The solar industry, like many, has been hit hard by supply chain constraints due to its concentration in China. Worker and power shortages, shipping delays and policy actions have all caused supply disruptions. Higher prices and delayed installations will persist until more sustainable solar manufacturing capacity is developed globally. The Commerce Department’s anticircumvention investigation of PV panels imported from Chinese companies in Southeast Asia further highlights the supply risks of having solar manufacturing overconcentrated in one region.
In addition to the fragility of this supply chain, solar buyers and governments are raising concerns about the high carbon emissions from China’s coal-fired solar factories and the use of forced labor in the Chinese solar supply chain.
More solar manufacturing capacity is needed to meet growing global demand. And while all solar is good, not all solar is created equal. When it comes to reducing carbon emissions, where new solar manufacturing is located is key. Solar supply chains located in lower-carbon economies provide both fewer manufacturing emissions and more diversified sources of supply, helping to reliably meet growing demand for modules to support grid decarbonization.
For a better supply chain, buy better solar
Fortunately, meeting rapidly growing demand for modules means the expansion of solar manufacturing capacity, which presents an opportunity to build a more sustainable and resilient supply chain. In response to market concerns about sustainable supply, manufacturers are expanding production across the solar supply chain in countries with cleaner grids and stronger environmental regulations.
The result is what we call “ultra low-carbon solar” — PV panels produced with significantly lower carbon emissions during the manufacturing process vs. the Chinese supply chain. The Clean Energy Buyers Institute estimates that solar manufacturing carbon emissions could reach 14-18 billion tons over the next 20 years in the current supply chain configuration. To put that in perspective, a “business as usual” approach relying on the current supply chains would see solar manufacturing emissions come to rival those of aluminum production, among the world’s most carbon-intensive industries.
We believe up to one-half of those emissions are avoidable with a more sustainable solar supply chain. By reducing manufacturing emissions, we would accelerate the carbon benefits of solar and halve the “carbon payback” time for solar projects, reducing emissions before the first watt is generated. A sustained demand signal for better solar would accelerate the expansion of solar manufacturing in lower-carbon economies, such as the U.S. and Europe, securing a more reliable module supply from multiple sources.
Ecolabels make sustainable purchasing easy and reliable
The Clean Energy Buyers Institute (CEBI) recently launched the Decarbonizing Industrial Supply Chain Energy (DISC-e) initiative, which leverages customer-driven demand for clean energy to reduce industrial sector greenhouse gas (GHG) emissions, including Scope 3 sources. CEBI says utilities can avoid significant carbon emissions in solar manufacturing “by making no-cost asks about the environmental attributes of the solar equipment employed in solar projects, using specific RFP language to strengthen requests of equipment suppliers, and leading in the market with public statements prioritizing low-carbon solar.”
There are tools emerging to facilitate purchasing ultra low-carbon solar with confidence.
The Global Electronics Council is a nonprofit dedicated to leveraging the power of purchasers to create a more sustainable world. Since 2006, the GEC has helped purchasers reduce greenhouse gas emissions and other environmental impacts through their sourcing. The GEC’s EPEAT Type 1 ecolabel is widely used by companies and governments in 43 countries, including organizations like Lockheed Martin, Citigroup and the U.S. Government to facilitate sustainable purchasing of products including computers, copiers, mobile phones and PV modules.
Type 1 ecolabels are the gold standard in ecolabels because they require third-party verification that the product meets technical performance criteria. GEC is due to release later this year an update to its EPEAT Type 1 ecolabel for PV modules that will recognize low embodied carbon (carbon footprint) PV, designed to make specifying low-carbon solar panels convenient and reliable for purchasers.
Better buying is already driving U.S. solar manufacturing expansion
Attention to solar sustainability and supply chain issues is driving solar buyers to seek more secure sustainable supply, including multi-GW scale orders for U.S.-produced modules. This is leading the solar industry to step up and expand manufacturing here in the U.S. We already have clean polysilicon production capacity roughly equal to U.S. demand, and solar panel production in the U.S. is on track to double within the next two years, with gigawatt scale module production at multiple facilities. There has been a string of recent investments in other elements of the U.S. solar supply chain as well, including basic raw materials, solar cells, solar glass, inverters and trackers. From a relatively small base, we are seeing meaningful expansion and rebuilding of the U.S. solar industry.
And it’s not just in the U.S. Manufacturers have also announced expansions in the EU, Taiwan, India and elsewhere. India’s recent Production Linked Incentive policy holds great promise for further large-scale expansions across the entire solar supply chain in South Asia.
Let’s build a better solar supply chain
The EPEAT PV ecolabel provides transparent sustainability criteria and third-party verification of a product’s claims to make purchasing better PV simpler for utilities and corporations. By choosing to buy better solar, these entities can help reshape the solar manufacturing landscape to create a more resilient, diversified and sustainable supply chain.
We agree with the Clean Energy Buyers Institute: “As the energy transition moves full-steam toward a carbon-free electricity system, now is the moment to leverage market demand to establish low-carbon norms that truly optimize emissions.” The simple choice to purchase low-carbon solar can create positive momentum throughout the solar supply chain, leading to lower emissions, more reliable module supply and more U.S. manufacturing jobs — producing a clearer path to meet our clean energy goals.
