Cannot Eliminate Dependence On China For Wafers & Cells

• Chinese solar industry will continue to hold more than 80% global share of solar PV module manufacturing till 2026, according to Wood Mackenzie 
• While other countries like India and the US are bringing up module manufacturing significantly, China will still be the prominent supplier of wafers and cells 
• As the rest of the world catches up, China is already investing big time into solar, widening the technology and cost gap 
• The oversupply situation is expected to force Chinese module manufacturers to take orders at a loss, reduce capacity, or shut down entirely 

For the next 3 years, China will continue to dominate the global solar PV manufacturing with more than 80% share of the world's polysilicon, wafer, cell and module manufacturing, according to Wood Mackenzie. This will lead to the widening of the technology and cost gap between China and the rest of the world. 

The country has already invested more than $130 billion into its solar industry in 2023. In its latest report How will China's Expansion affect global solar module supply chains, Wood Mackenzie analysts believe that more than 1 TW of wafer, cell and module capacity is forecast to come online by 2024, which means it has sufficient capacity to meet annual global demand now through 2032. 

"China's solar manufacturing expansion has been driven by high margins for polysilicon, technology upgrades and for developing local manufacturing in overseas markets, China will still dominate the global solar supply chain and continue to widen the technology and cost gap with competitors," said Senior Consultant at Wood Mackenzie and Author of the report, Huaiyan Sun. 

In comparison, the US and India together have announced more than 200 GW of planned solar module capacity since 2022 thanks to strong policy support in the form of Inflation Reduction Act (IRA), and Production Linked Incentive (PLI), respectively. 

India will be the next largest solar module manufacturer after China by 2025, taking over from Southeast Asia. Recently, Indian credit agency ICRA Limited pegged India's solar module manufacturing capacity to exceed 60 GW by 2025 (see Future Bright For Indian Solar PV Manufacturing). 

However, the world cannot eliminate its dependence on China for its wafers and cells requirements as yet. 

Additionally, Chinese solar modules win cost-wise as these are 50% cheaper than those produced in Europe and 65% cheaper than the US. 

In terms of technology as well, Wood Mackenzie analysts see China staying put as the global technology leader as Chinese companies have so far announced plans to build more than 1 TW of n-type cell capacity, '17 times more capacity than the rest of the world.' 

Speaking of technology, leading Chinese manufacturers are already exploring next-generation technologies, beyond even the latest n-type. LONGi recently announced the world record of 33.9% efficiency for crystalline silicon-perovskite tandem cell (see LONGi Announces Impressive Tandem Solar Cell World Record).  

Analysts also reflect on the current situation of oversupply in the market, compounded by intense competition that's leading to companies canceling their expansion plans. Oversupply is mainly related to old production lines that produce lower efficiency modules based on p-type and M6 cell technology. China has terminated more than 70 GW capacity in the last 3 months.  

Nonetheless, Chinese solar industry has its own challenges to face as Wood Mackenzie points out, "The solar manufacturing industry in China is entering a challenging time. Module manufacturers will be forced to take orders at a loss, reduce capacity, or shut down entirely."