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China unleashed the full might of its solar energy industry last year. It installed more solar panels than the United States has in its history. It cut the wholesale price of panels it sells by nearly half. And its exports of fully assembled solar panels climbed 38 percent while its exports of key components almost doubled.<\/p>\n
Get ready for an even bigger display of China\u2019s solar energy dominance.<\/p>\n
While the United States and Europe are trying to revive renewable energy production and help companies fend off bankruptcy, China is racing far ahead.<\/p>\n
At the annual session of China\u2019s legislature<\/a> this week, Premier Li Qiang, the country\u2019s second-highest official after Xi Jinping, announced that the country would accelerate the construction of solar panel farms as well as wind and hydroelectric projects.<\/p>\n With China\u2019s economy stumbling, the ramped-up spending on renewable energy, mainly solar, is a cornerstone of a big bet on emerging technologies. China\u2019s leaders say that a \u201cnew trio\u201d of industries \u2014 solar panels, electric cars and lithium batteries \u2014 has replaced an \u201cold trio\u201d of clothing, furniture and appliances.<\/p>\n<\/div>\n<\/div>\n The goal is to help offset a steep slump in China\u2019s housing construction sector. China hopes to harness emerging industries like solar power, which Mr. Xi likes to describe as \u201cnew productive forces,\u201d to re-energize an economy that has slowed for more than a decade.<\/p>\n The emphasis on solar power is the latest installment in a two-decade program to make China less dependent on energy imports.<\/p>\n China\u2019s solar exports have already drawn urgent responses. In the United States, the Biden administration has introduced subsidies that cover much of the cost of making solar panels and part of the much higher cost of installing them.<\/p>\n The alarm in Europe is particularly great. Officials are bitter that a dozen years ago, China subsidized its factories to make solar panels while European governments offered subsidies to buy panels made anywhere. That led to an explosion of consumer purchases from China that hurt Europe\u2019s solar industry.<\/p>\n A wave of bankruptcies swept the European industry, leaving the continent largely dependent on Chinese products.<\/p>\n<\/div>\n<\/div>\n \u201cWe have not forgotten how China\u2019s unfair trade practices affected our solar industry \u2014 many young businesses were pushed out by heavily subsidized Chinese competitors,\u201d Ursula von der Leyen, president of the European Commission, said in her State of the Union address<\/a> last September.<\/p>\n The remnants of Europe\u2019s solar industry are now fading away. Norwegian Crystals, an important European producer of raw materials for solar panels, filed for bankruptcy last summer. Meyer Burger, a Swiss company, announced<\/a> on Feb. 23 that it would halt production in the first half of March at its factory in Freiberg, Germany, and would try to raise money to complete factories in Colorado and Arizona.<\/p>\n The company\u2019s U.S. projects could tap renewable energy manufacturing subsidies<\/a> provided by President Biden\u2019s Inflation Reduction Act<\/a>.<\/p>\n China\u2019s cost advantage is formidable. A research unit of the European Commission calculated in a report in January that Chinese companies could make solar panels for 16 to 18.9 cents per watt of generating capacity. By contrast, it cost European companies 24.3 to 30 cents per watt, and American companies about 28 cents.<\/p>\n The difference partly reflects lower wages in China. Chinese cities have also provided land for solar panel factories<\/a> at a fraction of market prices. State-owned banks have lent heavily at low interest rates even though solar companies have lost money and some went bankrupt<\/a>. And Chinese companies have figured out how to build and equip factories inexpensively.<\/p>\n<\/div>\n<\/div>\n Low electricity prices in China make a big difference.<\/p>\n Manufacturing the main raw material for solar panels, polysilicon, requires huge amounts of energy. Solar panels typically must generate electricity for at least seven months to recoup the electricity that was needed to make them.