China Dominating Solar Panel Industry


Ten years ago, solar panels were made mostly in the United States, Germany, and Japan. Chinese manufacturers made almost none. But by 2006, the Chinese company Suntech Power had the capacity to make over a million silicon-based solar panels a year and was already the world’s third-largest producer. Today Chinese manufacturers make about 50 million solar panels a year—over half the world’s supply in 2010—and include four of the world’s top five solar-panel manufacturers. What makes this particularly impressive is that the industry elsewhere has been doubling in size every two years, and Chinese manufacturers have done even better, doubling their production roughly every year.

This dominance isn’t due to cheap labor in Chinese factories: making solar cells requires such expensive equipment and materials that labor contributes just a small fraction of the overall cost. Nor is it because the Chinese companies have introduced cells that last longer or produce more power: by and large, they make the same type of silicon-based solar panels as many of their competitors around the world, using the same equipment. They have succeeded in large part because it’s faster and cheaper for them to build factories, thanks to inexpensive, efficient construction crews and China’s streamlined permitting process. Though demand for solar power continues to grow around the world, the market is flooded with photovoltaic panels: worldwide production capacity more than doubled from 2009 to 2010 and continued to increase in 2011.

Yet despite their potential advantages, it has been difficult for thin-film solar cells to compete with the ever decreasing costs and improving efficiency of crystalline silicon ones. One company, Arizona-based First Solar, has succeeded in developing low-cost manufacturing techniques for thin-film solar panels, but these methods use a material—cadmium telluride—that results in panels less efficient than silicon ones. Despite these struggles, it is possible that thin-film technology will eventually challenge conventional solar panels. If that’s true, Chinese makers of crystalline silicon solar cells may not dominate the market forever. But the strategy of first scaling up conventional technology and then introducing innovative designs to keep lowering the cost per watt of solar power has put them in a good position to maintain their lead for years. In the meantime, some, like Suntech, are working to produce thin-film panels of their own. When thin films do replace crystalline silicon, it could be Chinese manufacturers that make them.

via Techonology Review