China’s Solar Dominance: How Key Consumer Markets Are Adapting

Highlights :

  • China monopolizes the global solar market claiming an 80 per cent share in all the key manufacturing stages of solar panels.
  • The recent issues with supplies from there have meant a renewed effort in large consuming markets for domestic supply chains too.
China’s Solar Dominance: How Key Consumer Markets Are Adapting

Governments across the globe are increasingly investing in various sources of new and renewable energy to reach their targets of either achieving carbon neutrality or reducing emissions considerably to help realise the goal of the Paris agreement – limiting the rise in global temperature below 2-degree celsius from pre-industrial levels. Solar power is one of the most important sources of renewable energy in the world today. And the transition to net-zero emissions will need expansion in the sector whose global supply chains are currently heavily concentrated in China. There is a need to diversify away from dependence on China.

Solar PV manufacturing capacities need to expand to meet international energy and climate goals. As per IEA, annual additions of solar PV capacity around the world need to more than quadruple by 2030 to be on track with the IEA’s pathway to reaching net zero emissions by 2050.

China’s Hegemony

Over a decade ago, solar manufacturing was spread across the continents with Europe, Japan and the United States being the major manufacturing hubs. Now, the industry is chiefly dependent on China for its immediate solar needs.

According to an IEA report, China monopolizes the global solar market claiming an 80 per cent share in all the key manufacturing stages of solar panels. Further, the share of the Asian giant for the key elements like polysilicon and wafers is set to rise to over 95 per cent in the years to come. China also leads in terms of investment – almost two-thirds of global large-scale solar investment.

While it is true that Chinese industrial and innovation policies boosting production and expanding markets of solar panels made solar PV the most affordable electricity generation technology, it has concentrated the supply chains to itself leading to imbalances. There is a need today to check those imbalances so as to make the growth of the solar industry resilient to any supply side shocks, or such anomalies. Diversifying production is the need of the hour for the development of solar, especially seeing how China has made a subtle shift to a ‘China First’ policy even in sectors where global supply chains count on it.

“Solar PV’s global supply chains will need to be scaled up in a way that ensures they are resilient, affordable and sustainable,” said IEA Executive Director Fatih Birol.

The cost factor is the key reason deterring other countries from attempting their own manufacturing. The basic manufacturing, labour, and overheads cost in China are at least 10 per cent less than in India. Further, it is much less than other solar markets – 20 per cent cheaper compared to costs in the United States and 35 per cent lower than that of Europe.

How Key Consumer Markets Are Adapting

Solar panel prices have increased around 20 per cent over the last year. Delays in solar PV deliveries and higher prices prompted governments and other stakeholders around the world to pay increasing attention to solar PV manufacturing supply chains. Let’s shed some light on key consumer market measures in diversifying solar energy.

The United States

Climate action has been a priority ever since President Joe Biden came into office. The recent Inflation Reduction Act (IRA) 2022 may help the US compete with China in terms of renewable production, especially solar energy. The act introduced an investment package of $369 billion for the clean energy transition.

The Act includes tax incentives for the development of a more robust solar industry as the country aims to triple domestic solar manufacturing by 2024. As of now, North America has less than a 3 per cent share of global solar panel manufacturing capacity.

The US has been taking some actions to counter China’s solar dominance lately. Earlier this year, the country extended tariffs on solar products containing crystalline silicon from China. Additionally, the Uyghur Forced Labor Prevention Act banned products including solar components from China’s Xinjiang region.

However, as seen recently in the 2 year exemption to module imports from China, the US remains caught between high demand, and a domestic sector that simply cannot meet it competitively. It’s a problem that bedevils  the next country in our list too, although it seems to be making faster progress with sorting it out.


India has roughly 1.3 per cent share in global solar manufacturing capacity, and the country is aiming to more than triple it in the years to come, taking advantage of its ‘solar-friendly’ geographic location. India has taken several measures to promote local manufacturing of solar panels.

The earliest of the schemes was the Modified Special Incentive Package Scheme (M-SIPS) of the Ministry of Electronics & Information Technology. The scheme provides subsidies for capital expenditure – 20% for investments in Special Economic Zones (SEZs) and 25% for non-SEZs. The Scheme was open to receive applications till 31st December 2018. India launched PLI Scheme in 2021 for enhancing India’s manufacturing capabilities and exports of high-efficiency solar PV modules, with an outlay of Rs. 4,500 crores.

Some policies indirectly counter china’s solar dominance as well. In 2021, India prescribed that preference be given to ‘Make in India’ in Public Procurement in Renewable Energy Sector. Solar PV modules are one of the products that have sufficient local capacity and competition. The Government also announced the imposition of Basic Customs Duty (BCD) on the import of solar PV cells and modules with effect from this financial year. The Approved List of Module Manufacturers (ALMM), a list maintained by the government of India-based manufacturers whose output has to be mandatorily used in any government backed scheme, has also acted as an effective non-tariff barrier in recent months.

