Harnessing Solar Power : Combatting China’s Solar Monopoly
As India grapples with an ever unsteady energy market, from the Russia-Ukraine war ballooning oil prices and international pressure from the west attempting to stifle the Russian oil market it is becoming more and more urgent to move to in-house renewables. Even our regular reserves of coal have been slowly becoming less reliable as India is a coal importer and the recent AUKUS deal has nearly doubled the price of coal as India was forced to adjust to heightened coal prices from Indonesia. New Delhi has even pledged at COP26 to “Phase Down Coal” which although climatically conscious, has a significant geopolitical advantage is achieved.
If India were to decouple itself, even partially from the international coal market it would greatly decrease instability in India’s domestic energy supply. Seeing as how India has made significant steps towards a renewable energy-focused power supply we must also understand the geopolitical aspects and risks associated with such a maneuver. China, as of 2022 is the world’s leading manufacturer and exporter of solar panels. In 2019 China supplied 80% of the solar panels manufactured across the globe.
To Own the Sun
This, in other words, means China holds a near-monopoly on possibly the only viable renewable power systems in the world right now. This presents a large problem for India, as India too requires such solar panels but if the country were to shift from coal from Indonesia to solar panels from China it would only exacerbate the present geopolitical problems in India. Currently out of 571 million USD in solar panels being imported into India, the value sourced from China is 494 million USD (livemint, 2021). Even importing partially processed parts like silicon wafers, China is or majority trading partner by far with a trade value of Shifting to or remaining in a primarily solar energy system controlled by China would have the opposite effect to what India is working towards by phasing down coal. Unfortunately, India does not have the resources (human or raw materials) to produce solar panels at the price China does. With China’s ‘Labour transfer’ programs in the infamous Xinjiang Province pushing prices down and competition up India has no choice but to rely on China for its solar panels presently. Even disregarding China’s ‘flexible’ labour laws most of the main raw materials required to produce solar panels (crystalline silicon, amorphous silicon) are exported from the US with them being the top exporter of >99.99% pure silicon worth 835 million USD as of 2019. A close second is Germany with an export value of 832 million USD. This presents a unique opportunity for India to decouple from Chinese origin solar panels in the future. This article would like to illustrate a short and long term strategy for India to decouple its solar energy supply chain from China.
Short Term Strategy: “Don’t Dig for Gold, Sell Shovels”
At present India and the world is over-reliant on Chinese solar panels for their energy needs. This presents a geopolitical risk that can be significantly abated by a single aspect: maintenance.
A solar panel, like any other machine, is prone to wear and tear, manufacturing problems and defects as well as requires regular maintenance. Dark spots on a panel, overheating, cracking of the amorphous silicon glass sheet etc. are common problems with solar panels and they require technical expertise to fix. This is where India can benefit. By allowing China to take over the manufacture and export but keeping the maintenance of the solar panels domestically sourced India can gatekeep China from dominating the solar energy market within the country. This would require the setting up of easy to access privately owned but subsidized franchisees which can provide maintenance to Indian citizens’ solar systems. Similar to how we see a cellphone repair shop on every street corner there must be a significant stepping up of solar maintenance centres around the country. If maintenance was kept domestic it would also push the Indian expertise in solar systems which would pave the way for the long term strategy.
Long Term: Power, Piece by Piece
The essential components of a solar panel are as follows:
1. Crystalline Silicon cell
2. Highly transparent glass sheet
3. Butyryl/silicon plastic covering
4. Ethylene Vinyl Acetate shell
5. Copper electronic components
The crystalline silicon cell as well as the transparent glass sheet are sourced from pure silicon where the US is the top exporter followed by Germany. Unfortunately, China is the source of the raw material along with Russia and Brazil. This means India would have to move to source more silicon from other countries rather than China which would be a challenge as China is the largest exporter of silicon to India with 20 million Kg of Silicon sourced from China valued at 14 million USD. Our second-largest partner in imports is Germany with imports valued at 10 million USD (World Integrated Trade Solution, 2019). To overhaul our dependence on China we would require massive amounts of expertise as well as increase our trade reliance on Germany, Japan, Bhutan, Russia and Republic of Korea. This presents a unique opportunity for synergy as Republic of Korea is also the largest exporter of Ethylene Vinyl Acetate which is a crucial component of solar energy systems (World Integrated Trade Solution, 2019) as well as the Korea based OCI Company is one of the leaders in 99.9 10N% purity silicon. We would have to gradually push for stronger ties with Korea and Japan to shift the base of manufacturing from China towards more favourable international partners.
The main purpose of this manoeuvre is to stabilize solar energy supply by pushing the required components into India rather than outsourcing them. International markets are prone to fluctuation and in the energy sector, this can cause large scale disruptions in a nation. We can see how international conflicts can push markets into uncertainty in the Russia-Ukraine conflict, where India had to choose between buying Russian oil or siding with the West’s sanctions over the conflict. Since it is not feasible for India to source the raw materials domestically or even fully process them it is essential to shift trading partners to those more stable and favorable to India.
The next step would be to domesticize the manufacturing process. The previously mentioned Short Term strategy would be a significant step to increasing private enterprise and investment in the manufacturing of solar panels, significantly decreasing geopolitical risk and shifting leverage away from China. If the short-term strategy were to be implemented adequately there would be large investments in India’s solar energy sector both monetary and in terms of employment. The opportunities created in solar from the short and long-term strategies would push India into a stable, independent solar market.
The decoupling of India from China will be a challenge. From supply chain problems to international relations with China taking a significant hit will have large ramifications in both the short- and long-term periods but to fight a monopoly there will have to be sacrifices.
Notes
1. livemint. (2021, August 05). India’s solar cells, modules imports down to $571.65 million last fiscal. Retrieved from livemint.com: https://www.livemint.com/industry/energy/indias-solar-cells-modules-imports-down-to-571-65-million-last-fiscal-11628166317028.html
2. World Integrated Trade Solution. (2019). Ethylene polymers; in primary forms, ethylene-vinyl acetate copolymers exports by country in 2018. World Bank.
3. World Integrated Trade Solution. (2019). India Silicon Dioxide Imports by Country in 2019. World Bank.
Pic Courtesy-Ronan Furuta at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
