Production scale, not lower labor costs, drives China’s current advantage in manufacturing photovoltaic (PV) solar energy systems, according to a new report released today by the Energy Department’s National Renewable Energy Laboratory (NREL) and the Massachusetts Institute of Technology (MIT).
Although the prevailing belief is that low labor costs and direct government subsidies for PV manufacturing in China account for that country's dominance in PV manufacturing, the NREL/MIT study shows that a majority of the region's current competitive advantage comes from production scale enabled, in part through preferred access to capital (indirect government subsidies), and resulting supply chain benefits. The study’s findings also suggest that the current advantages of China-based manufacturers could be reproduced in the United States.
“Assessing the Drivers of Regional Trends in Solar Photovoltaic Manufacturing,” co-authored by NREL and MIT, and funded by the Energy Department through its Clean Energy Manufacturing Initiative, was published today in the peer-reviewed journal Energy & Environmental Science. By developing manufacturing cost models, the team of researchers examined the underlying causes for shifts from a global network of manufactures to a production base that is now largely based in China.
The study shows that China’s historical advantage in low-cost manufacturing is mainly due to advantages of production scale, and offset by other country-specific factors, such as investment risk and inflation. The authors also found that technology innovation and global supply?chain development could enable increased manufacturing scale around the world, resulting in broader, subsidy?free PV deployment and the potential for manufacturing price parity in most regions. Their analysis indicates that further innovations in crystalline silicon solar cell technology may spur new investment, significantly enhancing access to capital for manufacturers in most regions and enabling scale-up, thus equalizing PV prices from manufacturers in the United States and China.
“Our analysis finds that investments in technology research and development are critical not only to the widespread deployment of solar PV in most locations, without subsidy, but also may equalize factors that affect regional competitiveness, thus creating opportunities for U.S.-based manufacturers,” NREL Senior Analyst Alan Goodrich said. “The race for cost-competitive clean energy from the sun is far from over and incredible growth opportunities remain.”
“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 research team relied on industry-validated manufacturing cost models to calculate minimum sustainable prices (MSP) for monocrystalline silicon solar panels manufactured in the United States and in China, simulating how a global manufacturing firm decides where to locate its factories. The MSP represents the minimum price at which a company can sell its products, while providing expected returns to sources of capital — conditions that are necessary to sustain growth without subsidies.
Excluding shipping costs, the team estimated that China?based manufacturers have a 23% MSP advantage over U.S.?based manufacturers today, taking into account differences in the manufacturing costs of modules, wafers, and cells within each country. Scale and supply?chain advantages account for the majority of a Chinese factory’s MSP advantage. These advantages, which are not inherent to China, could be replicated by U.S.-based manufacturers if comparable scale can be achieved.
To motivate serious capital investment in the U.S. to manufacture PV at scale, the technology must be truly innovative, low cost, and able to compete subsidy-free. “The ‘holy grail’ is an innovative PV module with high efficiency, low material costs, streamlined and scalable manufacturing, and unquestionable reliability,” said Tonio Buonassisi, associate professor at MIT and co-author of the study. “The PV modules you can buy today have a few of these attributes, but not all of them together. Thus, practical technological innovation is a key driver to accelerate the convergence between photovoltaics and traditional energy sources, both in terms of price and scale. This common goal, for the benefit of all nations, is an opportunity for international cooperation that leverages our complementary strengths.”
NREL is the U.S. Department of Energy's primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for the Energy Department by The Alliance for Sustainable Energy, LLC.
Visit NREL online at www.nrel.gov
David Glickson | EurekAlert!
New study first to predict which oil and gas wells are leaking methane
21.12.2018 | University of Vermont
Droughts boost emissions as hydropower dries up
21.12.2018 | Stanford's School of Earth, Energy & Environmental Sciences
The scientific and political community alike stress the importance of German Antarctic research
Joint Press Release from the BMBF and AWI
The Antarctic is a frigid continent south of the Antarctic Circle, where researchers are the only inhabitants. Despite the hostile conditions, here the Alfred...
World first experiments on sensor that may revolutionise everything from medical devices to unmanned vehicles
The new sensor - capable of detecting vibrations of living cells - may revolutionise everything from medical devices to unmanned vehicles.
Dead and alive at the same time? Researchers at the Max Planck Institute of Quantum Optics have implemented Erwin Schrödinger’s paradoxical gedanken experiment employing an entangled atom-light state.
In 1935 Erwin Schrödinger formulated a thought experiment designed to capture the paradoxical nature of quantum physics. The crucial element of this gedanken...
Cellulose obtained from wood has amazing material properties. Empa researchers are now equipping the biodegradable material with additional functionalities to produce implants for cartilage diseases using 3D printing.
It all starts with an ear. Empa researcher Michael Hausmann removes the object shaped like a human ear from the 3D printer and explains:
The phenomenon of so-called superlubricity is known, but so far the explanation at the atomic level has been missing: for example, how does extremely low friction occur in bearings? Researchers from the Fraunhofer Institutes IWM and IWS jointly deciphered a universal mechanism of superlubricity for certain diamond-like carbon layers in combination with organic lubricants. Based on this knowledge, it is now possible to formulate design rules for supra lubricating layer-lubricant combinations. The results are presented in an article in Nature Communications, volume 10.
One of the most important prerequisites for sustainable and environmentally friendly mobility is minimizing friction. Research and industry have been dedicated...
16.01.2019 | Event News
14.01.2019 | Event News
12.12.2018 | Event News
18.01.2019 | Materials Sciences
18.01.2019 | Life Sciences
18.01.2019 | Health and Medicine