China is now the largest solar panel producer, producing about 75% of solar panels worldwide.
Not only has the quantity of solar panels increased, but the quality of the panels also drastically increased. As a result, China is currently a primary driver of global decarbonization efforts, even though there have previously been some worries regarding the quality of Chinese panels.
However, there have been worries about how China's market domination could affect monopolies and issues with intellectual property.
Is China dominating the solar panel industry?
Solar panels available for sale in Australia and New Zealand come from various manufacturing sources, not solely from China.
However, over the last 10 to 15 years, China has become the leading manufacturer of solar panels and, more so, the dominant player when it comes to the key components used to manufacture solar panels.
Based on figures released by the International Energy Agency (IEA), in 2021, almost 75% of global solar panels were manufactured in China.
An additional 15.4% of solar panels were manufactured in the Asia Pacific region, including South Korea, Singapore, Malaysia, the Philippines, and Vietnam. Approximately 2.8% of modules were manufactured in Europe, 2.4% in North America and 4.4% in India and the rest of the world.
If we look at raw silicon wafers used to make solar cells, China has an even firmer grip on the silicon wafer market, manufacturing almost 97% of the silicon wafers globally.
Renewable dominance in China’s plan for the future
From the late 2000s to the early 2010s, China had a focused economic strategy to develop solar technology and manufacturing as a key technology growth opportunity.
Since then, many initially leading panel manufacturers globally, including Conergy, SolarWorld and Bosch from Germany, Solaria from the USA, LG from South Korea, Sharp, and Kyocera of Japan – could not compete with the Chinese expansion and low prices. As a result, they were pushed to lower volumes or even bankruptcy.
Several countries, such as the US, Germany, and other European Union nations, imposed tariffs and restrictions on importing Chinese solar panels. This action stemmed from the perceived manipulation of the market by selling products below cost, a practice referred to as dumping.
This has seen some European and US manufacturers continue operating in a protected market. Several large Chinese solar manufacturers worked to circumvent these market restrictions and expanded their manufacturing with factories in other South East Asian countries to avoid the restrictions.
Becoming a leader
China currently consumes more than half of the world’s solar modules. Much of this is utilised to construct mega-scale solar power facilities or massive solar farms. Today, solar panel makers from China supply companies around the globe. It is not uncommon for solar companies in Australia to source panels and inverters from China, and they have replaced European and US suppliers over the past decade as the key country of supply.
Now that Chinese-made products have increased in quality, even European or US manufacturers have gained access to and sell them under their more established brands.
Furthermore, in the solar industry today, it is common for companies to have their headquarters in one country and run their manufacturing facilities in another.
Why is China’s dominance an issue?
The world needs more renewables, and China has banked big on solar. This gamble has pushed panel, inverter, and racking prices down for over a decade and made solar accessible for the masses. Therefore, while China, on the one hand, is still building more coal-fired power stations than many other countries, it has, on the other, been a significant driver of the de-carbonisation efforts for the rest of the world.
Nevertheless, there have been some concerns with the supply of panels from China.
Quality of the product
There has been a common perception that the quality of panel and inverter products manufactured in China is lower than those manufactured in more developed countries such as the USA, Europe, Japan and South Korea.
This held true a few years ago, but now it appears that product quality has improved, as the widespread failure of Chinese panels, once common 5 to 10 years ago, has become rare.
An indicator from the IEA study on R&D in the solar industry by country shows that China is responsible for approx. 25% of global solar Research and development (R&D) expenditure while manufacturing a significantly higher global supply.
This would suggest that Chinese solar manufacturers are less focused on technological innovation and more focused on mass production.
Humanitarian and political concerns
People have also expressed concern about using Chinese-manufactured products due to human rights abuses by the Chinese Government. Additionally, published stories suggest that authorities have forced minority groups like the Uyghurs in Western China into “re-education” facilities, including forced labour camps.
The concentration of supply channels
While manufacturers of solar panels exist outside China, it’s evident that China houses a significant concentration of manufacturing capacity for them. This has also raised concerns internationally about the attention of market power for the renewable industry in the hands of China.
This can create a risk for the global supply chain due to a lack of diversity in supply options. Due to its dominance, it could also mean reduced competition and potential market manipulation by China.
Fair is fair
But why should China not benefit from placing a large wager on renewable energy? After years of massive investment in renewable energy, China has surpassed the United States as the world’s top solar power panel manufacturer by 25—a massive win.
This FAQ isn’t suggesting that all Chinese panels are inferior; it’s simply informing you about the primary manufacturing location for most panels.
If you want high-quality panels for your solar system, regardless of their production location, it pays to research before you make a significant investment. Some Chinese-made panels exhibit long-lasting quality, while others remain unreliable or “dead duck” panels from China.
It is usually the old rule – you get what you pay for.
You can start by learning the best panels for your home through detailed research. This should give you an idea about the main criteria to consider when judging solar panels. You can also read customer reviews about the specific brand of solar panels installed in their homes. Finally, get advice from a local installer whom you can trust, as they will give you honest advice on the best choice of the panel.