- China has become the global leader in solar energy production, outpacing the rest of the world in commissioning solar energy.
- The US, EU, and other countries are trying to protect their markets and stay competitive by offering subsidies and tax breaks and placing limits on tariff-free imports.
- China's dominance has driven down prices and spurred innovation, but it has also caused European manufacturers to struggle and lose jobs.
- Brazil and the US are taking steps to reduce dependence on Chinese solar products and increase their own production.
- Europe's early role in driving growth in the solar sector has been overshadowed by China's dominance, leading to job losses and a debate on the cost of the energy transition.
- China's dominance has helped drive global investment and renewable energy targets are being met ahead of time.

- Europe is ahead in solar energy capacity by 1 decade
- China is winning the next race
- Latin America and the U.S. are also in the race
- Consumers and clean energy advocates are the winners
- International trade is favored by most European governments
- Companies in other countries producing something cheaply is just part of life

China controls the majority of the global manufacturing process for solar energy – a stark contrast to its position 15 years ago, when Europe was the sector's unchallenged leader. The reason? A heavily subsidized industry and lots of government financing. As well as a sharp decline in costs for consumers. But Western nations decry an unfair market advantage. One Swiss solar panel maker is determined to stay competitive, by moving its manufacturing from Germany to the U.S. -- where energy prices are lower and they can tap into incentives offered under the Inflation Reduction Act. Do they stand a chance? And is it so bad if China dominates the market?

00:00 THE RACE FOR SOLAR POWER
00:36 GERMANY LOSES ITS GRIP
02:07 HOW DID CHINA GET SO FAR AHEAD?
03:08 SOLAR PRODUCTION IN THE AMERICAS
08:06 IS IT SO BAD IF CHINA DOMINATES THE MARKET?
09:28 A BRIGHT FUTURE FOR SOLAR ENERGY

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#TransformingBusiness #Solar #China

When it comes to solar power, China is outpacing everyone.

Last year, it commissioned as much solar energy as the entire world did in 2022.

The driving that China has done, the clean energy economy actually has been really, really beneficial.

The US, the EU, and other countries are desperate to protect their markets and stay competitive.

They're doling out subsidies, promising tax breaks, and placing limits on tariff-free imports.

We'll start in Bittefeld, Wölfen, Germany, where Swiss solar panel manufacturer, Mayer Burger, makes some of its products.

The company is a leading manufacturer of solar cells and modules.

It employs over a thousand people, but it's having a bit of a crisis.

Lately, it's had to confront the challenges of manufacturing in Europe, where energy and production costs have risen significantly, making it difficult to turn a profit.

The Chinese solar modules flooding the market are cheaper and in some cases more efficient – a reality that has pushed several European manufacturers into bankruptcy.

And yet, by the end of the year, a new Mayaboga factory is slated to be up and running.

But it won't be in this German town of roughly 40,000 people.

It'll be in Colorado Springs, USA, where it can take advantage of incentives for green tech companies under the U.S.

Inflation Reduction Act, known as the IRA, something we'll delve into a little later.

Mayerberger CEO Gunther Erfurt has gone as far as threaten to shut down manufacturing in Germany if the government doesn't provide incentives that are equivalent to those offered under the IRA, putting 500 jobs at risk.

Mayerberger didn't respond to our request for an interview, but Erfurt has made his position clear.

Well, in the early 2000s, the country was experiencing a severe shortage of 1 of the main raw materials needed to make solar panels.

It was buying it from other countries at a very high price.

Making polysilicon became a national priority.

Local governments fast track permission for the construction of new plants and state owned companies and banks poured money into the new facilities.

And as a result manufacturing capacity shot up.

According to Chinese outlet PV time 1 of the many who track the growth.

China has been in a sense the perfect country to do this because the political system allows for the integration of consumption and production policies and it allows for long-term thinking.

Richard Black is a director of policy and strategy at global energy think tank, Ember.

There are some countries in the world where this probably couldn't have happened because they don't have those things at all.

