For countries to transition from fossil fuels to cleaner energies like solar power, component supply chains need to be more geographically diverse, officials said during a solar energy conference in New Delhi on Tuesday.
Currently, 75 percent of the components needed for solar power are made in China, according to a recent report by the International Energy Agency. Representatives at the fifth assembly of the International Solar Alliance, made up of 110 member countries, want that to change.
“By 2030, we expect solar power to be the cheapest source of electricity in most geographies,” said Ajay Mathur, ISA Director General.
Adding that freight prices have skyrocketed, Mathur urged “multiple regions from which solar PV products can move from producer to supplier” to ensure more nations benefit from cheap solar prices.
Launched by India and France at the 2015 Paris climate conference, the ISA aims to promote the use of solar energy as countries seek to reduce their use of fossil fuels to curb global warming. And while China has invested more than $50 billion in new solar power supply capacity (ten times more than Europe) and created more than 300,000 manufacturing jobs, it is not part of the alliance.
“China’s policies have contributed to cost declines of more than 80 percent, helping make solar PV the most affordable electricity generation technology in many parts of the world,” said Heymi Bahar, senior analyst of the International Energy Agency. “However, they have also led to imbalances between supply and demand.”
Bahar added that the global market is almost entirely dependent on China for solar products, with 15 percent of global supply coming from a single Chinese plant, raising concerns that the world is too reliant on a few concentrated supply chains.
“This concentration has already led to price increases during the COVID-19 pandemic and extreme weather events” in China when exports were interrupted, Bahar said. “Diversification will result in a more secure supply chain.”
Industry experts say a diversified supply chain can also boost jobs, grow economies, foster innovations, provide energy security and help countries meet their climate goals.
“Right now, the jobs that are being created in countries like India are mostly on the construction and installation side and not the manufacturing side,” said Ulka Kelkar, who leads India’s climate policy analysis. for the World Resource Institute. “To really benefit from the full potential of solar manufacturing job creation possibilities, it is important to diversify.”
India’s federal energy minister, RK Singh, told the conference on Tuesday that countries have “a responsibility to enable development in parts of the world that lack access to energy and energy security.”
The Indian federal government recently approved $2.6 billion in funding for a production-linked incentive scheme that would encourage the manufacture of home solar modules. The US Inflation Reduction Act also encourages domestic manufacturing of solar power components.
The solar energy market must grow tenfold by the end of the decade if global climate goals are to be met, according to the ISA and the International Energy Agency.
The ISA assembly, which runs through Wednesday, also announced programs that will encourage solar energy investments in Africa, as well as assist startups in the solar energy space.