After investing over $130bn into the solar industry in 2023, China will hold more than 80% of the world’s polysilicon, wafer, cell, and module manufacturing capacity from 2023 to 2026, according to Wood Mackenzie.
The analysts firm’s report, “How will China’s expansion affect global solar module supply chains?”, found that manufacturing expansion has been driven by high margins for polysilicon, technology upgrades and policy support.
Huaiyan Sun, senior consultant at Wood Mackenzie, and author of the report said: “China’s solar And despite strong government initiatives for developing local manufacturing in overseas markets, China will still dominate the global solar supply chain and continue to widen the technology and cost gap with competitors.”
More than one terawatt (TW) of wafer, cell and module capacity is forecasted to come online by 2024, meaning China’s capacity is sufficient to meet annual global demand now through to 2032, based on Wood Mackenzie forecasts of annual demand growth.
Strong government policies in overseas markets have started to increase local solar manufacturing, but they are still not cost-competitive compared to Chinese supply.
A module made in China is 50% cheaper than that produced in Europe and 65% cheaper than the US, according to the report.
The US and India have announced more than 200GW of planned module capacity since 2022, driven by the Inflation Reduction Act (IRA) in the US and the Production Linked Incentive (PLI) in India.
“Despite considerable module expansion plans, overseas markets still cannot eliminate their dependence on China for wafers and cells in the next three years,” Sun said.