Government policy and heaps of state funding acted as a powerful sharpening steel to the country's competitive edge.

China now controls 80 to 95% of the entire global solar production supply chain.

Its tight grip on the supply chain has driven down prices and spurred innovation.

But what's the impact of China's productivity on other countries?

Latin America's biggest economy is leading the renewable energy boom taking place across the continent.

Not only does the country get copious amounts of the sun's rays, but it benefits from newly enacted laws that protect local manufacturers.

President Lula da Silva's administration scrubbed tax reductions on imported solar modules from China and raised import fees on assembled ones.

Brazilian trade group Absalar isn't convinced this will work.

National companies, they do not have the ability to produce what we need.

They don't have the ability to supply what the local markets demands.

Anna Martinez says the measures might have a negative impact.

And that's the thing is a bigger complication because we are now trying to tax something to foster the local industry but the local industry is not able to supply everything that the national solar industry demands.

And while Brazil takes steps to protect its domestic industry, it still relies on Chinese financing to help pave its path to green energy.

And Brazil isn't the only country trying to reduce dependence on China.

In the U.S., President Biden's Inflation Reduction Act has fueled solar investment and growth.

These blue dots show the sites of future solar manufacturing facilities.

For Mayer Burger, building a whole new plant in Colorado Springs gives it access to tax credits up to $1.4 billion, as well as get state support and a hefty loan from the U.S.

Department of Energy, none of which it would get if it expanded manufacturing in Germany.

But companies planning to begin or expand operations in the US shouldn't get too comfortable just yet.

If Donald Trump wins a second presidential race, the solar subsidies could be in jeopardy.

His advisors have said that if elected, Trump will look to cut much of Biden's plan and loosen restrictions for fossil fuel producers again.

Though at this point, there may not be as much global buy-in.

It's hard to see that working really, especially as many other countries are also planning to increase their fossil fuel production at a time when global demand is going to shrink.

But how did Europe lose its way in the first place?

So Germany's role back in the early 2000s was extremely important.

Germany created the first real continuing big market for solar panels.

Generous government subsidies in Germany and Italy helped drive down costs.

By 2010 the EU had doubled growth in the solar sector from the previous year.

But soon solar equipment from China began to flow into the market, selling for less than what it costs to make its equivalent in Europe.

China was subsidizing heavily solar modules, so they came up with dumping prices on the market.

And there was no control from the European side on it.

Claudia Kempfert is an economist and energy expert.

The European solar producers, especially the German ones, could not really compete with China.

European solar panel makers like Con Energy and Solar World struggled to stay afloat.

As China took steps to increase its manufacturing power, Europe took steps to protect its market from cheaper Chinese products.

In 2013, the EU imposed limits on tariff-free goods coming from the country.

In Germany, we lost over 100,000 jobs in the solar sector because of this heavy subsidizing of solar modules in China.

And we had a huge debate of whether or not the energy transition is costly or should we do it or not.

And all this came to the situation that we were not the solar market leaders anymore.

But is it so bad if China dominates the market?

Today, solar-powered energy is the cheapest form of electricity for the majority of countries that use it, and that's thanks to China's output.

And the price of installation keeps dropping.

Estimates put the cost somewhere between $300 and $900 per kilowatt by 2030.

Japanese electronics giant Panasonic shut down production at its solar panel factories at home and in Malaysia a few years ago, choosing to outsource it to a subcontractor instead.

Arm of South Korea's LG shut down its plant in Huntsville, Alabama in 2022, citing higher costs for materials and logistics, along with severe supply issues.

And remember Mayer Burger from the beginning of this video?

They want to stay in the game, but it's too expensive in Europe.

We should not be too dependent on imports of solar modules and produce our own solar modules in Europe, in Germany as well, and keep the jobs also here.

And there is a market advantage if we would do so and not leave the whole market dominance to 1 nation, which is China.

So How did China become the global leader in solar energy production?

