China’s EV industry future reflects solar power’s extraordinary past growth
Oct 31, 2023
It is a serious mistake to underestimate the strength and capacity of China’s commitment to its green new dream.
Seventeen years ago an American financial services company with a bullish commodity bias, published an article about the prospects for solar power in China that I had written.
At the time solar energy was a niche industry. Costs were much higher than conventional energy sources like coal, gas and nuclear electricity, and analysts were skeptical about the competitiveness and scalability of solar panels.
At the time, Australian investors were more focused on near term investment opportunities in coal uranium gold and base metal opportunities than a niche technology like solar. Skepticism was the order of the day.
A similar transformative journey as was witnessed in the PV sector is emerging again, as technological disruption positions BYD, Geely and Tesla, (with its Shanghai footprint and Chinese battery suppliers) at the vanguard of a green industrial economy in the service of a great new dream.
We can best look ahead at how innovation in electric transportation might proceed by examining the recent history of the development of solar PV.
It will serve as the most recent example of a chronic failure to grasp the new opportunities rising out of innovation in the green economy.
On March 20, 2006 my article “PHOTOVOLTAIC CELLS BLOOM IN CHINA.” featured at financialsense.com.
To make the larger story clear, I centred the tale around Zhengrong Shi, one of the graduate students at the University of New South Wales who began working under Martin Green on a “solar cell” technology called Crystalline Silicon on Glass (CSG).
Unable to secure Government support to develop CSG technology commercially and with no local corporate interest, the technology was sold to a German company in 2004.
In the interim, Zhengrong Shi, with $6 million in Chinese government funding, went back to Wuxi, his hometown, and founded Suntech Power.
Chinese panel production went from 1% of global production to 20% between 2003 and 2008. By 2007, Suntech Power was the world’s 10th-largest solar cell manufacturer, mainly supplying the German market in the face of a severe polysilicon wafer shortage. Raw polysilicon production in Xinjiang hadn’t gotten underway, and with his American wafers, the situation favoured Suntech, which had signed long-term offtake contracts with US foundries before the shortage materialised.
In 2010, Suntech shipped 1.49 GW and was targeting over 2 GW in 2011.
The situation quickly changed; Suntech’s contracts with the US foundries also committed the company to higher costs than the local players who could now access “at-market” wafer and polysilicon prices and assemble them on newer and more efficient production lines. Struggling to keep the company afloat, Shi crossed red lines. The Suntech board declared bankruptcy after defaulting on US$541 million worth of bonds. Shi had been demoted from chairman to director earlier that month.
Before that first industry shakeout, Suntech, Yingli, Trina, and Jinko, together, had about 17% of the global panel market. By early 2014, the three remaining companies had raised their share to 30%. Suntech’s physical assets and intellectual property were acquired by Shunfeng Photovoltaic.
In the meantime, more leading figures appeared, some of whom had also done their postgraduate work under Dr Martin Green.
Dr. Xiaojing Hao – Hao completed her PhD with Green in 1999 and went on to found the Chinese solar company CSI Solar. She served as CTO of CSI Solar.
Dr. Jianhua Zhao – Zhao was part of Green’s research group at UNSW and contributed to the development of the PERC solar cell. He co-founded solar manufacturer China Sunergy in 2004.
Dr. Aihua Wang – Wang worked in Green’s lab at UNSW and was part of the team that set early efficiency records for silicon solar cells.
Dr. Stuart Wenham – Wenham received his PhD under Green in 1987. He co-founded Suntech Power with Shi Zhengrong and served as Chief Technology Officer.
In 2014, Chinese companies began introducing PERC, first licensing the technology. At the same time Chinese equipment makers implemented a coordinated strategy of equipment acquisition, talent recruitment, indigenous innovation, and began “working around” existing intellectual property constraints to develop their own techniques to manufacture bifacial cells. (This innovation captured unutilised sunlight by reflecting it off the back of the cell.)
By 2015, China’s PV manufacturing capacity exceeded 100 GW, accounting for over half of global capacity. Chinese PV manufacturers continued to innovate, developing new technologies such as half-cut cells and pre-assembled shingled modules.
By the end of 2016, China’s PV manufacturing capacity reached 200 GW, nearly two-thirds of global capacity. The Chinese manufacturers introduced passivated contact cells.
By 2018, with a new focus on monocrystalline cells and modules, China’s PV manufacturing capacity exceeded 400 GW, accounting for over four-fifths of global capacity.
The following year, Chinese PV manufacturing capacity reached 500 GW, over five-sixths of global capacity, with new developments in heterojunction and perovskite cells.
China’s PV manufacturing capacity exceeded 600 GW in 2020, 66% of global capacity and increasingly focused on high-efficiency products, such as monocrystalline cells.
By 2021, China was 75% of global capacity, Chinese engineers focused on tandem cells and gigawatt-scale processes.
Last year, China’s PV manufacturing capacity exceeded 800 GW, accounting for 80% of global capacity.
This year, China’s PV manufacturing capacity is expected to reach 900 GW, with nine of every 10 solar new panels made in China.
My original 2006 article highlighted rapid growth, but the Chinese PV industry grew at more than twice the pace as then envisioned.
Total installed solar capacity in China grew from just 0.4 GW in 2006 to over 300 GW by 2021, averaging over 40% annual growth.
The average price of solar panels dropped 90% from 2006 to 2021. This made solar cost-competitive with fossil fuels on a levelised cost of energy basis.
In 2023, solar electricity is the cheapest form of energy in history.
Professor Green’s pioneering work in silicon solar photovoltaics over several decades identifies him as making the most significant individual contribution to the rapid growth and competitiveness of solar PV technology.
Only names like Wang and Musk can reasonably hope to match the scope and scale of Professor Martin Green’s impact.
This also demonstrates that it is a serious mistake to underestimate the strength and capacity of China’s commitment to its green new dream.
Kari McKern, who lives in Sydney, is a retired career public servant and librarian and IT specialist. She has maintained a life time interest in Asian affairs and had visited Asia often, and writes here in a private capacity.
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