global growth projections, the market faces challenges. Oversupply issues in Asia have driven down solar module prices over the past year and a half. Chinese manufacturers are grappling with high inventories and waning demand, prompting aggressive pricing strategies to clear stock.
To survive, companies are focused on maintaining cash flow and exploring new markets like the U.S., while facing a seasonal dip in European orders. Yet, China’s manufacturing prowess, while driving down costs, has led to concerns over industrial overcapacity, particularly in solar panels and EV batteries. This excess capacity depresses prices, squeezes profitability, and can destabilize global markets.
The international response includes tariffs by the U.S. and EU on Chinese imports, aimed at leveling the playing field and safeguarding domestic industries. Despite these tensions, China’s industrial policies have significantly lowered costs for solar and batteries, benefitting global adoption of green technologies.
An expert said “overreliance on China for these technologies raises supply chain risks and geopolitical concerns. Developing countries, torn between cheap imports and economic independence, must navigate these challenges carefully. In summary, while China’s manufacturing prowess has driven down costs and accelerated green technology adoption globally, managing overcapacity remains critical. Finding the right balance between cost-effective green technologies and safeguarding against market disruptions is crucial for a sustainable global energy transition”.
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