Building a green, fair and resilient solar supply chain (UK)
Executive summary
The global solar PV supply chain is deeply dependent on the People’s Republic of China (PRC): The PRC’s global market share across the whole solar PV supply chain exceeds 80%, and stretches to over 97% at the silicon wafers stage of production.
Dependence on PRC solar undermines energy security and puts Net Zero targets at risk: The PRC has a track record of weaponizing its dominance of critical supply chains to achieve geopolitical goals. This threatens the UK’s target to ramp up solar capacity fivefold by 2035, and puts at risk a major component of the UK’s future energy supply.
PRC solar sanctions could impose major costs on UK energy bills: Our modelling shows that PRC bans on solar exports, for example, precipitated by geopolitical fallout following a conflict across the Taiwan strait, could cost the UK £4.40 billion by 2035 in increased energy bills, or £155 per household and provide a major setback to the UK’s climate ambitions, with new solar installations falling far behind planned targets.
The UK needs a new solar strategy: The UK finds itself in a precarious position when it comes to securing the solar PV supply chain. Unlike the US and EU, the UK has no major solar manufacturing capacity to scale up. This paper proposes a UK solar strategy based on three priorities:
De-risking new solar installations: The UK should incentivise its energy providers to diversify their supply chains by introducing minimum standards of supply chain resilience as a precondition for government support, including for new bids under the Contracts for Difference scheme. Standards should ensure that UK providers are not overly reliant on the PRC’s supply chain and have effective contingency plans for supply chain disruptions.
Diversifying the global supply chain: Vietnam, Malaysia, and other countries in Southeast Asia are best placed to compete with the PRC’s economies of scale and low energy costs – particularly at the earlier stages of the solar PV supply chain. The UK should press for the G7’s Partnership for Global Infrastructure and Investment to raise US $5bn for large-scale capacity building at the strategically important polysilicon and wafers stages of production.
Investing in leading-edge technologies: Perovskite solar cells have emerged as a promising alternative to traditional crystalline silicon panels, being both more efficient and less dependent on the PRC’s polysilicon supply chain. UK firms and universities lead the world in the research and development of PSCs, an advantage that can be cemented with further government support.