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Perovo Solar Park.

Image Credit: Zachary Shahan.

Published on September 27th, 2013 | by U.S. Energy Information Administration

Production Scale (Not Cheap Labour) Gives China Solar Advantage

September 27th, 2013 by U.S. Energy Information Administration

Originally published on the US Department of Energy Website

Production scale, not lower labor costs, drives China’s current advantage in manufacturing photovoltaic (PV) solar energy systems, according to a new report released on September 5 by the Energy Department’s National Renewable Energy Laboratory (NREL) and the Massachusetts Institute of Technology (MIT). Although the prevailing belief is that low labor costs and direct government subsidies for PV manufacturing in China account for that country’s dominance in PV manufacturing, the NREL/MIT study shows that a majority of the region’s competitive advantage comes from production scale—enabled, in part, through preferred access to capital (indirect government subsidies) —and resulting supply-chain benefits. The study’s findings suggest that the current advantages of China-based manufacturers could be reproduced in the United States.

Chinese solar modules at Perovo Solar Park
Image Credit: Zachary Shahan / CleanTechnica (CC BY-SA license)

“Assessing the Drivers of Regional Trends in Solar Photovoltaic Manufacturing,” co-authored by NREL and MIT, and funded by the Energy Department through its Clean Energy Manufacturing Initiative, was published in the peer-reviewed journal Energy & Environmental Science. By developing manufacturing cost models, the team of researchers examined the underlying causes for shifts from a global network of manufactures to a production base that is now largely based in China. The study shows that China’s historical advantage in low-cost manufacturing is mainly due to advantages of production scale, and is offset by other country-specific factors, such as investment risk and inflation. The authors also found that technology innovation and global supply-chain development could enable increased manufacturing scale around the world, resulting in broader, subsidy-free PV deployment and the potential for manufacturing price parity in most regions.

See the Energy Department Progress Alert and the complete report.

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Tags: China, China solar industry, Chinese Solar Panel Subsidies, Solar Labour Costs, Solar Production Scale, united states, US solar industry

About the Author

U.S. Energy Information Administration -- the EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.

JamesWimberley

What´s the optimum size for a solar PV plant? 1GW a year? It´s not like steel where the economies of scale keep going and the supergiant integrated mills like POSCO´s are the cheapest. As solar panel production expands from 35 GW/year to >100 GW over the next five years, we may see something more like the global car industry, with quite large but not monstrous assembly plants scattered over the world in major markets. They will all be run by Chinese corporations.
Ivor O’Connor

So if we had ore mined here in America in huge quantities.
By machines so we would not have labor costs.
And if we had a steel industry to melt that ore.
Again by machines so our prices would not skyrocket.
And if we also had glass factories.
And if we did our own massive wafer fabrications.
With no EPA to tell us about the waste.

Then all we would have to do is make a huge PV fabrication plant of a scale rivaling the Chinese to compete against them?

Hmmm…. I’ll think about it.
Shiggity

Making solar pv really isn’t labor intensive at all. When you look into a modern PV factory there are hardly any people inside it.

Making a standard mono-crystalline cell is actually quite easy from a manufacturing standpoint, like steel or concrete.