Solar supply chains: between Chinese dominance and geopolitical tensions

China, the global leader in the solar industry, is redefining the rules of international trade. Between overcapacity and growing protectionism, supply chains are undergoing unprecedented reconfiguration.

Share:

Comprehensive energy news coverage, updated nonstop

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access • Archives included • Professional invoice

OTHER ACCESS OPTIONS

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

FREE ACCOUNT

3 articles offered per month

FREE

*Prices are excluding VAT, which may vary depending on your location or professional status

Since 2021: 35,000 articles • 150+ analyses per week

China’s rise in the photovoltaic (PV) panel industry is disrupting global economic and geopolitical balances. By consolidating its position as the leader with over 80% of global production, China is forcing major economies to rethink their industrial and trade strategies. This context fuels tensions while reshaping supply chains.

Chinese dominance rooted in structural and strategic advantages

Since the 2000s, China has deployed an exceptional industrial strategy to establish itself in the photovoltaic sector. Industrial clusters, combining integrated production and optimized logistics, have played a key role in this rise. These clusters bring together all stages of production, from polysilicon to final modules, creating economies of scale that reduce costs.

Chinese manufacturers also benefit from local support policies, including direct subsidies, low-cost land, and preferential loans. By combining these advantages with advanced infrastructure, China has enabled its companies to produce at costs significantly lower than their Western competitors.

Technological mastery strengthens this dominance. Chinese manufacturers like LONGi and Trina Solar invest heavily in advanced technologies, particularly tunnel oxide passivated contact (TOPCon) cells, which increase module efficiency while lowering costs. These technological advances place Chinese companies at the forefront of global innovation.

The limits of Western protectionist policies

Faced with China’s rise, the United States and the European Union introduced protectionist policies. Starting in 2012, the United States imposed anti-dumping and countervailing duties to limit imports of Chinese panels. In 2018, additional tariffs were implemented, followed in 2022 by the Inflation Reduction Act (IRA), offering subsidies covering up to 30% of local solar supply chain investment costs.

However, these initiatives have shown their limits. Manufacturing costs in the United States remain about three times higher than Chinese products. Furthermore, Chinese manufacturers quickly adapted their supply chains. By relocating part of their production to Southeast Asia, particularly Thailand, Vietnam, and Malaysia, they effectively circumvent trade barriers. These countries have become major hubs for the reassembly of solar modules destined for Western markets.

In Europe, protectionist policies have also failed to revitalize the local industry. The Carbon Border Adjustment Mechanism (CBAM) imposes taxes on inputs like aluminum, but its direct impact on solar equipment remains limited. European customs tariffs, introduced in 2012, were lifted in 2018 to stimulate solar installations. This decision strengthened the dominance of Chinese products in the European market.

Overcapacity and its global implications

China’s overcapacity poses a major challenge to the global industry. The country produces far more than its domestic market can absorb, flooding the global market with low-cost products. While this dynamic accelerates the adoption of solar panels in many countries, it threatens local industries in countries without tariff protections.

The European Union is a striking example. The removal of customs tariffs in 2018 facilitated access to cheap Chinese products but at the cost of contracting its own manufacturing industry. Conversely, the United States, by maintaining strict trade barriers, has had to compensate with extended subsidies, significantly increasing costs for consumers and governments.

Fragmentation of supply chains

Geopolitics plays a key role in reconfiguring supply chains. U.S. restrictions on products linked to forced labor in the Xinjiang region, the world’s main polysilicon supplier, have led to major disruptions. The Uyghur Forced Labor Prevention Act (UFLPA), adopted in 2021, bans the import of products associated with this region. This legislation has forced companies to rethink their supply sources, creating delays and increasing costs.

In response, Chinese manufacturers are diversifying their production sites. In addition to Southeast Asia, massive investments are being made in the Middle East, where modern infrastructure and attractive energy costs are drawing producers. However, this growing fragmentation complicates logistics and increases delivery times for Western markets.

A transition to new trade norms

In addition to geopolitical tensions, emerging trade norms are redefining the conditions of global trade. In Europe, the Carbon Border Adjustment Mechanism and strict carbon footprint requirements are becoming essential criteria for public procurement. These new rules effectively exclude many Chinese manufacturers unable to provide compliant documentation.

