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In a new monthly column for pv magazine, the International Solar Energy Society (ISES) explains why potential trade disruptions in the global PV supply chain are substantially different from those related to coal, oil and gas.
China produces the majority of the worlds solar panels. However, this concentration of the industry should not be particularly worrying.
Solar panel production within the global industry is not more than $400 billion annually. This is because they are very cheap and durable. By comparison, the global automobile industry is seven times larger. For strategic reasons, some local production of solar panels can be aimed for, but a new large local industry will not be created. Most of the value of the solar industry is in the host country, not in imported solar panels. Local industries include project engineering, transportation, land, fencing, support structures, cabling, power conditioning, maintenance, substations, transmission, power trading, and increasing the share of renewables in the national energy mix. Large-scale pumped hydro storage does not rely on imported batteries.
Size of the future photovoltaic industry
How can we calculate the ceiling of the global PV module industry? The first step is to calculate how much solar energy will be needed in the future.
Renewable electricity from solar and wind can be used to decarbonise energy by electrifying transport using electric vehicles, heating and cooling using heat pumps and industrial heating using electric furnaces. The chemical industry can be decarbonised by using renewable electricity to produce hydrogen for ammonia production, metals, plastics, ceramics and synthetic fuel for aviation and shipping.
Thus, solar panels, supported by wind energy, can replace fossil fuels throughout the economy.
The average global electricity production is currently 3.6 MWh per person per year. Electricity production in Europe, North America, China, Japan, Singapore and Australia ranges from 6 MWh to 12 MWh per person per year. This will need to be doubled or tripled to decarbonise transport, heating, industry and aviation.
Suppose there are 10 billion people by mid-century, and, optimistically, all of them are fully decarbonised and wealthy. Suppose further that clean electricity production reaches 20 MWh per person per year, for a global total of 200,000 TWh per year.
Let’s assume that solar PV provides 80% of this energy, with the remainder coming from wind, hydro and other clean energy technologies. For this task, we need about 100 TW of PV, assuming an average capacity factor of 18%. This capacity factor assumes a mix of rooftop, floating, ground-mounted and tracking solar, and takes into account the fact that three-quarters of the world’s population lives in the sun belt, below 35 degrees latitude.
The wholesale price of solar panels has fallen below $0.12/W, which is about $25/m2. If we estimate that the cost of solar panels will eventually drop to $0.10/W and that panels have an average life of 25 years, the annual steady-state demand for solar panels is therefore $10 trillion divided by 25 years, or $400 billion per year.
By comparison, the worlds gross domestic product is about $100 trillion a year, or 250 times as much, and could be much higher by mid-century. Spread across 10 billion people, $400 billion a year for solar panels amounts to just $40 per person per year. This is a tiny fraction of the annual income of a well-off person. In other words, photovoltaic modules are very cheap and long-lasting.
Business interruptions
Electrifying everything through solar and wind power eliminates vulnerability to disruption of fossil fuel supplies for vehicles, heating and cooling, industry and aviation.
If solar panel shipments from China were disrupted by trade disruption, war, or a pandemic, a slow power shortage could result. It would take several years before the lack of solar panel supply became severe. This is fundamentally different from the disruption of coal, oil, and gas supplies, which cause economic disruption on a timescale of weeks.
Other countries would have plenty of time to start producing their own solar panels, albeit at a slightly higher cost. There is nothing about solar panel production that is intrinsic to China.
Solar power confers a high degree of economic resilience to trade disruption by ditching fossil fuels. If the supply of solar panels from China were to abruptly cease, it would be a nuisance rather than a crisis.
The photovoltaic advantage
Solar PV and wind are on track to dominate global electricity production. By 2023, solar and wind will provide 80% of new global generating capacity. Also in 2023, global annual net new deployment of solar capacity doubled the sum of all other power generation technologies combined. Global solar capacity and solar generation are doubling every three years.
Solar energy is not limited by cost, land availability, material availability, or environmental and social impact. No other energy technology can match it.
The solar industry is based on the silicon solar cell, invented in 1954. Silicon is the second most abundant element in the Earth’s crust (27%) after oxygen and is inexhaustible. Recently, Longi announced a new cell efficiency of 27.3%. Commercial solar cells improve by around 0.5% per year and the efficiency of full-size solar panels could exceed 26% by around 2030. Improving cell efficiency reduces costs across the value chain by increasing energy output per unit area.
The power and surface area of ??solar panels with an efficiency of 26% required per well-off person in our prospective scenario, 20 MWh per person per year, are 10 kW and 40 m2 respectively. Panel recycling is not a major task, as only 1.6 m2 of panels per person per year will be removed.
Authors: Prof. Ricardo Rüther (UFSC), Prof. Andrew Blakers /ANU
Andrew.blakers@anu.edu.au
rruther@gmail.com
ISES, the International Solar Energy Society, is a UN-accredited NGO founded in 1954 that works towards a world with 100% renewable energy for all, used efficiently and prudently. |
