Why Global Solar Manufacturing Still Favors Asia: IRENA Explains

The International Renewable Energy Agency (IRENA)’s latest report delivers a clear verdict: Asia remains the world’s most cost-competitive hub for solar manufacturing. Its analysis shows that total solar module prices are shaped less by where panels are assembled and more by which parts of the supply chain are imported versus produced locally.

At the technology level, the report highlights a key cost advantage of standard monocrystalline cells such as PERC. These cells rely on a relatively simple structure—high-purity silicon wafers, aluminium frames, tempered glass, ethylene-vinyl acetate (EVA) encapsulants and small amounts of silver for metallisation. Unlike TOPCon technology, they do not require advanced layers or specialised materials, keeping input costs lower, which translates directly into savings. Drawing a cost comparison, the IRENA 's report finds monocrystalline cells to be 10%–15% cheaper than TOPCon cells, largely due to less complex manufacturing processes. TOPCon cells, by contrast, face higher upfront costs because of additional processing steps and the materials needed to produce thin-film layers.

Why imports undercut domestic manufacturing

These conclusions are based on a comparison of domestic solar module production across the United States, Germany, India, Australia, Viet Nam and China. The report finds that, in many cases, importing key components is cheaper than pursuing full domestic manufacturing.

Importing polysilicon reduces costs compared with an entirely domestic supply chain, although wafer, cell and module manufacturing still need to take place locally—keeping overall costs relatively high. The cost gap widens further when wafers or cells are imported.

Country-level differences are stark. Viet Nam remains more competitive than India, largely due to lower electricity prices, even as both benefit from low labour costs. Germany, meanwhile, stands out for its high manufacturing costs, driven almost entirely by expensive electricity—an especially heavy burden for energy-intensive upstream processes such as polysilicon production.

IRENA’s analysis shows that industrial electricity tariffs and labour rates are the primary drivers of cost differences across regions. For consistency, the study assumes manufacturing capacities of 50 tonnes for polysilicon and 4 GW each for wafers, cells and modules across all markets.

Germany And Viet Nam See Sharp Cost Drops

The impact of imports is most visible in module pricing. When polysilicon is imported, total module costs fall by 7% in Viet Nam and by up to 10% in Germany compared with full domestic manufacturing. Importing wafers delivers even bigger savings, cutting total module costs by 19% in Viet Nam and by as much as 29% in Germany.

China and Viet Nam enjoy a clear edge. Fully domestic module manufacturing in Viet Nam costs around USD 0.180 per watt-peak (Wp). Importing wafers from China reduces that cost to USD 0.146/Wp, a 19% drop. Importing solar cells pushes costs down further to USD 0.124/Wp, representing a 31% reduction compared with full domestic production.

These differences underline how strongly upstream manufacturing stages influence final module prices. Domestic production faces higher costs due to capital intensity, labour and electricity expenses. Imports, particularly from China, benefit from established supply chains and economies of scale, sharply lowering costs.

Overall, the findings strengthen the case for import-led strategies over high-cost domestic manufacturing, especially where labour and power remain expensive. Importing cells from China delivers the lowest total module cost while still allowing countries to retain local module assembly—offering a pragmatic balance between cost competitiveness and domestic manufacturing presence. For countries like India, who find this unacceptable, the answer lies in simultaneously working to improve other factors like cost of electricity, spoeed of approvals, and access to licensed technology at a lower cost.