China's exports of solar panels expected to increase further

China’s exports of solar modules are expected to gain further momentum this year, buoyed by increasing global demand amid the green energy transition as well as Europe’s plan to cut energy imports from Russia, said industry analysts. The increasing demand for solar power worldwide will continuously provide opportunities for solar companies in China, leading to a robust rise in exports of Chinese solar components, said Luo Zuoxian, Director of Intelligence and Research at the Sinopec Economics and Development Research Institute. Compared with China, the world’s top solar manufacturer, Europe’s manufacturing capacity is smaller, and the market needs to rely on China in the short to medium term, he said.

Exports of solar products, together with lithium batteries, lead China’s list of high-tech and high-value exports, according to the Ministry of Commerce (MOFCOM). According to Deutsche Bank, more than one-third of Germany’s small and medium-sized enterprises in the solar industry rely heavily on Chinese supplies. Peter Walch, Purchasing Manager of German solar company Belectric, said the company might not be able to build and develop solar power plants without the core components provided by Chinese companies.

According to BloombergNEF, total exports of solar cells and modules from China rose sharply in 2022 to a record high of USD46.3 billion, up 63% from the previous year. Solar modules with a capacity of 157 gigawatt (GW) and solar cells totaling 24 GW were exported. “China dominates the global solar supply chain, with at least an 80% share of the total manufacturing capacity for photovoltaic module production,” said Tan Youru, Analyst from BloombergNEF.

The EU was the biggest destination for Chinese PV exports in 2022, buying nearly USD23 billion worth of products, up 113% year-on-year, equivalent to about 84 GW of modules, more than half of China’s total module exports in 2022.

BloombergNEF said it expects the market for newly built PV modules to grow by another 8 GW in 2023 in Europe to reach 49 GW, with China contributing significantly to it. Although many countries are hoping to establish solar manufacturing capacity so that they can depend less on China, the capital expenditure required to do that is still significant, especially in the U.S. and Europe, despite the decreasing costs due to efficiency improvements and cheaper equipment over the last decade. Estimates by Pingan Securities show that China will account for a large proportion of solar product exports during the 2022-26 period. The world’s top six PV module manufacturers, including Jinko Solar, LONGi Green Energy Technology and Trina Solar, are Chinese. Jinko Solar, which is based in Shanghai, saw its shipments of PV modules rise to 44 GW last year, ranking second worldwide, with 14 production bases, the China Daily reports.