Reforging the Solar PV Supply Chain
The growth of the solar photovoltaic (PV) industry has been one of the most significant developments in the transition to clean energy. With the solar sector projected to continue its exponential growth, the industry must ensure that its manufacturing processes are environmentally and socially responsible.
Much of the manufacturing base of the global solar supply chain is rooted in the Xinjiang Uyghur Autonomous Region. The Xinjiang region’s vast metallurgical-grade silicon smelters and solar-grade polysilicon plants contain approximately 12% and 42% of global metallurgical-grade silicon production and solar-grade polysilicon factory capacity, respectively. These facilities have entangled solar PV manufacturing with Chinese government repression of minoritised peoples through forced labour, authoritarianism and injustice.[1]
Top 10 solar PV manufacturers in the world[2]
| Rank | Company | Production Capacity (MW) | Country of Domicile |
|---|---|---|---|
| 1 | JinkoSolar | 15,000 | China |
| 2 | Trina Solar | 14,500 | China |
| 3 | JA Solar | 10,000 | Canada |
| 4 | LONGi Solar | 10,000 | China |
| 5 | Canadian Solar | 9,000 | South Korea |
| 6 | First Solar | 7,000 | USA |
| 7 | Hanwha Q-Cells | 6,500 | USA |
| 8 | GCL System Integration | 6,000 | China |
| 9 | Yingli Green Energy | 5,000 | China |
| 10 | Risen Energy | 5,000 | China |
Without strong action to exclude Xinjiang-based manufacturers from clean energy technology markets, the global clean energy sector risks normalising state-sponsored oppression of Uyghur, Kazakh and Kyrgyz peoples in Xinjiang as acceptable, turning the region into an environmental sacrifice zone.
At the same time, China’s continued dominance in the solar supply chain presents financial risks for the solar industry. Overconcentration of manufacturing capacity in a single country and region increases the solar sector’s vulnerability to supply chain disruptions from unpredictable economic, political and accident-related events. A focused effort to shift away from Xinjiang-based solar commodity production could help ensure a more reliable supply of solar PV commodities, while also promoting greater technological innovation in manufacturing and better shielding the industry from reputational and regulatory risks.
Growth of China’s share of global solar PV manufacturing capacity[3]
| Year | Growth of China’s Share |
| 2007 | 26% |
| 2010 | 43% |
| 2015 | 65% |
| 2020 | 72% |
How to Diversify Solar Manufacturing
Diversifying solar manufacturing by establishing new, alternative capacity will require a strategic and coordinated effort among governments, industry stakeholders and investors. There are several factors that will need to be considered.
- Energy affordability and abundance: Whatever the location, there must be abundant, low-cost energy. Energy remains the biggest cost of production in metallurgical-grade silicon, solar-grade polysilicon and ingot/wafer production, aside from labour costs. Currently, solar PV production is centralized in Xinjiang precisely because of low energy costs and abundant raw material (coal).
- Upfront fixed capital costs: Because of locational differences, public incentives will struggle to alleviate considerable differences in land, labour and construction costs. However, public policy can create incentives in terms of upfront fixed capital costs that can help drive domestic erection of solar industrial plants.
- Technical expertise: Technical expertise in developing large-scale solar-grade polysilicon, solar PV cell and especially monocrystalline silicon ingot/wafer manufacturing plants has become increasingly limited outside of China. Supply chain reorganisation efforts should leverage recent technical expertise in Korea, Japan, Taiwan, Malaysia, Germany and the United States.
Steps to Promoting Greater Social and Environmental Responsibility
In addition to diversifying solar manufacturing, there are steps that the solar industry can take to promote greater social and environmental responsibility.
- Increase transparency and traceability in the supply chain: The solar industry must ensure that its supply chain is free from forced labour and human rights abuses. To achieve this, companies should increase transparency and traceability in their supply chains by regularly auditing their suppliers and sharing the results publicly.
- Promote circularity: The solar industry should promote circularity by implementing closed-loop supply chains and recycling programs to reduce waste and minimize the environmental impact of solar panel disposal.
- Invest in R&D: To promote technological innovation and reduce the reliance on high-polluting raw materials, the solar industry should invest in R&D of new materials and manufacturing processes.
- Foster international cooperation: The solar industry should work together with governments, NGOs and other stakeholders to address the social and environmental challenges associated with solar PV manufacturing. By fostering international cooperation and sharing best practices, the industry can promote responsible and sustainable manufacturing practices globally.
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References
[1] Horizon Advisory, “Uyghurs For Sale: Re-education, Forced Labour and Surveillance Beyond Xinjiang” and was published in March 2020”, March 2020. Available at: https://www.aspi.org.au/report/uyghurs-sale
[2] PV Tech, “Top 10 PV module manufacturers in 2020”, 2020. Available at: https://www.pv-tech.org/analysis/top-10-pv-module-manufacturers-in-2020
[3] International Energy Agency (IEA), “Renewables 2021: Analysis and Forecast to 2026”, 2021. Available at: https://www.iea.org/reports/renewables-2021