These trade norms create additional barriers for Chinese manufacturers, but their long-term impact remains uncertain. While they encourage more responsible production, they also risk increasing costs for end consumers and limiting access to affordable solar panels.

Uncertain perspectives

As trade tensions persist, the global solar industry evolves in an uncertain environment. China retains a competitive advantage through its production capacity and technological innovations. However, the growing pressure of Western regulations and protectionist policies could limit its long-term dominance.

On the other hand, Western countries must find a balance between reducing their dependence on China and maintaining economic competitiveness. Current subsidies, while effective in the short term, require a long-term strategy to ensure the viability of local industries.

i Grid Solutions and CPower have partnered to accelerate the deployment of solar plants through on-site power purchase agreements, targeting 30MW of installed capacity by 2028.
PowerBank has signed a lease for a 1.76 MW ground-mounted solar project in upstate New York, aiming to power around 200 homes through a community-based programme.
AXIAN Energy has acquired a majority stake in the Bangweulu solar plant in Zambia, strengthening its pan-African solar strategy while entering a rapidly growing energy market.
Sun Trinity has commissioned a 3.1 MW solar carport in Nara, bringing its on-site PPA capacity with Aeon Mall to 10.1 MW under a nationwide rollout plan across twelve commercial sites.
A joint programme funded with CHF15.12mn ($19mn) aims to boost energy efficiency and renewables in Alpine regions by 2029.
Aurora Renewables will develop an intelligent microgrid combining solar, batteries and digital simulation technology to enhance power supply in northern Saskatchewan.
Norwegian firm Scatec expands its presence in West Africa with two solar projects totalling 64 MW and a 10 MWh storage system, under lease agreements signed in Liberia and Sierra Leone.
The New South Wales Government has approved Ark Energy’s hybrid solar and battery project in Richmond Valley, combining a solar power plant and long-duration storage.
Nextracker will supply steel frames for solar modules to T1 Energy in a multi-year deal worth over $75mn, aiming to strengthen the local solar supply chain and reduce dependence on imported aluminium.
Geronimo Power has started construction on the Bee Hollow solar park in St. Clair County, a 150 MW project expected to generate $54mn in direct economic impact for the region.
EDF has inaugurated a 1.2 MWc solar power plant and an intelligent electrical grid in Maripasoula, French Guiana, strengthening the energy autonomy of this remote community previously reliant on fuel imports.
EDP has commissioned a solar power plant in Salerno integrating livestock farming, with a capacity of 10 MWc and an annual output of 17 GWh, marking the launch of a hybrid model to be replicated in France and Germany.
Aura Power has finalised financing for its fourth UK solar plant in twelve months, backed by Rabobank, bringing its under-construction capacity to 242 MWp across the country.
The Tützpatz solar project, developed by Vattenfall and powered by GCL System Integration, combines energy production and agricultural use across 93 hectares without public funding.
Koshidaka Group signed a 10-year power purchase agreement with Farmland and Eneres to supply its Tokyo-area facilities with electricity from a 1.6MWAC solar plant located in Annaka.
The PairPHNXX system, designed for rapid deployment in areas without grid access, targets agricultural, military, and industrial markets with a turnkey modular technology.
Ascent Solar Technologies has delivered samples of its flexible photovoltaic technology to two companies for testing in extreme environments, at sea and in space.
Geronimo Power has started construction of the Bee Hollow solar project, valued at $54mn, in St. Clair County, delivering jobs, tax revenue and a partnership with the IMEA municipal agency.
The British government has approved Tillbridge Solar Farm, a 500-MW solar power plant with 2,310 MWh of energy storage, developed by Tribus Clean Energy and Recurrent Energy.
wpd solar France has launched construction of a 140.6MWc photovoltaic park in Marcy, in the Nièvre department, integrating agricultural co-activity across 632 hectares in partnership with five local farms.

All the latest energy news, all the time

Annual subscription

8.25€/month*

*billed annually at 99€/year for the first year then 149,00€/year ​

Unlimited access - Archives included - Pro invoice

Monthly subscription

Unlimited access • Archives included

5.2€/month*
then 14.90€ per month thereafter

*Prices shown are exclusive of VAT, which may vary according to your location or professional status.

Since 2021: 30,000 articles - +150 analyses/week.