<\/p>\n<\/div>\n<\/div>\n Coal<\/a> provides two-thirds of China\u2019s electricity at low cost. But Chinese companies are reducing costs further by installing solar farms in the deserts of western China, where public land is essentially free. Companies then use the electricity from those farms to make more polysilicon.<\/p>\n By contrast, Europe has costly electricity, particularly after it stopped buying natural gas<\/a> from Russia during the Ukraine war. Land used in Europe for solar farms is expensive. In the Southwestern United States, environmental concerns<\/a> have slowed the installation of solar farms, while zoning issues have blocked permits for the transmission of renewable energy.<\/p>\n China\u2019s coal consumption has made it the world\u2019s largest annual contributor to greenhouse gas emissions. But the country\u2019s pioneering role in making solar panels less expensive has slowed the increase in emissions. <\/p>\n<\/div>\n<\/div>\n \u201cIf the Chinese manufacturers had not brought down the cost of panels by more than 95 percent, we could not see so many installations across the world,\u201d said Kevin Tu, a Beijing energy expert and nonresident fellow with the Center on Global Energy Policy at Columbia University.<\/p>\n Annual solar panel installations have nearly quadrupled worldwide since 2018.<\/p>\n Some of the new solar farms generating electricity for polysilicon production are in two provinces in southwestern China, Qinghai and Yunnan. But much of the polysilicon is made in the Xinjiang region of northwestern China. The United States bans imports made with materials or components manufactured by forced labor in Xinjiang<\/a>, where China has repressed predominantly Muslim minorities like the Uyghurs<\/a>.<\/p>\n That has led the United States to block some shipments of solar panels from China<\/a>, while the European Union has been considering similar action.<\/p>\n Chinese companies increasingly do the initial, high-value stages of solar panel manufacturing in China, and then ship the components to overseas factories for final assembly. This allows the shipments to avoid trade barriers, like tariffs imposed on many Chinese imports by President Donald J. Trump. Several of China\u2019s biggest solar panel manufacturers are building final assembly plants in the United States to tap subsidies offered as part of the Inflation Reduction Act.<\/p>\n The law includes extensive subsidies to revive the American solar panel industry, which almost completely collapsed a decade ago in the face of low-cost imports from China. But building an industry that can stand on its own will be difficult.<\/p>\n<\/div>\n<\/div>\n China produces practically all of the world\u2019s equipment for making solar panels, and almost all of the supply of every component of solar panels, from wafers to special glass.<\/p>\n \u201cThere is know-how to it, and it\u2019s all in China,\u201d said Ocean Yuan, the chief executive of Grape Solar, a company in Eugene, Ore., that works with Chinese solar companies that are setting up assembly operations in the United States.<\/p>\n That know-how used to be in the United States. As recently as 2010, Chinese producers of solar panels relied mainly on imported equipment, and faced long and costly delays if anything broke down.<\/p>\n \u201cIt took days or weeks to get replacement parts and engineers,\u201d said Frank Haugwitz, a longtime solar energy consultant specializing in the Chinese industry.<\/p>\n<\/div>\n<\/div>\n In 2010, Applied Materials, a Silicon Valley company, built two extensive labs<\/a> in Xi\u2019an, the city in western China famous for terra-cotta warriors. Each lab was the size of two football fields. They were intended to do final testing for assembly lines with robots that could churn out solar panels with practically no human labor.<\/p>\n<\/div>\n<\/div>\n But within several years, Chinese companies had figured out how to do it themselves. Applied Materials considerably cut back its production of solar panel tooling and focused on making similar equipment that makes semiconductors.<\/p>\n Today anyone who tries to make solar panels outside China faces potential delays in installing or fixing equipment.<\/p>\n While Europe is mulling whether to follow the United States\u2019 example with its own subsidies and import restrictions on solar products, Mr. Haugwitz said, \u201cIt will remain a challenge for Europeans to compete.\u201d<\/p>\n Joy Dong and Li You contributed research.<\/p>\n<\/div>\n<\/div>\n