Climate policy: Solar energy expected to be cheaper through globalization

Globally integrated solar-cell supply chains may help to make solar energy cheaper, according to research published this week in Nature. Compared with a nationalized approach, in which supplies from external solar-cell (photovoltaic modules) producers are limited, a globalized supply chain could save billions of US dollars in installation fees, the study suggests.

Countries often support domestic renewable energy manufacturing, with policies aiming to localize growth and employment benefits from the renewable energy industry. Yet to reduce global carbon emissions at a sufficient scale, renewable energy needs to be deployed quickly and widely, and thus needs to be cost-effective.

Gang He and colleagues compare the difference in costs of solar cell deployment between localized and global supply approaches across major markets. They calculate that the globalized solar-cell market has saved installers US $24 billion in the USA, $7 billion in Germany and $36 billion in China between 2008 and 2020. Projections suggest that relying on domestic producers would result in solar cell prices that are 20–25% higher in 2030, compared to globalized supply chain scenarios.

This research provides the first quantitative estimation of costs saved through globally integrated supply chains, compared with strictly domestic solar-cell production. Climate policy should consider both the distribution of benefits from the renewable energy industry, and the ways in which costs could be substantially cut through globalized supply chains, the authors conclude.