China’s Solar Panel Boom Is Making Solar Energy More Affordable

China dominates the world in solar panels production. Polysilicon is the primary material for solar panels. Making and refining it from raw materials is highly energy-intensive, and China’s manufacturing plants use coal, the dirtiest fossil fuel, as the energy source for their polysilicon plants.

Because coal is cheap, this also reduces the cost of solar panels manufactured in China instead of using more expensive or cleaner energy. But will the production of solar panels reach a point where solar energy is cheap enough or can compete with coal to power the manufacturing plants used to make them?

The Economist’s essay on solar power, Sun Machines, tackles solar energy’s rapid and revolutionary growth and its plummeting costs, primarily made in China.

It notes that around 70 billion of these solar cells will mainly come from the country. Polysilicon is a product made from sand made of quartz, a central component of solar panels or modules. Transforming quartz into polysilicon requires very high heat and undergoes a complex process of purification using chemicals and distillation to convert the raw quartz into almost 100% pure polysilicon. In 2023, Chinese firms made 93% of the world’s polysilicon.

Solar panels or modules comprising 60 to 72 cells sandwiched between sheets of glass are starting to provide power to homes, schools, commercial areas, and anywhere power is needed. 

Noting the rapid growth and expansion of solar power that has been unfolding in recent decades, the article says that in 2023, all the world’s solar panels will cover just less than 10,000 square kilometres, producing 1,600 terawatt-hours of energy. This represents 6% of the total global electricity generated.

“Michael Liebreich, a veteran analyst of clean-energy technology and economics, puts it this way: in 2004, it took the world a whole year to install a gigawatt of solar-power capacity (1gw is a billion watts or a thousandth of a terawatt); in 2010, it took a month; in 2016, a week. In 2023, single days saw a gigawatt of installation worldwide. Throughout 2024, analysts at BloombergNEF, a data outfit, expect to see 520-655gw of capacity installed: up to two 2004s a day” (Sun Machines, 2024).

The International Energy Agency (IEA) notes that buying and installing solar panels currently represents the most significant investment in energy generation at $500 billion, a figure closer to upstream oil and gas investments. 

The International Solar Energy Society also projects that 2026 solar power will generate more energy than all the world’s nuclear power plants, more than wind turbines by 2027, more than dams by 2028, more than gas-fired power plants by 2030, and by 2032 solar power will exceed energy produced from coal-fired plants.

A paper published in 2022 by Rupert Way of Oxford University and colleagues projects a “fast transition” by 2070 if the cost of solar and other new technologies continues to plummet. By 2070, solar cells will become a significant energy source, above other energy sources, including fossil fuels and other renewable energy.

Energy experts have sadly not expected or even foreseen this kind of solar energy revolution 20 years ago. Their conservative forecasting two decades ago has now been poorly thrashed. In contrast, projections by environmental enthusiasts such as Greenpeace have been more accurate.

For instance. In 2009, when installed solar capacity worldwide was 23GW, the energy experts at the IEA predicted that in the 20 years to 2030, it would increase to 244GW, but by 2016 it had reached the milestone 14 years earlier. Greenpeace predicted in 2009 that solar capacity would reach 921GW by 2030, but in 2023, it already hit 1,419GW, with no signs of slowing down anytime soon.

The article also notes that the levelized cost of solar energy has decreased by a thousand times. In simple terms, the levelized cost of solar energy is the sum of the project’s costs (initial cost) over the lifetime divided by the sum of electrical production over the lifetime.

Government subsidies in China and the proximity of their polysilicon sundries to the coal mines and coal-powered plants make manufacturing polysilicon cheaper. Also, the increase in production makes the process more affordable. Unit costs go every time cumulative production doubles.

Another advantage of solar panels over other renewable energy sources is their relative unobtrusiveness. They can sit quietly where they are installed, on roofs, fields, and above water while generating emissions-free energy. In the case of wind turbines, they will need to be bigger and pylons taller to increase efficiency.

Solar cells have been standardised, meaning they are made the same way anywhere in the world, with firms only competing for prices if they have managed to make their solar cells a little bit more efficient in generating more solar power. Solar panels are also easier to ship anywhere in the world and enjoy more “social license” than any other form of renewable energy, such as fossil fuel, nuclear, or renewable energy.

But there is a catch: solar panels won’t generate energy at night, which is why batteries are needed. Getting abundant and cheap solar power for consumers could translate into profits, but this would include battery storage and long transmission lines into the equation. China is also mass-producing batteries, making them cheaper.

So how could cheap solar panels and storage batteries be leveraged to ensure broader and more rapid expansion of solar energy? Lawrence Berkeley National Laboratory proposed a solution that would use railways and trains. Imagine a 100-car train carrying batteries with a three gigawatt-hour capacity – the railway will bring them to the solar farms to charge, then deliver them to consumers. It is an intelligent and novel idea and can be a feasible alternative to building transmission lines.

The article notes that people will find many uses when solar electricity becomes cheap and abundant. For once, plentiful and affordable solar energy can produce green hydrogen cost-effectively, and the price can be reduced to a point where the cost of green hydrogen per kg is competitive with fossil fuels. An energy firm in India is already planning to do this.

Read The Economist Essay: Sun Machines.

All about solar panels

To learn more about solar panels, the differences between polycrystalline and monocrystalline cells, their process, which ones are more efficient in generating solar energy, and the cost difference between them, read this article, Monocrystalline vs Polycrystalline Solar Panel.

The article also notes that both these types of solar cells have a useful life of between 35 to 40 years and can be recycled.