Innovation in Global Solar Photovoltaic’s Industry Impacted by China’s Production Surge

Posted On November 02, 2020     

The photovoltaic (PV) industry of China has undergone striking development in recent years and is presently the global market leader with regard to newly added capacity and high production. China’s PV manufacturing industry was considered minuscule before 2005. It violated 100 megawatts (MW) of cell production in 2005, surged to 7 percent of global supply from less than 2 percent in the year 2003. Production grew in the next two years, another order of magnitude in the following three, and doubled again in 2011, capping roughly 200 x growths in six years. The high subsidies provided by the Chinese government made China a global player in PV manufacturing during the 2010s China’s market share globally in 2011, had exceeded 60 percent and remained above that level since then.

In the course of the Covid-19 crisis, China has come out as a leader in terms of solar PV panel production and photovoltaic (PV) installations. The country has the biggest installed solar power capacity of more than 205GW, which contributes over 35% of the global installations. China’s annual installation was projected to be around 30GW in 2020.

China is dominating at every stage of global PV manufacturing these days. The scale and supply chain benefits of the Chinese production system are alarming. The c-Si technology at the center of this system grasps over 95 percent of the global market. China’s industry ability continues to grow speedily despite making little or no profits. This shows that subsidies, whether actually flowing or just serving as an oblique backstop, still form the landscape.

China’s subsidy-assisted in gaining dominance in PV manufacturing has motivated prices way down, but at the cost of depression, promising alternative technological pathways. The remarkable reduction in the solar PV modules' price, which stemmed from China’s subsidy, has facilitated high dominance in PV manufacturing during the 2010s.

China became the leading player in PV manufacturing globally with the critical help got from government subsidies. Chinas central government has given a vast amount of subsidy to PV investment in a long phase, causing a national investment boom in the PV industry. In the early stage of the rise, governmental subsidies can encourage technological innovation and photovoltaic enterprises' growth. It is also prompted to maximize the social and economic effects. Excessive subsidy-powered competition from China desolates the industry in the rest of the world, exclusion many innovative companies.

China’s rush drastically turned the technological innovation route due to which PV prices dropped, efficiency rise, and process innovation prosper. But R&D-intensity, patenting, and start-ups collapsed. As the course of innovation turned, alternative technological pathways that may have led to even lesser prices and better performance were discontinued. Mercantilism is mainly problematic in industries in which innovation is quick. Mercantilist policies helped in demolishing many innovative firms that are out of China. These policies also compressed new entry and limited funds in innovation by the survivors. The shift in trajectory has prohibited, to date, fully exploring some technological opportunities with the prospective to capitulate better results over the long run.


Continuous innovation in solar photovoltaic’s (PV) is essential to accomplish global climate goals. It is necessary to improve today’s dominant PV technology to a greater extent. The world wants more options, and China’s dominance confines them.

Policymakers should take steps to form and sustain technological diversity in PV and other climate-critical technologies while working with associates to control clean energy mercantilism. A collaborative effort between China’s competitors could be the best way to apply such steps. That communal effort should then be extended to keep going innovation in other climate-critical technologies that are likewise at risk.

Related Report:

Global Solar Photovoltaic Panel Market Report

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