China's solar exports grew 64% in 2022 to $52bn despite global tensions, according to analysis by UK consultancy Wood Mackenzie.
"Trade tensions have taken a back seat to high power prices driven by the energy crisis, and this is causing consumers and developers from around the world to buy more solar panels from China,” said Alex Whitworth, research director at Wood Mackenzie.
China’s exports were mainly dominated by modules in 2022 – and Europe remained the country’s top solar module export market with a 56% share, according to Wood Mackenzie findings.
But solar cells saw more than 100% growth as the global photovoltaics (PV) market expanded, with Southeast Asia taking a 31% share of China’s solar cell exports.
US tariffs on Chinese-made modules have driven module production to Southeast Asia, where many manufacturing facilities import cells from China. US President Joe Biden has paused new tariffs on Southeast Asian solar imports.
Chinese modules maintained their cost-competitiveness against other markets in 2022 and were up to 57% cheaper than US- and EU-produced modules. This price gap was mainly driven by material cost, where China holds the advantage due to low energy costs, scale advantages and government support, whereas US and EU solar module manufacturing is not competitive without subsidies.
In addition to domestic supply needs, Chinese export capacity for upstream wafers and cells will grow to more than 230 GW in 2026, more than sufficient to meet the anticipated global market demand of 170 GW in 2026 outside China.
China’s PV industry is highly profitable and is re-investing its profits to expand domestic capacity while also attracting new investors, said Wood Mackenzie.
Available module capacity for export in China is also expected to grow gradually to 149 GW by 2026, leaving some room for other markets to expand module production. More manufacturers are investing in upstream sectors that are more profitable than modules.
“The US is counting on the IRA [Inflation Reduction Act], which will allocate at least $41bn to stimulate domestic manufacturing,” said Whitworth. “But costs still favour imported modules, and even as more local module production comes online in coming years, there will be persistent dependence on imports of components from Asia.”
The US government’s aim to produce 100% US-made modules by 2026 will be difficult due to a significant lack of wafer and cell production in the region, and incentives cannot fully bridge the manufacturing cost gap between US-made modules and Chinese ones, cautioned the report.
“In Europe, the EU is advocating trade restrictions to secure local PV manufacturing but lacks specific policies to propel capacity build‑outs and displace imports. India also has great ambitions to expand its PV manufacturing, but financial support is insufficient to reach aggressive targets,” added Whitworth.
With a mature supply chain and large production capacity for export, Southeast Asia has benefited from China-targeted PV trade policies by the US, as more module production has moved to the region. However, Chinese manufacturers hold 55% of Southeast Asia’s PV manufacturing capacity, which relies on Chinese-produced components.
“As more markets demand local jobs and investment for solar, Chinese manufacturers are well positioned to grow as global technology providers,” added Whitworth.
Companies outside China also have opportunities, but it will be challenging for them to escape China’s low-cost supply chain and pool of expertise that has taken over a decade to develop.
“China’s massive domestic market scale and supply chain are in a league of their own and appear to be on a sustainable growth trajectory, making it hard for other global players to displace. The race to dominate global solar markets this century is not over, but Chinese companies have a strong lead and are not slowing down,” Whitworth concluded.