New solar panel roof shingles buy in Detroit, Henderson, Chula Vista

The Chinese Solar Machine

01.01.70

En years ago, solar panels were made mostly in the United States, Germany, and Japan. Chinese manufacturers made almost none. But by 2006, the Chinese company Suntech Power had the capacity to make over a million silicon-based solar panels a year and was already the world's third-largest producer. Today Chinese manufacturers make about 50 million solar panels a year—over half the world's supply in 2010—and include four of the world's top five solar-panel manufacturers. What makes this particularly impressive is that the industry elsewhere has been doubling in size every two years, and Chinese manufacturers have done even better, doubling their production roughly every year.

This dominance isn't due to cheap labor in Chinese factories: making solar cells requires such expensive equipment and materials that labor contributes just a small fraction of the overall cost. Nor is it because the Chinese companies have introduced cells that last longer or produce more power: by and large, they make the same type of silicon-based solar panels as many of their competitors around the world, using the same equipment. They have succeeded in large part because it's faster and cheaper for them to build factories, thanks to inexpensive, efficient construction crews and China's streamlined permitting process. The new factories have the latest, most efficient equipment, which helps cut costs. So do the efficiencies that come with size. As a result, Chinese manufacturers have been able to undercut other makers of silicon solar panels and dash the hopes of many upstarts hoping to introduce novel technology.

Source: Technology Review

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