By trying to solve a domestic problem and then throwing state funding and its formidable manufacturing weight behind it.

It helped drive global investment and renew the commitment to solar power.

Thanks in large part to this burgeoning economy China and a majority of EU bloc countries will hit their renewable energy targets for 2030 ahead of time.

And in the race for more solar energy capacity Europe is ahead 1 decade.

But it's consumers and clean energy advocates that emerge victorious.

If your government that's in favor of international trade and most European governments are in favour of international trade in principle, then you can't really complain when companies in another country start producing something that you want and they're producing it really cheaply and so on and exporting it to you, that's just part of life.


Speaker 0: When it comes to solar power, China is outpacing everyone. Last year, it commissioned as much solar energy as the entire world did in 2022.

Speaker 1: The driving that China has done, the clean energy economy actually has been really, really beneficial.

Speaker 0: Not everyone sees it that way, though. The US, the EU, and other countries are desperate to protect their markets and stay competitive. They're doling out subsidies, promising tax breaks, and placing limits on tariff-free imports. So how did China become so unbeatable? And is that a bad thing?

We'll start in Bittefeld, Wölfen, Germany, where Swiss solar panel manufacturer, Mayer Burger, makes some of its products. The company is a leading manufacturer of solar cells and modules. It employs over a thousand people, but it's having a bit of a crisis. Lately, it's had to confront the challenges of manufacturing in Europe, where energy and production costs have risen significantly, making it difficult to turn a profit. The Chinese solar modules flooding the market are cheaper and in some cases more efficient – a reality that has pushed several European manufacturers into bankruptcy.

And yet, by the end of the year, a new Mayaboga factory is slated to be up and running. But it won't be in this German town of roughly 40,000 people. It'll be in Colorado Springs, USA, where it can take advantage of incentives for green tech companies under the U.S. Inflation Reduction Act, known as the IRA, something we'll delve into a little later. Mayerberger CEO Gunther Erfurt has gone as far as threaten to shut down manufacturing in Germany if the government doesn't provide incentives that are equivalent to those offered under the IRA, putting 500 jobs at risk.

Mayerberger didn't respond to our request for an interview, but Erfurt has made his position clear. So how did China get so far ahead? Well, in the early 2000s, the country was experiencing a severe shortage of 1 of the main raw materials needed to make solar panels. Polysilicon. It was buying it from other countries at a very high price.

So Beijing took action. Making polysilicon became a national priority. Local governments fast track permission for the construction of new plants and state owned companies and banks poured money into the new facilities. And as a result manufacturing capacity shot up. Here's how much.

According to Chinese outlet PV time 1 of the many who track the growth.

Speaker 1: China has been in a sense the perfect country to do this because the political system allows for the integration of consumption and production policies and it allows for long-term thinking.

Speaker 0: Richard Black is a director of policy and strategy at global energy think tank, Ember.

Speaker 1: There are some countries in the world where this probably couldn't have happened because they don't have those things at all.

Speaker 0: Government policy and heaps of state funding acted as a powerful sharpening steel to the country's competitive edge. China now controls 80 to 95% of the entire global solar production supply chain. Its tight grip on the supply chain has driven down prices and spurred innovation. But what's the impact of China's productivity on other countries? Let's go to Brazil as an example.

Latin America's biggest economy is leading the renewable energy boom taking place across the continent. Not only does the country get copious amounts of the sun's rays, but it benefits from newly enacted laws that protect local manufacturers. President Lula da Silva's administration scrubbed tax reductions on imported solar modules from China and raised import fees on assembled ones. Brazilian trade group Absalar isn't convinced this will work.

Speaker 2: National companies, they do not have the ability to produce what we need. They don't have the ability to supply what the local markets demands.

Speaker 0: Anna Martinez says the measures might have a negative impact.

Speaker 2: And that's the thing is a bigger complication because we are now trying to tax something to foster the local industry but the local industry is not able to supply everything that the national solar industry demands.

