When Beijing is choked by a smog emergency, the Western press is all over it. Dystopian images of residents blanketed in particulate fit the perception of China as an environmental trainwreck. But China’s pollution challenges obscure a more complex reality: No other country is doing as much to transition the world off of fossil fuels and onto renewable energy.
For years, the Chinese government has subsidized its domestic solar manufacturing industry, flooding the global market with cheap panels and driving down prices worldwide. For China, this was just a good way to make a buck. But it also helped other countries—which had pro-solar policies but couldn’t afford the panels—become actual, real-life solar-powered nations. Today, because of China’s cheap solar panels, the green-energy ambitions of countries across the world have gone from being long shots to slam dunks.
It started with Germany. In April 2000, the national government passed a law requiring all German power companies to buy up excess energy generated by solar. This effectively guaranteed that anyone who installed solar panels could sell the extra power they generated at a premium rate. As a result, demand for solar panels skyrocketed.
But German manufacturers of solar panels couldn’t keep up with the sudden demand for their product. China saw an opening, and the Chinese government helped its solar companies scale up fast. Consumers in countries like Germany, where policies encouraged solar use, began gobbling up the cheap Chinese panels—and China’s solar industry soon ballooned to become the world’s largest.
By solving the world’s problem of how to meet surging demand for solar power, China inadvertently became the factory floor that powered the global green-energy revolution.
“They fundamentally changed the economics of solar all over the world,” the director of the Solar Institute at George Washington University told ClimateWire in 2016. Between 2008 and 2013, global prices for solar panels plummeted by 80 percent, thanks mainly to China cornering the market. Today, seven out of ten solar panels are manufactured in China.
China’s barnstorming the world with solar panels has fueled a dramatic rise in renewable energy use. The 2019 Renewables Global Status Report found that “renewable energy has been established globally as a mainstream source of electricity generation,” and now accounts for more than 26 percent of worldwide electricity generation. The same report two years earlier found that “solar generation, in particular, is surging worldwide at a much faster pace than expected,” and concluded that “China is one of the driving forces behind the solar power boom.” It’s one of the primary reasons that CO2 emissions in much of Europe are, after many years of policy pushes, starting to drop.
This all may sound like bad news for solar industries outside of China. But the fact is, in countries like the U.S., manufacturing is only about one-third of the solar business. Solar firms employ far more workers for assembly and installation of solar arrays, and rely on solar’s popularity—powered by cheap Chinese panels—to keep this work flowing in.
But will it? China has recently stirred uncertainty by flirting with the idea of decreasing government subsidies for its solar companies. And the Trump administration hasn’t helped with its tariffs. And yet, most analysts expect cheap panels to keep flowing out of China. Perhaps counterintuitively, the Chinese government’s move to slash solar subsidies is forcing firms to drop their prices to stay competitive, which could “create a glut of solar panels and send their prices tumbling worldwide,” reports InsideClimateNews,
This is why an analysis published in April by the Asia Europe Clean Energy Solar Advisory (AECEA) predicted that “China’s solar market would steadily transition to a subsidy-free market by 2021,” at which time the solar panel manufacturing business will stand on its own two feet, and the industry will achieve what its advocates have long been waiting for: sustainability.
This story is part of a collection called Doing Good is Good Business: Stories about generating clean energy while making a buck. Read more here.