Wood Mackenzie: China’s Solar Exports Boom 64% In 2022 Despite Global Trade Tensions

Highlights :

  • High power prices compelled consumers and developers from around the world to buy more solar panels from China.
  • Europe remained the China’s top solar module export market with 56% share.
Wood Mackenzie: China’s Solar Exports Boom 64% In 2022 Despite Global Trade Tensions Violators of Domestic Content Requirement Norms To Face Strict Action

A new report from Wood Mackenzie has revealed that solar exports of China grew 64% to $52 billion in 2022 despite global trade tensions.

Wood Mackenzie research director Alex Whitworth held that trade tensions have taken a back seat to high power prices driven by the energy crisis, and this is causing consumers and developers from around the world to buy more solar panels from China.

Wood Mackenzie mentions that China’s exports were mainly dominated by modules in 2022 – Europe remained the country’s top solar module export market with 56% share. But solar cells saw more than 100% growth as the global PV market expanded, with Southeast Asia taking 31% share of China’s solar cell exports.

US tariffs on Chinese-made modules have driven module production to Southeast Asia, where many manufacturing facilities import cells from China.

Chinese modules kept their cost-competitiveness against other markets in 2022 and were up to 57% cheaper than US and EU produced modules. This price gap was mainly driven by material cost, where China holds the advantage due to low energy costs, scale advantages and government support, whereas US and EU solar module manufacturing is not competitive without subsidies, holds Wood Mackenzie.

China On Expansion Spree

Wood Mackenzie analysis held that in addition to domestic supply needs, Chinese export capacity for upstream wafers and cells will grow to more than 230 GW in 2026. This capacity will be more than sufficient to meet global market demand outside China of 170-GW by that year.

Available module capacity for export in China is also expected to grow gradually to 149GW by 2026, leaving some room for other markets to expand module production, mentions Wood Mackenzie. More manufacturers are investing in upstream sectors which are more profitable than modules.

US, EU, And India Are No Challenge To China

Whitworth says in Wood Mackenzie report that the US is counting on the IRA, which will allocate at least US$41 billion to stimulate domestic manufacturing. But costs still favour imported modules, and even as more local module production comes online in coming years, there will be persistent dependence on imports of components from Asia.

 “In Europe, the EU is advocating trade restrictions to secure local PV manufacturing but lacks specific policies to propel capacity build outs and displace imports. India also has great ambitions to expand its PV manufacturing, but financial support is insufficient to reach aggressive targets,” added Whitworth.

With a mature supply chain and large production capacity for export, Southeast Asia has benefitted from China-targeted PV trade policies by the US, as more module production has moved to the region. However, Chinese manufacturers hold 55% of Southeast Asia’s PV manufacturing capacity, which relies on Chinese-produced components.

Trade Restrictions Challenge Chinese Manufacturers To Globalise Operations

“As more markets demand local jobs and investment for solar, Chinese manufacturers are well positioned to grow as global technology providers,” added the Wood Mackenzie official.

Companies outside of China also have opportunities, but it will be challenging for them to escape China’s low-cost supply chain and pool of expertise that has taken over a decade to develop.

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