BENGALURU, India (AP) — For countries moving away from fossil fuels and toward clean energy like solar power, supply chains for components must be more geographically diverse, officials say. a solar energy conference in New Delhi on Tuesday.
Currently, 75% of the components needed for solar power are manufactured in China, according to a recent report by the International Energy Agency. Representatives of the fifth assembly of the International Solar Alliance, made up of 110 member countries, want to change that.
“By 2030, we expect solar to be the cheapest source of electricity in most geographies,” said Ajay Mathur, director general of ISA.
Adding that freight prices have increased, Mathur urged “more regions where solar photovoltaic products can go from producer to supplier” to ensure that more countries can benefit from cheap solar energy prices.
Launched by India and France at the 2015 climate conference in Paris, the ISA aims to promote the use of solar energy as countries look to reduce their use of fossil fuels to prevent global warming. And although China has invested more than $50 billion in new solar supply capacity – ten times more than Europe – and created more than 300,000 manufacturing jobs, it is not part of the alliance.
“China’s policies have contributed to cost reductions of more than 80%, helping solar photovoltaics become the cheapest electricity generation technology in many parts of the world,” said International Energy Agency senior analyst Si Heymi Bahar. “However, they also lead to supply-demand imbalances.”
Bahar added that the global market is almost entirely dependent on China for solar products, with 15% of the global supply coming from a Chinese plant alone, leading to concerns that the world is dependent only in a few, concentrated supply chains.
“This concentration has already resulted in increased prices during the Covid-19 pandemic and severe weather events” in China when exports are disrupted, Bahar said. “Diversification results in a more secure supply chain.”
Industry experts say a diverse supply chain can also increase employment, grow economies, encourage innovation, provide energy security as well as help countries achieve their climate objectives.
“Today, the jobs that are created in countries like India are mostly on the construction and installation side of things and not on the manufacturing side,” said Ulka Kelkar, who oversees climate policy analysis at India for the World Resource Institute. “To benefit from the full potential of job creation possibilities in solar manufacturing, it is important to diversify.”
India’s federal power minister, RK Singh, told the conference on Tuesday that countries have a “responsibility to develop parts of the world that lack energy access and energy security.”
India’s federal government recently approved funding of $2.6 billion for a production-linked incentive scheme that will encourage domestic solar module manufacturing. The US’s Inflation Reduction Act also encourages domestic manufacturing of solar power components.
The solar energy market should grow tenfold by the end of the decade if global climate goals are to be met, according to the ISA and the International Energy Agency.
The ISA assembly, which runs until Wednesday, also announced programs that will encourage investment in solar energy in Africa as well as help start-ups in the solar energy space.
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