Nature and Biodiversity

We need new solar supply chains. Here's why

Davos 2023 ; Currently, more than 80% of solar panel production – in all phases – is concentrated in China, and that figure could soon reach 95% for some fundamental components.

Currently, more than 80% of solar panel production – in all phases – is concentrated in China, and that figure could soon reach 95% for some fundamental components. Image: Anders J/Unsplash

Francesco Starace
Partner, EQT Infrastructure Advisory, EQT
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This article is part of: World Economic Forum Annual Meeting

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  • Through innovation and clear planning, solar PV can benefit various energy grids and new markets.
  • According to the IEA, annual additional PV power output must at least quadruple by 2030, if we are to reach the net zero goal by 2050.
  • Solar manufacturing giga-factories can alleviate the pressure on energy systems around the world.

The spectacular global growth of solar power, which is one of the driving forces in the energy transition, requires a similar increase in the production of solar panels. Here's where the sector is now - and what we need to make possible.

What's in place now: Concentrated manufacturing hubs

Currently, more than 80% of solar panel production – in all phases – is concentrated in China, and that figure could soon reach 95% for some fundamental components. This phenomenon is so marked that the International Energy Agency (IEA) has, for the first time, produced an entire Special Report on Solar PV Global Supply Chains.

China’s competitive labour market, availability of raw materials and ability for economies of scale has made it the clear global solar leader. China’s massive production of panels has enabled the strong global growth of solar energy. This has lowered costs and made it more affordable than fossil fuels.

China’s solar panel industry could not, despite its size, meet global demand on a long-term basis: according to the IEA, annual additional PV power output must at least quadruple by 2030, if we are to reach the net zero goal by 2050.


What's the World Economic Forum doing about the transition to clean energy?

What's emerging: New giga-factories

Outside of China, other countries and companies are working hard to boost the global solar supply chain so that we can reach our net zero goals. In Sicily, in southern Italy, a solar panel factory (the 3SUN Gigafactory) has, through a combination of continuous innovation and production since 2010, positioned itself as a leader in the renewable energy space.

It started production in 2011 using thin-film silicon technology, which at the time was mainstream. It had an efficiency level of around 10% and a lifespan of 25 years. Since then, there has been a process of continuous innovation. This was firstly with bifacial panels which could use both direct sunlight and that which was reflected on the ground and onto the back of the panel. Then hetero-junction technology (HJT) was introduced: HJT panels have an efficiency level of 21% - 24% and a lifespan of up to 35 years. The TANGO (iTaliAN pv Giga factOry) project, with the backing of the European Union, will now enable the facility to increase the current production level to 3 GW a year, thus becoming the largest solar factory in Europe.

Currently, research is focused on Tandem Cells, which consist of two overlapping cells: one is “traditional,” while the other is made of perovskite. This not only uses solar radiation in the red wavelength, but also the blue.

Such were the results that had been achieved, the Catania factory was able to make a decisive leap forward in 2022. Thanks to an investment of some €600 million, of which €118 million comes from the European Innovation Fund for large-scale projects, 3Sun will become a giga-factory.

Lessons learned

Technological innovation has played a key role in increasing the efficiency of solar panels to levels that were previously considered impossible. There isn’t only an environmental benefit for the energy transition, but also a competitive one for manufacturers. In other words, innovation and technological excellence can make a difference.

If that’s the first lesson that can be learnt, then the second concerns the importance of international cooperation. This giga-factory began with Japanese technology. It then developed HJT panels with France’s CEA-INES and is now working on the Tandem cell with Italian research institutes. These include ENEA (the national agency for new technologies, energy and sustainable development), the CHOSE center at the University of Rome in Tor Vergata, the Istituto di Struttura della Materia (the Institute for the Structure of Matter) at CNR (the National Research Council) and BeDimensional, a spin-off of Graphene Labs at the Istituto Italiano di Tecnologia (the Italian Institute for Technology) in Genoa.

These are just a few examples of a promising future: economic globalization and the opening up of markets enable companies to look for the most innovative solutions, no matter where they come from. Furthermore, this shows that in today's world, no one is self-sufficient: public and private entities must make their own wealth of skills, experience and resources available.

Lastly, the key element that enabled 3Sun to make a great leap forward was the granting of European Union funds. Funding is essential for technological innovation for the energy transition.

What's needed next?

Solar technology must now be scaled. We need many more Gigafactories. This can be achieved through international partnerships and national and supranational funds.

We must heed the IEA’s recommendations for incentivizing investment with tax breaks, allocating funds for technological research, and adopting stringent regulations in favour of the circular economy. We need to recycle materials and produce devices and components that were conceived right from the design stage with a view to their reuse. This will reduce the need for raw materials.

If these suggestions were ignored, then entities like 3Sun could risk being just individual isolated cases: they might be technologically advanced, but they would have little global impact. In this way, the energy transition would suffer, not only on account of the afore-mentioned risks, but also because the rate of technological innovation would slow down.

If numerous giga-factories were to be built, then solar energy all over the world could continue to grow, thus making a vital contribution to the protection of the environment. The 3Sun experience shows that this is possible.

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