Energy Transition: China and the future of the EU Solar Tech Industry

Abstract

With the 2019 European Green Deal, the EU has set an ambitious roadmap to enable European citizens to benefit from a Green Transition. One of the main goal of the Green Deal is the deployment of renewable energy sources. Within these, solar power has been identified as the fastest growing
source. Within solar technologies, crystalline-silicon (c-Si) based account for a market share of 95%. Nevertheless, large-scale production of solar PVs encounters many challenges, due to the current solar industry design. Countries that aim at developing solar technology on a significant
scale, have to face China’s current market dominance. China is the largest producer, exporter, and installer of solar panels, on a worldwide scale. The final goal of the research is to evaluate if and how could China impede the competitiveness
or market expansion of Member States in the c-Si solar-tech industry. The main research question therefore is: What is China’s market dominance when compared to the European Union in the solar panels
global industry?
The analysis is structured by following the application of a novel Analytical Framework that takes into account all the significant factors that are able to influence the solar market dynamics. From the application of Analytical Framework to the EU-China case-study emerges the Market Dominance
Assessment, that analyses the actual market dominance of China, with respect to the European Union, in the commercialization of c-Si technologies.
Three are the main takeaways that can be drawn from the Market Dominance Assessment. Firstly, China, technically, controls over 80% of the worldwide c-Si solar market; each variable of the Analytical
Framework confirms the predominance of Chinese companies along the global solar supply chain, creating a situation where European parties cannot have access to those resources that allowed China to reach its current status. Secondly, the European Union is dependent on imports of Chinese c-Si panels, at the point that 90% of the current PV installations in the European territory come from China and few other Asian countries; at the same time, the EU is China’s number one trading partner. C-si panels trading, therefore, over years, created a situation of mutual dependency
among the two market parties, where the EU is dependent of Chinese export rates, while
China, to avoid over-supply, is dependent on European import rates. Thirdly, the best market strategy that Member States can apply is to accept and recognize the market dominance of China, and work to strengthen the domestic solar industry by tackling local weaknesses. As outlined in the policy options, the European Union, on my advice, should work, in the first place, towards the
implementation of a European electricity market. In conclusion, the European Union, therefore, remains highly dependent on Chinese c-Si panels, and this dependency is expected to rise in the coming years, due to future European plans to foster
solar energy. Anyhow, with the right policies and an adequate degree of investments in the solar industry, European countries will easily be able to reach the goals set in the European Green Deal.