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Solar, battery manufacturing could help Net Zero become reality — but demand lags behind
Insights from Nikkei Asia, Bloomberg, The Washington Post
The News
A new International Energy Agency report found that the current global manufacturing capacity for solar cells and modules could meet the sector’s target to realize a Net Zero emissions scenario by 2030, but these facilities are drastically underutilized — just 50% — as supply outpaces demand and countries’ ability to incorporate more solar energy into the grid.
The report also found that the global installed battery capacity rose to 2.5 terawatt hours, 3.5 times the current demand. If planned battery installments come to pass, then batteries could also meet 90% of their sector’s target for the Net Zero emissions scenario by 2030, the report found.
The uptick is being driven by rising global investment in clean technology, which includes solar, wind, batteries, electrolyzers (crucial for green hydrogen), and heat pumps. Investment grew by more than 70% to $200 billion in 2023 compared to 2022, the report found. But it also cautions that more climate-forward policies are needed to boost demand for clean energy.
SIGNALS
China dominates solar technology innovation
China accounts for more than 80% of global solar PV module manufacturing capacity, but it’s also leading innovation. Japan was historically the leader in total patent filings for perovskite solar cells, but China and South Korea have surpassed it since 2020. China also dominates in academic publishing on the subject, Nikkei Asia reported. But excess solar supply and fierce competition in China mean some solar manufacturers are contemplating layoffs, as well as production cuts or delays: Longi Green Energy Technology Co, the world’s largest solar manufacturer, announced plans to cut 30% of its workforce, for example.
Europe’s solar industry is struggling to expand
Though the EU is launching investigations into China’s alleged unfair trade practices over solar technology, experts say the bloc’s solar infrastructure isn’t enough to meet its needs. German solar manufacturer, Meyer Burger, announced plans to cut 500 jobs and relocate to the United States in January after experiencing $330 million in losses in 2023 alone, “fueling political debates on whether the industry deserves long-term state support to ensure its survival,” Euractiv reported. But bailing out companies like it may “be a poor use of public funds and may not make much of a difference” in the near-term, Environment and Society Center researchers argued in Foreign Policy. They say funding research and new solar factories would be savvier to create long-term competitiveness and sustainability instead.
Tensions roil the US solar manufacturing industry
In an April petition filed to the US Department of Commerce, American solar manufacturers demanded more trade protections against Chinese imports, which they argue cripples competition. But the petition also exposed a divide in the industry: panel installers and solar farm developers fear restrictions on Chinese imports could raise prices and hurt consumers, decreasing demand. “More duties will only cause uncertainty and unnecessary project delays, holding the U.S. back in meeting our clean energy deployment and manufacturing goals,” one developer told The Washington Post. Shifting state policies compound the anxiety: California recently decided to cut solar energy subsidies for homeowners, leading to a huge drop in demand and thousands of job layoffs.
