Global Supply Chain Saves 67 Billion USD in Solar Panel Production Costs

As solar manufacturing has recently been plagued by geopolitical tensions and supply chain crises, several regions are looking to accelerate domestic manufacturing. A new study finds that the globalized solar PV supply chain played a key role in helping to reduce module prices from 2006 to 2020.

The U.S. researchers calculated that a globalized supply chain would save 67 billion USD in solar panel production costs compared to a counterfactual scenario in which more and more installed capacity was supplied by domestic manufacturers over the aforementioned time period.

Specifically, their research focused on historical installed capacity and data on raw materials and sales prices for solar panel modules deployed in the United States, Germany, and China, the three largest solar deployment countries. It found that globalizing the solar supply chain has saved 24 billion USD, 7 billion USD and 36 billion USD for the United States, Germany and China respectively.

According to the study titled Quantifying Cost Savings in the Global Solar PV Supply Chain which published in the journal Nature, assuming that all three countries vigorously pursued nationalist trade policies that limit cross-border learning during the same period, solar panel prices in 2020 will rise sharply 107%, 83% and 54% higher in the US, Germany and China, respectively.

Michael Davidson, assistant professor at UC San Diego and co-author of the study, said: ‘Policies that cut off global value chains and restrict the movement of people and capital will disrupt the global learning process that has made solar power successful. Models that demonstrate the viability of ambitious clean energy goals rely on continued cost reductions, which may not be achieved if countries choose to go it alone.’