China dominates the expansion of solar capacity

Solar energy: falling panel prices, sharply rising capacity

Sources: Ember, DWS Investment GmbH as of 8/28/24

We expect China's dominance to continue to grow this year. According to China's National Energy Administration (NEA), the country's photovoltaic capacity increased by 123 gigawatts from January to July. This took the country’s total photovoltaic capacity to 740 gigawatts, an increase of around 50%, while wind power capacity was around 470 gigawatts, an increase of 20%.^[1] Given these figures, we expect renewable energy capacity to continue to grow through 2024.

The price trend in solar panels is also impressive, which is a direct consequence of the increased capacity. According to the International Energy Agency (IEA), spot prices for photovoltaic solar modules fell by almost 50% year-on-year in 2023, while production capacity tripled since 2021.^[2] Production capacity currently under construction suggests that the global supply of solar modules will reach 1,100 gigawatts by the end of 2024, with production potential likely to be three times higher than current demand forecasts.

China is likely to maintain its leading global position. "It is unlikely that the announced projects will significantly change the high geographical concentration of the overall PV supply chain," says the IEA.^[3] The European Union has recognized the dangers that could arise in the photovoltaic sector as a result of excessive dependence on China, with about 90% of supplies being imported from China. In contrast, solar panel manufacturers in the US have their profits protected by trade barriers and tax benefits. For this reason, the so-called European Solar Charter was signed on April 15, 2024. It sets out immediate action to be taken by the Commission, EU member states and representatives of the PV value chain. This includes wholesale, distribution and manufacturing sectors, "to ensure full compliance with EU competition and state aid rules."^[4]