A recent report by Wood Mackenzie highlights China's formidable presence in the global solar industry, with projections indicating that by 2023, the country will command more than 80% of the world's polysilicon, wafer, cell, and module manufacturing capacity. This monumental achievement stems from China's substantial investment, totaling over $130 billion in the solar sector in 2023.
The report, titled “How will China's expansion affect global solar module supply chains?,” underscores that this manufacturing expansion has been driven by a combination of factors, including lucrative margins for polysilicon, continuous technological advancements, and steadfast policy support.
Huaiyan Sun, Senior Consultant at Wood Mackenzie and author of the report, noted, “China's solar manufacturing capacity has grown significantly, and despite strong government initiatives 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.”
The report further predicts that more than one terawatt (TW) of wafer, cell, and module capacity will come online by 2024, effectively positioning China's capacity to meet the annual global demand up to 2032, based on Wood Mackenzie's forecasts for annual demand growth.
While strong government policies in overseas markets have triggered local solar manufacturing initiatives, the report underscores that these efforts are yet to achieve cost competitiveness compared to Chinese supply. According to the findings, a module manufactured in China costs 50% less than one produced in Europe and 65% less than in the United States.
Notably, both the United States and India have declared ambitious plans for over 200 gigawatts (GW) of planned module capacity since 2022. These plans have been catalyzed by the Inflation Reduction Act (IRA) in the United States and the Production Linked Incentive (PLI) in India. However, as Sun pointed out, “Despite considerable module expansion plans, overseas markets still cannot eliminate their dependence on China for wafers and cells in the next three years.”