Speaker 0: And while Brazil takes steps to protect its domestic industry, it still relies on Chinese financing to help pave its path to green energy. And Brazil isn't the only country trying to reduce dependence on China. In the U.S., President Biden's Inflation Reduction Act has fueled solar investment and growth. These blue dots show the sites of future solar manufacturing facilities. There are more than 40 of them.

For Mayer Burger, building a whole new plant in Colorado Springs gives it access to tax credits up to $1.4 billion, as well as get state support and a hefty loan from the U.S. Department of Energy, none of which it would get if it expanded manufacturing in Germany. But companies planning to begin or expand operations in the US shouldn't get too comfortable just yet. If Donald Trump wins a second presidential race, the solar subsidies could be in jeopardy. His advisors have said that if elected, Trump will look to cut much of Biden's plan and loosen restrictions for fossil fuel producers again.

Though at this point, there may not be as much global buy-in.

Speaker 1: It's hard to see that working really, especially as many other countries are also planning to increase their fossil fuel production at a time when global demand is going to shrink.

Speaker 0: But how did Europe lose its way in the first place?

Speaker 1: So Germany's role back in the early 2000s was extremely important. Germany created the first real continuing big market for solar panels.

Speaker 0: Generous government subsidies in Germany and Italy helped drive down costs. By 2010 the EU had doubled growth in the solar sector from the previous year. But soon solar equipment from China began to flow into the market, selling for less than what it costs to make its equivalent in Europe.

Speaker 3: China was subsidizing heavily solar modules, so they came up with dumping prices on the market. And there was no control from the European side on it.

Speaker 0: Claudia Kempfert is an economist and energy expert.

Speaker 3: The European solar producers, especially the German ones, could not really compete with China.

Speaker 0: European solar panel makers like Con Energy and Solar World struggled to stay afloat. As China took steps to increase its manufacturing power, Europe took steps to protect its market from cheaper Chinese products. In 2013, the EU imposed limits on tariff-free goods coming from the country. But it was too little, too late.

Speaker 3: In Germany, we lost over 100,000 jobs in the solar sector because of this heavy subsidizing of solar modules in China. And we had a huge debate of whether or not the energy transition is costly or should we do it or not. And all this came to the situation that we were not the solar market leaders anymore.

Speaker 0: But is it so bad if China dominates the market? Today, solar-powered energy is the cheapest form of electricity for the majority of countries that use it, and that's thanks to China's output. And the price of installation keeps dropping. Estimates put the cost somewhere between $300 and $900 per kilowatt by 2030. Though it's not all positive.

Japanese electronics giant Panasonic shut down production at its solar panel factories at home and in Malaysia a few years ago, choosing to outsource it to a subcontractor instead. And the U.S. Arm of South Korea's LG shut down its plant in Huntsville, Alabama in 2022, citing higher costs for materials and logistics, along with severe supply issues. And remember Mayer Burger from the beginning of this video? They want to stay in the game, but it's too expensive in Europe.

Speaker 3: We should not be too dependent on imports of solar modules and produce our own solar modules in Europe, in Germany as well, and keep the jobs also here. And there is a market advantage if we would do so and not leave the whole market dominance to 1 nation, which is China.

Speaker 0: So How did China become the global leader in solar energy production? By trying to solve a domestic problem and then throwing state funding and its formidable manufacturing weight behind it. And is that bad? It helped drive global investment and renew the commitment to solar power. Thanks in large part to this burgeoning economy China and a majority of EU bloc countries will hit their renewable energy targets for 2030 ahead of time.

And in the race for more solar energy capacity Europe is ahead 1 decade. China is winning the next. Latin America and the U.S. Throw their hats into the ring. But it's consumers and clean energy advocates that emerge victorious.

Speaker 1: If your government that's in favor of international trade and most European governments are in favour of international trade in principle, then you can't really complain when companies in another country start producing something that you want and they're producing it really cheaply and so on and exporting it to you, that's just part of life. You

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Why is the West so desperate to compete with China's solar sector? | Transforming Business