Further, in schemes like – CPSU Scheme Phase-II, PM-KUSUM and Grid-connected Rooftop Solar Programme Phase-II – government subsidy is given to source solar PV cells and modules from domestic sources. The next big move is the expansion of the PLI scheme by a further Rs 19500 crore, to push domestic manufacturing capacity from around 10 GW currently to over 40 GW by 2025.  This time, it will also include backward integration into cells, wafers, and even Polysilicon. This time does feel different for India, thanks to the strong backing of leading industrial houses, from the Adani Group to Reliance and the Tata, besides a host of other emerging players with experience in the sector.

The European Union

The EU together roughly shares 3 per cent of global solar manufacturing capacity. EU Solar Strategy aims to provide a framework to massively deploy solar PV energy in Europe. It sets out new objectives of almost 320 GWac (400 GWdc) by 2025 and almost 600 GWac targets for EU solar by 2030 – equivalent to 750 GWdc. (Note: The European Commission uses AC units in their communication, whereas the industry typically favours DC units. Wattage units, unless otherwise mentioned, are always in DC, where 1 GWac = 1.5 GWdc).

A new EU Solar PV Industry Alliance endorses the European Solar Initiative objective of 20 GW of solar PV manufacturing in Europe in 2025. The EU imposed anti-dumping and anti-subsidy controls on solar panels from China between 2013 and 2018, in a bid to protect European manufacturers from a flood of cheaper parts from the world’s top solar product maker.


Australia is currently installing 4GW of solar photovoltaic (PV) capacity a year but meets just 3% of that from a local supplier. The country does not have a clear policy to boost domestic manufacturing of solar PV on the levels of measures other major markets target.

“By 2030, the government aims to have 82% renewables in the national electricity market. To achieve that, we will need to produce much more solar capacity onshore as well as have a diversity in our international supply chains,” observed Renate Egan, the Australian PV Institute (APVI) secretary and head of the Australian Centre for Advanced Photovoltaics. With abundant land and sunshine, what Australia has done instead is to focus on trans continental export possibilities of electrical energy, generated using solar power at massive farms. Plus green hydrogen production, as technology evolves to drive down prices.

Latin America

The South American nations are also moving toward domestic production of solar products. For now, the measures are mostly driven by private players.

Solarever, a Mexican solar module manufacturer, recently announced that it intends to invest $1 billion in the construction of its second solar panel factory in Zacoalco de Torres, in the state of Jalisco. The facility looks to produce both cells and modules. Earlier, Solarever also unveiled plans to increase its production capacity from 500 MW to 1 GW at its factory in Tecomán, in southwestern Mexico.

Similarly, Brazilian PV system provider Sengi Solar announced an investment of BRL 440 million ($85 million) for the construction of two solar panel factories in the states of Paraná and Pernambuco. The facilities will have a combined capacity of 1 GW.

South East Asia

South East Asia has also seen a push for local manufacturing, although it has to be said that a significant part of the manufacturing system built up in South East Asia, especially Vietnam, Malaysia, and Thailand is Chinese-backed, to skirt sanctions on direct imports from China in the US and other markets.

Some of the biggest manufacturers of solar products in the region include likes of Boviet Solar and Allesun which operate with two manufacturers in Vietnam & Cambodia, specializing in solar cell, and module manufacturing. Vietnam’s Boviet Solar specializes in the manufacturing of monocrystalline PERC cells, mono facial and bifacial PV modules. The firm recently entered into an 861-megawatt PV module master supply agreement with Vesper Energy.

Middle East

Countries such as China and India are particularly known for housing many manufacturers, but other sun-sufficient regions, like Middle East Asia, are also seeing solar manufacturing activities as well.

Contributing to the country’s industrial development and the achievement of the Kingdom’s 2030 sustainability goals, Saudi Arabia attracted PV Hardware (PVH) to exploit the country’s market. PVH announced the launch of its manufacturing facility, PV Hardware Middle East, in Saudi Arabia, last year. It will produce PV trackers, mounting structures, and robotic cleaning devices. Further, the company will develop and train local manufacturers, equipping them with the knowledge to produce subassembly parts of the technology themselves.

Saudi electric company Bin Omairah Holding launched the largest factory for solar panels production in the Middle East and North Africa (MENA) region, in Tabuk Industrial City, with SR700 million ($186.6 million) worth of investments and a production capacity of nearly 1.2 gigawatts (GW).

Saudi Arabia is offering attractive incentives for local manufacturing, which would help boost the region’s solar manufacturing.


The Chinese dominance in solar manufacturing has played out over two decades, of meticulous planning and execution. China based firms are global leaders today, including investments into R&D and innovation. Many are also seeking to manufacture outside China on their own, driven not by politics but by practical business considerations. Ironically, they could be some of the key players if manufacturing supply chains are to truly diversify away from China.

"Want to be featured here or have news to share? Write to info[at]

Junaid Shah

Junaid holds a Master of Engineering degree in Construction & Management. Being a civil engineering postgraduate and using his technical prowess, he has channeled his passion for writing in the environmental niche.