Diversifying the solar photovoltaic supply chain to secure Europe’s energy and climate roadmap and sovereignty
M. M. R. Evans, Pierre‐Philippe Grand, Julien Dupuis
Abstract
Europe relies on solar photovoltaic (PV) as one of the main energy sources in its climate roadmap. Europe has been a pioneer and leader in PV production, and the installation targets are continually increasing via Renewable Energy Directive revisions. However, over the last 15 years, most of the manufacturing capacities of solar PV modules and upstream components have been offshored to China where they have been largely upscaled and upgraded. These so-called gigafactories have led to significant cost reductions for PV modules and have supported the uptake of solar energy worldwide, China itself becoming the market leader. Nevertheless, facing successive energy, sanitary, and political crises, Europe has been impacted by the vulnerability of globalized supply chains and is bringing sovereignty back to the center of debate. Its recent Industrial Green Deal especially focused on strategic technologies such as PV. Indeed, the overwhelming domination of China in PV products puts the sector supply chain at high risk of disruption. This could be critical in the long term when the time comes for repowering a dominant infrastructure and much earlier once the current thermal power plants are decommissioned to be replaced by PV. Moreover, the unavailability of key components could impede the proper operation of installed PV, threatening energy security. One of the sovereignty drivers is to reshore some manufacturing capacities in Europe, but, as seen in the United States with the Inflation Reduction Act consequences, reindustrializing comes at a significant cost. Based on a detailed bottom-up PV production model to quantify the various cost items, this article discusses strategies for Europe to diversify the supply chain of PV, including rebuilding a minimum share of factories and also developing strategic partnerships, to pursue its energy transition while maintaining affordable costs for consumers.