A new study from Massachusetts Institute of Technology (MIT) and the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) has debunked the belief that low wages and massive government subsidies are responsible for China’s dominance of the global solar panel market.
The study found the main reasons for low PV prices in China – which as of 2011 produced 63 percent of the world’s solar panels – are highly-developed supply chains and economies of scale. According to the NREL, the findings suggest that the current advantages of China-based manufacturers could be reproduced in the United States.
The report, Assessing the Drivers of Regional Trends in Solar Photovoltaic Manufacturing, found the relatively low labour costs in China were negated due to automation in PV cell manufacturing plants and country-specific factors such as inflation.
“Innovation is critical to driving the technological advancements that can position the U.S. to gain greater market share in the global PV supply chain,” said David Danielson, Assistant Secretary for Energy Efficiency and Renewable Energy at the Energy Department.
“We believe that innovation could drive down costs and drive up efficiencies not only in PV manufacturing, but also in the production of other high-tech and high-value clean energy technologies, and position U.S.-based manufacturers to be leaders in one of the most important global economic races of the 21st century.”
The MIT/NREL team applied a minimum sustainable prices (MSP) benchmark for monocrystalline silicon solar panels manufactured in the United States and in China. MSP is the minimum price a company can sell its products, without subsidy, while still delivering a profit.
Today, Chinese solar producers have a 23 percent MSP advantage over their U.S. counterparts, but the American solar cell industry could achieve the same results by replicating the scale and supply chain advantages enjoyed by their Chinese counterparts.
Tonio Buonassisi, an associate professor of mechanical engineering at MIT and co-author of the report, said that MSP costs in the USA are higher than the market price of solar panels, which is not sustainable long term. “That’s why improved technology is essential,” he said.