China’s Solar Capacity Opens Opportunities For Global South

Building vast amounts of renewable energy is the pathway towards achieving a decarbonised economy by 2050. China’s massive production of solar panels, the rate of which is five times faster than the rest of the world from the polysilicon to the finished product, has helped drive down the cost of solar panels (China’s giant, 2024).

According to Wood Mackenzie, China’s growth in production capacity has created a supply glut, causing solar module prices to plummet 42% in 2023. The oversupply of solar panels from China has provoked import duties from trading partners such as the US  to avoid being swamped by low-cost equipment (Hayley, 2024).

US Treasury Secretary Janet Yellen visits China to warn them that their excess capacity risks American workers, firms, and the global economy. “Overcapacity can lead to large volumes of exports at depressed prices,” she says (Janet Yellen, 2024).

Western leaders fear China’s overcapacity threatens to flood their markets with cheaper solar equipment. Still, Amit Ronen, director of the Solar Institute of George Washington University, says this is a gift to the rest of the world, mainly to developing countries (Campbell, 2024).

A 2024 report from Ember looks at how solar power manufacturing from China could help developed countries achieve their renewable energy capacity targets and deliver significant gains in energy access, particularly in sub-Saharan Africa, where 675 million people still lack access to power.  

The report notes that from 2021 to 2023, solar power manufacturing has tripped and is set to reach 1,100 GW per year by the end of 2024. Around 80-84% of this capacity is based in China. This mass supply has reduced solar prices to a historic low of about US$0.10 per watt, representing a 50% decrease in 2023.

However, this abundant and affordable supply of solar energy – dubbed as the “renewables revolution” is profoundly unjust, the report notes, essentially passing Africa – only 2% of the global investment in clean energy is reaching Africa and other developing countries in the Middle East, Asia and the Pacific, Latin American and the Caribbean. These regions need electricity the most and are also highly vulnerable to climate change impacts.

The report forecasts a surplus of solar panel manufacturing capacity from 2024 to 2030 of 3,837 GW, calling it “spare” solar capacity. It is the difference between the manufacturing capacity over 2024-30 of 7,310 GW and the projected deployment over the same period at 3,473 GW.

The report also proposes that this spare solar capacity can significantly advance the energy transitions of countries that need it most – in Africa, the Middle East, Asia and the Pacific, Latin America and the Caribbean.

These regions need electricity the most and are also highly vulnerable to climate change impact. This could help them increase their energy access and avoid the need to build new fossil fuel power stations.